218 Properties, LLC v. City of Carson , 226 Cal. App. 4th 182 ( 2014 )

Filed 5/14/14
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION EIGHT
218 PROPERTIES, LLC, et al. B241969
Plaintiffs and Respondents, (Los Angeles County
Super. Ct. Nos. BS131337
v. & BS131374)
CITY OF CARSON et al.,
Defendants and Appellants.
APPEAL from a judgment of the Superior Court of Los Angeles County.
James C. Chalfant, Judge. Reversed in part, affirmed in part.
Aleshire & Wynder, William W. Wynder, Sunny K. Soltani and Jeff M. Malwy,
for Defendants and Appellants, City of Carson and City of Carson City Council.
Gilchrist & Rutter, Richard H. Close, Thomas W. Casparian and Yen N. Hope, for
Plaintiff and Respondent Imperial Avalon Mobile Estates, LLC.
Law Offices of Douglas W. Beck & Associates and Douglas W. Beck for Plaintiff
and Respondent 218 Properties, LLC.
__________________________
The City of Carson and its city council appeal from the trial court’s judgment
directing Carson to approve the mobilehome conversion applications of 218 Properties,
LLC and Imperial Avalon Mobile Estates, LLC. We reverse the trial court in part and
direct it to enter judgment affirming Carson’s disapproval of the application for
conversion by 218 Properties, LLC. We affirm, however, the trial court’s judgment to
the extent it directs Carson to approve the application for conversion by Imperial Avalon
Mobile Estates, LLC.
FACTS AND PROCEEDINGS
1. Background1
Traditionally, mobilehome park residents have owned the mobilehome coaches in
which they lived, but did not own the plots of land that their coaches occupied. To
encourage ownership of plots by residents, the Subdivision Map Act (Gov. Code,
§ 66410 et seq.)2 at section 66427.5 provides a method by which a mobilehome park
owner can convert the park from a community occupied by tenants who rent their plots
into a community akin to a condominium association, in which residents own their plots.
Converting a mobilehome park into a resident-owned community affects rent
control. Upon the park owner’s very first sale of a plot, all residents lose the protection
of local rent control regardless of whether the owner sells any more plots. (El Dorado
Palm Springs, Ltd. v. City of Palm Springs (2002) 96 Cal. App. 4th 1153, 1164-1165 (El
Dorado).) For lower-income residents, state rent control law instead takes effect.
(§ 66427.5, subd. (f)(2).) For all other residents, rent control disappears entirely.
(§ 66427.5, subd. (f)(1).) Because a mobile park owner can escape local rent control by
selling just one plot, an unscrupulous park owner can abuse the conversion process by
1 The trial court ruled the writ proceedings involving the applications of 218
Properties and Imperial Avalon were related matters. Accordingly, we consider their
appeals together.
2 All future undesignated statutory references are to the Government Code.
2
pursuing a “sham” conversion without intending to convert the park into a wholly
resident-owned community. To prevent sham conversions, the Legislature in 2002 added
a tenant-survey requirement to the mobilehome park conversion statute. (Chino MHC,
LP v. City of Chino (2012) 210 Cal. App. 4th 1049, 1066 (Chino MHC); Colony Cove
Properties, LLC v. City of Carson (2010) 187 Cal. App. 4th 1487, 1501-1502 (Colony
Cove).) The survey requirement, codified at subdivision (d) of section 66427.5, directs
the local agency with authority to approve the conversion to “consider” the survey’s
results as part of the agency’s review of the proposed conversion. Courts have wrestled
with the meaning of the word “consider” in trying to apply the survey requirement to
proposed conversions. We discuss later in this opinion how different courts have
answered that question.
2. 218 Properties, LLC
218 Properties, LLC owned Park Granada Trailer Lodge, a 26-plot mobilehome
park in Carson. 218 Properties owns five of the plots. In 2009, 218 Properties submitted
to the City of Carson its application to convert Park Granada Trailer Lodge into a
resident-owned park. In March 2010, the Carson planning commission approved the
application. The Carson city manager thereafter appealed the planning commission’s
approval to the Carson City Council.
In May 2010, the city council heard Carson’s appeal. The owner of 218
Properties, Thomas Heinemann, submitted his declaration in support of conversion. He
declared that he had bought the mobilehome park as an investment to support his
retirement, but the park generated a negative cash flow; consequently, he wanted to sell
off the park’s plots to generate income. To ensure the conversion was bona fide, he was
willing to agree to the following conditions: First, he promised a 15 percent discount on
the sales price to park residents who bought their plots within the first 180 days of the
conversion’s approval. Second, he promised to abide by rent control until he sold 20
percent of the plots. And third, he promised to require all future new residents of the
3
park to buy their plots when moving into the park, thereby ensuring the entire park would
eventually become fully resident owned.
