BILL ANALYSIS �
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|SENATE RULES COMMITTEE | SB 444|
|Office of Senate Floor Analyses | |
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|327-4478 | |
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THIRD READING
Bill No: SB 444
Author: Evans (D), et al.
Amended: 4/26/11
Vote: 21
SENATE TRANS. & HOUSING COMMITTEE : 5-2, 5/3/11
AYES: DeSaulnier, Kehoe, Lowenthal, Pavley, Simitian
NOES: Gaines, Harman
NO VOTE RECORDED: Huff, Rubio
SUBJECT : Mobilehome park conversion to resident
ownership
SOURCE : County of Sonoma
County of Ventura
Golden State Manufacturers Home Owners League
DIGEST : This bill permits a local government to subject
an application to convert a mobilehome park to resident
ownership to all relevant state laws, including 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. In almost all cases the local agency's
approval of the subdivision is a discretionary act.
Existing law, however, provides for a few situations in
which a local agency must deny the subdivision map, such as
if the map is inconsistent with the community's general
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plan.
The Subdivision Map Act establishes a different process for
conversions of mobilehome parks to resident ownership,
which severely limits a local agency's discretion. Under
this process (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. Government Code Section 66427.5 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 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 provisions
of law to avoid the economic displacement of non-purchasing
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residents (i.e., the bullets above).
This bill:
1. Deletes the special process under the Subdivision Map
Act for conversions of mobilehome parks to resident
ownership and provides that such conversions shall be
subject to the applicable provisions of the Subdivision
Map Act and other applicable state 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 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
(i.e., 1 and 2 above) are declaratory of existing law,
thus indicating that the Legislature never intended to
limit a local agency's discretion under the Subdivision
Map Act; 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; 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; and that
the special process under the Subdivision Map Act has
never been intended to relieve the subdivider or local
agency from complying other applicable state laws.
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
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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.
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 shall be
calculated. That formula raises rents to market levels
over a four-year period, except that those renters who are
low-income may only have their rents increased by the
average monthly increase in rent in the four years
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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. The city council included this
condition to prevent the park owner's circumvention of 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 special process in 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 condominium-type parks, where the owner
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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
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."
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
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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.
FISCAL EFFECT : Appropriation: No Fiscal Com.: No
Local: No
SUPPORT : (Verified 5/5/11)
County of Sonoma (co-source)
County of Ventura (co-source)
Golden State Manufacturers Home Owners League (co-source)
AARP
Associates Group for Affordable Housing
Blue Pacific Mobile Home Park Homeowners' Association
California Alliance for Retired Americans
California Rural Legal Assistance Foundation
California Senior Legislature
Cities of Buelton, Buenaventura, Capitola, Carson, Chino,
Goleta, Rohnert Park, and Torrance
Coddingtown Estates How Owners Association
Congress of California Seniors
Contempo Marin Homeowners Association
Counties of San Luis Obispo, Santa Barbara, Santa Clara,
and Santa Cruz
DeAnza Mobile Home Park Owners Association
Fairness for Mobile Home Owners
Firecrest Mobilehome Park Homeowners Association
Homeowner's Coalition, Mobilehome Parks of Tuolumne Co.
Lamplighter Chino Home Owners Association
League of California Cities
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Rancho Santa Barbara Mobile Home Association
San Luis Obispo County Mobilehome Residents' Assistance
Panel
Sequoia Gardens Mobile Home Owners Association
University Park Homeowners Association
Ventura Mobilehome Resident's Council
Vista Del Lago Homeowners' Association
Western Center on Law and Poverty
OPPOSITION : (Verified 5/13/11)
Hart, King & Coldren
Law Offices of Gilchrist & Rutter
Loftin Firm LLP
Marineland Community Association, Inc.
Palm Beach Park Association
Rancho Carlsbad Owners Association
Western Manufactured Housing Communities Association
ARGUMENTS IN SUPPORT : The author's office 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 $1,000 to $1,500 in a short four years. The author's
office is concerned that the end result is that the
affordable housing stock is severely compromised.
The author's office 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
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conversion.
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."
JJA:mw 5/16/11 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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