MOBILEHOME PARK PRESERVATION POLICIES/CONVERSION ORDINANCE UPDATE-REPORT ON RECOMMENDATIONS

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1 CED AGENDA: 11/16/15 ITEM: D (6) CITY OF SAN JOSE CAPITAL OF SILICON VALLEY Memorandum TO: COMMUNITY & ECONOMIC DEVELOPMENT COMMITTEE FROM: Harry Freitas Jacky Morales-Ferrand SUBJECT: SEE BELOW DATE: Approved SUBJECT: M Date ///r//r MOBILEHOME PARK PRESERVATION POLICIES/CONVERSION ORDINANCE UPDATE-REPORT ON RECOMMENDATIONS RECOMMENDATION Provide comments on staffs recommendations for the Envision San Jose 2040 General Plan (General Plan) text amendments, on the Council Policy (Policy) approach, and on staffs approach to amending the provisions of Title 20 of the San Jose Municipal Code (the Zoning Code) to further the preservation of mobilehome parks (MHPs). OUTCOME Feedback provided by the Community & Economic Development (CED) Committee to staff on the proposed items described above will be cross-referenced to the full City Council. Council direction will help staff finalize recommendations to the Planning Commission and City Council. EXECUTIVE SUMMARY To further the protection of mobilehome parks in the City of San Jose, the City Council directed staff to research and recommend possible amendments to the General Plan and Zoning Code, as well as other policy proposals. Current Goals, Policies, and Actions in the General Plan and provisions in the Zoning Code offer some level of protection of existing mobilehome parks from conversion to other uses. The City Council now seeks to strengthen the City's policies and regulations for the preservation of existing mobilehome parks as housing that can be relatively affordable to residents in the City, taking into consideration that such housing is not deedrestricted affordable housing. Staff is proposing a new City Council Policy, General Plan text amendments, and amendments to the Zoning Code to implement this Council direction.

2 Page 2 BACKGROUND The conversion of mobilehome parks is a land use issue regulated both by the State and by the City under the San Jose Municipal Code and the General Plan. The City is allowed, but not required, by State law to have a mobilehome park conversion ordinance. In 1986 the City adopted an ordinance now found in Chapter of the Zoning Code to regulate the conversion of mobilehome parks consisting of four or more mobilehomes to ownership or to other uses (sometimes referred to as the "mobilehome park conversion ordinance"). Such conversions require approval of a Conditional Use Permit (CUP) or a Planned Development Permit (PD Permit). No mobilehome park conversions have been processed under this ordinance. Attributes of Existing Mobilehome Parks in San Jose Staff research shows that the City of San Jose has 59 mobilehome parks with approximately 10,836 mobilehomes that house approximately 35,000 residents, which is the largest number of both mobilehomes and households in any city in California. A mobilehome is typically owned by its occupant and located on rented space in a mobilehome park. Mobilehome parks' spacerents are regulated by the City's Mobilehome Rent Control Ordinance in the San Jose Municipal Code, Chapter 17.22, and its Regulations, and many spaces in these mobilehome parks have rents that are affordable to households of low incomes. The mobilehome parks in the city vary in size, age, location, type of mobilehomes, and in composition of residents. Approximately half of the city's 59 mobilehome parks were built between 1961 and According to an infrastructure study conducted by the City of San Jose in 2009, these older MHPs require major investment in infrastructure including electrical, water and sewer upgrades, updates to "campground" style bathroom and laundry facilities, poor drainage, and other issues. 1 Mobilehome parks built since 1975 generally appear to be in good condition with wellmaintained infrastructure. Of the 59 mobilehome parks, 19 mobilehome parks (32%) contain more than 200 spaces each. Additionally, 12 of the 59 mobilehome parks (20%) are considered senior MHPs, containing a total of approximately 1,793 homes, and restricted to households where one member of the household is at least 55 years of age. Some mobilehome parks consist exclusively of mobilehomes, and others contain a mix of recreational travel-trailers and mobilehomes; some are well-maintained, and others are in need of maintenance; some are in central urban areas served by public transit, and others are in more outlying areas of the city. The mobilehome parks in the city also vary in terms of their zoning and General Plan land use designations. Some mobilehome parks are located in Industrial Zoning Districts or in areas that are designated in the General Plan for industrial or other nonresidential uses and are predominantly surrounded by industrial uses, and others are located in areas with residential land use and zoning designations. 1 Mobilehome Park Infrastructure Assessment Memorandum to the Mobilehome Advisory Commission, July 31, 2009

