REPORT TO PLANNING COMMISSION
SUBJECT
Title
Tentative Map applications, for condominium purposes, for Ranchero Mobile Estates and Thunderbird Mobile Estates (mobilehome parks) to convert the ownership structure from rental mobilehome park to resident-owned mobilehome park in accordance with Government Code Section 66427.5.
File #: 2015-7707
Location: 900 Henderson Avenue (APN:213-38-008) Ranchero Mobilehome Park
Proposed Project: Tentative Map for a subdivision of 112 mobilehome spaces for condominium purposes.
File #: 2015-7706
Location: 954 Henderson Avenue (APN: 213-38-005) Thunderbird Mobilehome park
Proposed Project: Tentative Map for a subdivision of 166 mobilehome spaces for condominium purposes.
Environmental Review: If the Planning Commission denies the Tentative Map, the action would be exempt under the California Environmental Quality Act (“CEQA”) as pursuant to CEQA Guidelines Section 15270 CEQA does not apply to a project that a public agency rejects or disapproves. If the Planning Commission approves the Tentative Map, the action is exempt from CEQA review under CEQA Guidelines Sections 15061(b)(3) and 15301(k). The project proposes to subdivide existing mobilehome parks into a common interest development, but no other changes are proposed. Accordingly, there will be no physical change, no change in use and no change to the intensity of the use as part of the ownership structure changes resulting from this subdivision map. Therefore, no further environmental review is required.
Applicant / Owner: Sid Goldstein/Alex MacDonell
Project Planner: Gerri Caruso, (408) 730-7591, gcaruso@sunnyvale.ca.gov
Report
REPORT IN BRIEF
General Plan: Residential Low Medium (RLM) (both mobilehome parks)
Zoning: Residential Mobile Home (RMH)
Existing Site Conditions: Two Residential mobilehome parks under one ownership; the northern park, Ranchero Mobile Estates has 112 mobilehome rental spaces and the southern park, Thunderbird Mobile Estates has 166 mobilehome rental spaces.
Surrounding Land Uses
North: Single family residential neighborhood
South: Low-medium density apartments and Rancho La Mesa Mobilehome Park
East: Medium density residential
West: Single family residential and low density residential across Henderson Ave.
Issues: Pursuant to state law, the scope of the public hearing is strictly limited to whether the applicant has complied with the procedures in the Subdivision Map Act that apply to the filing of a tentative map for a conversion of a mobilehome park to resident ownership.
Staff Recommendation: Staff recommends that the Planning Commission deny both Tentative Maps (Attachment 3) on the ground that the tenant surveys submitted by applicant do not demonstrate that a majority of the park's residents support the subdivision as required by Government Code Section 66427.5 (Attachment 2).
The project applicant has applied for two tentative subdivision maps that will allow the parks to be converted from their current rental structure to a resident-owned condominium mobilehome park. The Thunderbird and Ranchero parks are fairly unusual in that tenants rent both the spaces (lots) and coaches. In most mobilehome parks, tenants own their coaches and rent only the spaces. The proposed conversion would allow the park owners to sell off individual spaces and the coaches on them. However, the parks will not change use and will continue to operate as mobilehome parks.
The City’s review of these applications (tentative map for condominium purposes) is governed by Government Code Section 66427.5, which preempts the City’s mobilehome conversion ordinance (Sunnyvale Municipal Code Chapter 19.72) as it relates to the conversion of a mobilehome park to resident ownership. Accordingly, the City’s scope of review is limited to the narrow issue of whether the applicant has complied with requirements of Government Code Section 66427.5 and that the conversion is otherwise consistent with state law. In addition, because the City's mobilehome conversion ordinance does not apply, the City cannot require a conversion impact report or require that the applicant provide relocation assistance for the current renters. However, Government Code Section 66427.5 requires that the applicant file a report on the impact of conversion. State law further provides rent control for low-income renters for four years after the conversion.
To determine if an application is a bona fide resident conversion, Government Code Section 66427.5 permits the City to consider the results of a resident survey regarding the conversion and reject applications that do not demonstrate the support of a majority of park residents. Here, the applicant has stated the proposed action is not intended to eliminate the mobilehome park, but to allow each coach site to be subdivided and sold, and to obtain financing to make improvements to the park. Potential improvements include installing electric entry gates and performing clubhouse remodels at both parks, pool resurfacing at Ranchero, and installing a jacuzzi at Thunderbird (Letter, Attachment 1, Impact Report, see Attachment 4). The timing of the sale of lots will be at the discretion of the owner, subject to completion of a public report issued by the California Bureau of Real Estate (BRE).
