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Home My WebLink AboutMINUTES - 11191996 - D7 . - DOI Contra TO: BOARD OF SUPERVISORS Costa FROM: Harvey E. Bragdon, Community Development Director �T C.UA, J County. DATE: November 19, 1996 SUBJECT: Response to Letter Requesting the County's Participation in the state's Mobilehome Park Resident Ownership Program (MPROP) for the Bay View Mobilehome Park, Bay Point SPECIFIC REQUEST(S) OR RECOMMENDATIONS(S) & BACKGROUND AND JUSTIFICATION RECOMMENDATIONS ACCEPT the staff report of the request to participate in the state's Mobilehome Park Resident Ownership Program (MPROP). A summary of the Mobilehome Park Resident Ownership Program is attached as Appendix A. FISCAL IMPACT None. BACKGROUND At the September 10, 1996 Board of Supervisors meeting, item C.150 was referred to the Community Development Department for further review. This item addressed a resident's request to purchase a mobilehome park in the Bay Point area. The urgency behind the request to participate in the MPROP program stems from an abatement action, approved by the Board of Supervisors on September 24, 1996, against the 8-space mobilehome park at 81 Bay View Avenue, in Bay Point. Staff feels that County assistance in such a proactive fashion is an inappropriate method to be implemented at this mobilehome park due to its extremely small size and perceived unlikeliness of meeting program requirements. However, should it choose to, the Board of Supervisors may feel that participation in MPROP is an appropriate mechanism to assist this hybrid type of affordable housing for future requests. CONTINUED ON ATTACHMENT: _x YES SIGNATURE: k _RECOMMENDATION OF COUNTY ADMINISTRATOR_RECOMMENDATION OF BOARD COMMIT EE APPROVE OTHER SIGNATURE(S): ACTION OF BOARD ON November 19, 1996 APPROVED AS RECOMMENDED X OTHER VOTE OF BOARD MEMBERS I HEREBY CERTIFY THAT THIS IS A x UNANIMOUS (ABSENT -------- ) TRUE AND CORRECT COPY OF AN AYES: NOES: ACTION TAKEN AND ENTERED ON THE ABSENT: ABSTAIN: MINUTES OF THE BOARD OF SUPERVISORS ON THE DATE SHOWN. Contact: Community Development Elizabeth'Dunn 335-1252 ATTESTED November 19, 1996 CC' County Counsel PHIL BATCHELOR, CLERK OF THE Better Government Ordinance BOARD OF SUPERVISORS AND Mobile Home Advisory Committee C Y ADMINISTRATOR I 2 APPENDIX A I. THE MOBILEHOME PARK RESIDENT OWNERSHIP PROGRAM The state Department of Housing and Community Development (HCD) operates the Mobilehome Park Resident Ownership Program (MPROP). The MPROP program is an open, competitive process where a resident organization, in conjunction with the local jurisdiction, submits an application to receive a percentage.of the funds needed to purchase the mobilehome park from the current owner.. The intent of MPROP is to encourage the purchase of mobilehome parks by its residents in order to protect low income park residents from displacement. MPROP funds are designed to fill the gap between what private financing residents can afford with the expectation that potential MPROP borrowers will secure loans from private lenders at the maximum amount that they can qualify for(less that amount that they are paying for their housing costs; presumed to be 30%). Currently, there is$3,000,000 is available this year for allocation of loans that may be made on behalf of the mobilehome park residents. Approximately 20%, or $600,000, is reserved for rural mobilehome parks. A maximum of$750,000 may be allocated per park for the necessary loans to be used in the purchase process. As there is limited technical assistance that HCD can provide, the Department recommends that potential applicants consider using consultants or other housing professionals to assist in the purchase process when submitting an application to participate in MPROP. A total of 175 points may be awarded towards a resident ownership proposal. A proposal in an urban area must receive at least 60%, or 105 points, in order to receive a positive recommendation. For rural areas, a proposal must receive at least 50%, or 87 points, in order to receive a positive recommendation. Applications are reviewed based upon the twelve criteria below: * financial feasibility and loan security * project cost * efficiency of use of program funds * organizational capacity * avoidance of displacement * project support * speed and ease of conversion * below market financing * affordability for low-income residents * security of tenure * local housing programs * under served areas The current round of applications opened September 1, 1996 and closed November 1, 1996. The next open application period is from June 1, 1997 to August 1, 1997. Recipients would be notified of available funds beginning November 1, 1997. H. COMPONENTS OF THE MPROP PROGRAM A. LOAN TYPES There are three types of loans, all at 3% simple interest, under the MPROP program. These include: 1) Conversion loans, which provide interim financing to the resident organization for such purchase and conversion costs such as: acquisition, loan origination fees and other financing costs; legal and professional fees; and rehabilitation costs. Repayment is required upon completion of the conversion. The term of the loan is for three years during which time only monthly interest payments are repaid to HCD. 2) Blanket loans, which provide long-term financing to resident organizations for the conversion costs of low-income mobilehome spaces. This type of loan must directly 3 APPENDIX A benefit low-income residents, whether thr ugh a rent subsidy, loan or other mechanism. Similar to a mortgage for other types of residential units, the term of the loan is 30 years. 