BILL ANALYSIS �
SENATE TRANSPORTATION & HOUSING COMMITTEE BILL NO: SB 444
SENATOR MARK DESAULNIER, CHAIRMAN AUTHOR: evans
VERSION: 2/16/11
Analysis by: Carrie Cornwell FISCAL: no
Hearing date: March 29, 2011
SUBJECT:
Mobilehome park conversion
DESCRIPTION:
This bill permits a local government to subject an application
to convert a mobilehome park to resident ownership to all
relevant state and local laws, including all provisions of the
Subdivision Map Act.
ANALYSIS:
The Subdivision Map Act governs the division of real property
into parcels or condominiums and requires that a subdivider file
a tentative map for approval by a local agency. Under the act,
a subdivider of a mobilehome park who wishes to convert that
park to another use must file a tentative or parcel map and must
also file a report on the impact of the conversion on residents
of the park. This report must specifically address the
availability of adequate replacement space in other mobilehome
parks. When approving the map, the local agency may require
that the subdivider take steps to mitigate any adverse impacts
of the conversion on the displaced residents of the park.
Existing law creates an exemption to the Subdivision Map Act for
conversions of mobilehome parks to resident ownership. Under
this exemption (contained in Government Code Section 66427.5), a
subdivider of a mobilehome park submits a tentative or parcel
map to the local agency for review and approval. This exemption
requires the subdivider to avoid the economic displacement of
non-purchasing residents by:
� Surveying residents about their support for the conversion.
� Offering each existing tenant an option to buy his or her
lot.
� Filing a report on the impact of the conversion on
residents and making that report available to residents of
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the park.
� Submitting to a local agency hearing solely on the
subdivider's compliance with the law requiring avoidance of
economic displacement of non-purchasing residents.
� Limiting rent increases of non-purchasing, low-income
residents by an amount equal to the average monthly increase
in rent in the four years immediately preceding the
conversion, except that in no case shall the increase be
greater than the increase in the consumer price index (CPI);
� Limiting rent increases on those non-purchasing residents
who are not low-income to market-rate levels through equal
annual increases spread over a four-year period.
The legislative body or an authorized advisory agency (i.e., the
planning commission) of the local government must hold a hearing
to approve, conditionally approve, or disapprove the map. The
scope of the hearing - and therefore, the approval or
disapproval -- is limited to whether or not the subdivider
complied with the requirements of the exemption (i.e., the
bullets above).
This bill :
1.Deletes, in effect, the exemption in the Subdivision Map Act
for conversions of mobilehome parks to resident ownership and
provides that such conversions shall be subject to the
Subdivision Map Act and any other applicable state or local
laws.
2.Requires that the legislative body or an authorized agency of
the local government shall hold the hearing to approve,
conditionally approve, or disapprove the map and that only the
portion of that hearing relating to mitigating the economic
displacement of nonpurchasing residents shall be limited in
scope to ensuring that the subdivider complied with has
complied with Government Code Section 66427.5 (i.e., the
bullets above). For that portion of its review, the local
government may disapprove the map if it finds that the survey
results have not demonstrated adequate resident support for
the conversion.
3.Declares that its amendments to the Subdivision Map Act are
declaratory of existing law; that the intent of the
Legislature has been and continues to be that a local agency
must consider the resident survey in making the decision to
approve, conditionally approve, or disapprove the map; and
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that the local agency has the authority at its discretion to
disapprove the map if it finds that the results of the survey
have not demonstrated adequate support.
BACKGROUND:
The residents of California's nearly 5,000 mobilehome parks
typically own their mobilehomes and rent the spaces in
mobilehome parks on which the homes are placed. Mobilehomes,
once placed in a park, are difficult to relocate. Because of
this, many local governments impose mobilehome park space rent
controls to limit the amount that rent on a space can increase
each year.
For various reasons, mobilehome park residents in some parks
have decided to join together and buy the park 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.
Until 1996, local jurisdictions imposed their own conditions on
proposed subdivisions of mobilehome parks into individual,
resident-owned lots. In the 1990s, some argued that local
governments sometimes imposed conditions under the Subdivision
Map Act that prevented the conversion of a park into resident
ownership. For example, a local government might condition the
map on the building of sidewalks, curbs, and gutters on the
streets in the mobilehome park. In 1995, then Senator Craven
introduced a bill to address this issue.