In opposition to the conversion, the residents of the mobilehome park submitted a
survey signed by 20 residents. The survey stated the 20 residents were not interested in
buying their plots anytime in the foreseeable future.3 Carson’s city attorney advised the
city council that the council could grant the city’s appeal, and thus disapprove the
conversion, if the city council concluded the residents’ survey raised questions about the
proposed conversion’s bona fides.4 Concluding the promised inducements of 218
Properties’ owner, Thomas Heinemann, to encourage residents to buy their plots were
illusory for several reasons, the city council disapproved the conversion based on the lack
of resident support. First, according to the city council, the benefit of Heinemann’s
promise to early buyers of a 15 percent discount on each plot’s sales price could not be
calculated because the plots’ values were yet to be appraised. Second, Heinemann had
not identified the appraiser. And third, Heinemann offered no evidence that any residents
were non-low-income tenants who would benefit from his promise to continue rent
control past the sale of the first plot. Accordingly, the record indicated in the city
council’s assessment that 218 Properties did not expect to produce a change in the estate
interest of a significant percentage of the mobilehome park residents. Thus, the
conversion was not bona fide.
218 Properties filed in the trial court a petition for writ of mandate. Rejecting
Carson’s reasons for disapproving the conversion, the trial court found Heinemann’s
declaration was substantial evidence that the conversion was bona fide as a matter of law.
3 An earlier survey to which six residents responded is in the record. Five of those
residents opposed the conversion, and one did not state an opinion. Because of technical
flaws in this earlier survey, however, 218 Properties accepted as constituting the
statutorily required survey the second survey showing no support among the 20 residents.
4 The city attorney based his advice on this division’s unpublished decision in
Carson Harbor Village, Ltd. v. City of Carson ((Mar. 30, 2010, B211777) [nonpub.
opn.]) and argued it was binding precedent.
4
The court noted that likely all of 218 Properties’ tenants were low income, meaning rent
control remained in place even after 218 Properties began selling plots under the
conversion; hence, 218 Properties could not use the conversion to escape rent control if
that were 218 Properties’ intention for converting. The court further found that Carson
could not rely solely on the resident survey to find the conversion was not bona fide
because residents may not veto a conversion. (See El Dorado, supra, 96 Cal.App.4th at
p. 1182; Colony Cove, supra, 187 Cal.App.4th at p. 1507; Chino MHC, supra,
210 Cal.App.4th at p. 1066 [“The law is not intended to allow park residents to block a
request to subdivide.”].) The court held, “[t]he conversion is bona fide, and the finding to
the contrary is not supported by substantial evidence.” The trial court entered judgment
directing Carson to approve the conversion. Carson appeals from the court’s judgment.
3. Imperial Avalon Mobile Estates, LLC
Imperial Avalon owns a 225-unit mobilehome park in Carson. In 2009, Imperial
Avalon submitted its application to the City of Carson for approval to convert the
mobilehome park to resident-owned. The Carson planning commission approved the
conversion.
The Carson city manager appealed the planning commission’s approval to the
Carson City Council. In May 2010 the city council heard Carson’s appeal. The city
council reviewed the residents’ survey of support to which 83 residents had responded.
Only 18 residents supported the conversion. Based on the lack of resident support, the
city council concluded Imperial Avalon’s planned conversion was not bona fide because
Imperial Avalon did not expect to change the estate interest of a significant percentage of
the residents. The city council therefore granted Carson’s appeal, and disapproved the
conversion.
Imperial Avalon filed in the trial court a petition for writ of mandate to direct
Carson to approve the conversion. The trial court found Carson erred in rejecting
Imperial Avalon’s incentives to encourage the residents to buy their plots: allowing rent
control to remain in effect until 20 percent of the plots were sold; requiring new residents
5
to buy their plots; and, offering a 15 percent discount to residents who buy within the first
90 days, and a 10 percent discount to those who buy within the second 90 days. The
court held the residents’ opposition could not veto the conversion, and Carson could not
rely solely on the survey to find the conversion was not bona fide. The court stated “The
conversion is bona fide, and the finding to the contrary is not supported by substantial
evidence.” The court thus entered judgment for Imperial Avalon directing Carson to
approve the conversion. This appeal followed.
STANDARD OF REVIEW
We review for substantial evidence Carson’s disapproval of Imperial Avalon’s and
218 Properties’ applications. We do not review, nor are we bound by, the trial court’s
factual findings or legal conclusions. “The scope of our review of the subject
administrative agency action in this case is identical with that of the superior court. The
same substantial evidence standard applies, and the issue is whether the findings of
[Carson] were based on substantial evidence in light of the entire administrative record.
