An Enterprising Solution to the Complex Problems of Owning a Home on Rented Land
by Paul Bradley
Reprinted with permission from the Cooperative Housing Journal, a member service of the National Association of Housing Cooperatives, 1401 NY Ave. NW #1100, Washington, DC 20005, (202)737-0979
“If I lived in an apartment, I’d pack it up and say, ‘See you later, alligator,’” Carole Charlantini from Kingstowne Park told a reporter. “But I can’t hitch this (mobile home) up to my car and just drive away to a new lot.”
This article describes the infrastructure in New Hampshire that led to and supports the current trend of converting manufactured housing parks to cooperatives, explains the structure and financing vehicles employed, discusses the benefits and challenges of cooperative ownership, and concludes with a vision for a cooperative manufactured housing park system in New Hampshire.
Manufactured housing parks represent a sizeable source of affordable housing for low- and moderate-income people in New Hampshire and in most rural states. Roughly four percent of New Hampshire’s 1.2 million people live in manufactured housing parks. Overall, the New Hampshire Office of State Planning reports that eight percent of the state’s housing stock is manufactured housing, including those homes in parks and those on individual parcels of land.
A partnership between tenant activists and community economic development practitioners has resulted in protective regulations for manufactured housing homeowners and a sense that remaking the industry based on resident ownership is possible. Homeowners have fought for nearly three decades to gain these protections and the resident ownership efforts are well into their second decade.
A group of homeowners in Allenstown, New Hampshire, organized and fought the Town of Allenstown over the taxation of their homes in 1972. At the time, mobile homes were registered as motor vehicles and taxed under varying formulas across the state. Headed by tenant activist Al Levesque, the group hired an attorney and drafted legislation to enact a manufactured homeowners’ bill of rights.
In 1973, the fledgling Mobile Homeowners and Tenants’ Association (MOTA) succeeded in passing one of the strongest manufactured housing park landlord-tenant laws in the country. “Prior to State Law RSA-205A, landlords would require keys to peoples’ homes and they would enter whenever they wanted. Tenants would be required to buy skirting and sheds from the park owner, and use a specific heating oil dealer,” remarks Florence Quast, a long-time leader with MOTA.
In 1988, the New Hampshire Community Loan Fund joined MOTA to argue for a “right of first refusal” law for park residents. The law’s passage was a virtual endorsement for resident-ownership—an acknowledgment at the time that owning a home on rented land was simply bad public policy.
From 1973 until 1994, violations of State Law RSA-205A were the subject of New Hampshire’s District Court system—a costly endeavor since it often involved an attorney plus court costs. MOTA scored another legislative victory in 1994 with the institution of the Manufactured Housing Board. The board has the authority of the court, but not the costs: Filings cost only $25 and the system is geared to self-representation. “The board is doing well although I wish they had authority to review rents,” notes Florence Quast.
In the 1999 legislative session, MOTA surprised many by getting strong initial support in the state senate for a rent justification bill. This bill would require park owners to “justify” their increase if it were challenged by 50 percent of the tenants. Fashioned after an existing Rhode Island law, this bill’s passage is the last large component of a fairer system for regulating homes on rented land. It ultimately failed in the senate, but the bill will be back.
The New Hampshire Community Loan Fund was created in 1983 with two founding beliefs: (1) that it is not always low incomes that keep people from taking charge of their lives, sometimes it is lack of access to credit, and; (2) that there are owners and managers of capital that would put it to use for self-help community efforts if they had a way to do so.
The Loan Fund is a private, nonprofit organization providing loans and technical assistance to self-help community economic development projects that benefit people with low and moderate incomes. It loaned over $23 million to community-based affordable housing and economic development projects in New Hampshire from 1984 to 2000.
The first loan by the Loan Fund was to a manufactured housing park tenants’ group for land acquisition as a cooperative in 1984. This experience grew into a proactive organizing and financing program for resident ownership of manufactured housing parks.
The injustice of people having to move (and effectively losing their homes) due to park closures, living with significant health and safety threats and experiencing hefty rent increases led the Loan Fund to develop a full program of development, management training, and financing for cooperative conversions. The Loan Fund has evolved into a specialty technical assistance provider because, in addition to capital, community groups need customized information and training at the right time and place in order to reach their goals. Many people would not even begin to organize, believing ownership impossible. A sense of possibility may be the Loan Fund’s most important product.