SB 310 (Craven), Chapter 256, Statutes of 1995, amended the
Subdivision Map Act to limit local review of the subdivision
application and to ensure that subdividers of mobilehome parks
gave residents the opportunity to purchase a space in the park
and to avoid being displaced if they could not afford to
purchase a space. SB 310 limited local review of an application
to subdivide a park into resident-owned space solely to
compliance with its provisions, which are to avoid the economic
displacement of non-purchasing residents.
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Under SB 310, residents who cannot purchase their spaces are
allowed to remain as renters, and SB 310 prescribed a formula
for how rents for non-purchasing residents would be calculated.
That formula raises rents to market levels over a four-year
period, except those renters who are low-income may only have
their rents increased by the average monthly increase in rent in
the four years immediately preceding the conversion, but in no
case by more than an amount equal to increases in the CPI.
In 1993, the owner of the El Dorado Mobile Country Club, a
377-space mobilehome park in Palm Springs, filed a tentative
subdivision map as a first step to converting the park to
resident ownership. The Palm Springs City Council, concerned
that this was a "sham" conversion to circumvent its local rent
control ordinance, approved the map subject to several
conditions, including that the effective map date would be the
date escrow closed on 120 lots in the park. Under this
condition, the park would cease to be subject to the city's
mobilehome space rent control ordinance when 120 of its lots
sold. After that date, the formula for mitigating economic
displacement under SB 310 bill would be applicable. This would
prevent circumventing the rent control ordinance by just selling
a few lots (i.e., a "sham" conversion).
El Dorado's owner filed a lawsuit in superior court to compel
approval of the subdivision map without the conditions,
including the condition delaying the effective date of the map.
El Dorado's owner claimed that the effective date of conversion
was when one lot was sold, and the city council did not have the
power to impose more stringent requirements. The lower court
denied the park owner's petition, but in 2002, the 4th District
Court of Appeal reversed that decision ruling in favor of the
park owner in El Dorado Palm Springs, Ltd., v. City of Palm
Springs.
The appellate court ruled that the city was limited to the scope
of assuring that El Dorado's owner had complied with
requirements of Section 66427.5, the exemption to the
Subdivision Map Act enacted by SB 310. The court ruled that
Section 66427.5 takes effect as soon as one unit is sold, and
therefore, its rent formulas supersede a local rent control
ordinance as soon as that first lot is sold.
The proponents of SB 310 had not foreseen instances in which
mobilehome park owners, rather than residents, would use its
exemption to the Subdivision Map Act to convert their parks into
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condominium-type parks, where the owner subdivides the park and
sells spaces to the residents. As the value of the land under a
mobilehome park increases, rents for those spaces may not
increase commensurately in local communities with rent control
ordinances, and this circumstance can create an incentive for a
mobilehome park owner to convert his or her park to resident
ownership.
Since the owner of El Dorado Park in Palm Springs first used the
Subdivision Map Act for conversion to resident ownership, many
more mobilehome park owners have pursued this type of
conversion. This has set up a conflict between park owners and
park residents over the use of existing state law for conversion
of parks to resident ownership, which has resulted in both
legislation and litigation.
In August of last year some of this litigation resulted in
another appellate court ruling in a different district of the
California Court of Appeals, which found that other state laws,
but not other provisions of the Subdivision Map Act, apply to
conversions to resident ownership. In Pacific Palisades Bowl
Mobile Estates, LLC v. City of Los Angeles, the 2nd District
Court of Appeal ruled that other state laws, specifically the
Mello Act (relating to housing in the coastal zone) and the
Coastal Act, apply to a mobilehome park conversions within the
coastal zone and "the local authority must ensure compliance
with those acts in addition to compliance with section 66427.5."
COMMENTS:
1.Purpose . The author notes that mobilehomes have traditionally
provided affordable housing to people that would otherwise be
priced out of any type of ownership. Local rent control
ordinances keep mobile homes affordable for seniors and
working families who are on a fixed income.
Current law allows a mobilehome park to be subdivided into
residential ownership. The author notes that the original law
was written in order to give the residents of mobilehome parks
an opportunity to buy the land they live on but that serious
unintended consequences have surfaced. For instance, if one
parcel in a mobilehome park is sold, the four year phase-out
of rent control begins. This means that a parcel that is
rented for $600 today may be rented for $1000 to $1500 in a
very short four years. The author is concerned that the end
result is that the affordable housing stock is severely
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compromised.
The author states that in the past few years, there has been a
surge in applications being filed by park owners who want to
convert their parks from rental mobilehomes into residential
ownership. This is often being done over the protests of
local government and residents of the parks, who have no
recourse to stop the conversion.