[Citations.] . . . [W]e must examine the findings made by [Carson] itself to determine
whether they were supported by substantial evidence, rather than limiting ourselves to a
review of the findings made by the trial court. [Citations.] (Desmond v. County of
Contra Costa (1993) 21 Cal. App. 4th 330, 334-335; see also American Canyon
Community United for Responsible Growth v. City of American Canyon (2006)
145 Cal. App. 4th 1062, 1070.)
DISCUSSION
1. Substantially Different Survey Results Require Different Outcomes
As previously noted, section 66427.5 governs conversion of mobilehome parks
into resident-owned communities. As part of a conversion, section 66427.5,
subdivision (d) requires a resident survey. At the time Imperial Avalon and 218
Properties submitted their applications for conversion, section 66427.5 subdivision (d)
6
provided: “(1) The [mobile park owner] shall obtain a survey of support of residents of
the mobilehome park for the proposed conversion. [¶] . . . [¶] (5) The results of the
survey shall be submitted to the local agency upon the filing of the tentative or parcel
map, to be considered as part of the subdivision map hearing . . . .”5 The Legislature
adopted the survey requirement from its concern that park owners might use conversion
as a subterfuge for purposes other than bona fide conversions. In an uncodified statement
of legislative intent, the Legislature explained: “It is the intent of the Legislature to
address the conversion of a mobilehome park to resident ownership that is not a bona fide
resident conversion, as described by the Court of Appeal in El Dorado[, supra,]
96 Cal. App. 4th 1153. The court in this case concluded that the subdivision map approval
process specified in Section 66427.5 of the Government Code may not provide local
agencies with the authority to prevent nonbona fide resident conversions. The court
explained how a conversion of a mobilehome park to resident ownership could occur
without the support of the residents and result in economic displacement. It is, therefore,
the intent of the Legislature in enacting this act [requiring a resident survey] to ensure
that conversions pursuant to Section 66427.5 of the Government Code are bona fide
resident conversions.” (See Historical and Statutory Notes, 36E West’s Ann. Gov. Code
(2009 ed.) foll. § 66427.5, p. 47.)
Local agencies and courts have wrestled with the meaning of the statutory duty to
“consider” the tenant survey, and how that consideration should affect the analysis of
whether a conversion is bona fide. Complicating the analysis is subdivision (e) of section
66427.5, which, in seeming contradiction of the duty to “consider” the survey,
purportedly restricts the local agency’s review of the application solely to determining
whether the mobile park owner complied with each step of the conversion statute’s
procedures. Subdivision (e) states: The park owner “shall be subject to a hearing . . . to
approve, conditionally approve, or disapprove [the conversion]. The scope of the hearing
shall be limited to the issue of compliance with this section.” (See e.g. Goldstone v.
5 The Legislature has since amended subdivision (d). We discuss the amendment,
which took effect on January 1, 2014, post.
7
County of Santa Cruz (2012) 207 Cal. App. 4th 1038, 1045 (Goldstone) [noting
“seemingly conflicting directives laid out in” subdivisions (d) and (e)].)
The Carson City Council concluded based on the resident surveys that the
conversions were not bona fide and thus disapproved the conversions. Relying on
subdivision (e), Imperial Avalon and 218 Properties assert that Carson erred in
disapproving the conversions. In support, Imperial Avalon and 218 Properties cite
Sequoia Park Associates v. County of Sonoma (2009) 176 Cal. App. 4th 1270, which
noted: “ ‘The [mobile park owner] shall be subject to a hearing by a legislative body or
advisory agency, which is authorized by local ordinance to approve, conditionally
approve, or disapprove the [conversion]. The scope of the hearing shall be limited to the
issue of compliance with this section.’ ” (Id. at p. 1293, italics in original.)
Since Sequoia Park Associates, other appellate courts addressing the conflict
between subdivisions (d) and (e) have gone the other way. Those courts have concluded
the better view is to allow the local agency to rely on the survey’s results to determine
whether the conversion is bona fide. The thrust of the analysis by these courts asks for
what purpose does the survey exist if not to gauge the interest of residents in buying their
plots, and thus to assess the likelihood of the conversion’s success. We agree with these
post-Sequoia Park decisions. Taking a survey’s results into account is more in keeping
with section 66427.5’s overall intent than does the contention of Imperial Avalon and
218 Properties that the survey is a mere ministerial task to be checked-off a list of pro
forma steps in a conversion. (See Goldstone, supra, 207 Cal.App.4th at p. 1054
[considering results of survey “does less violence to the statute than construing” the
survey requirement as ministerial surplusage].)6 These latter cases, which held the
survey’s results must be taken into account in order to avoid rendering the survey
language meaningless, are:
6 218 Properties suggests a trial court, but not the local agency, may entertain the
survey’s results, not just the fact of it having been duly performed, if residents mount a
post-conversion legal challenge to a conversion that in retrospect appears to be a sham.
