HomeMy WebLinkAbout7/2/2003 - STAFF REPORTS (18) J y
DATE: 'May-?
TO: CITY COUNCIL
FROM: CITY ATTORNEY
1. ADOPT, AS AN URGENCY MATTER, "AN ORDINANCE OF THE CITY OF
PALM SPRINGS, CALIFORNIA, ADDING SECTION 4.08.136 TO THE PALM SPRINGS
MUNICIPAL CODE, RELATING TO THE CONVERSION OF RENTAL MOBILE HOME
PARKS TO RESIDENT OWNERSHIP, AND DECLARING THE URGENCY THEREOF."
2. INTRODUCE BY TITLE ONLY AND WAIVE FURTHER READING, "AN
ORDINANCE OF THE CITY OF PALM SPRINGS, CALIFORNIA, ADDING SECTION
4.08.136 TO THE PALM SPRINGS MUNICIPAL CODE, RELATING TO THE
CONVERSION OF RENTAL MOBILE HOME PARKS TO RESIDENT OWNERSHIP."
RECOMMENDATION:
The City Attorney recommends, that in order to implement the teachings of the Court of
Appeals in El Dorado Palm Springs, Ltd. V. City of Palm Springs, 96 Cal.App.41h 1153
(2002), the City Council take the following actions:
1. Adopt, as an urgency ordinance, an ordinance entitled "AN
ORDINANCE OF THE CITY OF PALM SPRINGS, CALIFORNIA,
ADDING SECTION 4.08.136 TO THE PALM SPRINGS MUNICIPAL
CODE, RELATING TO THE CONVERSION OF RENTAL MOBILE HOME
PARKS TO RESIDENT OWNERSHIP, AND DECLARING THE
URGENCY THEREOF;" and, simultaneously
2. Introduce by title only and waive further reading of an ordinance
entitled "AN ORDINANCE OF THE CITY OF PALM SPRINGS,
CALIFORNIA, ADDING SECTION 4.08.136 TO THE PALM SPRINGS
MUNICIPAL CODE, RELATING TO THE CONVERSION OF RENTAL
MOBILE HOME PARKS TO RESIDENT OWNERSHIP."
SUMMARY:
Government Code §§ 66427.4 and 66427.5 provide mechanisms by which rental mobile
home parks may be converted from a landlord-tenant form of ownership to resident
ownership. Though not envisioned within this State statutory scheme, case law now
allows an owner of a rental mobile home park to make application to convert the mobile
home park from a landlord-tenant form of ownership to a resident form of ownership
through use of a statutory scheme which was primarily intended to facilitate resident-
initiated mobile home park ownership conversions.
Within the City of Palm Springs, at least one such mobile home park owner, El Dorado
Palm Springs, Ltd., has undertaken such a park-owner initiated conversion. That
conversion sparked significant disputes between the mobile home park owner, the
resident homeowners' association, and the City of Palm Springs, resulting in litigation by
and between these parties. In a published appellate decision, entitled El Dorado Palm
#23766v.1 1 / 'd
Springs, Ltd. v. City of Palm Springs, 96 Cal.App.4th 1153 (2002), the Court of Appeals
for the Fourth Appellate District, Division 2, held as follows:
"We are . . . concerned about the use of the section [Government Code §
66427.5] to avoid local rent control, especially since the section does not
state when the rent control phaseout in section 66427.5, subdivision (d)
becomes applicable, and it provides no time limits for the completion of
the conversion. The City is also concerned that there could be an abuse
of the conversion process: 'Under the argument of Amicus, Appellant
could simply purchase one of the newly created subdivided units, price . .
. the remaining units at prohibitively expensive amounts, and obtain for
himself a 'life time exemption' from Palm Springs Rent Control
ordinances.' . . . Section 66427.5 cannot be used to evade a local rent
control ordinance. We also agree . . . that the section may not be used to
justify preemption of a local rent control ordinance if the conversion is
unsuccessful."