3) Individual loans, which provide long-term assistance for low-income residents to purchase a lot or other real property interest in a mobilehome park. The term of the loan is 30 years. Alternate repayment schemes may include interest-only payments or a deferral of all principal and interest payments for the full term of the loan. These borrowers must have incomes of at least 80% or below the county's median income and be able to qualify for a conventional loan for a MPROP loan. A loan may be made for a maximum of 50% of the eligible costs associated with the acquisition of a mobilehome park. Under certain circumstances, HCD may approve a loan of up to 95% of the value of the collateral (structures and land of the mobilehome park). Contra Costa County's median income for a four person household is $58,400. Low-income households are defined as those whose income is at 80% of th�area median income, or $41,600, for a four person household. Exhibit 1 is a table which illus ates the income levels, ranging from extremely-low, very-low, low and median, that relates to the number of persons within the household. R ELIGIBILITY REQUIREMENTS 1. Project A proposal to purchase a mobilehome park must have at least one low-income household to be eligible to participate in this program. Additionally, the project must be converting to resident ownership or control and meet the minimum standards of the Mobilehome Parks Act upon conversion. The form of resident ownership may be either a condominium, cooperative or mutual benefit corporation. A 2 Resident Organizations The applications must be submitted jointly by a mobilehome park resident organization and a local public entity. The resident organization must: a) have, at the time of the application and funding, no less than two-thirds of the resident households as members b) be a legally recognized entity c) be able to enter into a contract d) be capable of being sued The resident organization must represent at least two-third of the households in the park and at least two-thirds of the residents must participate in the purchase. 3. Local Public Entity The Local Public Entity may be a city, county, housing authority, redevelopment agency, community development commission or other governg body. The governing bodies of the local public entity and the resident organization must Tuthorize, by a resolution, participation in the program at the time the application is submitted. II[. WHAT IS NEEDED FOR A MPROP APPLICATION? 1. Establishment of a Resident Organization. A resident organization must be created. Generally, these organizations are non-profit entities, similar to a Homeowner's Association. As stated above, the organizational structure chosen by the mobilehome park residents allows a group to act on behalf of the residents with a Board of Directors and by-laws. 4 APPENDIX A i 2. Willing Seller There must be a willing seller offering the property at a price that can be supported by a certified appraiser. Should there be interest by a local jurisdiction to apply for MPROP funds but the selling price is unrealistic, eminent domain pwers can be used. 3. Site control At the item of application, the resident organization must have site control. Acceptable forms of site control include an executed contract to purchase and an irrevocable option agreement. 4. Verifiable Land Holding As the project is to result in resident ownership of the mobilehome park, either a subdivision must be completed or the resident organization must acquire a fee or long-tem leasehold interest, of at least 15 years, in the park. 5. Participation from the Local Entity As stated earlier, the local jurisdiction and the resident ownership proposal must be co- applicant's in this process., An approved resolution establishing the local jurisdiction's participation with the resident owners must be submitted. 6. Work with a Consultant As discussed earlier, the state Department of Housing and Community Development can provide limited technical assistance. It recommends that potential applicants consider using consultants or other housing professionals to assist in the purchase process when submitting an application to participate in MPROP. EDV c-.\da ta\xNp60\mobile\mprop.bos