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potential loss of affordable rental housing for seniors (please see Attachment 7 for the Planning Commission meeting minutes). 1. "Bona fide" resident conversion: The SMA requires the Park owner to "obtain a survey of support of residents...for the proposed conversion" [Subsection (d) to Section 66427.5 set forth on Attachment 8]. The intent of this section is to prevent a "sham conversion" and to ensure that a conversion under this Section be a "bona fide resident conversion". A "sham conversion" is a conversion completed as a way to exempt a mobile home park from applicable rent control provisions by processing a condominiurrr map but selling only one or very few lots. However, the term "bona fide resident conversion" is not clearly defined and the SMA does not state what the level of support, if any, is required in order for the conversion to "bona fide." In this instance, the Park owner obtained a survey of support of the residents. (A copy of the survey can be found in Attachment 10). The residents were given three choices: support for the conversion, don't support the conversion; and decline to respond at this time. There were 119 responses to the surveys; 41 in support, 39 not in support, and 38 who "declined to respond at this time." The applicant contends, based on case law, the statutory language of Section 66427.5 itself, and the legislative history of that statute, including the amendment to the statute in 2002, that there is no threshold requirement as to the number of residents who must support the conversion in order for the conversion to be bona fide (please see Attachment 3). The Commission, in denying the application, relied on its interpretation of the legislative history of the amendments to Section 66427.5 and other sections of the SMA, to reach a different conclusion (please see Attachment 7, pages 16-20.) 2. Loss of affordable rental housing: If the application is approved, the Park owner may begin to sell the lots after ten years. The current residents will be given the right of first refusal to purchase their lots; those who choose not to purchase their lots may continue to reside in the Park and continue to pay rent. Rent increases thereafter will be set by Section 66427.5 and depends on the income of the household. Rent increases for lower-income households will be tied generally to cost-of-living increases, but rents for households that are not lower income will rise to "market value" (as determined by the Park owner), phased in over a five-year period. But as then current residents move out or die, any new resident will be required to purchase a lot. Accordingly, over time, the City will lose what has been affordable rental housing for seniors. On the other hand, the City may well acquire affordable, for sale, housing for seniors. In terms of for-sale affordable housing (land and building), the sales price for households of 80 person of the median income is around $200,000 and for households of 120 percent of the median income, around $300,000. Since the City does not know at this time what the initial sales price for the lots to existing residents (ten years in the future) will be, it is speculative as to whether the price just for the lots will fall within any of ranges listed above. Moreover, because the new resident must purchase the lot and Page 3 of 6