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CITY CLERK'S OFFICE - MEMORANDUM
To: City Council
From: Councilmember McKeown
Date: Neyember 22 2044
December 6, 2011
13 -A: Request of Councilmember McKeown that the Council direct staff to
explore means whereby the City can best protect the safety of Village
Trailer Park residents and of the existing affordable housing, and assure
that all of the City's own options with respect to various ongoing
processes are preserved; and related Information Report. (Continued from
November 22, 2011 meeting)
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City o Information Item
Santa Monieu
Date: November 22, 2011
To: Mayor and City Council
From`. Rod Gould, City Manager
Marsha Jones Moutrie, City Attorney
David Martin, Director of Planning and Community Development
Andy Agle, Director of Housing and Economic Development
Subject: Village Trailer Park
Introduction
This report provides information regarding options available for preserving affordable
housing for residents of the Village Trailer Park.
Background
On November 8, 2011, the City Council discussed a request that the Council direct staff
to explore means whereby the City can best protect the safety of Village Trailer Park
residents and of the existing affordable housing, and assure that all of the City's own
options with respect to various ongoing processes are preserved. Following discussion
and a failed motion, Councilmember McKeown requested that the discussion item
return to the November 22 Council Agenda.
The Village Trailer Park is a 109 -space mobile home park, located at 2930 Colorado
Avenue, which is governed by local rent control requirements. Currently, 52 spaces in
the park are occupied full time. On July 10, 2006, the park owner and applicant, Village
Trailer Park, LLC, gave twelve months' notice of termination to tenants that the Village
Trailer Park (VTP) would close on July 31, 2007. In response, City and Rent Control
Board representatives notified the park owner that before giving notice of closure, a
removal permit was required from the Rent Control Board for the controlled spaces in
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the park in accordance with Section 1803(t) of the City Charter and, among other things,
that the notice required greater specificity as to the future use of VTP. On October 27,
2006, the owner of the Village Trailer Park served the residents with a 12 -month notice
of closure that superseded the previous notice that was contested by the City, stating
that the closure was for the purpose of holding the park as vacant land and for
investment. In an attempt to avoid litigation over the park closure process, the applicant
requested that the City process a. Development Agreement application for a project that,
among other things, could qualify for a removal permit under the City Charter.
Settlement negotiations between the City and the owner initially resulted in extending
the closure date to January 31, 2008. Subsequently, on November 27, 2007, Council
approved a memorandum of understanding (MOU) that tolled the closure notice as of
October 9, 2007. In exchange for postponing the notice period for park closure, the
park owner agreed to pursue negotiations for a development agreement that satisfies
the City Charter requirements for a rent control removal permit. The MOU's tolling
provision is subject to 30 days written notice, at which point the remaining balance of
the notice period (114 days) would resume.
Government Code Section 65863.7 and California Mobilehome Residency Law require
preparation of a tenant impact report, including preparation of the relocation plan.
On July 8, 2008, Council authorized an agreement for preparation of the required report,
to be completed under the direction of the City, at the expense of the property owner.
As time has progressed, several residents and their representatives have requested
City assistance in ensuring that priority for local affordable housing resources be
provided to income - qualified Village Trailer Park residents who are at risk of losing their
housing. Village Trailer Park residents currently receive local preference first priority
under the City's Housing Trust Fund Guidelines and are also identified as being
displaced and therefore receive priority for Housing Authority programs (e.g. Section 8
vouchers). Staff and the relocation consultant have provided information regarding
available affordable housing resources to all residents.
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Discussion
The City Council, Village Trailer Park residents, and the public have asked questions
regarding available options for the future of the Village Trailer Park and its residents,
including:
Could the City use its regulatory powers to prevent closure of the Village Trailer Park?
State law allows an owner of a mobile home park to go out of the mobile home
business. As a result, the City's RMH (residential mobile home park) zoning for the site,
as well as the potential for landmark designation, cannot prevent the owner from closing
the park.
The City Council is the legislative body responsible under state law for ensuring
compliance with the requirements of Government Code §65863.7 and §65863.8 for a
mobilehome park conversion, closure or cessation and the "change of use" provisions
for termination of tenancies under Civil Code §798.56(g) and (h). In Keh v. Walters
(1997) 55 Cal.App.4" 1522, 1532 -1533, the court concluded that the integrated notice
and procedural requirements of the Mobilehome Residency Law (MRL) in the Civil Code
and the conversion process in the Government Code apply whenever there is a change
of use of a mobilehome park, and that when complying with those procedures that "a
park owner is entitled to convert property used as a mobilehome park to another use, or
even to hold it as vacant land."