3 Page 3 Discussion at City Council and Council Committee Meetings In recent years, the Council has expressed an interest in enhancing the protection of existing mobilehome parks in San Jose from conversion to other uses. This interest has informed Council's consideration of amendments to the General Plan, including but not limited to the comprehensive update of the General Plan in 2011 (Envision San Jose 2040) and State-mandated Housing Element updates. At its priority-setting session on September 9, 2014, the Council added consideration of an update to the mobilehome park conversion ordinance to the ordinance priority list. At the May 20, 2015 meeting, the Rules and Open Government Committee approved adding the Mobilehome Park Preservation Policies/Conversion Ordinance Update to the current Work Plan for the CED Committee and placed it on the June 22, 2015 CED Committee meeting agenda. On June 22, 2015 staff presented a proposed work plan on the Mobilehome Park Preservation Policies/Conversion Ordinance Update to the CED Committee. The Committee accepted the work plan and directed staff to meet with MHP owners and operators to include their input into the work plan prior to presenting it to Council for discussion and action. Staff facilitated two focus group meetings with MHP owners and operators on July 16 and 23, In addition, two focus groups with residents were held by staff on July 30 and August 6, The CED report and the work plan that staff proposed was presented at a Council hearing held on August 11, In response to recommendations made by Councilmembers in two separate Councilmembers' memoranda submitted prior to the hearing, the City Council adopted two motions as follows: 1. The report was accepted, including the joint memorandum from Mayor Sam Liccardo, Vice Mayor Rose Herrera and Councilmembers Chappie Jones, Manh Nguyen and Tarn Nguyen, dated August 7, 2015, to (1) accept staffs report and work plan to further the preservation of mobilehome parks; and (2) direct staff to return in two weeks with an urgency ordinance, and with a standard ordinance to establish a moratorium on mobilehome park conversions for six months. 2. Acceptance of Councilmember Johnny Khamis' recommendations including: (a) direct Housing staff to meet with stakeholders and MHP owners, to discuss their "Opt-In; Stay in Business" proposal regarding alternative methods of maintaining mobile home inventory, and (b) return to Council with a review of the 2040 General Plan to examine MHPs with Urban Village designations and the implications for MHP residents with respect to conversion. On August 25, 2015, the City Council adopted an interim ordinance, as an urgency measure (urgency ordinance), establishing a temporary 45-day moratorium on the conversion or closure of mobilehome parks pending the review and possible amendment of the land use regulations applicable to such conversions and closures. The Council also directed staff to refer to the Planning Commission for its review and recommendation, at its earliest possible regular meeting,

4 Page 4 a substantially similar non-urgency ordinance establishing a temporary moratorium on the conversion or closure of mobilehome parks pending the review and possible amendment of the land use regulations applicable to such conversions and closures. At its September 9, 2015 public hearing, the Planning Commission recommended to the City Council a non-urgency ordinance establishing a temporary moratorium on mobilehome park closure and conversion. The Council adopted this non-urgency ordinance on September 15, 2015 to establish a temporary moratorium through February 25, 2016 on the conversion or closure of mobilehome parks pending the review and possible amendment of the land use regulations applicable to such conversions and closures. ANALYSIS In the Bay Area there is an extreme shortage of affordable housing. The City of San Jose and a few other jurisdictions in the Bay Area contain mobilehome park spaces that are rent-controlled. The rent-controlled mobilehome park spaces in the City provide an essential source of relatively affordable housing to approximately 35,000 residents in the City, some of whom are low-income, disabled, or senior citizens. As land prices have increased, the economic value of converting mobilehome parks to other uses has become more attractive to some owners of the land on which mobilehome parks are located. For example, two mobilehome park conversion applications in Sunnyvale were filed recently. In addition, Palo Alto has been processing a conversion for some time. These two cities do not have rent-control requirements for mobilehome parks, but the loss of the mobilehome park spaces in any nearby jurisdiction could mean that if a mobilehome park in the City of San Jose were to close, there would be even fewer possible spaces for a mobilehome park resident to relocate his or her mobilehome. When the comprehensive update to the General Plan was adopted in 2011, five mobilehome parks were included within the boundaries of Urban Villages, which are identified growth areas in the city intended for mixed-use development after adoption of plans specific to each Urban Village. These mobilehome parks include Imperial San Jose Mobile Estates, La Buona Vita, Mobile Home Manor, Winchester Ranch, and Willow Glen Mobile Estates. In September 2014, when the Council added the Mobilehome Park Conversion Ordinance as a priority in their ordinance priority-setting session, several Councilmembers noted that the mobilehome parks located in Urban Villages could be converted, and that the City must do more to protect these existing mobilehome parks as housing options. Potential Impacts from Mobilehome Park Conversion The impacts of a mobilehome park conversion to another use could be significant. Most mobilehomes cannot be moved, so displaced mobilehome owners would lose their homes and have to purchase a vacant mobilehome or move a new mobilehome into an existing vacant space in another mobilehome park. That would likely require a new mortgage and might mean higher