The mom-and-pop developers and owners of the 13-unit Meredith Trailer Park were an elderly couple who had been advised to sell the park to prepare for the husband’s move to a nursing home. The wife didn’t want to lose her house, a former cottage converted to a year-round home located in the front corner of the park. This is not the story of an “out-of-state corporation”—it is a story of a well-liked older couple being forced to sell. Fortunately, they wanted the best for the tenants.
“A couple of us tried to go to the bank to buy it as individuals, but we don’t have that kind of credit,” remembers Bob Sirles, a 26-year resident of the neighborhood and maintenance worker at a local state institution. “Most of us just figured we’d be thrown out so we were looking for solutions—moving, buying something else, renting somewhere, just hanging in and hoping for the best.”
The park consisted of 13 “mobile homes” and the owners’ house plus 40 acres of land near New Hampshire’s largest lake, Lake Winnepesaukee. In 1984, the economy was improving quickly and real estate development, especially of vacation homes and condos, was nearing a boiling point.
Sirles’ search for solutions led him to Rebecca Storey, a student in New Hampshire College’s Community Economic Development Program and friend of his sister. Around Sirles’ kitchen table, the idea of a resident-owned cooperative to purchase the park came to life.
Storey helped Sirles and his neighbors develop a cooperative organization and work with the town to comply with the order to repair the leaking septic system that was polluting an adjacent brook. They pooled resources to retain a local lawyer to negotiate a purchase and sales agreement with the park owner.
The tenants were mostly working two jobs to support their families. Just like her neighbors, the elderly park owner lived on a low income and was unhappy with the thought of losing her own home. She felt forced to sell her land and didn’t want to move.
An agreement was reached. The resident-owned cooperative would buy the park at a below-market price and would give the park owner a lifetime lease on her home. She could have made more money selling to a developer, but by helping the tenants, she got enough cash to meet her needs and, as important to her, she got to stay in her home rent-free. (As it would turn out, the cooperative owners would play a central role in helping her maintain her home and independence in the ensuing years.)
When looking for financing, all five area banks denied the cooperative’s proposal as quickly as they refused the earlier individuals’ requests. For bank underwriters, the Meredith Center Cooperative’s legal documents and professional financial presentation didn’t overcome their skepticism about the group’s lack of management experience, the bad septic system, the generally low family incomes, and the group’s lack of a down payment. Besides, each loan officer asked, “What is a cooperative?”
Storey was determined that lack of capital would not be the reason her new friends would be tossed off their land and lose their homes. The park owner was getting nervous about the cooperative’s bid.
Storey served on the steering committee for the start-up of the New Hampshire Community Loan Fund, which was being created to provide capital for just these kinds of situations. The Institute for Community Economics of Massachusetts was helping the Loan Fund get organized and agreed to lend the “good faith” deposit money so the cooperative could sign a binding agreement.
On June 1, 1984, the Meredith Center Cooperative became the Loan Fund’s first borrower and bought their park.
Their first act as tenant-owners was to remove three truck loads of litter and debris. In the transition from renters to owners, the unclaimed garbage around the dumpster and common areas became everyone’s responsibility. The second step was the purchase of a new water pump to improve water pressure to solve shower stoppages every time a neighbor flushed a toilet. The first year, people turned on their faucet and thought, “We own it.” Rebuilding the septic system completed their initial improvements.
With the future of the park certain, homeowners began making home improvements and bringing in new homes. Now, 16 years later, the park is debt-free and has the lowest monthly park “rent” in the state.
The Meredith tenants’ victory in 1984 wouldn’t be followed until 1986 when two resident acquisitions took hold in Milford and Greenville.
Today, New Hampshire is home to 44 cooperative manufactured housing parks. MOTA played a role in organizing several parks while the Loan Fund organized and financed the majority of the state’s cooperatives. So, too, the Loan Fund has grown—from the first $42,000 loan in Meredith to over $23 million in total lending today. Staff has expanded from one to a staff of 30 working in three broad program areas: affordable housing, community facilities, and economic opportunity.
“If we buy the park, we have control over the rent and how it gets spent. If another investor bought the park, they might try to raise rents in order to produce a profit. The rent money we collect will stay in the park and we can improve the facility. After all, nobody takes care of your place better than you do,” noted Paul Stevens, a board member from Lakes Region Mobile Home Park Cooperative.