218 Properties cites no authority, however, for its suggestion, and Chino MHC, LP v. City
of Chino, supra, 210 Cal.App.4th at page 1069, rejected a similar suggestion.
8
● Colony Cove, supra, 187 Cal.App.4th at pages 1505 to 1506, which stated:
“[The mobile park owner] urges that we follow the example of Sequoia Park . . . .
That construction would . . . preclude the City from considering the contents of the
survey of support during the . . . hearing process and limit it to purely ministerial duties—
determining whether the survey had been prepared and filed in accordance with
section 66427.5 . . . [¶] When the Legislature amended [] section 66427.5 in 2002, it did
not change the language now contained in subdivision (e), which continues to state that
‘the scope of the . . . hearing shall be limited to the issue of compliance with this section.’
However, the phrase ‘limited to the issue of compliance with this section’ must be
interpreted in light of the new language of the preceding subdivision (d). That
subdivision requires applicants to obtain a survey of support of the residents of the
mobilehome park . . . and to submit ‘[t]he results’ to the entity or agency ‘authorized by
local ordinance to approve, conditionally approve, or disapprove the [subdivision] map.’
This language alone suggests that the contents of the survey, as opposed to its mere
existence, are relevant to the approval process. By thereafter specifically stating that the
results are ‘to be considered as part of the subdivision map hearing prescribed by
subdivision (e),’ the Legislature made that intention explicit. Construing the statute to
eliminate the power of local entities and agencies to consider the results of the survey
when processing a conversion application would consign the ‘to be considered’ language
of subdivision (d)(5) to surplusage.”
● Goldstone, supra, 207 Cal.App.4th at page 1054:
Goldstone held the local agency may consider the survey’s results, not just
whether the survey was conducted in compliance with the conversion statute’s
procedures. And although the conversion statute leaves unsettled what the local agency
is to make of the results, the local agency may not set a minimum percentage of support
requirements. The Goldstone court explained:
“Subdivision (d)(5) requires that the owner submit the ‘results’ of the survey to the
local agency. If, as [the mobile park owner] contends, the scope of the hearing is strictly
limited to the question of the owner’s ‘compliance’ with the statute per section 66427.5,
9
subdivision (e), why bother submitting the ‘results’ of the survey to the local agency,
rather than mere proof of compliance with section 66427.5? If [the mobile park owner’s]
interpretation is correct, the survey’s results are irrelevant, at least as far as the local
agency is concerned, so why specify that they be submitted? If the Legislature simply
wanted the hearing to be about compliance with the statute, it could have directed that the
[mobile park owner] submit just the survey form, along with sufficient proof of
compliance with section 66427.5’s other directives. [¶] The remainder of section
66427.5, subdivision (d)(5) tells us what the Legislature intended the local agency to do
with those results—it intended that they are ‘to be considered as part of the subdivision
map hearing required by subdivision (e).’ ‘Consider,’ as a transitive verb, is defined as
follows: ‘1: to think about carefully: as a: to think of esp. with regard to taking some
action . . . . b: to take into account . . . 2: to regard or treat in an attentive or kindly way
. . . 3: to gaze on steadily or reflectively 4: to come to judge or classify . . . 5: regard
. . . 6: suppose.’ (Merriam–Webster's Collegiate Dict. (10th ed.1999) p. 246.) As an
intransitive verb, ‘consider’ is defined as ‘reflect, deliberate.’ (Ibid.) Accordingly, the
plain meaning of subdivision (d)(5) directs the local entity or agency to ‘think about
carefully’ or ‘deliberate’ upon the results of the resident survey as part of the hearing. If
the Legislature intended the local entity or agency to tick boxes on a compliance checklist
and rubberstamp all applications where the appropriate boxes were marked, it would not
have directed the [mobile park owner] to submit the results of the resident survey, nor
would it have directed that those results ‘be considered’ as part of the hearing.”
● Chino MHC, supra, 210 Cal.App.4th at pages 1068-1069:
Chino MHC held a local agency may rely on the survey to find the conversion is a
sham, but it may not make that finding based solely on a lack of majority support among
the residents for the conversion. The court explained:
“The Legislature considered allowing a local agency to impose conditions of
approval but ultimately it rejected this approach. It also considered requiring the sale of a
threshold number of lots, but it rejected this approach, too. It had before it a suggestion
that it should require a specified minimum level of resident support, but it did not adopt
10
it. Instead, the Legislature chose to require a survey of support. [¶] The reason for
requiring a survey was ‘to ensure that the conversion is not a sham conversion . . . .’
