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Posts Tagged ‘rent control’

California Housing Crisis: Manufactured Homes Could Be Part of the Solution

October 14th, 2016 No comments

Costly government regulations have stifled the development of attainable housing

October 14, 2016 (Sacramento, CA) – In an effort to educate public policymakers on how mobilehome parks operate and how the misapplication of rent control has contributed to California’s housing crisis, the Western Manufactured Housing Communities Association (WMA) has launched a statewide public education campaign.

There is no question that California is one of the most expensive places to live in the country,” said Sheila Dey, Executive Director of WMA. “So when the purchase price of a mobilehome can be up to 30% less than a traditional home, state and local government should be creating incentives to build more mobilehome parks and not less.”

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Fish-eye lens camera view of California manufactured home by Kit, – this photo was not part of WMA’s original column. Photo credit, ManufacturedHomes.com

Rent control is a reaction to local government’s failure to plan for their community’s future housing needs. When attainable housing is no longer accessible, politicians force parkowners to subsidize a tenant’s housing costs regardless of income, which often leads to a reduction in park amenities and in some cases, lawsuits when rents do not cover a park’s operational costs.

California has created a regulatory environment where existing parks are threatened by rent control ordinances that undermine a park’s economic sustainability, and cost prohibitive building regulations and fees that have stifled the construction of new parks. As a consequence, it’s been decades since a new mobilehome park has been built in California.

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Graphic credit – MHProNews.

Building more manufactured home communities could ease California’s housing crisis,” said Dey. “But first, politicians are going to have to address rent control’s failure and reduce building fees, and at the very least, require means-testing so that rent control truly benefits the needy.”

In an effort to educate policymakers, WMA has released a video which explains how parks operate and how they have become a source of quality housing for scores of people from all socio-economic backgrounds. To demonstrate its misapplication, the video showcases a rent control park in Malibu, California, where millionaires live in beachfront properties, and for some, the properties serve as a second home.

 

 

Fast Facts

  • Mobilehomes offer all the quality and comfort of traditional homes, for up to 30% less.
  • Unlike a traditional rental property such as apartments, mobilehome parks operate like small villages or cities. Rents often cover property taxes and fund essential neighborhood services, such as, park management, utilities, cable, roads, landscaping, security, recreation and more. When rent control ordinances reduce or freeze rents at below market rates, services can be reduced like a city facing budget deficits.
  • Rent control ordinances do notrequire means-testing. As a consequence, park owners are required to subsidize the housing costs of tenants, regardless of their need.
  • In an extraordinary case, a father and son want to close their mobilehome park, but the  City of Palo Alto is standing in the way by threatening to forcibly seize it by eminent domain.
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Image collage inserted by MHProNews.com, and was not part of WMA’s original column.

  • Very much like homebuilders, costly regulations and fees do not provide financial incentives to expand or build new mobilehome parks in California, limiting the potential for new stocks of attainable housing. Even though mobilehomes are a source of affordable housing, not one park has been built in California in decades.
  • Rent control regulations can cost local governments millions of dollars to administer and to legally defend; all at the expense of other government servicesand programs.
  • Rent control can lead to lawsuits when parkowners are denied their right to a fair and reasonable return on their investment. This year, afederal jury unanimously found that the City of Carson’s mobilehome park rent control ordinance violated the constitutional rights of a parkowner in Southern California. The parkowner was awarded $7.5 million in damages.
  • Many parkownerssupport long-term lease agreements and direct rental assistance programs, which provide bonafide rental protection and help to those mobilehome park residents truly in need.

To follow WMA’s campaign to reform the failed practice of rent control, visit

www.wma.org/real-housing-solutions,

www.facebook.com/realhousingsolutions and

twitter.com/CAHousingFix ##

sheiladey-wma-westernmanufacturedhomecommunitiescalifornia-postedindustryvoicesmhpronewsSheila Dey & Marko Mlikotin

WMA

 

(Editor’s Note: Rent Control and Measure V (see our latest story, linked here and in the image below) have both local and national importance. So MHProNews offered to provide this forum for this column to be republished.  Other industry perspectives are welcome – indeed, there are other professional views on rent control in recent Industry Voices guest blog posts. Scroll down below or see the listing below the banner ads on the right.

