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City Settles Case with Community Owner for $1.5 Million

August 7th, 2018 Comments off


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The City of Chino recently reached a $1.5 million settlement with a manufactured home community owner.

The suit originally asked for $34 million, and was filed in July 2010 by Chino MHC, owner of Lamplighter Chino Mobile Home Park,  per the Champion Newspapers.

The settlement agreement resolves long-standing disputes and litigation between the parties,” city spokeswoman Arianna Fajardo said in July. “The settlement makes clear that it is not an admission of any wrongdoing whatsoever on the part of the city. Instead, the city council wished to move beyond the disputes and avoid further expenditure of time and funds litigating these matters.”

The California Supreme Court declined the city’s request to hear the case.

In 2011, Superior Court Judge Joseph Brisco ruled that the City of Chino could not prohibit the conversion of the park, even though a survey of residents reportedly revealed most opposed the plan.

The City of Chino appealed, but lost in October 2012, when the Fourth District Court of Appeal ruled that the city council could not stop conversion of the mobile home park to resident ownership, unless city could show the owner was taking the step to avoid the city’s rent control policy on land-lease manufactured home communities.

Under this scenario, non-purchasing resident households will not be required to vacate their spaces,” former-city attorney Jimmy Gutierrez told the council.  He had warned officials that the decision could result in lawsuits that the city would lose.

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A Community Sector Industry Attorney Comments

Hart King tells MHProNews that they were not involved in this case, and that the comments from C. William “Bill” Dahlin “are personal and do not reflect any client or the firm.”

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It is my understanding the tenants also sued the city [in 2014] and I am not sure if this second piece of litigation is also at issue in the settlement referenced in the article,” Dahlin told the Daily Business News on MHProNews.

As an FYI, an approved subdivision of a MHP in California makes the park exempt from local rent control once the first space has been sold,” Dahlin said.

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Click to learn more about this upcoming wholesale event, which is not related to the story posted.

As a generality most park owners do not require existing residents to buy their space when a subdivision is approved. Rather the park owner generally allows existing homeowners to continue as tenants, but frequently do require a successor tenant to buy the space.” the California-based attorney said.

I assume this subdivision was pursued because the city’s rent control ordinance had the rents at a small fraction of market rent. After this subdivision was judicially approved the state legislature made it almost impossible to subdivide a MHP w/o tenant support. That legislation has effectively stopped almost all subdivision applications.” Dahlin added that this was “Just another consequence of rent control. The state has also made park closures economically VERY difficult and that has prevented older functionally obsolete MHPs from closing to allow newer developments to proceed. Yet another consequence of rent control and one factor in the state’s “housing crisis

The battle is part of the ongoing struggles between local jurisdictions and manufactured home community owners that are taking place in many parts of the country.  Some other recent cases are linked below.  ## (News, analysis, and commentary.)

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Related Reports:

MHCs and Rent Control – Cure or Cause for Affordable Housing Crisis?

 

Manufactured Home Community Owner Alert, Rent Control, MHAction Plans Organized Action in Several States

 

“Unconstitutional Taking,” “Gentrification on Trial” in Recent Oak Hill Manufactured Home Community Ruling

UPDATE: MHC Future in Doubt, the Other Side of Rent Control

Different Kind of Community Closure, Continues Grabbing Headlines in Mainstream News

 

 

MHCs and Rent Control – Cure or Cause for Affordable Housing Crisis?

December 7th, 2016 Comments off

rentcontrolunionleadercaliforniamanufacturedhomecommunity-postedmanufacturedhousingindustrydailybusinessnewsmhpronewsThe housing and human services commission in Sunnyvale, California, has made a significant recommendation to the city council.

Per the San Jose Mercury News, on November 16th the commission unanimously voted to rank “rent stabilization” as the top issue to recommend that the city council study in January.

The recommendation comes as groups form to “protect” manufactured home community residents from high prices and projects that could replace the parks.