While there are a range of approaches being used around the country, two main objectives underlie New Hampshire’s cooperative financing and ownership structure: (1) to maximize the degree of resident control, and; (2) to make membership accessible to all families, regardless of income.
First, resident control is paramount. Resident control puts people most affected by the decisions in charge of making them. In a cooperative park, each homeowner owns his or her home and one share in the cooperative corporation that owns the land. Most co-ops require that one must both own a home and reside in that home in order to become a member.
Second, “open membership” is real only if it is affordable to every homeowner in a park. Most all of New Hampshire’s cooperatives are structured with low membership share prices—most ranging from $500 to $1,000. During the acquisition phase, co-ops allow resident homeowners to pay a low down-payment and make monthly payments, during which time they have all of the rights and responsibilities of membership. People buying a home in a cooperative park pay their full fee up-front. Because the share price is low, homeowners have been able to roll the share price into their house financing. Share financing is an internal financing mechanism.
The low share price paid by individual members, added together, results in a low down payment for the cooperative’s purchase of the park. The gap between what the residents can raise and what a conventional bank will lend is provided by the Community Loan Fund in what’s called a senior/subordinate debt package.
In all of New Hampshire’s cooperatives, the land and infrastructure (sewer, water, etc.) are financed and secured by mortgages—so called blanket land loans. When you hear bankers say “we don’t finance land,” they’re not talking about manufactured housing parks. Parks are “cash cows” that generate a very reliable cash flow and cash flow can be financed. “Homeowners cannot afford not to pay their rent—otherwise they’re gone!” exclaimed one park owner from Connecticut.
Private banks followed the lead taken by the New Hampshire Community Loan Fund and the New Hampshire Housing Finance Authority—a quasi-public agency that financed the second and third cooperative parks (and several since) and subsequently received a national award for their innovation in financing resident purchases. The Loan Fund and Housing Finance Authority’s early leadership and positive experiences gave banks the confidence that this was a legitimate and safe line of business. These deals are a stretch for bankers due to ostensible challenges such as the lack of fixed leadership, no personal guarantees, little “cash” equity, a property that has likely experienced disinvestment, a democratically controlled borrower, and a new line of business for the borrower.
Since 1988, banks have reliably provided first mortgage financing for cooperative purchases and now compete for deals.
Early bank debt packages were done under traditional “commercial” lending terms with one-year adjustable rate mortgages. Rate risk is especially sensitive in co-op parks since the single source of income is rents and the objective is to stabilize rents.
Fortunately, in the early 1990s, the Federal Home Loan Bank of Boston began a fixed rate community investment program for its member banks. This development has been crucial for banks to offer a fixed rate loan product that helps cooperatives accomplish their goal of rent stability.
Critically important sources of debt and grants for infrastructure improvements have come from HUD’s Community Development Block Grant program and more recently through the USDA’s Rural Development program. Low-cost debt and grants are especially important since cooperatives generally seek to make much-needed environmental improvements that competing buyers don’t consider.
Paul Stevens, a board member at the latest cooperative park conversion in New Hampshire said, “The company that wanted to buy the park is from Colorado. You would be surprised, but these mobile home parks are million dollar businesses and a lot of companies are buying them up all over the state.” In this latest case, the 109-unit park carried a $2 million purchase price, or $18,348 per lot.
Organization and Management
Democratically controlled community living can be a challenge. Neither democracy or self-management is automatically smooth and easy. As in our larger democracy, civic life is not always pleasant and respectful.
Once the cooperative acquires the park, the leaders’ responsibilities shift from those of organizers to those of managers. In a park cooperative, people and a system are needed to collect the rents and keep the books, approve new members, maintain the infrastructure, enforce park rules, mediate disputes, and endlessly communicate.
When too few share the work, leaders can become burned-out and feel unappreciated. Effective operations rely upon good information and frequent communication—both challenges in volunteer organizations run by busy people.
These representative democracies are in a large measure using self-management, with the bulk of the work falling upon the volunteer board of directors. Some successfully employ a volunteer committee structure, too.
In the 81-unit Hideaway Village Cooperative, the board of directors utilizes a committee structure including membership, finance, legal/grievance, and maintenance committees and a “junior co-op” (composed of youth in the co-op) to manage the park. All board and committee members are volunteers. “I do a lot of running around and keeping things moving…it works but it can be brutal,” notes Kevin Brigham, the cooperative’s chairman.
