BILL ANALYSIS �
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|SENATE RULES COMMITTEE | AB 225|
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THIRD READING
Bill No: AB 225
Author: Chau (D) and Nestande (R), et al.
Amended: 8/20/14 in Senate
Vote: 27 - Urgency
SENATE TRANSPORTATION & HOUSING COMMITTEE : 10-0, 8/5/14
AYES: DeSaulnier, Beall, Cannella, Galgiani, Hueso, Lara, Liu,
Pavley, Roth, Wyland
NO VOTE RECORDED: Gaines
SENATE APPROPRIATIONS COMMITTEE : 5-0, 8/14/14
AYES: De Le�n, Hill, Lara, Padilla, Steinberg
NO VOTE RECORDED: Walters, Gaines
ASSEMBLY FLOOR : Not relevant
SUBJECT : Mobilehome Park Purchase Fund
SOURCE : Author
DIGEST : This bill gives the Department of Housing and
Community Development (HCD) greater flexibility in its
administration of the Mobilehome Park Purchase Fund, including
allowing HCD to lend these funds for individuals to repair their
mobilehomes and for nonprofit sponsors or local public entities
to acquire mobilehome parks.
Senate Floor Amendments of 8/20/14 increase the maximum
loan-to-value ratio from 100% to 115% for loans from the fund
that are made to resident organizations, nonprofit housing
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sponsors, and local governments when they are acquiring a
mobilehome park; and decrease the maximum loan-to-value ratio
from 115% to 100% for loans to individual homeowners.
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 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. HCD administers the fund under its
Mobilehome Park Resident Ownership Program (MPROP).
To qualify for a loan, at least 30% of the converting park's
spaces must be for homes owned by low-income residents. In
addition, HCD must verify that at least two-thirds of a
mobilehome park's households support the conversion to resident
ownership, that any displacement of residents will be mitigated,
that the conversion is consistent with state and local law, and
that the conversion is financially viable.
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 30 years and an interest rate of 3% per annum, unless HCD
finds that a lower interest rate is necessary and will not
jeopardize the financial stability of the fund. 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. In
addition, loans to individuals must be secured with 100%
collateral, including that securing any senior debt (i.e., an
existing mortgage on the home).
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This bill:
1.Renames the Mobilehome Park Purchase Fund as the "Mobilehome
Park Rehabilitation and Purchase Fund" and renames MPROP as
the "Mobilehome Park Rehabilitation and Resident Ownership
Program."
2.Permits HCD to make loans from the fund to nonprofit housing
sponsors and local public entities to acquire a mobilehome
park. Such loans must be to either:
Cure significant outstanding violations of state law
governing health and safety in mobilehome parks.
Support a park acquisition that in the determination of
HCD will substantially benefit low- and moderate-income
homeowners, including maintaining affordable space rent
level.
In either case, HCD shall make the loan for the minimum amount
necessary to bring the park into compliance with all
applicable health and safety standards and maintain
affordability, be for no more than 40 years at 3% interest,
and not exceed the value of the collateral securing the loan.
The bill directs HCD to determine eligibility for and the
amounts of these loans by considering, among other things, all
of the following:
Current health and safety conditions in the park and the
likelihood that they could be remedied without the loan
The degree to which the loan will benefit lower-income
homeowners
The age of the park and the age of the infrastructure
that will be rehabilitated
In addition, before making a loan, HCD must verify the
projected operating budget of the park, funds for and costs of
purchase and rehabilitation, and that no park residents will
be involuntarily displaced as a result of the purchase or that
the displacement shall be mitigated as required under state
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and local law.
1.Permits HCD to make loans to resident organizations or
qualified nonprofit sponsors to assist lower income homeowners
to make needed repairs or make accessibility-related upgrades.
Applicants must otherwise have qualified for an MPROP loan
and demonstrate sufficient organizational stability and
capacity to manage a portfolio of loans to individual home
owners. HCD may adopt guidelines to implement this loan
program. Allows loans to resident organizations, nonprofit
housing sponsors, and local governments to be for up to 115%
of the value of the collateral securing the loan.
2.Allows HCD, when lending from the fund to individual
homeowners or resident organizations in support of a
conversion to resident ownership, to loan for a term of up to
40 years (rather than 30).
Comments
MPROP funding and history . The 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 approximately $24 million is available.
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 continues to
decline. The program had only two successful applications in
2011 and, as noted above, none in the past two years. HCD staff
reports that there is currently one pending application.
FISCAL EFFECT : Appropriation: Yes Fiscal Com.: Yes
Local: No
According to the Senate Appropriations Committee:
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 HCD.
SUPPORT : (Verified 8/20/14)
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Golden State Manufactured-Home Owners League
ARGUMENTS IN SUPPORT : According to the author this bill
facilitates programmatic changes to MPROP that will make the
application and loan requirements more attractive to potential
borrowers. The author hopes this will ensure that HCD can use
the accumulated funds to preserve affordable homeownership
opportunities. The author asserts that the bill aims to achieve
three key goals:
Make MPROP work better for conversions to resident ownership.
The bill would make several changes to ensure the most
attractive loan terms for resident-initiated conversions.
Ensure that MPROP can be used for acquisition and
rehabilitation of mobilehome parks by nonprofit developers who
will own and operate the park. Some parks in California are
suffering from years of neglect, leading to substandard
conditions within the park. If not remedied, the park could
eventually close, displacing the homeowners. With many
troubled parks, having a nonprofit owner take over ownership
and management while undertaking repairs can stabilize the
park and ensure that it remains an affordable source of
housing. This bill streamlines MPROP rules governing
acquisition by nonprofits by separating in statute the MPROP
funding rules for nonprofit acquisitions from those governing
conversions to resident ownership. The proponents believe
this will ensure that the program better supports funding for
nonprofit acquisition and rehabilitation.
Allow a portion of the funds to be used by homeowners for
rehabilitation and accessibility improvements. The bill
authorizes MPROP funds to be used to provide low-cost loans to
low-income homeowners in need of minor repairs or
accessibility upgrades for their homes, to be provided in
connection with an MPROP-funded acquisition or conversion by
nonprofit organizations.
JA:nl 8/21/14 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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