On July 10, 2006, the Village Trailer Park ( "VTP ") owners gave twelve months' notice
that the mobile home park would close on July 31, 2007. The MRL requires a park
owner to provide mobile homeowners at least twelve months' notice of a change of use
only if the change of use requires no local governmental permits. In response, Santa
Monica Rent Control Board representatives notified VTP that before giving notice of
termination of tenancies for the purpose of closing the park under the Mobilehome
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Residency Law ( "MRL "), Civil Code §§ 798 et seq, the park owner was first required to
obtain a removal permit from the Rent Control Board for the controlled units in the park
pursuant to City Charter §1803(t)(2)(ii). The City Attorney's Office agreed with the Rent
Control Board. In letters dated July 27 and September 21, 2006, the City Attorney
informed VTP that because a removal permit from the City's Rent Control Board was
required to change use, VTP was first required to obtain approval of requisite local
governmental permits and then provide a six -month minimum notice of termination of
tenancy. (See Civil Code §798.56(g)(2).) As a result of authorized settlement
negotiations between the City, the Rent Control Board and VTP, VTP (1) amended and
extended its closure notice to January 31, 2008, and (2) entered into an MOU, approved
by the Council on November 27, 2007, that tolled Notice of Closure as of October 9,
2007, leaving a remaining notice period of 114 days that would resume upon
termination, and (3) applied for a Development Agreement project pursuant to a Council
"float -up" hearing that satisfies Rent Control Removal Permit Requirements under City
Charter section 1803(t)(2)(ii).
In Yee v. City of Escondido (1992) 503 U.S. 519, 528, the United States Supreme Court
recognized that "the Mobilehome Residency Law provides that a park owner who
wishes to change the use of his land may evict his tenants, albeit with 6 or 12 months
notice. Cal.Civ.Code Ann. § 798.56(g)." In rejecting petitioners' claim that California's
statutory procedure for changing the use of a mobile home park is in practice "a kind of
gauntlet" that prevented them from changing the use of their land and forced them to
suffer the unwanted physical presence of tenants amounting to a physical taking, the
Court held that because the petitioners had not gone through the park closure
procedure, the court would not consider that claim. However, it warned: "A different
case would be presented were the statute, on its face or as applied, to compel a
landowner over objection to rent his property or to refrain in perpetuity from terminating
a tenancy." This warning from the Supreme Court means that if a city attempted to go
farther than the state has gone to protect mobile home park residents against the
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impacts of park closure or conversion, the city would be subject to legal liability for
"taking" the park owner's property.
There are two Land Use and Circulation Element (LUCE) policies that address Village
Trailer Park. LUCE Policy D24.13 states, "Retain the Village Trailer Park to the extent
feasible, and permit recycling to other uses that are consistent with the MUCD and in
compliance with the City's Rent Control Charter Amendment and sections of the
California Government Code applicable to recycling mobile home parks." The
Development Agreement process currently underway is consistent with the spirit of this
policy.
LUCE Policy D24.14 states, "Explore means to sustain Village Trailer Park's economic
viability by incorporating it into a larger multi - property master plan, if feasible, or by the
transfer of development rights that have as a goal, preserving existing housing as an
integral part of a new mixed -use project." In response, staff met with the owner of VTP,
as well as the owners of the two adjacent properties. The discussion acknowledged the
primary challenge and complexity of creating a multi - property master plan that is
economically feasible and would likely need to be consolidated in one ownership entity.
Further, a transfer of development rights from the Village Trailer Park property as a
community benefit for the other remaining properties would likely be necessary to
facilitate the retention of VTP. This transfer could potentially require greater height and
FAR than the adopted LUCE in order to accommodate the transfer of floor area and still
have sufficient on -site open space. Implicit in such a scenario would be the payment
from adjacent property owners of sufficient funds to the Village Trailer Park owner in
order to compensate for a lack of development on the site. The property owners
considered potential scenarios for a multi - property master plan but after discussions, did
not agree to pursue such a scenario. The City does not have the authority to mandate
the participation of adjacent property owners in a transfer of development rights and as
such, the cooperation of all property owners would be voluntary.
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Could the City use its proprietary powers to prevent closure of the park?
The City could attempt to acquire the park in order to maintain it as a mobile home park.
