Loading...
HomeMy WebLinkAboutAgenda Statement 1986/02/25 Item 15 COUNCIL AGENDA STATEMENT Item 15 Meeting Date 2/25/86 ITEM TITLE: Report: Proposed Conversion of Orange Tree Mobilehome Park and Discussion of City Mobilehome Park Assistance Program Resolution Approving Co-Application with Orange Tree Mobilehome Park Residents Association for State Mobilehome Park Conversion Assistance SUBMITTED BY: Community Development Directo (4/5ths Vote: Yes No x ) REVIEWED BY: City Manager( At the request of the City Council , the Community Development Department has been ex- ploring appropriate forms of Mobilehome Park Conversion Assistance. Recently, the Residents Association of Orange Tree Mobilehome, a 154 space park at 521 Orange Avenue, asked the City to assist them in several ways in acquiring the park and converting it to resident ownership. The Association is under extreme time constraints asso- ciated with the purchase escrow and the funding cycle for state assistance. As a result, the City is being asked for commitments in the absence of information nec- essary to determine the housing assistance benefits and amount of financial assis- tance and in the absence of a formalized City assistance program. In response, conditional support is recommended and discussion of an assistance program is provided for consideration. RECOMMENDATION: That the City Council : (1 ) Adopt the resolution approving Co-Appli- cation with Orange Tree Mobilehome Park Residents Association for State Mobilehome Park Conversion Assistance; and (2) Provide direction as to Council 's desire to have a Mobilehome Conversion Program formulated. BOARDS/COMMISSIONS RECOMMENDATION: The Mobilehome Issues Committee supports the con- cept of resident ownership for mobilehome parks and encourages Council to adopt a favorable position on this issue. DISCUSSION: The consideration of assistance to Orange Tree Mobilehome Park occurs, unfortunately, in a climate of haste. The Residents Association reports that purchase negotiations with the park owner had been lengthy and fruitless until very recently, when financial exigencies motivated the owner to negotiate a quick sale to the Resi- dents Association. The property is in escrow for a purchase price of $4 million and with a closing date of April 10. As a result of the sudden negotiation success, the funding cycles for state assistance, and the short escrow, the Residents Association and its consultants have had a difficult time collecting all necessary information. The inability of the Association and its consultants, Continental Associates, to provide information to staff which would allow appropriate financial and benefit analysis leads to the recommendation for conditional support of the conversion. Information necessary for proper analysis includes property appraisal and acquisition financing figures, resident income data, the amount of City funds needed to assist eligible low-income households, a determination of any improvements required by the City Planning Department, and an engineering report detailing any needed repairs. The requested assistance and support includes co-application with the Association for State conversion funds, direct City financial assistance for interim financing for park acquisition, and direct financial assistance to low-income resident house- holds wishing to participate in the conversion. The park's consultants have also requested special consideration in regards to the City's Planning process. In particular, they would like the tentative and final maps waived; replacing this process with a shorter, less expensive Certificate of Compliance. Planning, Community Development, Engineering, and the City Attorney's office are working together to Form A-113 (Rev. 11/79) Page 2 Item 15 Meeting Date 2/25/86 formulate an appropriate response to this request, and it is hoped that a specific proposal will be brought before Council in the near future. Co-Application for State Funds The State Mobilehome Park Assistance Program (MPAP) offers loans of up to $500,000 at 7% interest for park conversion costs, park rehabilitation, operating reserves, and take-out financing for low-income residents. The program requires that an application be made jointly by the park Residents Association and a local public entity. Because the City was asked to co-apply on January 14 and the State deadline to apply was January 24, we arranged with the County Housing Authority to co-apply on our behalf as they were already set up to act as co-applicant with local parks. It was necessary for the park to apply for this particular round of State funding so that the Residents Association has a total commitment of funds before the park closes escrow on April 10. As co-applicant, a public entity certifies that it has reviewed the project and that is meets local criteria in terms of zoning, housing programs, resident support and minimized displacement of residents. In addition, the State asks for a local commitment of financial support for the park. Because information concern- ing most of these items is not yet available for review, the City and County jointly submitted a conditional certification of the above mentioned points. After receiving and reviewing further information, the public co-applicant, either the City or the County, has the option of withdrawing support or officially certifying to the points. While the County can continue to act as co-applicant for Orange Tree, it seems more appropriate for the City to provide this type of certifica- tion because most of the certifications involve local ministerial or discretionary actions and because local autonomy would be maximized. City Assistance for