I believe it’s important and that it needs to be studied and understood to see what can the city can consider putting in place to protect these residents,” said Commissioner Diana Gilbert.

The issue was driven to the forefront in part by residents of the Plaza Del Rey Mobile Home Park.

The community was sold to the Carlyle Group last year, and residents claim that their rents were increased by 7.5 percent. In August several residents of Plaza Del Rey contacted residents of other manufactured home communities in the city and founded the Sunnyvale Mobile Home Alliance, which made rent stabilization for their communities a top priority.

Many group members attended the commission meeting and urged commissioners to recommend the issue be studied by the city council.

This is an important issue to a lot of people. We’re afraid we’ll be priced out,” said Ron Banks, a Plaza Del Rey resident.

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Location of Plaza Del Ray. Credit: Google.

The Mercury News reports that in June, Councilmembers Jim Davis and Tara Martin-Milius both suggested studying the rent control issue in 2017. City staff recommended deferring the issue, suggesting instead that the council prioritize affordable housing efforts. Housing and human service commissioners disagreed, ranking the issue number one of several issues presented to them.

If the city council does choose to study rent stabilization, phase one would involve research into existing stabilization programs and assessing the benefits and costs of such an ordinance in the city. It would be followed by community outreach and study sessions with the housing and human services commission.

What Does “Rent Control” Actually Mean? MH Industry Experts Speak

rentcontrolcwilliamdahlinjdhartkinglawindustryvoicesmanufacturedhomeindustrycommentarymhpronews-500x300The entire objective of rent control is to distort the market and have a government agency decide what rent is appropriate,” said C. William Dahlin, JD  of Hart | King Law in his comments regarding the situation in Sunnyvale.

Such governmental controls never lead to more housing or better housing. 

Dahlin also cites the impact on taxpayers.

Any unbiased research will disclose that cities across California, and elsewhere in the nation, have engaged in time consuming and expensive litigation because of price-fixing for rents in mobilehome parks,” said Dahlin.

The cities of Escondido, Hollister, San Marcos, Palm Springs, and multiple others have spent literally millions of dollars arising out of enactment of rent control ordinances. All of those funds come from the taxpayers in the city. Only a small minority of city residents reap the ‘benefits.’” Dahlin’s full commentary is here.

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Sam Landy, UMH President and CEO.

Sam Landy, Esq., President and CEO of UMH Properties, Inc., makes his company’s position very clear on the issue.

UMH would not buy a rent controlled community and believes all community owners should work with residents to avoid rent control,” said Landy.

The fact is if we raise our rents too high we will have no sales and no occupancy. No reasonable landlord would do such a thing. Our rents have to make economic sense or we have no business. Therefore, in the long term, there is never a need for rent control.

Landy’s points dovetail with those of Dahlin.  You can read Sam Landy’s full commentary here.

I would like to think there are alternatives that don’t rely on third-party boards and local ordinances,” said Paul Bradley, President of ROC USA. “I approach

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Paul Bradley. Credit: Fosters.

things with a win/win mindset, and from what I’ve seen, courts and boards seem to satisfy neither party in most cases.  A fundamentally different value proposition and mindset is required to stem the tide of rent control.” The fully commentary from Bradley can be found here.

The Daily Business News will continue to monitor the Sunnyvale situation as it develops. ##

(Image credits are as shown above.)

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RC Williams, for Daily Business News, MHProNews.

Submitted by RC Williams to the Daily Business News for MHProNews.

Measure V – Battle Lines Drawn

October 10th, 2016 Comments off
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Collage and text credit by MHProNews. Click to see full sized image.

As the moms and pops that built our mobile home parks age out, predatory, out-of-town corporate investors have been taking over. – Measure V proponents

Once rent control is adopted, politicians will – by the tenants’ votes – be giving the landlord’s property to the tenants. It happens all the time.Sam Landy, CEO UMH Properties

These are just two of the many published perspectives over controversial Measure V – a Humboldt County, California ballot measure that proposes significant changes to the relationship between manufactured home community owners and their residents.