Based on recent comparable sales and appraisals commissioned in the area, staff
estimates that the cost to purchase the park would range between $22 million and $30
million, if there were a willing seller. In the absence of a willing seller, the City would
need to pay enough to induce the owner to sell and cover holding costs and expenses
or the City would need to resort to use of its powers of eminent domain, both of which
would likely increase the required purchase price. If the City were to acquire the park,
the City would likely need to enhance the livability of the park by improving the
underlying infrastructure, as has been done for the City -owned Mountain View Mobile
Home Park. For Mountain View, the City spent over $6 million (in 2008 dollars) to
upgrade the park's utilities. If the City were to pursue a program to create sustainable,
livable manufactured homes in the park, many millions more could be spent. In
addition, as only 52 spaces at Village Trailer Park are occupied, the City would likely
need to subsidize the park's operating costs until more spaces were occupied and
producing rent. Property management and operating expenses at Mountain View are
approximately $375,000 per year, as a comparison. Owning and managing a mobile
home park is not one of the City's core strengths. As a result, if the City chose to
pursue a path of preserving the park in place, a potentially more successful approach
would be to loan funds to a non - profit affordable housing organization to acquire,
rehabilitate, deed restrict and manage the park. In cases of acquisition and
rehabilitation, the City typically loans the entire amount up -front so that the non - profit
can immediately pursue rehabilitation.
If the City were to pursue acquisition of the park, funds would need to be diverted from
other capital projects and affordable housing developments. Funds that are available to
the City as a result of its master cooperation agreement with the Redevelopment
Agency are the primary funding source for most capital projects and affordable housing
developments that are currently in planning and design. A balance of available funds is
being held in reserve in order to make payments to the state in the event redevelopment
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legislation passed by the state in June 2011 is upheld by the California Supreme Court.
As a result, current projects would need to delayed or abandoned in order to fund the
acquisition and rehabilitation. Projects of significant size such that their delay or
abandonment could fund the acquisition include:
• Palisades Garden Walk, or
• A combination of the Pico Library, the Mountain View Mobile Home Replacement
Loan Program and the Colorado Esplanade.
Other projects included in the "immediate priorities" adopted by Council in May 2011 are
either already committed to third parties (Civic Center Joint Use Project at Santa Monica
High School) or will require additional financing if state redevelopment legislation is
upheld (Civic Auditorium, Exposition Light Rail local match, Fire Station #1
replacement.)
The City's General Fund balance has been designated to economic stabilization funds,
to several Council- approved capital projects and strategic initiatives at various stages of
implementation, and to efforts to mitigate rising pension costs. Redirecting funds from
these purposes would require a broader discussion of trade -offs and may result in
higher costs in the future.
What are other options for providing affordable housing for the current residents?
The development agreement application submitted by the owner of the Village Trailer
Park includes the development of 109 rent - controlled apartments, 57 (i.e. 52 %) of which
will be deed restricted as affordable to a range of extremely low income to moderate
income households. Pursuant to Section 1803(t) of the City Charter, at least 15% of the
109, rent - controlled units (i.e. 16 units) must be affordable to low- income persons.
There have been ongoing discussions between the park owner and legal
representatives of VTP residents. These discussions have resulted in the owner
providing a preliminary relocation proposal to park residents that improves upon the
initial application and includes a menu of options for residents that choose to relocate in
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the interim period (before formal hearings on the proposed Development Agreement) as
well as in the longer term. In public testimony, the park owner has indicated that
residents will have the option of returning to one of the 109 rent - controlled apartment
units that are proposed to be constructed on -site, with provisions for temporary off -site
accommodations during construction of the units.
While the Development Agreement process is underway (i.e. the interim period), some
residents have inquired about the availability of housing choice vouchers and deed -
restricted affordable apartments. Staff and the relocation consultant met with residents
on August 10, 2011 and outlined the process to apply for Section 8 vouchers along with
information on affordable housing opportunities. Staff and the relocation consultant are
continuing to provide assistance to residents interested in these options. In the longer
term, several residents have explained that a trailer or mobile home better meets their
needs than does living in an apartment. For those residents, moving to City -owned
Mountain View Mobile Home Park may be an option. However, this is not an option in
the interim period as the key deal points of a $9.2M financing program approved by the
City Council on December 14, 2010 only applied to existing residents of Mountain View
Mobile home Park. The program's administrative guidelines are currently in
development and further, the City Council would need to take action to amend the
program so that it could be open to VTP residents. Such an amendment to the program
may also require the allocation of additional funds as the $9.2M financing program
assumed the participation of all Mountain View Mobile home Park residents. Until the
loan program is opened to Mountain View Residents and it is known how many choose
to participate, it will not be known how much of the allocated funds will remain or the
extent to which additional funds will be needed to offer a similar program to Village
Trailer Park residents. Staff anticipates that it will bring forward program amendments
concurrent with the Development Agreement hearings and that a minimum of 26 pads
will be available at Mountain View, if units are upgraded and ready for occupancy at
Mountain View.
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Negotiations are ongoing between Staff and the park owner as to the appropriate
affordability limits of the on -site deed restricted units proposed as part of the
Development Agreement and the details of the relocation proposal. The final relocation
plan will be brought forward for the City Council's consideration at the time of formal
public hearings for the project.
Prepared By: Jing Yeo, Special Projects Manager, PCD
Andy Agle, Director of Housing and Economic Development
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