Staff has reviewed the Tentative Map submittals. Although the applicant submitted all the required documents for a complete application, staff does not believe the results of the resident survey demonstrate that the majority of residents support the proposal, as required by state law. As a result, staff recommends denial of the application.
BACKGROUND
The Subdivision Map Act (SMA) is “the primary regulatory control” governing the subdivision of real property in California. The SMA governs local legislative bodies' ability to regulate and control of the design and improvement of subdivisions. (Cal. Gov't. Code Section 66411.)
Government Code Section 66427.5 is the section of the SMA that regulates conversion of a mobilehome park from a "landlord-tenant" form of ownership to "resident" (condominium) ownership, and facilitates the conversion of mobilehome parks to resident ownership by preempting much of a local government's ability to regulate such conversions. Over the past several years, a number of mobilehome park owners throughout the state have used Government Code Section 66427.5 to convert mobilehome parks from rental parks to resident-owned mobilehome parks. This applicant's proposal is consistent with that trend.
The owner of the Thunderbird and Ranchero mobilehome parks filed applications with the City for Tentative Map approval pursuant to Government Code Section 66427.5 in August 2015. The applications were not deemed complete until February 2017, because the initial submittals did not include all of the information required under Government Code Section 66427.5. Staff worked with the applicant to address issues with, and correct deficiencies in, the tentative subdivision maps included with the applications.
The applicant proposes to continue using the properties as mobilehome parks, but approval of the application (and subsequent satisfaction of California Bureau of Real Estate requirements) would allow a change to the parks’ ownership structure. Specifically, the proposed subdivision maps would allow the conversion of both the 112-space Ranchero mobilehome park and the 166-space Thunderbird mobilehome park from rental parks to resident-owned ownership parks, which would allow the individual spaces to be sold. The existing physical arrangement, use, and intensity of use of the mobilehome parks would remain the same.
If the City approves the proposed subdivision maps, the parks will remain a mobilehome park and will continue to be regulated by the state Manufactured Housing Act and Mobile Home Parks Act, administered and enforced by the Department of Housing and Community Development, and the Mobilehome Residency Law. However, the ownership structure would change, in that each space could be separately transferred following the completion of the following additional steps, which are regulated at the state level:
• Submit a detailed condominium plan to the BRE for its approval. The project would then operate under state law that regulates operation and fiduciary responsibility of the project.
• Disclose the tentative purchase price for the individual mobilehome lots.
• Sales to the resident could occur at any time following completion of those steps.
• Purchase is not required; renters could choose to remain and rents would only be permitted to increase pursuant to Government Code Section 66427.5, as summarized below.
• Those choosing to purchase would own their specific mobilehome space and have an easement to the common areas. Purchasers would become members of a homeowners’ association and would be subject to paying homeowners' association assessments. State programs may provide purchase assistance to residents who wish to purchase their lot and qualify as a lower-income household.
Another key feature of a Government Code Section 66427.5 (resident ownership) conversion is that mobilehome parks under this form of ownership structure are exempt from local mobilehome rent control. Sunnyvale does not currently have local rent control, although it is part of a study issue for the 2017 calendar year. The City is required to process this application in a timely manner and may not defer taking action while the issue of local rent control is analyzed.
EXISTING POLICY
General Plan Goals and Policies
Goal HE-1 Adequate Housing. Assist in the provision of adequate housing to meet the diverse needs of Sunnyvale households of all incomes levels.
• Policy HE-1.1Encourage diversity in type, size, price and tenure of residential development in Sunnyvale, including single-family homes, townhomes, apartment, mixed-use housing, transit-oriented development and live-work housing.
Goal HE-2 Enhanced Housing Conditions and Affordability. Maintain and enhance the conditions and affordability of existing housing in Sunnyvale.
• Policy HE-2.6 Preserve Sunnyvale's mobilehome parks as affordable housing option. Maintain at least 400 acres of mobilehome park zoning.
(at the time of Tentative Map application)
GOAL LT -3 Appropriate Mix of Housing
• Policy LT 3.2 Encourage the development of ownership housing to maintain a majority of housing in the city for ownership choice.
(adopted April 11, 2017)
LUTE Goal G: Diverse Housing Opportunities. Ensure the availability of ownership and rental housing options with a variety of dwelling types, sizes, and densities that contribute positively to the surrounding area and the health of the community.
• Policy 62: Encourage the development of housing options with the goal that the majority of housing is owner-occupied.
The project site will continue to be zoned Residential Mobilehome (RMH). The number of units in the parks will remain the same. Mobilehomes in Sunnyvale have generally remained a more affordable housing option and older mobilehome parks, like the project site, have been attractive to lower income households.