5 Page 5 space-rental cost than the mobilehome owner's existing space, resulting in higher costs for housing for that household. Additionally, lower-income and fixed-income residents might not have enough income to meet another MHP's requirements. No new mobilehome parks have been built in San Jose over the last 30 years, and few new MHPs have been built in the State during that time. According to data from the State Department of Housing and Community Development, in the last 15 years approximately 900 mobilehome park spaces have been lost in four nearby counties (Santa Clara, Alameda, Santa Cruz, and San Mateo) due to mobilehome-parks' closures. As housing and land prices increase, it is reasonable to assume these losses may escalate making it more difficult over time to relocate residents to mobilehome parks in San Jose and even within the four-county areas referenced in Chapter of the Zoning Code. Mobilehomes available for sale and vacant spaces in San Jose's rent-controlled mobilehome parks are likely to be insufficient to address the demand created by closure of a larger mobilehome park, and this imbalance will increase as MHPs close. Space-rents in the city's mobilehome parks are typically between $650 and $1600. Mobilehome owners who have occupied their MHPs for a long period of time are more likely to have lower rent. Consequently, even if the lower-income or fixed-income MHP residents are able to find a mobilehome to purchase in another San Jose mobilehome park, their incomes may not allow them to meet the new MHP owner's income requirements because space-rent and the mortgage for the purchased mobilehome will be higher. Thus, it may be challenging to mitigate the economic impact of conversion and relocation on lower-income and fixed-income mobilehome owners. Displacement could also destroy the residents' neighborhood social networks and sense of community, which would be a significant social impact for seniors or for others with special needs. Policy and Ordinance Changes to Research and Assess for Possible Recommendation Staff has identified the following potential policy and ordinance changes that could strengthen the protection of existing mobilehome parks in the city: General Plan Text Amendments o Staff proposes adding General Plan text to strengthen goals to preserve existing mobilehome parks in the city as a source of existing affordable housing in established neighborhoods and to improve protection from conversion to other uses (see attachment). o To address Council's concern about more imminent pressure for conversion of mobilehome parks in Urban Villages and to avoid displacement of renters, staff proposes adding a General Plan policy to preserve mobilehome parks and other housing in each Urban Village until the preservation of affordable housing can be comprehensively addressed by adoption of an Urban Village Plan specific to that Urban Village.

