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Commissioner Fox stated that only approximately 40 out of 208 units, or 20 percent, were in favor of the conversion. She inquired if more than 50 percent, or 105 "yes" votes for 208 units, would be required for a majority. Mr. Roush replied that much like in an election, there may be 200 registered voters, but if only 100 vote, it would not require 101 votes for the measure to pass. He noted that the difficulty is that under case law, the applicants contend that they met the requirements of State law by simply conducting the survey. Commissioner Fox inquired what a "bona fide" survey meant. Mr. Roush replied that the legislative history of the language is not particularly illuminating and that it would have to fall back on an appellate court's decision before the amendment of State law, which decision talks about whether the intent of the application is to sell the units off as a residential conversion as opposed to selling off one or two lots, and then raising the prices on the lots so no one else can buy it, thereby removing the rent control provisions. He noted that in this case, the courts have said that if that happens, it would not be a bona fide conversion but a "sham" conversion, and the courts could step in and set it aside. Commissioner Fox inquired what the definition of a "sham" conversion was. Mr. Roush replied that it would be where the conversion is allowed to go through, the owner sells one or two lots to get rid of the rent stabilization ordinance, and then prices the lots so high that no one can reasonably purchase them, thereby eliminating rent control. Commissioner Fox inquired if rent stabilization would be removed if one of the mobile home spaces is sold under the current proposal. Mr. Roush replied that the first sale would trigger the four -year phasing -in of market rates for those who do not qualify as lower income households. He added that the applicant has agreed to not sell any lots for at least ten years. Commissioner Fox noted that the current zoning of the property is CF (Commercial Freeway) and that she is not aware of any residential project in a CF zoning district. She inquired why the property would not need to be rezoned from commercial freeway to a residential zoning district. Mr. Roush replied that the issue is the amount of discretion the Commission has with respect to denying the application because of perceived inconsistencies with the zoning ordinance. The applicants will contend, based on existing case law, that the limit of the Commission's or the Council's discretion is with respect to complying with Section 66427.5 which is limited in nature. EXCERPTS: PLANNING COMMISSION MINUTES, February 25, 2009 Page 2 of 19