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Humboldt County, CA (in red.) Credit: Wikipedia

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Joe Dyton.

As Daily Business News’ Joe Dyton covered recently, Measure V proposes that:

  • Manufactured home community owners would be permitted to raise site rents once annually, and the increase would be tied to inflation via the Consumer Price Index;
  • When a home is sold or transferred, new resident site fees could only increase five percent higher than what the previous residents paid;
  • A community owner could raise rents to pay for improvements, but would first require written approval from more than 50 percent (a simple majority) of the homeowners/residents.

This has spurred a furious debate, including letters to the editor and opinion columns from both sides of the issue.

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Millionaires, such as actress Betsy Russell, are living in manufactured homes. To see a photo spread of her manufactured home which listed for 2 million dollars, click here.

Court Ruling, Views Dueling

Credit: Facebook.

Credit: Facebook.

In May, a federal jury unanimously found that the city of Carson and its rent control board violated the constitutional rights of the owner of Colony Cove — a mobile home park in Southern California,” said Doug Johnson, who is a member of Citizens Against Rent Control — NO on Measure V, in his letter to the Times-Standard.

The jury concluded that the board’s rejection of lawfully filed rent increase applications in 2007 and 2008 constituted a regulatory taking without just compensation,” Johnson wrote.  “Such government actions are barred by the Fifth Amendment to the U.S. Constitution.

Johnson’s comments are, in part, a response to those of Hilary Mosher. Mosher is chair of the Humboldt Mobile Home Coalition, who was quoted in an Op-Ed in the Mad River Union, seeking to make her case for Measure V.

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Credit: HumboldtMobileHome.org

Park owners are being merciless, and in some cases, outside the law in their rush to gouge park residents in raising fees and lot rents prior to the Nov. 8 election,” Mosher alleged.

This provides us with a perfect example of why Measure V is necessary – park owners are not required to be fair with their increases and we park residents are captive and have no say about whatever they want to do to us,” Mosher continued. “One park owner in McKinleyville, who failed to give tenants adequate notice, has even gone so far as to tell them in a letter that if Measure V does not pass, he may not raise the rent! We view this as voter manipulation and intimidation.

Johnson sees the Measure V issue as a danger to taxpayers that they may not be aware of, referring to the Colony Cove case in Carson, CA.

The jury went on to award the park owner more than $3.3 million in damages. In addition to this already staggering judgment — which the taxpayers of Carson will have to pay — the court ordered that the city pay an additional $4,128,662 in prejudgment interest and attorneys’ fees. Taxpayers are now on the hook for a whopping $7,464,718 — from just one bad Rent Control Board decision,” Johnson said.

One McKinleyville resident disagrees with Johnson’s take.

In his letter, Doug Johnson made a lot of untrue statements. He gave his address as McKinleyville — he does not live in Humboldt County,” claims Roxann Souter of McKinleyville in her Times-Standard letter-to-the-editor.

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Image credits are as shown.

Administration of Measure V is paid for through fees to mobile home owners. If park owners decide to go to court they potentially are costing taxpayers money— not Measure V. He [Johnson] said Carson taxpayers will have to pay millions— not necessarily true,” Souter continued.

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Video Interview with HUD expert includes: behind-the-scenes look at construction, community and home tours – click above.

That case is being appealed and research shows that these park owner cases most often lose in the higher court, with park owners liable for fees. Johnson claims that Measure V will impact public services — he has no crystal ball to know that,” Souter said.

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Carrie Peyton Dahlberg. Credit: Mad River Union.

In her opinion piece to the Mad River Union, semi-retired journalist, landlord and volunteer for “Yes on Measure V,” Carrie Peyton Dahlberg shared a similar perspective.