6 Page 6 Zoning Code Changes o Conversion of a mobilehome park to another use requires approval of a PD Permit or CUP. The City Council is one of the potential decision-making bodies for a CUP, but not for a PD permit. Staff suggests an amendment to make the City Council the initial decision-making body for consideration of all proposed mobilehome park conversions after the Planning Commission considers these proposals for recommendations to Council. o Staff also proposes to add provisions for making findings of consistency with the General Plan for CUPs. o Rather than substantively amending the mobilehome park conversion ordinance at this time, staff proposes to add a new section to Chapter with provisions so that the City Council may adopt such additional rules and regulations as are needed to implement the intent of this Chapter to facilitate adoption of the Council Policy described below. Council Policy Additional clarification of regulations in adopted ordinances is sometimes warranted by a Council Policy. These applicable policy statements adopted by the City Council are consolidated into the City Council Policy Manual, and these City Council Policies are viewable on the City Clerk's Web page. Staff suggests that new provisions for consideration of mobilehome park conversions to other uses be incorporated into a new Council Policy. Staff intends to post on the City's Web site a draft of the proposed Council Policy prior to Planning Commission consideration of the item. The proposed Council Policy is intended to facilitate implementation of the requirements in the Municipal Code regarding mobilehome park conversions including but not limited to: o Clarifying that the intent of Council direction is to encourage the preservation of mobilehomes; o Developing guidelines for good-faith negotiations between MHP residents (including mobilehome owners and mobilehome tenants) and MHP owners; and o Considering specific provisions for compensation to residents for displacement when conversions are proposed, including but not limited to considerations for affordablypriced replacement housing, purchase price for the existing mobilehome, relocation benefits, and community benefits/amenities within the proposed development. o Providing guidance and clarification regarding the implementation and interpretation of the existing mobilehome park conversion ordinance, not to amend the mobilehome park

7 Page 7 conversion ordinance. Therefore, some provisions that stakeholders have requested may not be realizable in such a Policy. Policy Alternatives In the "Policy Alternatives" section of this memorandum, alternative policy and ordinance changes are identified with reasons given that explain why staff is not recommending these alternatives at this time. EVALUATION AND FOLLOW-UP Moving forward, Policies and an ordinance will be drafted and presented to the Housing and Community Development Commission (HCDC) and the Planning Commission in January In February 2016, during a General Plan Hearing cycle, specific Council hearing dates will be decided by the Rules and Open Government Committee. Staff intends to bring the "stay in business" item to the CED Committee in 2016 for a separate focused discussion. To date, City staff has met three times with Brandenburg, Staedler and Moore, a group that owns seven mobilehome parks in San Jose. Staff intends to present a memo describing this concept at the CED Committee meeting in 2016 prior to presentation to Council. Staff will also complete two stakeholder meetings one with owners and one with residents, and will have the concept reviewed with HCDC prior to the CED Committee meeting POLICY ALTERNATIVES Alternative #1: Amend the existing mobilehome park conversion ordinance. Pros: The existing provisions of the mobilehome park conversion ordinance could be revised to provide more clarity, describing specific requirements for negotiation, and possibly to increase compensation to residents for relocation. Cons: Since adoption in 1986, the existing provisions in the mobilehome park conversion ordinance have not been implemented for conversion of any mobilehome park to other uses. Modifying the ordinance will be a lengthy process, and would require additional outreach and process which is at odds with the urgency associated with the Council direction. Conclusion: Existing provisions in the mobilehome park conversion ordinance have not been shown to be ineffective in the protection of mobilehome parks from conversion. Given that there have been no conversion applications, it appears that the current requirements have provided protection. Staff has recommended that the initial approach to clarifying the requirements under the ordinance be accomplished by a Council Policy.

8 Page 8 Alternative #2: Initiate City-conducted rezoning of mobilehome parks currently in other zoning districts to the R-MHMobilehome Park Zoning District. Pros: The R-MH Mobilehome Park Zoning District is intended primarily for mobilehome parks. Rezoning of mobilehome parks currently in other zoning districts to the R-MH Mobilehome Park Zoning District could protect mobilehome parks from conversion to other uses. Cons: City-initiated rezoning of private property could be protested by the owners of the affected properties. Such rezoning actions could be costly and time-consuming for the City. Conclusion: Mobilehome parks need an approved CUP or PD Permit for conversion even in the absence of a need to rezone such sites. The City has not identified budget or staff resources to undertake such actions, and the amount of time it would take to accomplish such actions could be substantial. Alternative #3: Create a General Plan overlay designation for mobilehome parks adding conditions, and apply it to all the existing mobilehome parks in the City. Pros: Such an overlay designation would be intended exclusively for mobilehome parks so that certain conditions and restrictions apply regardless of the base land use designation or zoning district. Applying such an overlay to all existing mobilehome parks in the city could protect these mobilehome parks from conversion to other uses. Cons: City-initiated General Plan amendments to apply an overlay designation on all existing mobilehome parks in the city could be protested by the owners of the affected properties. Such General Plan land use amendment actions could be costly and timeconsuming for the City to undertake. Conclusion: The City has not identified budget or staff resources to undertake such actions, and the amount of time it would take to accomplish such actions could be substantial. Alternative #4: Where they currently exist, amend the General Plan to remove Urban Village boundaries from existing mobilehome parks in the city. Pros: Removing mobilehome parks from the boundaries of Urban Villages could alleviate the perception by the MHP owners and potential developers that the General Plan has identified mobilehome parks as properties that are planned for future redevelopment and intensification, and not just as properties identified to be included in the Urban Village Cons: Because most of the pressure for redevelopment is being driven by the current robust housing market, and because the General Plan has strong policies on when and where new housing development can occur in Urban Villages, the inclusion of mobilehome parks within an Urban Village boundary could add another level of protection for these