[Citation.] The survey would enable ‘local agencies to determine whether the conversion
is truly intended for resident ownership, or if it is an attempt to preempt a local rent
control ordinance.’ [Citation.] However, the survey requirement was not intended to
enable park residents to block a conversion—not even when a majority of park residents
are opposed to the conversion. [¶] We therefore conclude that a local agency is entitled
to deny a conversion application based on the survey results. However, it may do so only
if the survey results show that the conversion is a sham. Only then can it be said that the
subdivider, even though it has obtained a survey, has not ‘compli[ed]’ with section
66427.5. The mere fact that a majority of residents are opposed to the conversion falls
short of showing that the conversion is a sham. And the mere fact that the subdivider
subjectively intends to obtain immunity from rent control also falls short. Section
66427.5 contemplates that a subdivider may be at least partly motivated by the prospect
of avoiding rent control, as it intentionally provides such immunity. Thus, a sham
conversion is one that is merely intended to avoid rent control and not to transfer
ownership to residents. [Citation.]”
Finding that the statutory duty to “consider” the survey was unclear, some courts
have asked the Legislature for clarification. For example, the Colony Cove court noted
“We recognize that our conclusion—that section 66427.5 permits consideration of the
results of the survey of support but not the promulgation of an ordinance requiring
specific levels of resident support—does not resolve the manner in which the City and
other local agencies are to approach conversion applications. The uncertainty derives
from the statute itself, which requires local agencies to consider resident survey results
but provides no guidance as to how the results may be used. It is our hope that the
Legislature will recognize the dilemma faced by local agencies . . . and act to clarify the
scope of their authority and responsibilities.” (Colony Cove, supra, 187 Cal.App.4th at
p. 1508, fn. 18.) And in Goldstone, the court stated: “Like Colony Cove, we
acknowledge that our holding in this case does not provide much, if any, guidance to
11
local agencies or entities about how to manage mobilehome conversion applications.
[Citation.] Though they are precluded, under Sequoia Park . . . from promulgating
ordinances requiring specified levels of resident support, section 66427.5, subdivision
(d)(5) instructs them to consider the results of the resident support surveys in passing on
conversion applications, but offers no direction on the appropriate use of those results.
We think everyone concerned, from mobilehome park owners to mobilehome residents to
the local agencies and entities, would benefit from such instruction, as it would make the
conversion application process more transparent and less uncertain. That, however, is a
task for the Legislature, not the courts.”
Perhaps hearing the pleas of various courts, the Legislature has returned several
times to the survey requirement. The most recent was Senate Bill No. 510, which took
effect on January 1, 2014. The bill amended subdivision (d) to permit a local agency to
disapprove an application for conversion based solely on the lack of majority support for
conversion among the residents. The amended language of subdivision (d) states (the
amended language is italicized): “(5) The results of the survey shall be submitted to the
local agency . . . to be considered in the agency’s decision as to whether to approve,
conditionally approve, or disapprove the map, and the agency may disapprove the map if
it finds that the results of the survey have not demonstrated the support of at least a
majority of the park’s homeowners. [¶] (6) Local legislative bodies may, by ordinance
or resolution, implement the requirements of this subdivision.”7 (Stats. 2013, ch. 373.)
7 Carson urges that we apply the amended language under the principle of adhering
to existing law when we render our decision. In support, Carson cites City of Watsonville
v. State Dept. of Health Services (2005) 133 Cal. App. 4th 875. There, the city of
Watsonville was about to begin fluoridating the city water supply as required by state
law, but city voters adopted an ordinance barring the city from doing so. (Id. at p. 881.)
The city filed a complaint for declaratory and injunctive relief on the question of whether
the state fluoridation law preempted the city ordinance. (Id. at p. 882.) The trial court
found implied preemption, and the city appealed. While the appeal was pending, the
state legislature enacted an explicit statement of state preemption for the fluoridation
program. (Id. at p. 884.) Following the legislature’s express statement of preemption,
the city argued to the Court of Appeal that the court should disregard the new legislation
because the appellate court should apply the law as it existed when the trial court entered
12
Thus, had the present conversion applications been filed in 2014, in all likelihood Carson
could have relied on newly-amended subdivision (d) to disapprove the applications, and
the posture of 218 Properties and Imperial Avalon on appeal would be much weaker. But
we review not some hypothetical applications. Instead, we review the correctness of
Carson’s disapproval of the conversions at the time Carson made its decisions. Because
Senate Bill No. 510 had not been passed when Carson disapproved the applications in
2010, that legislation is not a basis for upholding Carson’s decisions. Nevertheless,
Senate Bill No. 510 is instructive on what the Legislature may have envisioned all along
about the survey’s proper use because Senate Bill No. 510 reflects the thinking of
Legislators who have contemplated the matter, presumably considering the value and
practicalities of the survey in mobilehome park conversions.
