STATE WIDE RENT CONTROL—FACT OR FICTION?

There has been a flood of statements recently about “state-wide rent control.”  CoMO-CAL asked John Tennyson, Senator Dunn’s right hand man and this is his response:

With the additional information you provided below   –   I can NOW tell you that what these folks are talking about is the conversion of a rental mobilehome park to resident ownership using Government Code Sec. 66427.5 – it is a state code section but it is NOT state rent control.

This section provides that a local government is limited in terms of imposing conditions on a park conversion to a subdivision or condo park under the Subdivision Map Act to requiring: 1) a survey of resident support and, 2) imposing conditions whereby lower income (using HUD guidelines) who don’t buy in will be protected by a ‘rent covenant’ holding rent increases in the CPI.  Homeowners with incomes above the guidelines, who don’t buy in, are not protected other than their rent can be raised over 4 years after conversion to market rents.  Most folks in parks converted to a condo in this fashion are not well off but are somewhat above the HUD low income guidelines – so their rents would not be controlled other than the phase out over 4 years.   This section was enacted some years ago on the premise that a conversion would be initiated by residents in most cases who want to buy the park, to make it easier and more affordable for the residents to convert.  When the park is converted the above formula can then be imposed by the local government but not their general rent control ordinance effective on everyone in the park, so it becomes sort of a rent control decontrol thing.

In recent years, however, some park owners have seized upon this law to initiate a conversion themselves – setting the prices of the spaces high enough so that only a handful of residents can afford to buy or want to buy.  This started a few years ago in Palm Springs, in a celebrated court case that went to the Appellate Court involving the so-called El Dorado Park.  The City of Palm Springs was concerned that the park owner was only interested in using this so-called conversion as a means of exempting the park from the city’s rent control ordinance and imposed various conditions upon the park before it could convert, such as a requirement that 51% of the spaces had to be sold to residents, and that a financial assistance program for lower-income buyers be established, etc. – before the city would approve the conversion.  The park owner sued and the city ultimately lost, and the conversion went forth.  GSMOL responded with attempted legislation in 2002 to give local governments more power to impose conditions on such conversions – by park owners – to assure they were “bona fide” resident conversions.  This is where the survey requirement came in – but it is questionable whether it is being properly applied.   Since El Dorado, there have been a few other parks we know of where park owner conversions to condo parks have been initiated – two in the City of Carson, one in Pacific Palisades.  I was not aware of the Vallejo park case.   All of the cities where these parks are being converted have mobilehome rent control – so GSMOL thinks it’s a means for parks to get around local control.  I understand that GSMOL may be considering new legislation for 2007 to give locals even more power to regulate park owner conversions under 66427.5 – I am sure it will be very controversial  If you know the name of the Vallejo park, let me know – I like to keep abreast of these things.

Hope this helps to explain this rather complex issue.

John T

—–Original Message—–
From: frank wodley [mailto:fawodley@yahoo.com]
Sent: Thursday, September 14, 2006 9:37 AM
To: Tennyson, John
Cc: frank wodley
Subject: More Information on “rent control”

Mr. Tennyson:

Perhaps there is someother law which “protects low income” mobile home residents.  Here are two segments from recent newspaper articles THAT IMPLIES A PROTECTION FOR LOW-INCOME TENANTS:

The following statement was recently written about Vallejo Mobile Home Park  The park owner wants to convert from a rental mobile home park to one of resident ownership”

“Residents can refuse to buy the land and continue to rent. Low-income residents ($38,000 annual income or $44,000 for two people) would still have similar rents, but renters with higher incomes would have their monthly fees adjusted to state market levels, which are generally higher.”

Another article appeared in the Daily Breeze in Carson around May 2006:  “The conversion would remove the park from the Carson rent-control ordinance.  The owner would then be able to raise rents dramatically formoderate-income tenants, perhaps as much as doubling rent in four years.  The state rent-control law would protect low-income tenants – for singles, that means those earning less than $38,800 per year – which is perhaps a majority of the park.

I don’t get it, do you?

Frank