New Beginning Cooperative, a 26-unit park in Winchester, has chosen a hybrid version of self-management, giving board members a $50 per month rent discount. “Everyone’s a little bit more mellow when problems arise...I’m being paid and it’s part of what I’m here for. And, it’s generating interest from members who haven’t showed interest in volunteering before. I think we’ll have two or three new board members next term because of it. There’s no gratitude for the job other than from other board members, so it’s a nice little benefit for all you do. It’s been a blessing for me as a single woman living on my own...I’m plugging the holes,” reports Erin Robb, New Beginning’s treasurer.
Some cooperatives are beginning to use a portion of their rental income to employ management companies for rent collections and financial management services.
“Going with a property management company was the best thing we’ve ever done. My phone calls are down over fifty percent and our collection rate is up. It’s a different dynamic when a company is collecting the rents versus your neighbor—we were successful before, but now we’re successful and it’s easier,” notes Florence Quast, Soughegan Valley’s chairwoman for the past 15 years.
The state’s largest cooperative, Greenville Estates, a 192-unit park in Southwestern New Hampshire, has always relied upon paid staff—an office manager, part-time bookkeeper and two maintenance workers—to manage day-to-day affairs. Cooperatives do operate much like small New Hampshire towns. In fact, 20 percent of Greenville’s total population lives in Greenville Estates. That one co-op is larger than several New Hampshire towns.
Regardless of which members actively volunteer to manage the park, the benefits of ownership reach all residents. Therein lies the greatest rub for cooperative leaders: the lower rent is enjoyed by all, regardless of who participates in the hard work it takes. “Member participation” is the single greatest complaint of cooperative leadership.
Some leaders are beginning to put it into this perspective: “It’s like anything, you have those who do and those who don’t. You just work with those who want to be active and make the best of it,” says Brigham of Hideaway Village.
He also notes a key aspect of the challenge, “The newest residents don’t know what we’ve been through under the old owner. They kind of have a landlord-tenant perspective, and we’re the landlords! We’ve got to get them engaged as owners, somehow.”
Elliott Berry, a tenant advocate and attorney with New Hampshire Legal Assistance, puts it this way, “I worry about cooperative leaders who become burned out and bitter and begin to turn into the awful landlord that they railed against to begin with. It’s tough. Co-ops need to become excellent landlords in order to be successful.”
The Loan Fund is committed to developing effective cooperative management systems and practices in every park by providing training and support to directors and members. A front-line staff of three full-time specialists in finance, infrastructure, and organizational development provide one-on-one and group technical assistance and training. They also generate a statewide newsletter, regional leadership training sessions and a biannual conference.
Public Health and Environmental Improvements
Many resident acquisitions include substantial rehabilitation that translates into environmental clean-up projects: fixing the problem that is resulting in raw sewage on the ground, replacing old and leaking water lines, installing fire protection, improving drainage, removing underground oil tanks, and replacing dangerous electrical services. In many cases, parks suffer from years of disinvestment—cash is drained from the park and used elsewhere by park owners. It comes as no surprise that many park owners don’t take a long-term perspective. Cooperatives frequently find themselves in the position of correcting years of deferred maintenance and delayed capital improvements.
In a recent case, 45 homeowners at Pepin’s Mobile Home Park in Berlin, New Hampshire, acquired their park with an immediate plan to replace sewer and water lines, add fire protection, improve drainage, and resurface the road. Add electrical lines and you have a totally rehabbed park! While they purchased the park for $450,000, they have a $575,000 improvements budget, funded through loans and a Community Development Block Grant (CDBG.)
Cooperative ownership makes it possible for parks to be clean and safe places to live. CDBG administrators consider these good public investments because the benefits go to the people, not for profit. Town officials appreciate that cooperatives fix environmental problems and reduce the complaints they get for code enforcement.
Community Development
“Parks are neighborhoods and they have a life of their own,” remarks Lynn Booth, Loan Fund staff member and Lilac Drive Cooperative treasurer. “There’s tremendous opportunity to build strong community because these are self-defining and resident-controlled communities.”
Strong and healthy communities need three key components—financial stability, a safe environment, and a sense of “neighborhood” that people are proud of.
“We decided to call our cooperative New Beginning—we wanted to change our reputation in town,” said a founding member of New Beginning Cooperative. “Before we bought the park, the police would be in the park every day for one thing or another—drunks fighting in the street, domestic violence, kid problems. Now, the police rarely come here—people don’t put up with it any more. We found a new beginning...no, we made a new beginning.”