Here, Carson relied on the lack of residents’ support to disapprove both
conversions. Survey results help illuminate a conversion’s bona fides because a
conversion is not likely to succeed if the residents adamantly oppose it. (See Chino
MHC, supra, 210 Cal.App.4th at pp. 1073-1074 [agreeing with Goldstone that “near
unanimous” opposition with only 2 residents supporting conversion out of 147 residents
was sufficient to disapprove conversion].) At the same time, however, we may not give
the residents’ expression of disapproval veto power over the conversion. (See Chino
MHC at p. 1065, Colony Cove, supra, 187 Cal.App.4th at p. 1507 & fn. 18.) For 218
judgment. (Although the trial court had ruled against the city, the law of implied
preemption on which the trial court had seemingly based its judgment was less
unfavorable to the city, and thus gave the city at least a glimmer of hope on appeal, than
the new express preemption, which largely extinguished any hope the city had for a
successful appeal.) The Watsonville appellate court concluded that, contrary to the
general rule that an appellate court reviews the correctness of a trial court’s judgment at
the time the judgment was rendered, it would apply the new legislation stating express
preemption. The Watsonville court reasoned that the injunctive and declaratory relief
under review were prospective because such relief regulated the parties’ rights going
forward, and therefore the relief should conform to then-existing law. (Id. at pp. 884-
885.) The Watsonville court’s reasoning makes Watsonville distinguishable. Here, we
are asked to adjudicate the legality of Carson’s past actions in 2010 disapproving the
mobile home park conversions.
13
Properties, 20 residents responded to the survey from among 26 plots (five of which 218
Properties owned); all 20 residents opposed the conversion. For Imperial Avalon’s more
than 200 residents, however, only 82 residents responded to the survey, of whom 46
opposed the conversion, 18 supported it, and 18 did not state an opinion. In face of
resident opposition – for 218 Properties nearly, if not entirely, unanimous; for Imperial
Avalon much more muted – one must look to the park owners’ evidence that the
conversions might succeed. Here, Carson concluded that evidence fell short. For us as
an appellate court reviewing the administrative record, we must affirm Carson’s decisions
unless the evidence against Carson’s decisions is so overwhelming that it can be said that
no substantial evidence supports them. (Committee to Save the Hollywoodland Specific
Plan v. City of Los Angeles (2008) 161 Cal. App. 4th 1168, 1182.)
The declaration from Imperial’s President Edward Jong showed that a gradual
purchase of lots would enable the residents to own a majority of the park within a
reasonable time, and that the park eventually and inevitably would be entirely resident-
owned. Gradual sales would give Imperial steady income, and would be more profitable
to Imperial than selling the entire park in one transaction. Jong anticipated selling a
significant number of lots in the first year or two, and would encourage such sales by
offering discounted prices from appraised values to current residents. Jong expected to
sell 25 to 35 percent of the park’s lots to current residents in the first 180 days. Further,
Jong agreed that Carson’s rent control ordinance would remain in effect for non-low
income households until 20 percent of the park’s lots were sold. Jong also agreed that all
new purchasers of mobilehome units in the park would be required to purchase the
underlying lot. As attrition occurred through the sale of existing mobilehome units, this
would ensure that rental lots would be phased out over time, with the park majority
owned by residents as sales occurred, and eventually becoming 100 percent owned by
residents.
The only evidence against Imperial’s bona fide intent to alienate the lots in its park
is the survey of residents. There are 225 spaces or resident households in Imperial’s
park. Of the 225 households in Imperial’s park, only 83 returned ballots. Of those, 18
14
supported conversion, 46 opposed conversion, 3 did not mark their ballots, 15 declined to
state their votes, and 1 ballot was returned after the deadline. As in Chino, a majority of
residents did not care enough about conversion to respond to the survey. This low
response was insufficient to show the conversion was a sham.