For mobile home residents, the ‘free market’ is a myth. People who own mobile homes can’t pick up and leave if the park owner decides to create new fees or impose repeated rent increases. They are trapped. The only way out is to sell their home, the one asset many of them own,” said Peyton Dahlberg.

That is why, even though I’m a landlord, I collected hundreds of signatures this spring to help put Measure V on Humboldt County’s ballot. Many landlords I talked with signed the petitions,” Peyton Dahlberg wrote.

They know the difference between a tenant who is free to leave and one who is a captive renter, in a captive market. When they learned the details of Measure V, they realized it was fair to the park owners, as well as to the mobile homes owners.

A Landlord…?

The Daily Business News reached out to Peyton Dahlberg with questions related to her experience as a landlord, including whether or not she owned a manufactured home community or had friends or releatives who lived in manufactured home communities.

I will be glad to answer those questions in 2017,” she replied.

Dahlberg would not respond to a follow up.

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Credit: HumboldtMobileHome.org

Park owners in Humboldt County have been addressing the issue of alleged “excessive” rent for well over a year,” attorney C. William Dahlin told MHProNews.

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C. William “Bill” Dahlin.

However, the reality is that rents in Humboldt County are not excessive. Indeed, rents in Humboldt County mobilehome parks are exceptionally low. Do the research,” Dahlin said.

Most Park owners offer long-term leases that address and stabilize any legitimate concern about rent increases,” Dahlin explained. “A rent increase that reflects an increase in property taxes simply reflects the costs of doing business. Not one penny of such increases go to the park owner. Rather, such funds go the county for roads as well as police and fire services.”

Sheila Dey, Executive Director of the Western Manufactured Housing Communities Association told MHProNews that Doug Johnson’s statement reflected their association’s view. In addition, Dey also wrote this article on the harmful impact of Rent Control on affordable housing in California.

A Larger Problem…

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Paul Bradley. Credit: Fosters.com

I think rent control is a symptom of a larger problem.  To my eye, these stories are always about both sides doubling down politically and legally,Paul Bradley, president of Resident Owned Communities (ROCUSA) told MHProNews.

I would like to think there are alternatives that don’t rely on third-party boards and local ordinances.  I approach things with a win/win mindset, and from what I’ve seen; courts and boards seem to satisfy neither party in most cases.  A fundamentally different value proposition and mindset is required to stem the tide of rent control,” said Bradley.

UMH Properties’ president and Sam Landy sees it similarly.

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Sam Landy, UMH President and CEO.

The fact is, if we [as community owners] raise our rents too high, we will have no sales and no occupancy,said Landy. No reasonable landlord would do such a thing. Our rents have to make economic sense or we have no business. Therefore, in the long term, there is never a need for rent control.

The Daily Business News will monitor this controversial ballot measure. ##

(Editor’s Note: for a similar, related story featured in a Fox News video, please click here.  Update – WMA’s video and talking points, are linked here.)

(Image credits are as shown above.)

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RC Williams, for Daily Business News, MHProNews.

Submitted by RC Williams to the Daily Business News for MHProNews.

MH Industry Pros Respond to CFPB Report

October 8th, 2014 Comments off

richard_cordray_c-span2__creditWhile the Consumer Financial Protection Bureau’s recent report on financing the purchase of manufactured homes (MH) notes buyers of MH are often poor, elderly, rural and vulnerable to high-cost “chattel” (“home only,” personal property) loans, the bureau wants to ensure consumers have access to “responsible credit.” Their report, comments and the resulting controversies are the subject of a new Industry in Focus report, linked here.

Consumer Affairs reporter Truman Lewis says mortgage lenders generally disregard MH lending because the demand is not great, which leaves the door open to five national MH personal property lenders.