Following the decision of the Court of Appeals in El Dorado, the State legislature passed
into law Assembly Bill No. 930, which amends Government Code § 66427.5 to add
subsection (d) thereto. The stated purpose of the legislature in adopting Assembly Bill
930 was to "address the conversion of a mobile home park to resident ownership that is
not a bona fide resident conversion . . . ." The legislature went on to find and determine
that" in enacting this act [Assembly Bill No. 930,] it was the intent of the Legislature [to
ensure that conversions pursuant to Section 66427.5 of the Government Code] are bona
fide resident conversions."
BACKGROUND:
The ordinances presented for consideration of possible action by the City Council are
brought to you in two forms. This ordinance is presented as an urgency ordinance, and
can be adopted, and go into full force and effect, immediately if that is the desire of the
City Council. The City Attorney recommends the adoption of the ordinance as an
urgency ordinance so as to assure that its purposes, protections, and mechanisms will
apply to any and all pending applications to convert rental mobile home parks from a
landlord-tenant form of ownership to resident ownership.
In addition, also presented for consideration is a separate ordinance, a non-urgency
iteration of the prior ordinance. Out of abundance of caution, the City Attorney
recommends that the City Council introduce by title only and waive further reading of the
second ordinance in the unlikely event that some person or entity were to challenge the
efficacy of the urgency findings in the urgency ordinance.
As noted, the Ordinance has been drafted to be consistent with the teaching of the Court
of Appeals in the El Dorado opinion, and to implement the intent of the legislature in its
adoption of Assembly Bill No. 930. The Ordinance will apply to all subdivision map or
other applications to convert rental mobile home parks from landlord-tenant form of
ownership to a resident form of ownership, regardless of the manner in which it is
initiated.
Its stated purpose is to facilitate and to provide a mechanism by which a "certificate of
bona fide conversion" be obtained for any subdivision map or other application for
1 � h�
#23766v.1 7.
conversion of a rental mobile home park to residents ownership (regardless who initiated
the proceedings for such conversion). The ordinance requires the Rent Review
Commission to make findings determining that an owner-initiated conversion or a
resident-initiated conversion of a rental mobile home park will result in a conversion to
resident ownership, in fact.
David J. Aleshire
City Attorney
APPROVED:
City Manager
ATTACHMENTS:
1. Ordinance No. Urgency Ordinance adding Section 4.08.136 to the Palm
Spring Municipal Code
2. Ordinance No. Non-Urgency Ordinance adding Section 4.08.136 to the
Palm Spring Municipal Code
#23766v.1 3 ��
ORDINANCE NO.
AN ORDINANCE OF THE CITY OF PALM SPRINGS,
CALIFORNIA, ADDING SECTION 4.08.136 TO THE
PALM SPRINGS MUNICIPAL CODE, RELATING TO THE
CONVERSION OF RENTAL MOBILE HOME PARKS TO
RESIDENT OWNERSHIP, AND DECLARING THE
UGENCY THEREOF.
THE CITY COUNCIL OF THE CITY OF PALM SPRINGS, CALIFORNIA, DOES
ORDAIN as follows:
SECTION 1. Chapter 4.08 of the Palm Springs Municipal Code, relating to rent
control in mobile home parks, is hereby amended by adding thereto a new section to be
numbered 4.08.136, and reading, in its entirety, as follows:
"4.08.136 Conversion of Rental Mobile Home Park to Resident
Ownership.
(a) Scope & Intent. This section requires any subdivider to obtain
a certificate, as defined hereinafter, from the rent review commission prior
to the sale or offer for sale of occupied residential rental units within any
rental mobile home park covered by this Chapter that is the subject of a
map, pursuant to Government Code § 66427.5, or other subdivision map
or application for conversion to resident ownership. This section is
intended to protect non-purchasing residents of residential rental units
within a rental mobile home park from sham, fraudulent, failed, or other
non-bona fide conversions to resident ownership as prohibited by El
Dorado Palm Springs, Ltd. vs. City of Palm Springs(2002) 96 Cal.App.4th
1153.