As a matter of public policy, editorially MHProNews opposes rent control as contrary to the long-term interests of all involved.)

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To submit your own thoughtfully written guest blog post, please use the email address shown above, and put Industry Voices Guest Blog in the subject line. Attach a photo you want to use with your column. Thank you – the editor.

Measure V is Bad Public Policy, should be Rejected

October 4th, 2016 No comments

Park owners in Humboldt County have been addressing the issue of alleged “excessive” rent for well over a year.

Most Park owners offer long-term leases that address and stabilize any legitimate concern about rent increases.

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.

Rent control, by its nature, does not include any logical safeguards, such as income qualification. Rather, such ordinances are premised on the idea that park owners are “taking advantage” of homeowners because a mobile home cannot be easily moved.

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For our recent story on Measure V, please click the image above. An updated Measure V report will be coming soon to the Daily Business News, on MHProNews.

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.

Measure V is bad for Humboldt County, bad for Tenants, and bad for Park owners.

This type of legislation creates and fosters adversarial relationships and leads to expensive and time-consuming litigation. Again, do the research.

Ask what the city of Carson has paid for its rent control. Or the city of Escondido.

The taxpayers of Humboldt County will pay for this legislation [not the park residents] advanced by a small minority of persons who reside in mobilehome parks.

Measure V is bad policy.

Measure V should be rejected. # #
c-william-bill-dahlin-hartkinglaw-postedmanufacturedhousingindustryvoicesmhpronewsC. William Dahlin
Hart | King
4 Hutton Centre Drive, Suite 900
Santa Ana, CA 92707

(Editor’s Note: this comment came in response to MHProNews coverage related to Measure V, please see the link here.  Other industry commentary on this or other manufactured, modular and prefab housing related topics issue are welcome. Submit all letters to the editor/Op-Ed columns to: iReportMHNewsTips@mhmsm.com with the words Industry Voices Commentary in the subject line.)

Rent Control is the Wrong Prescription for California’s Housing Crisis

September 16th, 2016 No comments

How much sense would it make if your doctor applied a band aid to fix a broken leg? None whatsoever, however, this is how misdirected some prescriptions are to solving California’s housing crisis.

According to analysts, government imposed regulations and fees are leading contributors to why California is the most expensive place to live in the U.S., placing homeownership out of reach for many middle-class Californians. Instead of addressing the root cause, some policymakers are championing rent control, despite the fact that it has never effectively preserved or expanded affordable housing stocks.

One of their favorite targets is manufactured housing communities or mobilehome parks, as if private property owners are responsible for the housing crisis. However, when manufactured homes offer all the quality and comfort of a stick-built house, at prices 30% less, government should create incentives to build more mobilehome parks and not less.

Rent control’s failure is obvious when applied to manufactured homes, primarily, creating a tradeoff between lower rents and the capital investments parkowners must make to protect a park’s viability, quality of life and the value of the privately-owned homes located in the community. To understand how it has truly failed to increase the stock of affordable housing, one must also understand how parks operate.

Unlike traditional rental property such as apartments, mobilehome parks operate like small villages or cities. They provide all the benefits of a traditional neighborhood (i.e. security, social interaction, open space, and close proximity to needed goods and services) and they appeal to all income levels. The notion that all mobilehome community residents are poor and in need of financial assistance is wholly inaccurate. The only real difference is the park’s residents own the manufactured home, and the parkowner generally owns the land beneath it.

Rather than collect taxes like cities, parkowners collect rent to cover property taxes and fund essential neighborhood services, such as park management, roads, lighting and landscaping. In some cases, rents also cover all utilities, including cable. Some parks include clubhouses, fitness rooms, pools and golf courses. Consequently, when the government imposes a rent control ordinance that reduces or freezes rents at below market rates, it threatens a community’s quality of life.  Just like cities, when revenue does not exceed expenses, essential services are reduced or eliminated altogether, and as the maintenance of neighborhoods decline, so do property values as blight takes root.