2.The survey requirement . AB 930 (Keeley), Chapter 1143,
Statutes of 2002, responded to the El Dorado case by requiring
a subdivider to survey residents of the mobilehome park on
whether or not they support a proposed conversion to resident
ownership. The survey must be conducted in accordance with an
agreement between the subdivider and a homeowners' association
and must be obtained as a written ballot with each occupied
mobilehome space having one vote. Once completed, results of
the survey must be submitted to the local agency as part of
the subdivision map hearing. AB 930 included uncodified
language stating the bill was intended to assure that such
conversions were "bona-fide."
Since AB 930 added the survey requirement, some local
governments have enacted local ordinances to define "bona
fide," including a requirement that a certain percentage of
residents indicate an interest in purchasing their lots.
Several of these ordinances are the subject of pending
litigation as park owners have challenged the measure of
resident support as evidence that the conversion is bona fide.
Last year the 2nd District Court of Appeal, in Colony Cove
Properties, LLC v. City of Carson (2010), invalidated the City
of Carson's ordinance, which depended on certain percentages
of support in the resident survey to make presumptions about
whether a conversion was bona fide or not. While the court
invalidated the ordinance, it did leave open the possibility
that a local government could consider the survey in its
action at the hearing on the map application.
3.Court urges Legislature to clarify the law . In both Colony
Cove Properties and Palisades Bowl Mobile Estates, the 2nd
District Court of Appeal expressed "hope that the Legislature
will recognize the dilemma faced by local agencies illustrated
by �these cases] ?, and act to clarify the scope of their
authority and responsibility." This bill addresses that hope,
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because it gives local governments authority to apply any
applicable state or local law to an application to convert a
mobilehome park to resident ownership.
4.Arguments in opposition . The Western Manufactured Housing
Communities Association (WMA) opposes this bill because it
allows a local agency broader authority over the conversion of
mobilehome parks to resident ownership. WMA believes that
allowing local governments to exercise greater decision making
over the conversions will make the process more complicated,
costly, and less appealing for residents. The bill will allow
local governments to "continue to hold some parkowners in a
form of economic indentured servitude that will result in
continued deterioration of, and reduction in, the number of
mobilehome parks in California."
Writing in opposition for the Law Offices of Gilchrist &
Rutter, attorney Richard Close states that existing law is
specifically intended to relieve a subdivider of complying
with other applicable state and local laws in order to
maintain statewide uniformity, thus encouraging and
facilitating conversions so that residents will have the
opportunity to own their spaces. He further notes that
complying with local laws is generally not feasible as a
conversion is merely a change of ownership and not a change of
use.
5.Really about rent control ? It can be argued that bills
relating to the process for converting a mobilehome park to
resident ownership are really about rent control. As noted in
the background section above, once a single lot in a
mobilehome park is sold into resident ownership then the
entire park is removed from any local rent control ordinance
and subject to the rent increases prescribed in state law.
Because those local ordinances suppress the income that an
owner of a park can make from rents, it is typically in the
owner's interest to undertake a conversion to resident
ownership whether or not the majority of residents in that
park want to buy their lots or not. This bill would allow a
local government to establish ordinances or use other
provisions of law to disapprove conversions, so it could have
the effect of keeping mobilehome parks under local rent
control ordinances that could otherwise convert and get out of
that rent control.
6.Previous legislation . Last session, AB 566 (Nava) would have
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allowed a local government to consider the level of support
that a subdivider's survey demonstrates when approving or
disapproving a mobilehome park conversion to resident
ownership. That bill passed this committee by a 7 - 4 vote on
July 14, 2010, but Governor Schwarzenegger vetoed it.
In 2007, AB 1542 (Evans) would have increased a local
jurisdiction's authority over a mobilehome park conversion and
maintained or imposed rent control on spaces that were not
purchased when a mobilehome park converts to resident
ownership. That bill passed this committee on a 6 - 2 vote on
July 3, 2007, but Governor Schwarzenegger vetoed it.
POSITIONS: (Communicated to the Committee before noon on
Wednesday, March 23,
2011)
SUPPORT: Golden State Manufacturers home Owners League
(sponsor)
County of Sonoma (sponsor)
Blue Pacific Mobile Home Park Homeowners'
Associaton
California Rural Legal Assistance Foundation
City of Capitola
City of Chino
Fairness for Mobile Home Owners
Ventura County Board of Supervisors
Western Center on Law and Poverty
18 individuals
OPPOSED: Law Offices of Gilchrist & Rutter
Western Manufactured Housing Communities
Association (WMA)
60 individuals