(b) Maps or Applications for Conversion of One or More
Residential Rental Units Within a Rental Mobile Home Park to Resident
Ownership. In addition to any other requirement of state or local law, any
subdivider seeking conversion of a rental mobile home park to resident
ownership, pursuant to Government Code §66427.5 or through any other
subdivision map or application, which is subject to regulation under
Chapters 4.02, 4.04, and/or 4.08 of this code, shall obtain from the rent
review commission, prior to the sale or offering for sale of any residential
rental unit therein, a certificate of bona fide conversion finding and
determining that the conversion to resident ownership is bona fide within
the meaning of law, and not undertaken as a sham, fraudulent, or failed
conversion to remove residential rental units proposed to be converted to
resident ownership from the protections of the City of Palm Springs
Municipal Rent Control.
(c) Content of Application for Certificate of Bona Fide Conversion
to Resident Ownership. The certificate required herein shall be sought
pursuant to a written application filed with the rent review commission
under Section 4.08.070(0(2), which application shall include the following
information: (i) a copy of a resident support survey, conducted either in
#23673v.1 1 d r"1
the manner prescribed by Government Code § 66427.5(d)(1), or in some
other manner acceptable to both the subdivider and a resident
homeowners' association, demonstrating the numerical support or
opposition of each occupied residential rental unit to conversion to
resident ownership; and (ii) a written appraisal, conducted in accordance
with nationally recognized professional appraisal standards,
demonstrating the residential rental units to be offered for sale are to be
sold for their fair market value; and (iii) a written appraisal, conducted in
accordance with nationally recognized professional appraisal standards,
establishing monthly rental rates for non-purchasing residents following
the date of conversion and consistent with the requirements of
Government Code § 66427.5(f); and (iv) a representation, made in writing
and under oath, from the subdivider certifying that the map or other
application for conversion is intended to facilitate a bona fide conversion
of a rental mobile home park to resident ownership, together with a
description of such marketing plans, incentives, if any, or other actions
proposed to be undertaken by the subdivider to assure a bona fide
conversion of a rental mobile home park to resident ownership.
(d) Conduct of Commission Proceedings. Consideration of an
application for certificate of bona fide conversion to resident ownership
shall be conducted in the manner and within the time prescribed by
Section 4.08,080 for hardship rent increase proceedings. Notice of an
application shall be given according to the procedures and practices of
the commission then in effect for hardship rent increases, including the
giving of notice of the filing of the application, date of pre-hearing
conference, if any, and date, time and place of the hearing on the
application; which notice shall be delivered to or posted on each
residential rental unit within the rental mobile home park which is the
subject of an application. Any resident, resident homeowners'
association, or city staff shall be entitled to submit information or an
appraisal which sets forth what is considered to be the fair market sales
and/or rental value of the residential rental units that are the subject of an
application.
(e) Grounds for Issuance of Certificate of Bona Fide Conversion.
The rent review commission shall issue to any subdivider a certificate of
bona fide conversion upon finding, by a preponderance of the evidence,
of each of the following: (i) that not fewer than fifty percent (50%) plus
one of the occupied residential rental units to be offered for sale pursuant
to a map or application for conversion of a rental mobile home park to
resident ownership support such conversion to resident ownership; and
(ii) that the occupied residential rental units to be offered for sale and/or
rent will be sold and/or rented for an amount not more than the fair market
value of such residential units; and (iii) that the subdivider has not filed
the subdivision map or other application for conversion of a rental mobile
home park to resident ownership for the sole purpose to remove occupied
resident rental units therein from the protections of this Chapter. In the
event the subdivider, or a resident, or resident homeowners' association,
or city staff submit(s) a qualified appraisal(s) or other probative
information which determine(s) a fair market sales or rental value of the
#23673v.1 2
occupied residential rental units which, on average, differ by twenty-five
percent (25%) or greater in fair market sale and/or rental value, the rent
review commission may, as a condition to issuing a certificate of bona
fide conversion, request the parties agree that each party or each party's
appraiser select and jointly provide instructions to a third-party
independent appraiser, and agree to jointly share in the payment for an
independent third appraisal, which third appraisal shall be deemed by the
commission to constitute the fair market sales and rental values of the
occupied residential rental units to be offered for sale. Provided the
subdivider agrees, in writing, to offer each occupied residential rental unit
for sale and/or rent at the appraised fair market value determined by such
third-party appraiser, such agreement shall, standing alone, entitle the
subdivider to the issuance of a certificate of bona fide conversion without
any further showing required hereinabove.