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Government subsidies for traditional housing and apartments require means-testing; however, mobilehome parks are the exception. It’s true. In fact, rent controlled mobilehomes in Malibu California are selling for $4 million dollars or more!

As a consequence, parkowners who are under rent control are required to personally subsidize the housing of residents regardless of income or need, forcing these small business owners to close parks when rents no longer support the balance between affordability and sustainability.

Under these circumstances, there is also no financial incentive for builders to expand or build new mobilehome parks, limiting the potential for more affordable housing and local jobs.

This is why state and local government regulators should abandon the current course of driving up the cost of housing with costly, unneeded regulations, only to hastily impose price controls that don’t work once homeownership becomes unattainable. It is time for real and meaningful solutions. Making housing construction less expensive and more plentiful so that the savings can be passed on to all prospective homeowners is a good place to start. WMA and our members look forward to fully participating in this important public policy discussion. ##

sheiladey-wma-westernmanufacturedhomecommunitiescalifornia-postedindustryvoicesmhpronewsSheila Dey
Executive Director
Western Manufactured Housing Communities Association

(Editor’s Notes: Sheila Dey’s article is republished here with her written permission. This relates to a recent Daily Business News article by Joe Dyton on rent control – linked here – and is a different take on the same topic shared by UMH CEO Sam Landy, JD – linked here.  Other perspectives on the rent control – or other MH industry related issues – are welcome.)

 

 

Discrimination, Injustice against manufactured housing – a Call for Action by Industry Professionals

August 30th, 2016 No comments

Tony, this news story out of Dover, DE is yet another example of blatant agenda and discrimination against our industry. More importantly, this is discrimination against affordable housing and the individuals who live in manufactured or pre-fabricated homes.

If anything, this Dover zoning/MHC story is a case of officials harming their own constituents. Rent control is proven not to work, save to drive out more affordable housing over time. Further, in neighboring Maryland, there are conventional houses built on land-lease.  Do you see the excuses used against manufactured homes in Dover being used against those conventional houses built on a land-lease in Maryland?  No.

TMHA’s D. J. Pendleton, quoted in the article linked here, was correct.  Excuses by public officials to deny manufactured homes are often fig leaves, mere window-dressing used to discriminate against manufactured housing, land-lease communities and sizeable groups of Americans.

The problems with the ABC TV news story out of Houston is also a case of media ignorance or bias.  By saying what kind of housing the shooting took place, almost implies that the house had something to do with the crime.

When have you ever heard a reporter say, “there’s been a murder in a site-built home”…?

LisaTylerPhDWilliamPMcCartyPhDToddLambLambInvestmentsManufacturedHomeCommunitiesCrimeBradNelmsManufacturedHomesModularHomes-com-postedMHProNews-com

Graphic credit, MHProNews.com. The Dover story Brad is commenting on, is linked here, or by clicking the image above.

Lisa Tyler, Ph.D. and William P McCarty, Ph.D. have researched this issue of crime in manufactured home communities, and have disproven the old MHC’s and crime myth.

Todd Lamb is correct. Hands-on owners and managers who properly run their manufactured home communities – and lawfully screen for criminal history – will routinely find less crime than conventional housing neighborhoods in the same area.

However, I believe more than anything that these injustices should be motivation for us as an industry to do everything we can to elevate our brand identity.

If we continue to be complacent, history will continue to repeat itself and we will see more and more zoning laws that harm and hinder our much needed American manufactured home industry. ##
Editor’s Note, the comments above were submitted in reply to the story linked here, and to another story we will link up soon.)

brad-nelms-coo-manufactured-homes-com-posted-daily-business-news-mhpronews-comBrad W. Nelms
Mr. Nelms works with ManufacturedHomes.com and ModularHomes.com,
two companies dedicated to raising the brand image of manufactured homes and modular homes.

Rent Control in MHCs

September 4th, 2013 1 comment

Tony,

The phone rang one morning and a young man returned my call to him, we'd been playing phone tag. I had left a message with his wife in Oregon earlier, and he was calling about two Vermont MH communities I have listed for sale. From the voice of each, I guessed they were both far younger than I.