218 Properties is in a different posture. Thomas Heinemann purchased the park in
2009, and experienced negative cash flow from that time. Heinemann averred that he
wanted to sell lots piecemeal to provide cash flow during his retirement. He promised to
give current residents who opened escrow within 180 days after conversion a 15 percent
discount off the fair market value price. Both sides of the case agreed in the trial court
that “possibly 100 [percent]” of the park’s residents are low income, and will be subject
to continuing rent control under section 66427.5 subdivision (f), even after conversion
begins. Also, Heinemann agreed that Carson’s rent control ordinance would continue to
protect residents who were not low income until 20 percent of the lots in the park were
sold. Heinemann also agreed that the governing documents of the park would require
new residents to purchase the underlying lot at the same time as purchasing a trailer unit
in the park. Thus, over time, all lots in the park would become resident-owned.
The numerical results of the resident survey in 218 Properties differed sufficiently
from the numerical results in Imperial Avalon to rise to a difference in kind. The survey
in 218 Properties consisted of a letter signed by 20 individual residents living in the 26
spaces in the park. Of those 26 spaces, 5 are owned by 218 properties, meaning 20 out of
21 possible residents responded. Those 20 stated they were not interested in purchasing
their lots “at this moment or in the near future.” In the face of unanimous opposition to
the conversion among 20 out of 20 (or perhaps 21) residents of 218 Properties, Carson’s
conclusion that the conversion was not bona fide is not beyond the pale because those 20
residents are, after all, the most likely target of future sales. We may reverse Carson’s
disapproval of the conversion only if we conclude the evidence showing the conversion is
bona fide is sufficiently overwhelming to establish that the conversion is bona fide as a
matter of law. Only in the absence of any substantial evidence to support Carson’s
decision may we (or the trial court) reverse Carson’s decision. Because we cannot say
15
that evidence submitted by 218 Properties that its conversion will change its mobilehome
park into fully resident-owned facilities is overwhelming, we must reinstate Carson’s
disapproval of the application for conversion by 218 Properties.
2. Imperial Avalon’s Tenant Impact Report
Because we conclude the trial court correctly found that Imperial Avalon’s
application for conversion was bona fide – and thus Carson improperly disapproved the
application – we must address Carson’s alternative ground for appellate relief against
Imperial Avalon: a purportedly inadequate Tenant Impact Report (“TIR”).
Section 66427.5 obligated Imperial Avalon to file a TIR discussing the effect of
the conversion on the residents of Imperial Avalon’s mobilehome park. The statute
states: “At the time of filing a tentative or parcel map for a subdivision to be created
from the conversion of a rental mobilehome park to resident ownership, the subdivider
shall avoid the economic displacement of all nonpurchasing residents in the following
manner: . . . (b) The subdivider shall file a report on the impact of the conversion upon
residents of the mobilehome park to be converted to resident owned subdivided interest.”
In October 2009, Imperial Avalon submitted its TIR as part of its application for
conversion. In November 2009, the Carson planning commission deemed Imperial
Avalon’s application to be complete. The commission found that Imperial Avalon has
“complied with [Government Code section] 66427.5 with respect to submitting a Tenant
Impact Report which adequately meets the requirements to consider the impact of the
proposed conversion upon the residents of the park.”
In the appeal by Carson’s city manager to the city council following the planning
commission’s approval of the conversion, the city council concluded Imperial Avalon’s
TIR was inadequate under section 66427.5. Among other defects the city council
identified were the TIR “fails to report on the impact of the conversion upon displaced
residents”; was “incomplete” in not addressing “the availability of adequate replacement
space in mobilehome parks”; did not discuss the delay in moving from local to state rent
control; and did not discuss selection of an appraiser for the lots.
16
Imperial Avalon’s petition to the trial court argued that Carson’s city council could
not deem the TIR incomplete after Carson’s planning commission had declared it
complete. In addition, according to Imperial Avalon, even if the TIR were incomplete,
the city council exceeded its authority by rejecting the TIR without giving Imperial
Avalon an opportunity to supplement its TIR with the additional information that the city
council thought was missing.
The trial court correctly granted relief to Imperial Avalon on the points Imperial
Avalon urged. The Carson planning commission found the application was complete.
Because the TIR’s purpose is to inform residents of mobilehome parks and local decision
makers, the trial court correctly noted that “completeness and compliance [with the
statutory obligation to submit a TIR] are one and the same.” Carson’s review of the TIR
is limited to confirming whether the report complies with section 66427.5. (See
§ 66427.5, subd. (e) [hearing limited to determining compliance with statute].) Thus, if
Carson, through its planning commission, found the TIR was complete, Carson cannot
later, through its city council, reject the TIR on the ground its purported
“incompleteness” meant it did not comply with the statute requiring a TIR. (Chino MHC,
supra, 210 Cal.App.4th at pp. 1054, 1077 [“once a public agency has accepted an
application as complete, it cannot deny the application on the ground that it is
incomplete”].)