(f) Effect of Failure to Obtain Certificate of Bona Fide Conversion.
With respect to any subdivision map or other application for conversion of
a rental mobile home park to resident ownership for which the subdivider
shall have failed to obtain a certificate of bona fide conversion, as to any
non-purchasing resident, the amount of rent to be paid for the residential
rental unit so occupied shall be only that rent authorized under Chapters
4.02, 4.04, and/or 4.08, as applicapable, of this code. In addition, in the
event of the sale of a residential rental unit to any person or entity other
than the occupying unit resident, in addition to other rights and remedies
as provided by law, the subdivider shall afford to the non-purchasing
resident the notice and relocation assistance required by Section
4.08.130 of this Chapter prior to and in connection with any sale of a
residential rental unit to any person or entity other than the occupying unit
resident."
SECTION 2. CEQA EXEMPTION. Adoption of this ordinance is not subject to
the California Environmental Quality Act ("CEQA") by virtue of Public Resources Code
§§ 15061(b)(3) and/or 21080.8 so long as the application required herein does not
involve any expansion of the number of residential units within a property to be
continued to be operated as a resident owned mobile home park.
SECTION 3. SEVERIBILITY. If any section, sub-section, sentence, clause or
phrase of this ordinance is, for any reason, held to be invalid or unconstitutional by the
decision of a court of competent jurisdiction, such decision shall not effect the validity of
the remaining portions of the ordinance. The City Council of the City of Palm Springs
hereby declares that is would have passed this ordinance, and each and every section,
sub-section, sentence, clause, or phrase thereof not declared invalid or unconstitutional
without regard to whether any portion of the ordinance would be subsequently declared
invalid or unconstitutional.
SECTION 4. URGENCY FINDINGS. The Court of Appeals, in El Dorado v. City
of Palm Springs(2002) 96 Cal.App.4th 1153, held and determined that sham,fraudulent,
and failed subdivision maps or other applications for conversion of rental mobile home
parks to resident ownership were contrary to law. There is pending before the State
Department of Real Estate and application for conversion of the El Dorado Country Club
to resident ownership, and the City Council has previously issued a tentative tract map in
#23673v.1 3
117
connection therewith. Section 8 of that map requires the City to "monitor . . .[the]
conversion closely to assure that the applicant is not engaging in a 'sham' conversion . .
The final map for this conversion is about to come on for public hearing, and
Condition No. la of that map requires the subdivider to comply with Government Code §
66427.5(f), for which there is no appraisal to establish fair market rental values on file.
Accordingly, in order to assure that the prohibition on sham, fraudulent, or failed
conversions within the meaning of the decision in EI Dorado has not occurred, adoption
of this ordinance upon its first reading is essential to protect the public health, safety,
and general welfare. Hence this ordinance shall be in full force and effect upon its
adoption.
SECTION 5. AUTHORITY TO ENACT. The Palm Springs City Council is
expressly authorized to enact this ordinance by virtue of Municipal Code § 4.08.140
SECTION 6. PUBLICATION. The City Clerk is hereby ordered and directed to
certify to the passage of the Ordinance, and to cause the same or a summary thereof, or
a display advertisement, duly prepared according to law, to be published in accordance
with law.
ADOPTED this day of May, 2003.
AYES:
NOES:
ABSENT:
ABSTAIN:
ATTEST: CITY OF PALM SPRINGS
By
City Clerk Mayor
REVIEWED &APPROVED AS TO FORM:
#23673v.1 4 `
ORDINANCE NO.
AN ORDINANCE OF THE CITY OF PALM SPRINGS,
CALIFORNIA, ADDING SECTION 4.08.136 TO THE
PALM SPRINGS MUNICIPAL CODE, RELATING TO THE
CONVERSION OF RENTAL MOBILE HOME PARKS TO
RESIDENT OWNERSHIP.