Speaking with him, as I answered his questions, it was obvious this was not his first call on LLCs for sale. In a knowledgeable way he wound thru the obvious questions, finally asking whether Vermont LLCs are rent controlled. Yes, I explained, they are. I went on to explain Vermont allows CPI, about 3% annually presently, without concern, and a big one, allows provable capital improvements in addition, annually. I told him that as a former VT LLC owner I had found the scheme fully workable, as do many of my contemporaries.

The next day I got an email message saying he and his partner/wife had decided not to invest in any locale where rent control is in force. OK, I get it, but that removes quite a swath of locales, many which are hot purchase markets. This philosophy allows investment in say Mississippi or Alabama, but negates purchases in Florida or much of California. Oh…

After that, my mind wondered over my experiences of the dangers of rent control and lack of it. Yes, I said the danger of the lack of it. I actually was pretty young once, had hundreds of apartments and almost 2000 MH/RV sites. With the exception of a Florida LLC, I was in no jurisdiction where rent control was in effect. And when rent control was threatened in a jurisdiction, I was the first to the battlements opposing its imposition. I was and am a capitalist, and rent control seemed an anathema to my beliefs. I'm not alone, right?

But time went by, slowly the days passed, and some of my beliefs at 40 years of age made transition to a more measured understanding as I aged and acquired experience I previously lacked. Let me be frank, I was an accomplished and notorious rent increaser, which in my twilight years brings me no acclaim by others, and more importantly, myself.

What I found was that in apartments, and we're not speaking of New York City here, the market rents in an area kinda act as rent control. You find yourself as the top dog in rent rate for your 1000 sq. ft three bedroom apartment in your area. What you are very likely to find, as I did, your apartment rents last and less, staying empty longer than it should. Recovering the lost time and money brings you back to Earth and unless your calqy is busted, your late debt payments slap Hai Karate hard. I found apartments very self correcting as to rents.

Now, on to LLCs. We all know the reasons we invest in communities; they own the dwelling unit, they can't move the house, etc. All good stuff, of course. So as I bought LLCs from original owner/developers, I found that as longtime owners they had allowed their rents to slip behind the market, keeping their management easy, with many long term residents.

Of course, the purchase price always reflected the oft unspoken premium of raising rents to market. "Hell, they can pay a lot more than that!" So I paid more than cash flow to get the community, not real unusual, right? Then the rent increases started. Often stiff and early increases happened shortly after closing.

The first few increases were swallowed, albeit with plenty of bitching by residents. We raised rents as much in two-three years as the former owner did in 10 years. Note that in some instances the increased rent still didn't pay for the capitalized investment costs. I knew that, they only knew and cared their rent had doubled in short order. No esoteric explanations of cap rates and other MH investor jargon seemed particularly persuasive to the LLC residents.

Who was it, Newton, who theorized every action has an equal and opposite reaction? I raised rents, they moved out. And I acquired a reputation in that community as a rapacious rent increaser. And these reputations are hard to escape. I wouldn't really care that much except the reputation had a very bad impact on homesite rentals. That, I did care about.

At first I did the calculation I see many others doing. Yah, I had 100 homes at $100 per month, and even though I'm quickly down to 90 homes at $111 per month, hey, I'm getting the same money with less work and expenses. And it keeps going this way as rents increase, residents fleeing like a torrent, out the MH Paradise Estates gates, which has turned into Hell Bent Acres.  And as vacancies mount, you lose control of the community, no longer able to count on the desire to live in your LLC to keep people in line. And that desire includes pricing.

Were I the only one to have followed the raise-rents protocols, then only I would have suffered the residue, but of course, such was not the case. The MH industry's then flawed model, subsidized for years by flawed lenders, finally collapsed, dropping from 373,000 shipments in 1998, then tantalizing us into believing the hurricane-inspired 135,000 shipments of the mid 2000s was the stopping point, to the grim reality of 50,000 homes in the 2010s. Yah, I hear 60,000 homes could happen any day now.