Moreover, even if the TIR were incomplete, Carson’s city council did not honor
Imperial Avalon’s implicit statutory right to correct the TIR’s purported inadequacies.
The trial court found that the city council “did not request Imperial to supplement its TIR,
but rather denied the Application because the TIR was insufficient.” Under section
65944, subdivision (a), if information in a TIR is incomplete, the local agency may
request supplemental information as long as it is not information involving new matters.
The statute states: “After a public agency accepts an application as complete, the agency
shall not subsequently request of an applicant any new or additional information . . . .
The agency may, in the course of processing the application, request the applicant to
clarify, amplify, correct, or otherwise supplement the information required for the
17
application.” (§ 65944, subd. (a).) Thus, Section 65944 expressly authorizes a local
agency to request a mobilehome park owner to “clarify, amplify, correct, or otherwise
supplement” information in the application. (Ibid.) The agency may not, however,
request “any new or additional information” that the agency had not previously identified
as needed in the application. (§§ 65944, subd. (a), 65940, subd. (a).)
Finally, the purported incompleteness of Imperial Avalon’s TIR was not cited by
Carson’s city manager in its notice of appeal to the city council. Carson’s municipal code
requires that a notice of appeal to the city council state the grounds for appeal. Carson
Municipal Code section 9173.4, subdivision (B)(3) (“Division 3. Elements of Procedure:
Appeals”) states: “The form and content of an appeal shall include: [¶] . . . [¶] c. The
specific matter being appealed. [¶] d. A statement of the grounds for appeal or how there
is error in the decision of the matter being appealed.”8 But the city manager’s notice of
appeal stated merely “[t]he basis of the appeal is to review public policy and land use
issues and to preserve our rights and options in regards to the pending decision by the
Court in the Second Appellate District, Division Eight, in the matter of Carson Harbor
Village, Ltd. v. City of Carson . . . . Hence, with this appeal to the City Council, staff’s
recommendation to the City Council may change depending on the ruling of the Court of
Appeals in the CHV case decision.”
For the foregoing reasons, we find the trial court did not err in finding Carson
wrongfully relied on the purported inadequacy of Imperial Avalon’s TIR to disapprove
Imperial Avalon’s application for conversion of its mobilehome park.
DISPOSITION
The judgment is affirmed in part and reversed in part. The trial court is directed to
enter a new judgment reversing the City of Carson’s disapproval of the application for
conversion filed by Imperial Avalon Mobile Estates, LLC, and affirming the City of
8 http://www.codepublishing.com/ca/carson.html
18
Carson’s disapproval of the application for conversion filed by 218 Properties, LLC.
Each party to bear its own costs on appeal.
RUBIN, J.
WE CONCUR:
BIGELOW, P. J.
FLIER, J.
19
218 Properties et al. v. City of Carson et al.
B241969
BIGELOW, P. J., Concurring:
I concur in the judgment and reasoning of the majority opinion. I write separately
to acknowledge that, in a prior case, I expressed the view that that former section 66427.5
of the Government Code1 –– which then governed an application for a subdivision map
to be created from the conversion of a rental mobile home park to a resident-owned park
–– should not be interpreted to give authority to a local agency to deny such an
application on the ground that the conversion was not “bona fide” in light of a survey of
residents of the park. (See Carson Harbor Village, Ltd. v. City of Carson (Mar. 30, 2010,
B211777 [nonpub. opn.; dis. opn. by Bigelow, J.] (Carson Harbor Village).) The
Supreme Court denied review in Carson Harbor Village on June 17, 2010 (S182526),
and, in the years since, at least two courts of appeal construed former section 66427.5 to
give authority to a local agency to deny a conversion based on “consideration” of a
survey of residents. (See, e.g., Chino MHC, LP v. City of Chino (2012) 210 Cal. App. 4th
1049, 1069.) It is fair to say that, whatever my views on the interpretation of former
section 66427.5 may have been, that view will no longer carry the day. Here, I am
satisfied that the evidence supports a finding that Imperial Avalon is pursuing a bona fide
conversion, but does not support a finding that 218 Properties is pursuing a bona fide
conversion. Under former section 66427.5, each case must be determined based on its
own facts.
All of this is largely an academic exercise in any event. As the majority opinion
notes, the Legislature amended former section 66427.5, effective as of January 1, 2014.
The section now expressly gives authority to a local agency to base a mobilehome park
conversion decision on the results of survey of the residents of the park. (See Stats. 2013,
1 All further section references are to the Government Code.
1
ch. 373.) Cases going forward, including all constitutional, statutory, procedural and
factual issues, will need to be addressed under the new statute.
BIGELOW, P. J.
2