THE CITY COUNCIL OF THE CITY OF PALM SPRINGS, CALIFORNIA, DOES
ORDAIN as follows:
SECTION 1. Chapter 4.08 of the Palm Springs Municipal Code, relating to rent
control in mobile home parks, is hereby amended by adding thereto a new section to be
numbered 4.08.136, and reading, in its entirety, as follows:
"4.08.136 Conversion of Rental Mobile Home Park to Resident
Ownership.
(a) Scope & Intent. This section requires any subdivider to obtain
a certificate, as defined hereinafter, from the rent review commission prior
to the sale or offer for sale of occupied residential rental units within any
rental mobile home park covered by this Chapter that is the subject of a
map, pursuant to Government Code § 66427.5, or other subdivision map
or application for conversion to resident ownership. This section is
intended to protect non-purchasing residents of residential rental units
within a rental mobile home park from sham, fraudulent, failed, or other
non-bona fide conversions to resident ownership as prohibited by El
Dorado Palm Springs, Ltd. vs. City of Palm Springs(2002) 96 Cal.App.4th
1153.
(b) Maps or Applications for Conversion of One or More
Residential Rental Units Within a Rental Mobile Home Park to Resident
Ownership. In addition to any other requirement of state or local law, any
subdivider seeking conversion of a rental mobile home park to resident
ownership, pursuant to Government Code §66427.5 or through any other
subdivision map or application, which is subject to regulation under
Chapters 4.02, 4.04, and/or 4.08 of this code, shall obtain from the rent
review commission, prior to the sale or offering for sale of any residential
rental unit therein, a certificate of bona fide conversion finding and
determining that the conversion to resident ownership is bona fide within
the meaning of law, and not undertaken as a sham, fraudulent, or failed
conversion to remove residential rental units proposed to be converted to
resident ownership from the protections of the City of Palm Springs
Municipal Rent Control.
(c) Content of Application for Certificate of Bona Fide Conversion
to Resident Ownership. The certificate required herein shall be sought
pursuant to a written application filed with the rent review commission
under Section 4.08.070(f)(2), which application shall include the following
information: (i) a copy of a resident support survey, conducted either in
the manner prescribed by Government Code § 66427.5(d)(1), or in some
#23764v.1 1
other manner acceptable to both the subdivider and a resident
homeowners' association, demonstrating the numerical support or
opposition of each occupied residential rental unit to conversion to
resident ownership; and (ii) a written appraisal, conducted in accordance
with nationally recognized professional appraisal standards,
demonstrating the residential rental units to be offered for sale are to be
sold for their fair market value; and (iii) a written appraisal, conducted in
accordance with nationally recognized professional appraisal standards,
establishing monthly rental rates for non-purchasing residents following
the date of conversion and consistent with the requirements of
Government Code § 66427.5(f); and (iv) a representation, made in writing
and under oath, from the subdivider certifying that the map or other
application for conversion is intended to facilitate a bona fide conversion
of a rental mobile home park to resident ownership, together with a
description of such marketing plans, incentives, if any, or other actions
proposed to be undertaken by the subdivider to assure a bona fide
conversion of a rental mobile home park to resident ownership.
(d) Conduct of Commission Proceedings. Consideration of an
application for certificate of bona fide conversion to resident ownership
shall be conducted in the manner and within the time prescribed by
Section 4.08.080 for hardship rent increase proceedings. Notice of an
application shall be given according to the procedures and practices of
the commission then in effect for hardship rent increases, including the
giving of notice of the filing of the application, date of pre-hearing
conference, if any, and date, time and place of the hearing on the
application; which notice shall be delivered to or posted on each
residential rental unit within the rental mobile home park which is the
subject of an application. Any resident, resident homeowners'
association, or city staff shall be entitled to submit information or an
appraisal which sets forth what is considered to be the fair market sales
and/or rental value of the residential rental units that are the subject of an
application.
(e) Grounds for Issuance of Certificate of Bona Fide Conversion.