Interim Financing The Orange Tree Residents Association has requested financial assistance from the City and the State to help provide interim financing during park conversion. City and State funds would provide the difference between the purchase price of the park and the amount of conventional financing available from a private lender. The State will lend up to a maximum of $500,000. The combination of a State loan, conventional financing, and resident equity is not likely to cover interim finan- cing and thus Orange Tree will be requesting up to a maximum of $500,000 from the City. This money would be needed for the period of time it takes for the park to convert (which typically ranges from four months to a year) . Once the park is converted and individual loans are secured for the spaces, all or part of the interim loan money provided by the City could be rolled over to loans to assist low-income residents to purchase their spaces. At this time, staff does not have sufficient information on the park and the finan- cing arrangements to make a specific proposal for interim financing assistance. This information is provided to help Council gauge the scope of the Residents Asso- ciation' s request. Page 3 Item 15 Meeting Date 2/25/86 City Assistance to Low-Income Households It is anticipated that a number of low-income park residents at Orange Tree will not be able to afford to purchase their spaces, and therefore, the Residents Association has applied for take-out financing assistance for low-income residents from the State Mobilehome Park Assistance Program. However, the program only offers financing of up to 50% of the space purchase price for eligible residents, and this amount of assistance is generally not sufficient to make housing costs affordable. Thus, the Residents Association desires additional assistance from the City to provide secondary financing to needy households. The goal of combined City and State funding would be to provide sufficient funds to a household so that they can have the option of participating in resident ownership. Without this option many residents would either be forced to rent or become displaced. Staff is exploring the possibility of utilizing the County Department of Housing and Community Development's Mobilehome Occupant Assistance Program (MOAP) in the City of Chula Vista. MOAP provides deferred loans to eligible households so that housing costs remain affordable for low-income residents after conversion. If MOAP was used by the City, staff would initially screen a park desiring assis- tance and refer eligible parks to County staff. They would determine individual resident eligibility and analyze the total amount of City assistance needed. The County would work with City staff during this process and ultimately submit a report to us with their recommendations. Staff would analyze this information and ultimately submit a funding proposal to Council . If the City assists with both interim financing and low-income assistance, the money from interim financing could be rolled-over to provide funds for take-out loans for low-income residents. The City would be in a secondary financing position with respect to the take-out loans, and the loans would be due and payable upon sale of the property. The City, being in a position of equity participation, may actually receive more money from the sale than was originally lent. For example, if the City provides a loan to pay 50% of the original purchase price, when the space is sold the City would receive 50% of the selling price. Typically, parks that convert to resident ownership experience significant appreciation. Before a specific recommendation for low-income assistance for Orange Tree resi- dents can be brought to Council , staff needs further data concerning resident incomes and the total amount of assistance needed by low-income households. Discussion of City Mobilehome Park Assistance Program The experience of developing an assistance package for Orange Tree provides a beneficial environment in which to design a City-wide program. Staff desires Council direction as to the appropriateness of designing such a program. If desired, staff would return to Council with an articulated program incorporating the three types of assistance discussed for Orange Tree; one, acting as co- applicant with local parks for State assistance; two, providing a portion of interim financing during park conversion; and three, assisting low-income residents who otherwise could not afford to purchase their space. Details such as standards for levels of park assistance, City application procedures for mobilehome park assistance, and written agreements with the County Housing Authority to administer their MOAP program in the City would be brought forth at that time. r Page 4 Item 15 Meeting Date 2/25/86 Summary Any City Council support for Orange Tree would be preliminary and conditional at this time. Staff will return with a proposal for more specific commitments when we have received and analyzed further data concerning the park and the resident acquisition proceedings. In the meantime, if Council approves the City's co-applicant status with Orange Tree, it will have helped the residents pursue their goal of resident ownership. Because residents who own their own spaces are able to stabilize their housing costs, resident ownership eases mobilehome park residents escalating housing costs. Thus, Council would have an opportunity to help mobilehome park residents stabilize their housing costs and at the same time would assist low-income house- holds achieve home ownership. FISCAL IMPACT: Not applicable. by 9;' '1 `,7;1 of Chuff i ii , CL,hfornia Dated