BILL ANALYSIS �
Senate Appropriations Committee Fiscal Summary
Senator Kevin de Le�n, Chair
AB 225 (Chau) - Mobilehomes: loans.
Amended: August 6, 2014 Policy Vote: T&H 10-0
Urgency: Yes Mandate: No
Hearing Date: August 11, 2014
Consultant: Mark McKenzie
This bill meets the criteria for referral to the Suspense File.
Bill Summary: AB 225, an urgency measure, would provide for more
flexible loan terms and expand the allowable uses of funds from
the Mobilehome Park Purchase Fund (MPPF) to include loans for
assisting individual homeowners in making repairs and
accessibility upgrades to their mobilehomes.
Fiscal Impact:
Unknown increased expenditure of funds for new loans for
mobilehome repairs and upgrades, and as a result of
potential increased demand for park purchase loans due to
more flexible terms. (Mobilehome Park Rehabilitation and
Purchase Fund)
Minor costs to the Department of Housing and Community
Development (HCD).
Background: Existing law establishes the Mobilehome Park
Resident Ownership Program (MPROP), which allows HCD to make
loans to mobilehome park resident organizations, individual
low-income residents of mobilehome parks, qualified nonprofit
housing sponsors, and local public entities to finance
mobilehome park conversions to resident ownership and reduce
monthly housing costs for low-income residents. Loans under
certain provisions are for a maximum term of three years, and
for a term of up to 30 years under other provisions, as
specified, and interest rates must be three percent per annum.
HCD may reduce the interest rate and establish flexible
repayment terms for certain loans if the terms are necessary to
reduce the monthly housing costs for low-income residents to an
affordable level, and the rate and terms do not jeopardize the
security of the MPPF.
AB 225 (Chau)
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Between 1985 and 2001, MPROP provided loans to assist with the
conversion 66 mobilehome parks statewide to resident ownership.
Since 2002, new loan activity under the program has slowed and
activity continues to decline. The program has only had two
successful applications from the last four annual Notices of
Funding Availability, both of which were in 2011. HCD indicates
that the increasing cost and complexity of park conversions are
two of the primary reasons for the reduction in the number of
loan applications. In addition, financing for mobilehomes is
simply more difficult, and there have been fewer park owners
willing to sell, and fewer residents partnering with others to
purchase parks under mutually favorable terms.
Proposed Law: AB 225 would rename the MPROP as the "Mobilehome
Park Rehabilitation and Resident Ownership Program," rename the
MPPF as the "Mobilehome Park Rehabilitation and Purchase Fund,"
and make the following changes to the program:
Allow loans provided under the program to have a term of
up to 40 years, rather than 30 years.
Allow loans provided to individual low-income residents
under the program to have a total indebtedness of up to
115% of the value of the mobilehome used for collateral,
rather than up to 100% of the collateral's value.
Authorize HCD to make park acquisition loans to a
qualified nonprofit housing sponsor or a local public
entity if the park has significant outstanding violations
that threaten the park's long term viability or the
acquisition will substantially benefit low- and
moderate-income homeowners, including maintenance of
affordable rents.
Prescribe terms, conditions, and eligibility
requirements for loans made for park acquisition by
nonprofit housing sponsors and local public entities, as
specified.
Authorize HCD to make loans to resident organizations or
qualified nonprofit sponsors for the purpose of assisting
individual homeowners to make needed repairs or
accessibility-related upgrades to their mobilehomes. The
applicant entity must have an existing loan for park
acquisition or conversion, and must demonstrate stability
and capacity to manage a portfolio of homeowner loans.
Staff Comments: The MPPF is a continuously appropriated fund
that was originally capitalized with a $3 million transfer of
AB 225 (Chau)
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funds from the Mobilehome-Manufactured Home Revolving Fund. The
MPPF currently has a balance of approximately $34 million and
receives revenues from a $5 fee that mobilehome owners pay with
their annual registration fees, as well as loan repayments from
the outstanding portfolio of loans. As noted above, demand for
the program has been very low in recent years. This bill would
make modifications to the program with the intention of
stimulating demand.
The bill would provide more favorable loan-to-value terms for
certain loans, extended repayment terms of 40 years for all
program loans, and would also open up the loans to nonprofit
sponsors for the purpose of assisting individual homeowners with
repairs and accessibility upgrades. The overall magnitude of
increased demand for the program as a result of these changes is
unknown, but the bill would likely result in increased
expenditures of funds from the MPPF. It should be noted that
any increased expenditures would be consistent with the purpose
of the program and would help preserve a segment of affordable
housing stock.