9 Page 9 Planning process. MHPs. Given the additional time, budget, and staffing that would be required, General Plan land use amendments are not in the scope or schedule of this current work plan. Conclusion: The City has not identified budget or staff resources to undertake such actions, and the amount of time it would take to accomplish such actions could be substantial. PUBLIC OUTREACH/INTEREST An agenda for the CED Committee meeting listing and describing this item will be posted on the City's web-site prior to the CED Committee meeting in compliance with applicable requirements of the San Jose Municipal Code and State law. Staff has been available to discuss this item with interested members of the public. Staff will also send notification of this agenda item to a list of self-subscribed addresses that have requested notification. The City has a webpage dedicated to information regarding the Mobilehome Park Preservation Policies/Conversion Ordinance Update, and staff regularly updates this web-page as the status of the work plan progresses. For focus groups, staff notified stakeholders by written correspondence and by phone. For community meetings, staff notified stakeholders by written correspondence sent by and by regular mail. Staff facilitated two focus group meetings with MHP owners and operators on July 16 and 23, In addition, two focus groups with residents were held by staff on July 30 and August 6, Staff provided additional public outreach and received further public input from community meetings held on August 13, 29, and 31, 2015 after Council adoption of the previously imposed temporary moratorium by urgency ordinance. This input provided more insight on the housing constraints in the San Jose area, and suggestions on modifications to include in Zoning Code changes and new Council policies to address the problems related to mobilehome park closure and conversion. There were more than 70 attendees per meeting, including Vietnamese and Spanish speakers, as well as people in wheelchairs and seniors. Staff presented status updates at the HCDC meetings on September 10 and October 8, 2015, which provided opportunities for public input. Suggestions from public input for policy and code changes include the following: Re-designate in the General Plan all mobilehome parks to allow only the mobilehome park use. Re-designate in the General Plan mobilehome parks that are currently in Urban Villages to be outside of the boundaries of Urban Villages. Re-zone mobilehome parks in the city so that they all allow only the mobilehome park use.

10 Page 10 Require the City Council to be the decision-maker on all mobilehome park conversion applications (and Planning Commission can be a recommending body). Calculate fair market value from comparable mobilehomes that are outside of the mobilehome park that is the subject of a pending application for conversion. Define and provide a measure for equivalent quality of replacement housing. Mandate relocation requirements by Council Policy. Require no net loss of mobilehome park spaces or at least no net loss of housing units in the city if a conversion is approved. Establish an arbitration process when agreement between the mobilehome park owner/applicant and the mobilehome park residents cannot be reached. The existing provisions in the Zoning Code already address some of these issues to some extent. For example, the Zoning Code provides for mediation when agreement cannot be reached, and there are provisions for relocation assistance and compensation. Where feasible from a legal and practical standpoint, staff has also attempted to address many of these issues through the proposed General Plan text amendments, approach to the Council Policy, and scope of amendments to the Zoning Code, as discussed in this memorandum and in the attached documents. COORDINATION The preparation of this memorandum was coordinated with the City Attorney's Office. CEOA Not a project: Staff report on proposed work plan. File Number PP /s/ HARRY FREITAS Director of Planning, Building and Code Enforcement 1st JACKY MORALES-FERRAND Interim Director of Housing For questions, please contact Jenny Nusbaum, Supervising Planner, Ordinance and Policy Team, Planning Division at Attachments: Draft General Plan Text Amendments