BILL ANALYSIS �
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|SENATE RULES COMMITTEE | AB 1797|
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THIRD READING
Bill No: AB 1797
Author: Torres (D)
Amended: 6/26/12 in Senate
Vote: 21
SENATE TRANSPORTATION & HOUSING COMMITTEE : 6-3, 6/19/12
AYES: DeSaulnier, Kehoe, Lowenthal, Pavley, Rubio,
Simitian
NOES: Gaines, Harman, Wyland
SENATE APPROPRIATIONS COMMITTEE : 5-2, 8/6/12
AYES: Kehoe, Alquist, Lieu, Price, Steinberg
NOES: Walters, Dutton
ASSEMBLY FLOOR : 51-26, 5/29/12 - See last page for vote
SUBJECT : Mobilehome Park Purchase Fund
SOURCE : Golden State Manufactured-Home Owners League
DIGEST : This bill allows the Department of Housing and
Community Development (HCD) to lower the interest rate
below 3% when it makes loans from the Mobilehome Park
Purchase Fund.
ANALYSIS : The residents of California's nearly 5,000
mobilehome parks typically own their mobilehomes and rent
the spaces in the mobilehome park in which the homes are
placed. For various reasons, mobilehome park residents in
some parks have decided to join together and buy the park
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or their individual spaces within it. This is referred to
as a conversion to resident ownership.
Historically, when mobilehome parks have converted to
resident ownership, the residents have initiated the
process and enlisted the help of a nonprofit organization.
The nonprofit organization typically buys the entire park
and sells lots to individual owners. In 1984, the
Legislature created the Mobilehome Park Purchase Fund
(Fund) to encourage and facilitate this process for
converting mobilehome parks to resident ownership through
low-interest loans to resident organizations, individual
residents, qualified nonprofit housing sponsors, or local
governments. To qualify for a loan, at least 30% of the
converting park's spaces must be for homes owned by
low-income residents.
Existing law requires HCD to adopt regulations to
administer the Fund and to make loans from the Fund with a
term of no longer than three years and an interest rate of
3% per annum. Existing law also permits HCD to establish
flexible repayment terms if needed to achieve affordable
housing costs for low-income borrowers and if such terms do
not risk the security of the Fund.
HCD administers the Fund under its Mobilehome Park Resident
Ownership Program (MPROP).
This bill:
1. Permits HCD to lower the interest rate below 3% per
annum on loans made from the Fund, provided HCD finds
that a lower interest rate is necessary and will not
jeopardize the financial stability of the Fund.
2. Permits HCD to provide technical assistance to loan
applicants, or may contract with a qualified nonprofit
entity to provide technical assistance, and include the
cost of this assistance as part of the loan principal.
Comments
Purpose of the bill . The author introduced this bill to
increase the use of MPROP and loans made through that
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program to support mobilehome park conversions to resident
ownership. The bill gives HCD the flexibility to offer a
lower interest rate on MPROP loans, provided that doing so
would not jeopardize the overall stability of the Fund.
HCD already has statutory authority to offer flexible
repayment terms but is bound by the 3% interest rate that
is set in law. HCD staff indicate that an ability to lower
interest rates on these loans would allow for more
affordable payments, particularly on loans made to
individual residents who need assistance in purchasing
their space. In addition, this bill allows HCD to provide
technical assistance to loan applicants and include the
costs as part of the loan principal in order to help
homeowners and resident organizations navigate the
sometimes complex financial aspects of a park conversion.
MPROP funding and history . The Mobilehome Park Purchase
Fund receives revenues from a $5 fee that mobilehome owners
pay with their annual registration fee. The Fund also
receives repayments of loans HCD has made under MPROP.
Currently, $14 million is available under MPROP.
Between 1985 and 2001, MPROP provided loans to assist with
conversion in 66 mobilehome parks around the state. Since
2002, new loan activity under the program has slowed and
activity continues to decline. The program had only two
successful applications in 2011. HCD staff reports that
the increasing cost and complexity of park conversions are
two of the primary reasons for the reduction in the number
of loan applications.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
According to the Senate Appropriations Committee:
Unknown loss of interest, potentially in excess of
$150,000 after several years (Mobilehome Park Purchase
Fund), to the extent HCD charges a lower interest rate.
Actual impact would depend upon actual rates charged, the
repayment terms of the loan, and volume of loans subject
to lower rates.
Likely minor costs to HCD to provide, or contract for,
technical assistance on MPPF loans. Costs could be added
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to loan principal and repaid through loan payments.
SUPPORT : (Verified 8/8/12)
Golden State Manufactured-Home Owners League (source)
Western Center on Law and Poverty
ASSEMBLY FLOOR : 51-26, 5/29/12
AYES: Alejo, Allen, Ammiano, Atkins, Beall, Block,
Blumenfield, Bonilla, Bradford, Brownley, Buchanan,
Butler, Charles Calderon, Campos, Carter, Chesbro, Davis,
Dickinson, Eng, Feuer, Fong, Fuentes, Furutani, Galgiani,
Gatto, Gordon, Hagman, Hayashi, Roger Hern�ndez, Hill,
Huber, Hueso, Huffman, Lara, Bonnie Lowenthal, Ma,
Mendoza, Mitchell, Monning, Pan, Perea, V. Manuel P�rez,
Portantino, Skinner, Solorio, Swanson, Torres,
Wieckowski, Williams, Yamada, John A. P�rez
NOES: Achadjian, Bill Berryhill, Conway, Cook, Donnelly,
Beth Gaines, Garrick, Gorell, Grove, Halderman, Harkey,
Jeffries, Jones, Knight, Logue, Mansoor, Miller, Morrell,
Nestande, Nielsen, Norby, Olsen, Silva, Smyth, Valadao,
Wagner
NO VOTE RECORDED: Cedillo, Fletcher, Hall
JJA:m 8/8/12 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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