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BACKGROUND The background of this item is set forth in the attached August 18, 2009 and May 5, 2009 agenda reports. In summary, in 2007 the Park Owner filed an application with the City for a vesting tentative map, regarding the conversion of the Vineyard Villa Mobilehome Park. The application, if approved, would convert the Park from one which rents spaces to mobilehome owners to a single family manufactured home condominium project where residents could own the lots on which their mobilehomes sit. The Planning Commission considered the application in February 2009 and denied the application. The Park Owner filed an appeal and at the Council's August 18, 2009 meeting, the Council considered all of the evidence and adopted a resolution likewise denying the application. Following the Council's action, the Park Owner filed two court actions, one seeking an order from the court ordering the Council to reconsider its decision and to approve the application and the other seeking damages against the City. Also following the Council's action, a State Court of Appeal decision was published that called into question some of the legal bases upon which the Council rested its decision. In an effort to resolve the litigation, City Council appointed a committee (Mayor Hosterman and Councilmember McGovern) and the committee and City staff met with Park residents to discuss items of interest to the residents that would provide certainty and clarity to the residents if the Council were to reconsider its decision. The committee, staff and the residents developed such a list and, with Council direction, the committee and the City Manager thereafter met with the Park Owner (Dan Guggenheim) and negotiated tentative principals of agreement. Those principals have been discussed with the full Council in closed session and with Park residents. The Park residents that were able to attend an all Park meeting are in strong support of the principals. The principals have been embodied in the attached settlement agreement. The agreement, however, is conditioned on the Council's further consideration of the appeal and a decision upholding the appeal, thereby conditionally approving the application. DISCUSSION The Application Staff recommends that the Council uphold the appeal and approve the application for the following reasons. First, as will be explained in the next section concerning the settlement agreement itself, for the next 10 years, the Park will continue to operate as a rental mobilehome park, subject (at least through 2017 and potentially through 2022) to the current Rent Stabilization Agreement. Second, when the Park Owner begins to market the lots (which will be no earlier than January 2020), no resident will be required to purchase his /her own lot. Those residents who do not wish to purchase their lot and are considered lower income households will have their rents protected by State law (and if that law no longer exists, then by a formula that parallels current state law). Page 2 of 4