I sat in on some very contentious MHI committees in the late 2000s era trying to formulate a chattel long term lease the GSEs could swallow. In concert with this I reviewed many LLC profiles showing monthly rent and occupancy. It probably won't surprise you that the vacancy was truly scary, yet rents occurred steeply and frequently.  I had already tried that, and even with the generous retail financing by GreenTree, CIT, The Associates, Security Pacific, Chase and their ilk, it didn't work. Now we were dealing with the GSEs, who I did not find stupid, and we were trying to equate rents in LLCs to the capitalized valuation of single family conventional real estate lots. Any thought of sharply limiting rent increases to gain long term and low rate financing being the trade-off, got serious push back. Such was not to be and by then as the effort lost all bouyancy, the GSEs woke up to far bigger challenges.

As a post script I am the very first to admit that some major figures in that committee have since come far closer to the rent restraints advocated in the long term lease effort as their stated belief for industry resuscitation.  Will that be enough? I greatly doubt it, but I sure think it is an indisputable industry wide measure in the road back to something other than Warren Buffett's table scraps.

So to my young friend in Oregon, rent control, other then confiscatory NYC apartments or some California cities in MH, can be a useful LLC owner restraint, quieting some of the early animal spirits we can all exhibit before experience shackles us. Did I like going to the rent hearings in my community in Florida and taking phallus down the throat to the gag control center? Oh, I loved it.

Still, Florida LLCs are and have long been highly prized acquisitions, not greatly injured by the relatively manageable process for raising rents.  With the relatively benign rent control such as in Florida and Vermont, you and the industry are actually protected from many of the practices employed in the industry, leading to so much push back against us.

Before you believe I'm asking you to petition your jurisdiction for rent control, let me disabuse of that notion. Nothing could be further from the truth. I rail against governmental intrusion in to my affairs daily. Everyday the beast grows larger, only a financial collapse likely to abort its growth. The only point I am making is that one must practice rental increase restraint on your own. Sometimes laws can help a process.

The flip side is that lack of restraint causes lack of residents at a time LLC vacancy nationwide forebodes another step down in industry size. In places like Vermont and Florida and others, rent control, which one should practice on their own, is instilled by statute. Perhaps not the best solution, but the record says the world did not end there.

Yes, we tell a great story which seemingly has legs of truth about our affordable housing heritage. But for whatever reason, even though its great dog food, the dogs won't eat it. Perhaps a legacy of rapacious rent increases, closing parks, high default rates and high home value depreciation could be a good place to start the industry resurgence. We build great homes, but my friends, that, by itself is not enough. ##

marty-lavin-posted-on-mhpronews(MARTIN V. LAVIN
attorney, consultant & expert witness
350 Main Street Suite 100
BURLINGTON, VERMONT 05401-3413

802-660-8888 off / 802-238-7777 cell
marty@martylavin.com

(Editor's note: The hot link was added by us, not Marty, nor was the link requested in any way by Marty. We think it is good for others to realize that while Marty is 'retired,' he is still involved in this industry and clearly cares about manufactured housing deeply. That is why he sounds off on issues, because he cares enough to raise them for discussion, thought and action.

As always, letters and articles by you or your colleagues that may agree or take other perspectives are encouraged. Send them to latonyk@gmail.com with Industry Voices Guest Column in the subject line. )

Will California Park Owners Begin Heading For the Exits?

July 10th, 2013 5 comments

With the political changes in Sacramento, the tenant advocates are pressing their agenda with new vigor in 2013. Once again, they are pushing to amend the subdivision conversion statute (Government Code § 66427.5). They are advocating for changes which would allow local governments to deny conversions not supported by a majority of residents and which would give such governments authority to implement their own “conversion” regulations. There are even rumblings for statewide rent control for mobilehome parks.

Conversions under Section 66427.5 have been a favored exit strategy for park owners, resulting in related litigation all over the state. Recent decisions applying Section 66427.5 have been a "mixed bag." The decision in Sequoia Park Associates in 2009 was the “high water mark” for limiting the interference of local governments in conversions since the Ordinance was amended in 2002 to add the requirement that tenants be surveyed regarding their support. Based on that decision, many local governments and lower courts have approved conversions despite resident opposition. Subsequent reported decisions by different appellate courts have chipped away at and offered different interpretations of Section 66427.5. The 2010 decision in Colony Cove v. Carson held that local governments could "consider" the resident survey results, but the Court did not provide any guidance as to how local governments could consider or use the surveys. The Court did acknowledge, however, the lack of resident support in and of itself could not block a conversion.

