BILL ANALYSIS �
AB 225
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CONCURRENCE IN SENATE AMENDMENTS
AB 225 (Chau and Nestande)
As Amended August 20, 2014
2/3 vote. Urgency
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|ASSEMBLY: | |(May 16, 2013) |SENATE: |32-0 |(August 25, 2014) |
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(vote not relevant)
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|COMMITTEE VOTE: |6-1 |(August 27, 2014) |RECOMMENDATION: |concur |
|(H. & C.D.) | | | | |
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Original Committee Reference: TRANS.
SUMMARY : Gives the Department of Housing and Community Development
(HCD) greater flexibility in its administration of the Mobilehome
Park Resident Ownership Program, 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.
The Senate amendments delete the Assembly version of this bill, and
instead:
1)Rename the Mobilehome Park Purchase Fund as the "Mobilehome Park
Rehabilitation and Purchase Fund" (fund).
2)Rename the Mobilehome Park Resident Ownership Program as the
"Mobilehome Park Rehabilitation and Resident Ownership Program"
(MPROP).
3)Permit HCD to make loans from the fund to nonprofit housing
sponsors and local public entities to acquire a mobilehome park,
provided that no less than 30% of residents at the time of
acquisition are low-income. Such loans must be to either:
a) Cure significant outstanding violations of state law
governing health and safety in mobilehome parks; or
b) Support a park acquisition that, in the determination of
HCD, will substantially benefit low- and moderate-income
homeowners, including maintaining affordable space rent
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levels.
1)Require HCD to make loans for the minimum amount necessary to
bring the park into compliance with all applicable health and
safety standards and maintain affordability, for a term of no
more than 40 years at 3% interest, and not to exceed 115% of the
value of the collateral securing the loan.
2)Direct HCD to determine eligibility for and the amounts of these
loans by considering, among other things, all of the following:
a) Current health and safety conditions in the park and the
likelihood that they could be remedied without the loan;
b) The degree to which the loan will benefit low-income
homeowners; and
c) The age of the park and the age of the infrastructure that
will be rehabilitated.
1)Require HCD, before making a loan, to 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
will be mitigated as required under state and local law.
2)Permit HCD to make loans to resident organizations or qualified
nonprofit sponsors to assist low-income homeowners to make needed
repairs or accessibility-related upgrades under the following
circumstances:
a) Applicants must otherwise have qualified for an MPROP loan;
and
b) Applicants must demonstrate sufficient organizational
stability and capacity to manage a portfolio of loans to
individual homeowners.
1)Allow HCD to adopt guidelines to implement the repair and
accessibility-related upgrade loan program.
2)Increase the loan term for loans to individual low-income
homeowners from 30 to 40 years.
3)Increase the loan term for loans to resident organizations from
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30 to 40 years, and from 100% to 115% of the value of the
collateral securing the loan.
4)Include an urgency clause.
FISCAL EFFECT : According to the Senate Appropriations Committee:
1)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; and
2)Minor costs to HCD.
COMMENTS:
Background: 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.
MPROP was created in 1984 to provide low-interest loans to finance
the conversion of mobilehome parks to resident ownership and ensure
that low-income residents' housing costs remained at an affordable
level after conversion. The program is funded through a $5 fee that
certain mobilehome owners pay along with their annual registration
fee, as well as through loan repayment. There is currently about
$34 million in the MPROP fund.
New loan activity under MPROP has been slow in recent years, with
only a handful of loans made since 2007. The program had no
successful applications in 2010, 2012, or last year. HCD points to
the increasing cost and complexity of park conversions as two of
the primary reasons for the reduction in the number of successful
applications.
Purpose of this bill: The author introduced this bill to
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facilitate programmatic changes to MPROP that will make the
application and loan requirements more attractive to potential
borrowers. The changes will ensure that HCD can use the
accumulated funds to preserve affordable homeownership
opportunities. The bill aims to achieve three key goals.
First, this bill aims to make MPROP work better for conversions to
resident ownership. This bill would make several changes to ensure
the most attractive loan terms for resident-initiated conversions.
These include increasing the maximum loan-to-value ratio to 115%
for loans made to resident organizations, and allowing for a longer
repayment period to better match MPROP loans with other potential
funding sources, such as loans from the Federal Housing
Administration.
Second, this bill would ensure that MPROP can be used for the
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, and provides attractive loan terms for nonprofit
acquisitions. The proponents believe this will ensure that the
program better supports funding for nonprofit acquisition and
rehabilitation.
Third, this bill would allow a portion of the funds to be used by
homeowners for rehabilitation and accessibility improvements. This
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 resident organizations or
qualified nonprofit sponsors.
This bill was substantially amended in the Senate and the
Assembly-approved version of this bill was deleted.
Analysis Prepared by : Rebecca
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Rabovsky / H. & C.D. / (916) 319-2085
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