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loans, a State funded finance program was created for lower- income residents in converted parks. She added that lower- income residents can be loaned money up to 95 percent of the purchase price at three percent interest over 30 years, and payments will be tailored based upon the residents' income to ensure affordability. Ms. Forbath stated that there have been meetings in the park with large attendance, that they tried to provide as much information as possible to prepare the residents for the change, and that they were careful to mail information to everyone in the park. She noted that part of people's fear is the unknown, and the unknown in this case is change. She added that this change provides the option for some to own where none currently exists and for others to continue rent, although their rent may not be protected in the same manner as the present. She indicated that there would be no change of use upon conversion and that the park will always remain a mobile home park. Ms. Forbath stated that everything within the boundaries of a mobile home park is controlled by the State Housing and Community Development Department and that this will stay in place after conversion. She added that the Mobile Home Residency law will stay in place, as well and that additional protections under the Davis Sterling Act will be provided once a homeowners association is set up. Commissioner O'Connor referred to affordability and inquired what the price of the conversion would be today. Ms. Forbath replied that an appraisal has not been conducted. She noted that appraisals of this type are different from a regular single family home in that many factors must be determined, and would cost approximately $30,000. She stated that in other parks across the State, prices of lots depend upon the location of the park and that she believed it would be equal to or greater than the amount the owner could sell the park today to another party. She added that it is to the owner's advantage to sell lots gradually over time and that another reason park owners want to convert is because they would prefer to see the park as resident -owned rather than owned by a Real Estate Investment Trust (REIT) or other entity. Commissioner Fox presented a scenario where an 85- year -old is making monthly payments on a $50,000 mobile home, and this resident is given an option to purchase the lot for $200,000. She requested Ms. Forbath to describe the financing of such a loan where the senior resident would suddenly have to come up with funds to refinance the home and purchase the lot. Ms. Forbath stated that assuming the 85- year -old person qualifies as a lower- income resident and applies for the loan from the State, the State will look at the resident's income and ensure that the total housing costs, including mortgage, property tax, HOA dues, and utilities, do not exceed 30 percent of his /her income. She noted that if $500 is the remainder that would apply toward a mortgage, the State would defer the rest of the principal and interest short of $500 a month. EXCERPTS: PLANNING COMMISSION MINUTES, February 25, 2009 Page 7 of 19