ENVIRONMENTAL REVIEW
If the Planning Commission denies the Tentative Map, the action would be exempt under the California Environmental Quality Act (“CEQA”) as pursuant to CEQA Guidelines Section 15270 CEQA does not apply to a project that a public agency rejects or disapproves. If the Planning Commission approves the Tentative Map, the action is exempt from the California Environmental Quality Act (“CEQA”) pursuant to CEQA Guidelines Section 15061(b)(3) (where it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment, the activity is not subject to CEQA) and Section 15301(k) (division of existing single family and multiple family rental units into condominiums in cases where no physical changes would occur). In this case, there will be no physical change, no change in use and no change to the intensity of the use as part of the ownership structure change. In addition, existing utilities would continue to serve the project site. The conversion of the rental units into condominiums would not require any additional services or resources. The project does not include and would not require any site alterations; however, there may be some maintenance of existing facilities (i.e., repaving internal roadways and common area repairs). Therefore, the project would not have any new impacts on existing vegetation or trees, would not require any grading, and would not result in noise impacts. The project would not change the use of the existing structures, or generate additional traffic. As the project would not result in any significant environmental impacts, further environmental review is not required.
DISCUSSION
Limited Scope of City Review Under Government Code Section 66427.5
Government Code Section 66427.5 requires that applications for conversion to resident ownership be subject to a public hearing, and the City is permitted to approve, conditionally approve, or disapprove the application. However, the scope of the hearing "shall be limited to the issue of compliance with [Government Code Section 66427.5]."
Government Code Section 66427.5 includes the following requirements:
• The subdivider must offer each existing tenant an option to purchase a condominium interest in their mobilehome park space. No resident may be forced to purchase their space, but each resident household must be offered the choice to purchase or to continue residency as a tenant.
• Low-income households (with household incomes at or below 80% of the area median income) who do no purchase their space must be allowed to continue to rent their spaces, and rent increases (including any fees and charges) are limited to the lesser of the Consumer Price Index (CPI) and the average monthly rent increase in the four years preceding conversion.
• Non-purchasing residents who are not low income households may have their rents increased to higher so-called "market levels" in equal annual increases over four years.
• The subdivider shall file a report on the impacts of conversion upon current residents.
• The subdivider shall obtain a survey demonstrating support of a majority of residents for the conversion.
The survey must be done in writing and provide the City with substantial evidence that at least a majority of the prospective homeowners (one vote per unit or lot) support the conversion to resident ownership. This is intended to help the City determine if the conversion to resident ownership is bona fide, and the City is permitted to reject the application if there is not majority support for the conversion.
Although Government Code Section 66427.5 permits the City to conditionally approve the subdivision applications, the only conditions the City is permitted to impose are those that are required to comply with state and federal law.
Thus, in this case, the City’s discretion in reviewing this project does not extend to items the Planning Commission typically considers in development projects, such as compliance with minimum lot size, setbacks and/or other local development standards. In addition, the requirements in Sunnyvale Municipal Code Chapter 19.72 related to closure or cessation of mobilehome parks do not apply because the property will continue to operate as a mobilehome park. Furthermore, the City's conversion process set forth in Sunnyvale Municipal Code Chapter 19.72 is preempted to the extent it is inconsistent with Government Code Section 66427.5.
Tentative Map Review
The applicant has met the minimum submittal requirements of Government Code Section 66427.5 to have a hearing on the applications. Specifically, the applicant has provided a tenant impact report to the City, conducted two tenant surveys of park residents (initial survey conducted in August 2015 and re-surveyed in March 2017), and filed a proposed tentative map for each park. The required elements for the City’s review of the proposed maps (and status of each item shown in italics) include:
• Written notification to each tenant from the applicant of intent to convert at least 60 days prior to filing the map (completed April 25, 2015)
• File Tentative Map (Originally filed August 19, 2015. Revised map deemed complete by the City February 8, 2017)
• Complete a resident survey of park homeowners. (surveys submitted to the City August 19, 2015 and April 3, 2017, discussed in more detail below).
• File a Tenant Impact Report (Provided by mail to the residents within 15 days of the public hearing April 5, 2107.)