The worst decision for park owners, Goldstone v. County of Santa Cruz, was decided in early 2012. Goldstone held local governments could deny subdivisions if the subdivision was not supported by a majority of residents. Although not explicit, the Court seemed to adopt the view that a "bona fide" or “non-sham” conversion is, by definition, one supported by a majority or at least a large percentage of tenants. Chino MHC v. City Of Chino, decided in late October 2012, took a decidedly more pro-park owner view, concluding that a local government was required to approve a subdivision unless there was overwhelming opposition by the tenants. The Court also made clear its view that a bona fide conversion was one in which the park owner truly intended to convert it to tenant ownership. Unfortunately, the Chino decision still encourages tenants to attempt to block subdivisions or extort favorable terms in exchange for support for the conversion.

Late last year, the California Supreme Court issued a decision directly relevant to conversions in coastal zones, Pacific Palisades Bowl v. Los Angeles. The Court in that case held that local governments did have some authority to review conversions for compliance with the Coastal Act requirements (and other state laws). The ultimate impact of this holding is not entirely clear, but it makes clear that local governments can impose conditions relating to the replacement of affordable housing in a coastal zone.

Under the existing statute which has been relatively favorable to park owners, there still has been substantial resistance to subdivisions in many local communities, in some cases, even where no rent control exists. The processing of a subdivision for Pacific Mobile Home Park in Huntington Beach is a good example.

Articles.000/4819-2353-3075v.1

Pacific initiated a subdivision in 2010 with the support of a majority of the residents in the Park. The City fought Pacific’s subdivision Application. Pacific had to file a lawsuit after the City denied the Application. The City not only aggressively defended the lawsuit, but attempted to extort a favorable result by filing a cross-complaint seeking immediate physical removal of homes owned by park tenants who the City claimed were “trespassing” on an unused City right of way for decades.

The City’s denial of the subdivision Application was reversed in July 2012, which resulted in the City approving the subdivision in November, 2012. However, on December 3, 2012, the newly elected City Council voted to rescind the approval. Pacific then obtained a court order invalidating the vote and barring reconsideration of the subdivision Application by the City. That court order still did not stop the City two weeks later from voting to confirm their illegal December 3 vote. This did not sit well with the Judge who issued the order. The Court granted Pacific’s Application to set a trial for Contempt of Court for 6 of the 7 Council Members and the City Attorney. Finally, with the threat of a criminal trial hanging over their head, the City Council abandoned its challenge of the subdivision.

If Section 66427.5 is amended, which seems likely given the current political environment, then park owners can count on more local opposition to subdivision. The sad reality is that while local politicians often talk about how important affordable housing is to them, they often really do not want to see mobilehome park uses become permanent, particularly in coastal or other “upscale” locations.

If the door to subdivisions is closed, the final path of escape for park owners trapped in confiscatory rent control is closure. The U.S. Supreme Court has made clear that governments cannot stop closures in Yee v. Escondido. Yee recognizes that the right to go out of business is one of the crucial “sticks” in the “bundle of property rights.” Of course, the crucial issues become the cost of closure and the viability of alternative uses. Government Code 65863.7 limits payments to tenants to the “reasonable cost of relocation.” The common sense interpretation of “reasonable cost of relocation” limitation means the cost of physically moving a mobilehome and the tenant’s belongings. Certain local governments have adopted requirements that exceed this limitation, but we do not have any appellate decisions directly addressing the question. If conversions are made more difficult, it is likely we will get binding authority, hopefully confirming a “common sense” interpretation of Section 65863.7. We can count on the courts for common sense, right?

mark-alpert-hk&c-law-manufactured-home-professionals-mhpronews-com-75x75-.jpgMark Alpert is a partner with Orange County law firm, Hart, King & Coldren. He focuses much of his practice on manufactured housing issues, and has a particular expertise in rent control, subdivision conversions and park closures. Mark can be reached at (714) 432-8700 or at malpert@hkclaw.com.