SB 1027

This bill makes a number of changes regarding mobile or manufactured home communities.

Right to purchase

The bill requires the owner of a mobile or manufactured home community to provide notice to all persons who rent a mobile home or manufactured home or site in the community (residents) before selling the community or changing its use and gives the residents the right to purchase the community under those circumstances.

Under the bill, a community owner must give written notice at least 12 months before closing the community or changing the use of the community. A community owner must also give written notice if the owner lists the community for sale, receives a written offer to purchase the community, or is served with a foreclosure complaint for the community. Notice must be provided to all adult residents within the community and posted in a conspicuous public place within the community. The notice must also include a description of the rights of the residents, as provided under the the bill, and pertinent sale information, such as the price and terms of any offer received by the community owner.

Under the bill, after providing the required notice, the community owner must provide residents 60 days to make an offer to purchase the community and secure financing. If the residents make an offer to purchase and secure financing, the community owner must provide residents an additional 60 days to close on the purchase of the community.

The bill requires a community owner to negotiate with residents in good faith for a purchase agreement and to allow residents a commercially reasonable due diligence period and access to information necessary to make an informed decision regarding the purchase. The bill also allows residents to assign their right to purchase the community to a local or state government, tribal government, state agency, housing authority, or nonprofit organization with housing expertise for the purpose of continuing the use of the community.

Under the bill, a community owner is not required to provide notice, and no right to purchase arises, if the owner sells, transfers, or conveys the community in good faith to certain persons, including a spouse, certain family members, a joint tenant, or a business controlled by the owner.

Under the bill, a community owner may not sell the community unless the owner has paid all applicable assessments and fees regarding the community and complied with all applicable community licensing standards. Also, if a community does not contain an emergency shelter on-site, the community owner may not sell the community until the owner has constructed an emergency shelter on-site, unless, upon the sale of the community, the community property will no longer be used as a community.

Tax incentive

The bill allows a mobile or manufactured home community owner to claim an income and franchise tax subtraction equal to the income the owner receives from the sale of the community to a homeowner’s association, cooperative, or membership organization, any group composed entirely of homeowners, a nonprofit organization, or a nonprofit affordable housing developer if the sale is approved by more than 51 percent of the residents of the community.

Increases in rents and fees

The bill prohibits a mobile or manufactured home community owner or operator from increasing rent, fees, service charges, or assessments for any 12-month period unless the owner or operator provides notice to the community residents at least 90 days before the effective date of the increase, the increase does not exceed the average percentage change in the U.S. consumer price index, and the owner or operator has not been found to be in violation of any applicable health or safety law or regulation. Under the bill, if the average percentage change in the consumer price index is lower than 2 percent, the aggregate increase in rent, fees, service charges, and assessments may not exceed 2 percent. If the change in the consumer price index is more than 4 percent, the aggregate increase in rent, fees, service charges, and assessments may not exceed 4 percent. However, the community owner or operator may increase rent, fees, service charges, or assessments in an amount that exceeds the limits under the bill if such an amount is necessary to support any extraordinary increase in operating expenses.

Under the bill, if the community owner or operator proposes an increase in rent, fees, service charges, or assessments to support any extraordinary increase in operating expenses, the owner or operator must provide a notice to the community residents along with a financial summary that includes an itemized description of the operating expenses that have increased, the amount of the increase, and the impact of the increase on the revenues, expenses, and profit of the owner or operator. In addition, the notice must include an explanation of the rights of the residents to request a meeting with the community owner or operator to discuss the proposed increase and the ability to oppose the increase by filing a complaint with the Department of Safety and Professional Services or commencing an action in circuit court. With regard to any complaint filed or action commenced under the bill, the community owner or operator has the burden to prove that the amount of the proposed increase is an accurate estimate of the amount needed to cover the extraordinary increase in operating expenses. If DSPS attempts to resolve the matter by mediation, but the community owner or operator refuses to participate in mediation, the proposed increase is void and unenforceable.

Evacuation plan

Current law requires that every lease for a resident of a mobile or manufactured home community indicate whether the community contains an emergency shelter. If the community contains an emergency shelter, the community rules must indicate the location of the emergency shelter and procedures for its use.

The bill requires that each community owner develop a plan for evacuating the community residents in the event of a natural disaster or other emergency and that the community rules specify the procedure for using the plan. However, no such plan may take effect without the approval of the municipality where the community is located.

Regulation

Under current law, DSPS must license and regulate manufactured home communities. However, DSPS may authorize a city, village, or county to issue permits to and regulate manufactured home communities. Under current law, a person must have a permit to conduct, maintain, manage, or operate a manufactured home community. The bill eliminates the ability for DSPS to authorize a city, village, or county to issue permits to and regulate manufactured home communities.

Under current law, DSPS must inspect a manufactured home community when construction of the community is completed or modified and whenever DSPS receives a complaint or determines an inspection is appropriate. The bill also requires DSPS to annually inspect a manufactured home community. In addition, a resident of a mobile or manufactured home community who has any issue with the operation of the community may file a complaint with DSPS, regardless of the subject matter of the complaint, and DSPS must review and attempt to resolve the matter. After reviewing the complaint, if DSPS determines that another state agency or unit of government is best able to resolve the matter, DSPS must forward the complaint to that agency or unit of government. Furthermore, the bill requires that every lease for a resident of a mobile or manufactured home community provide the contact information for DSPS, including the website address.

Finally, any community owner that violates a provision under the bill may be fined not more than $1,000. The bill also allows an aggrieved resident to file a civil action against a community owner.

Because this bill relates to an exemption from state or local taxes, it may be referred to the Joint Survey Committee on Tax Exemptions for a report to be printed as an appendix to the bill.