• Public hearing with Planning Commission to approve, conditionally approve, or disapprove the map
The submitted tentative maps have been reviewed by staff and deemed complete based on state and city codes. Typically, the City is required to approve a map if the map is found to be consistent with the General Plan and applicable Specific Plans-provided none of the findings requiring denial are met (Findings, Attachment 5). Although the scope of the City's review for a resident mobilehome park tentative map is limited to whether the applicant has complied with the provisions of Government Code Section 66427.5 and other relevant state laws, one of the grounds for disapproval of the maps in these cases is if the City "finds that the results of the survey have not demonstrated the support of at least a majority of the park's homeowners." Although the applicant has met all the general submittal requirements, and is entitled to a hearing, the key issue is whether the survey has demonstrated majority support. If the City finds that the surveys do not demonstrate majority support, it may disapprove the project. For the reasons discussed below, staff believes that, as of the time of publication of this report, the surveys do not demonstrate majority support, and therefore staff recommends denial of the maps and the conversion.
The 2015 and 2017 Resident Surveys
The applicant conducted resident surveys between May and July 2015 and submitted the results to the City in August 2015. Staff reviewed the original survey form and the results provided by the applicant, and expressed concerns to the applicant that the survey results were inadequate to demonstrate that a majority of residents supported the conversion. At staff's recommendation, the applicant chose to conduct a second survey in March 2017 and submitted the results to the City in April 2017. The results of the 2015 and 2017 surveys are summarized below.
Ranchero Mobile Estates
The results of applicant's 2015 Ranchero survey were:
• 59 of 112 households responded to the survey (53% response rate)
• Of those responding, 44 were in favor of the conversion (39% of the total residents; 74% of those responding)
• Of those responding, 5 responded "no", and 10 "declined"
• 53 households (47% of total households) did not respond.
The results of applicant's 2017 Ranchero survey were:
• 33 of 112 households responded to the survey (29% response rate)
• Of those responding, 20 were in favor of the conversion (18% of the total residents; 61% of those responding)
• Of those responding, 6 responded "no", and 7 "declined"
• 79 households (71% of total households) did not respond.
Thunderbird Mobile Estates
The results of the applicant’s 2015 Thunderbird survey were:
• 67 of 166 households responded to the survey (40% response rate)
• Of those responding, 58 were in favor of the conversion (35% of total residents, 87% of those responding)
• Of those responding, 3 responded “no” and 6 “declined”
• 99 households (60% of total households) did not respond
The results of the applicant’s 2017 Thunderbird survey were:
• 34 of 166 households responded to the survey (20% response rate)
• Of those responding, 26 were in favor of the conversion (16% of total residents, 76% of those responding)
• Of those responding, 2 responded “no” and 6 “declined”
• 132 households (80% of total households) did not respond
Due to the low response rate, none of the four surveys prove that a majority of residents support the applicant's proposed conversion, only that a majority of residents who responded are supportive. Staff believes that this is inadequate to meet the "majority" support requirement of Government Code Section 66427.5. Furthermore, the 2015 survey forms used language that suggested the surveys and their purpose may not have been clear to the residents, further calling into question the initial survey results. When the applicant sent the 2017 surveys, using modified questions that more clearly described the conversion process and that were translated into multiple languages, both the number of responses the applicant received and the percentage of responses in support of the conversion dropped.
The applicant's position is that the surveys meet Government Code Section 66427.5's requirements, because the majority of the residents who responded (74% and 87% in 2015; 61% and 76% in 2017) stated that they were in favor of the conversions. Staff disagrees with this position. Although a majority of those responding favored conversion, the plain language of Section 66427.5(d)(5) requires approval of “a majority of the park's homeowners,” not a majority of those who respond. In this case, the survey results indicate that only 39% of total households for Ranchero and 35% of total households for Thunderbird were in favor of the conversion in 2015, and support for conversion declined to 18% of total households for Ranchero and 16% of total households for Thunderbird in 2017.
The applicant has further argued that Section 66427.5(d)(5) does not apply to this project because the provision says that a local agency may disapprove the map "if it finds that the results of the survey have not demonstrated the support of at least a majority of the park's homeowners." (Emphasis added) None of the parks' residents are “homeowners” in the sense that they “own” their homes (the applicant owns the spaces and coaches in the park) However, staff believes that the use of the word “homeowners” is the result of careless drafting, not because the Legislature intended to exclude residents of an all-rental park from the protections of the law. Elsewhere the Legislature uses the word “residents.” Section 66427.5(d)(1) requires the applicant to obtain "a survey of support of residents of the mobilehome park," and Section 66427.5(d)(4) provides that each occupied space shall receive one vote. (Emphasis added) Section 66427.5(d)(5) further directs the City to consider the survey results during the public hearing. It would be nonsensical for the Legislature to require a survey of all “residents” if only the responses by “homeowners” can be considered. Although there is no case law interpreting Section 66427.5 as applied to parks such as Thunderbird and Ranchero where residents rent both the spaces and coaches, court decisions indicate that the survey is a means for a local agency to determine if the conversion is a bona fide resident conversion (i.e., a conversation supported by the parks’ residents). Staff considers that requiring resident support is a reasonable interpretation of Section 66427(d), since otherwise, no consideration could be given to the views of residents. This position is further supported by the fact that the statute's legislative history states that the survey is for the purpose of determining support from residents, not just those who own their mobilehomes. The conversion of a mobilehome park to resident ownership may cause economic displacement of all residents not just those who own their coaches.