However, smaller regional and local MH lenders exist, but CFPB regulations restrict sales people from referring consumers to them for fear of violating CFPB rules.
Dan Rinzema, president of MHVillage and DataComp says the government regulation is misguided and does not help the market for the resale of manufactured homes, which would help make MH a competitive housing choice. Doug Ryan, Director of Affordable Housing Initiatives at the Corporation for Enterprise Development (CFED), a non-profit that supports affordable MH, echoes CFPB’s claim that borrowers are vulnerable to expensive loan products.

Some Washington insiders say the report stems from the stiff grilling CFPB Director Richard Cordray received Jan. 28, 2014 at the hands of the House Financial Services Committee’s Subcommittee, and point to a video of that hearing.

The 55-page report alleges that 68 percent of all MH purchase loans in 2012 were chattel loans compared to three percent of site-built home loans, and included that two-thirds of MH loans were eligible for traditional mortgages but chose personal property loans instead. Chattel loans are quicker to obtain, says the report, but have lower origination costs. Industry finance expert Dick Ernst, a principal at FinMarkUSA, says while the report notes the absence of a secondary mortgage market for MH, the cost to originate personal property loans is the similar regardless of the amount of the loan.

Meanwhile, the Government Accountability Office (GAO) report, in response to a request from the chairman of the House Financial Services Committee for an analysis of HUD’s implementation of the MHIA of 2000, says HUD has fallen short of encouraging Ginnie Mae to securitize manufactured home loans, which in turn reduces the availability of affordable MH.

The law firm of Bradley Arant Boult Cummings LLC said in a statement the CFPB report indicates the agency is showing interest in the MH industry which may lead to adjustments that could reduce burdens on the lenders and lower costs of credit to borrowers. Robert Williamson, of Hart King Law, says the paper may be a public recognition of the importance of MH to the consumer housing market, and may in turn stimulate a more robust MH market.

The Manufactured Housing Association for Regulatory Reform (MHARR) notes the report may be establishing a jumping off point for future CFPB activity, while the Manufactured Housing Institute (MHI) remarks the CFPB acknowledges the negative impact the Dodd-Frank Act, implemented in Jan. 2014, is having on the manufactured housing market.

Tim Williams of 21st Mortgage Corporation says the statement that 60 percent of chattel customers own their land and are therefore eligible for a conventional mortgage is incorrect, noting it is irresponsible of the CFPB to make such false statement. He says 26 percent of 21st’s borrowers say they own their land, but he is pleased the CFPB admits their regulations restrict credit to manufactured home owners.

When consumers are considering buying a site-built or a manufactured home, the two pieces of crucial information are the down payment and the monthly payment. MH sales people are restricted in what they can offer in response to such a question, while some believe it’s not a violation if a Realtor ® gives such information.

A chart from Fannie Mae demonstrates that even when the interest rate is higher for an MH, monthly payments often make the purchase of a manufactured home the lower cost option. The restrictions on MH salespeople helping consumers find financing can turn people away from even being interested in a manufactured home, further damaging the industry’s chances of offering affordable options, as Jason Boehlert, Senior VP of Government Affairs at MHI notes.

Major MH lenders have told MHProNews they have added staff to deal with the increase of applications being “shot-gunned” to multiple lenders, since the CFPB regulations took effect in Jan. 2014. This is increasing costs, all because MH retailers do not want to be accused of steering customers, which could result in heavy fines.

In addition, the lack of a secondary market for MH loans also limits mortgage lenders from making MH loans, which higher costs of funds makes the loan cost more to the borrower. The CFPB regulations result in lenders not accepting loans for under $25,000 because the cost to originate and service that sized loan makes them unprofitable.

While CFPB Director Cordray says, “Manufactured housing is a critical source of affordable housing for some consumers,” the regulations of the agency work is in the opposite direction—preventing potentially millions of Americans from buying durable, affordable, energy efficient homes that could stimulate the housing market and the jobs that would accompany the stimulus. ##

For the complete commentary, please click here.

(Photo credit: C-SPAN 2)