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Page 3 Memo to Chair and Members of the Plam~ing Commission February 19, 2009 happens to the rent in Park that is converted upon the sale of the lots (see discussion below), the Park Owner has also agreed to abide by the terms of any Rent Stabilization Agreement in effect when he begins selling tlrc lots. (Of course it is not certain that there will be such an agreement as the current Agreement expires December 31, 20]7.) Discussion State Subdivision Map Act Under the State Subdivision Map Act, conversion of rental mobile home parks to residential ownership is governed by Government Code, Section 66427.5, copy attached. Residents who wish to purchase their lots/spaces have the right to do so, assuming that they can afford to do so. For residents who choose not to purchase and are lower income households, their rents may be raised, buC they are limited to the average monthly increase in rent in the four years preceding the conversion. (For example, if the rents, in the four years prior to conversion, had increased a total of $48, the rental increase would be $12.) For residents who do not choose to purchase and who do not qualify as lower income households (and some, especially those who have more recently moved into the Park, will not so qualify), the preconversion rent may be increased to "market levels", in equal annual increases over a four year period (i.e., 20% each year). The Park owner, not the City, establishes "market level" rent. Litigation Over the Scope of Section 66427.5 On its face, Section 66427.5 appears to limit significantly a local agency's discretion to condition approval of the conversion to matters set forth in that section: "The [applicant] shall be subject to a hearing..."fhe scope of this hearing shall be limited to the issue of compliance with this section." The scope of this provision was litigated in the early 2000's. A park owner in Palm Springs sought to convert a mobile home park to residential ownership. Many of the park residents were opposed to the conversion, in part because they had concerns about what the price for the lots would be and also, as indicated above, what the rents would be for those persons who did not qualify as a lower income households. The City eventually approved the application but with a number of conditions. (For example, one of the conditions Palm Springs imposed on the approval was the use of a sales price established by a City approved appraiser; another condition required the developer to provide financial assistance to residents who wanted to purchase their lots.) The park owner, represented by the same firm that represents the Vineyard Villa Park owner, filed suit, contending that Palm Springs had no power to impose additional conditions. The appellate court felt compelled to agree because of the express language of the statute cited above. Said the court, "Although the lack of such authority may be a legislative oversight, and although it might be desirable for the Legislature to broaden the City's authority, it has not done so." One of the arguments that Palm Springs made in the litigation was that the purpose of Section 66427.5 was to allow conversions only when a majority of the residents were in favor of the conversion and that the statute did not allow sham conversions. That argument did not fly with the court because of the lack of any statutory language (at that time) to indicate that the residents had to support the conversion.