In addition to the fact that staff does not believe the surveys show the required level of majority support, Staff also analyzed the 2015 survey process, documents, and communications related to the survey and found the process inadequate. Staff raised the following concerns about the adequacy of the 2015 survey:
• The survey form did not use the term “resident conversion” or “conversion to resident ownership,” creating concern that survey respondents may not have clearly understood what they were supporting or not supporting when they completed the survey.
• The survey did not sufficiently convey, in plain and easily understandable language, that residents would have the option to purchase their lot and home if the application was approved and at such time an offer to sell is made by the owners once the condominium map is approved by the Bureau of Real Estate.
• Resident outreach meetings were translated into Spanish by a park employee, who is not a qualified translator.
When the applicant updated their survey forms and process to meet the City’s concerns, the 2017 survey results demonstrated less support for conversion from the residents compared to 2015.
Therefore, staff considers the survey issues described above, independently and taken together, are sufficient to support a finding that the resident surveys completed in 2015 and 2017 do not meet the survey requirements set forth in Government Code 66427.5(d), and therefore are insufficient to support approval of the Tentative Maps.
Additional 2017 Resident Outreach
Over the course of two days (Sunday March 12, 2017 and Monday March 13, 2017) the applicant held three outreach meetings at each park (total 6). At four meetings, the applicant provided Spanish translation. In total, approximately 168 households (of 278) were represented at the six meetings.
FISCAL IMPACT
Other than standard application fees there are no fees imposed on this Tentative Map. There may be increased property tax revenue from the site if the mobilehome park increases in value over time.
PUBLIC CONTACT
Public contact was made through posting of the Planning Commission agenda on the City's official-notice bulletin board, on the City's website, and the availability of the agenda and report in the Office of the City Clerk.
• A hearing notice was posted in the Sunnyvale SUN newspaper.
• 278 notices were sent to all residents in the mobilehome parks.
• 1,412 notices were sent to property owners and tenants within 300 feet of the sites.
• Notices were posted at the mobilehome park sites and the ends of the block as required by the Sunnyvale Municipal Code.
A Study Session was conducted for the Planning Commission on April 10, 2017. Staff presented an overview of the California Government Code requirements for a Tentative Map for condominium purposes for mobilehome park resident-ownership conversion. The Commission asked for clarification on the process and on the condominium map. There was also a request to include more information about how the resident survey was conducted. The original survey forms sent to the residents are attached (Attachment 7). A Commissioner requested information about the State development standards for mobilehome park such as setbacks and height limits (Attachment 8).
ALTERNATIVES
1. Find the project to be exempt from CEQA pursuant to CEQA Guideline Sections 15061 (b)(3) and 15301 (k), make the recommended findings in Attachment 5 of this report and approve the Tentative Map with Conditions of Approval in Attachment 6 of this report.
2. Find the project to be exempt from CEQA pursuant to CEQA Guideline Section 15270, deny the Tentative Map as the applicant has failed to meet the requirements for resident-ownership conversion as required by the Subdivision Map Act because the results of the surveys required by Gov. Code Section 66427.5 do not demonstrate the support of at least a majority of the park’s homeowners.
RECOMMENDATION
Recommendation
Alternative 2: Find the project to be exempt from the California Environmental Quality Act (CEQA) pursuant to CEQA Guideline Section 15270, deny the Tentative Map as the applicant has failed to meet the requirements for resident-ownership conversion as required by the Subdivision Map Act because the results of the surveys required by Gov. Code Section 66427.5 do not demonstrate the support of at least a majority of the park’s homeowners.
Staff
Prepared by: Gerri Caruso, Principal Planner
Reviewed by: Andrew Miner, Planning Officer
Reviewed by: Trudi Ryan, Director of Community Development
ATTACHMENTS
1. Applicant's Application Letters
2. Government Code Section 66427.5
3. Tentative Maps
4. Resident Impact Reports
5. Tentative Map Findings
6. Conditions of Approval
7. Survey Examples
8. State Mobilehome Development Standards