The rent review commission shall issue to any subdivider a certificate of
bona fide conversion upon finding, by a preponderance of the evidence,
of each of the following: (i) that not fewer than fifty percent (50%) plus
one of the occupied residential rental units to be offered for sale pursuant
to a map or application for conversion of a rental mobile home park to
resident ownership support such conversion to resident ownership; and
(ii) that the occupied residential rental units to be offered for sale and/or
rent will be sold and/or rented for an amount not more than the fair market
value of such residential units; and (iii) that the subdivider has not filed
the subdivision map or other application for conversion of a rental mobile
home park to resident ownership for the sole purpose to remove occupied
resident rental units therein from the protections of this Chapter. In the
event the subdivider, or a resident, or resident homeowners' association,
or city staff submit(s) a qualified appraisal(s) or other probative
information which determine(s) a fair market sales or rental value of the
occupied residential rental units which, on average, differ by twenty-five
Ile
44^37(AV 1
percent (25%) or greater in fair market sale and/or rental value, the rent
review commission may, as a condition to issuing a certificate of bona
fide conversion, request the parties agree that each party or each party's
appraiser select and jointly provide instructions to a third-party
independent appraiser, and agree to jointly share in the payment for an
independent third appraisal, which third appraisal shall be deemed by the
commission to constitute the fair market sales and rental values of the
occupied residential rental units to be offered for sale. Provided the
subdivider agrees, in writing, to offer each occupied residential rental unit
for sale and/or rent at the appraised fair market value determined by such
third-party appraiser, such agreement shall, standing alone, entitle the
subdivider to the issuance of a certificate of bona fide conversion without
any further showing required hereinabove.
(f) Effect of Failure to Obtain Certificate of Bona Fide Conversion.
With respect to any subdivision map or other application for conversion of
a rental mobile home park to resident ownership for which the subdivider
shall have failed to obtain a certificate of bona fide conversion, as to any
non-purchasing resident, the amount of rent to be paid for the residential
rental unit so occupied shall be only that rent authorized under Chapters
4.02, 4.04, and/or 4.08, as applicapable, of this code. In addition, in the
event of the sale of a residential rental unit to any person or entity other
than the occupying unit resident, in addition to other rights and remedies
as provided by law, the subdivider shall afford to the non-purchasing
resident the notice and relocation assistance required by Section
4.08.130 of this Chapter prior to and in connection with any sale of a
residential rental unit to any person or entity other than the occupying unit
resident."
SECTION 2. CEQA EXEMPTION. Adoption of this ordinance is not subject to
the California Environmental Quality Act ("CEQA") by virtue of Public Resources Code
§§ 15061(b)(3) and/or 21080.8 so long as the application required herein does not
involve any expansion of the number of residential units within a property to be
continued to be operated as a resident owned mobile home park.
SECTION 3. SEVERIBILITY. If any section, sub-section, sentence, clause or
phrase of this ordinance is, for any reason, held to be invalid or unconstitutional by the
decision of a court of competent jurisdiction, such decision shall not effect the validity of
the remaining portions of the ordinance. The City Council of the City of Palm Springs
hereby declares that is would have passed this ordinance, and each and every section,
sub-section, sentence, clause, or phrase thereof not declared invalid or unconstitutional
without regard to whether any portion of the ordinance would be subsequently declared
invalid or unconstitutional.
SECTION 4. EFFECTIVE DATE. This Ordinance shall be in full force and
effect thirty (30) days after passage.
SECTION 5. AUTHORITY TO ENACT. The Palm Springs City Council is
expressly authorized to enact this ordinance by virtue of Municipal Code § 4.08.140
/ /)?-- 3
#91764v 1 3
SECTION 6. PUBLICATION. The City Clerk is hereby ordered and directed to
certify to the passage of the Ordinance, and to cause the same or a summary thereof, or
a display advertisement, duly prepared according to law, to be published in accordance
with law.
ADOPTED this day of May, 2003.
AYES:
NOES:
ABSENT:
ABSTAIN:
ATTEST: CITY OF PALM SPRINGS
By
City Clerk Mayor
REVIEWED &APPROVED AS TO FORM:
"^37F'v 1 4