Kids are often a powerful community building focus. At New Beginning, early efforts to hold social functions for the adults failed. The Christmas Party replete with a visit from Santa brought out the kids...and their parents in tow!
“The junior co-op collects cans on Saturdays and uses the recycling money to buy playground equipment. It’s a great system because since they earn the money for the equipment, they take greater responsibility for it and respect it,” notes Hideaway Cooperative’s Brigham.
Ultimately, the development of a community is about the growth of people. One resident showed up at an early meeting of the Elm Street Cooperative and stated, “I don’t know what I can help with, my husband’s told me for 25 years that I can’t do anything, but when the co-op came along, I said, ‘I’m going to try it out.’” She went on to become a valuable and energetic committee member.
Because communities are based upon human dynamics and relationships, leadership and member training are at the core of the Loan Fund’s training program.
Building a Substantial Cooperative Park System in New Hampshire
Cooperation among cooperatives has already begun to take hold in New Hampshire’s cooperative parks. As the critical mass of cooperatives grows, so will opportunities for greater cooperation. Promising examples are already evident.
Three Winchester cooperatives recently got behind a local election and jointly ousted a long-time, anti-park selectman and replaced him with a cooperative leader from one of the parks. Leaders from all three parks now have a special monthly meeting with the selectmen to deal with park issues. Rarely has a group of low-income people in New Hampshire so dramatically affected the political decision-making of a town.
The Loan Fund’s Cooperator newsletter, written by and for cooperative members, is mailed to every one of the 2,070 co-op owners in New Hampshire. Co-op to co-op exchanges are also encouraged through regional forums organized by Loan Fund trainers. The Loan Fund and Citizens Bank sponsored a statewide conference called “Building Strong Communities” in October of 2000.
The next level in building community among cooperatives will be group-buying opportunities. The potential is great: cooperatives negotiating trash removal and paving contracts, and individual members joining together to buy heating oil and home goods. Early examples of heating oil purchasing groups have shown that an organized central operation of some sort is needed to support local efforts.
Eventually, a cooperatively owned property management company that provides management services, especially in the areas of rent collections and payables, may be viable. The company could bundle other services, including coordinated legal and auditing services (required by the state’s cooperative law) which could generate cost savings. It could also be the conduit for other cooperative buying strategies that support local cooperative communities and member families.
On both political and economic fronts, New Hampshire’s park cooperatives are on their way to becoming a powerful source of economic stability for low- and moderate-income families.
A Final Word
Resident owners create their own successes in this system rooted in local control. The Loan Fund’s goal is to help create the systems that support their successes and lead to resident ownership as a real opportunity for every park resident in the state.
Cooperative leaders are the backbone of this system. At a time when researchers are pointing to a decline in “social capital,” or civic engagement, these leaders are engaging their neighbors in cooperative community management. Their “new beginnings” are neighborhoods that contribute to the human spirit.
As of 2000, no cooperative in New Hampshire has lost its park to foreclosure or sold its park to an investor. But, like any business, circumstances will arise at some point in time and one will not succeed. When it happens it will be widely reported, and advocates cannot let private and public funders use this as a reason to back away from cooperative conversions.
The cooperative advantage is clear in New Hampshire: “We have increased our rents only five dollars since we bought the park eight years ago,” stated Ken Dame, a long-time leader for the Windy Hill Housing Cooperative in Tilton. “Who knows how high it would have gone with a private landlord—five, ten percent increases each and every year?” In Lilac Drive Cooperative, the group has not increased rents since buying the park in 1994 and now gives co-op members free rent in December. In Dover’s Cochecho River Cooperative, they’ve replaced septic systems, water lines, paved roads, and driveways and decreased their rents from $180 to $170 in the last 11 years.
Indeed, cooperative rents are lagging behind investor-owned park rents and co-ops are making health and safety improvements.
Some, like Hideaway Village, are capitalizing on the power of group buying by making steady improvements to their park—their playground is better than most public playgrounds in Rochester. Others, like the Winchester groups, are capitalizing on their political power, and most everyone is enjoying the benefits of knowing neighbors better.
New Hampshire’s cooperative manufactured housing parks are solving a serious economic injustice and providing a valuable source of affordable housing. And, we are beginning to build a substantial cooperative system that will increasingly support stable communities for low- and moderate-income families.
Tenant “Captivity”
The investors—the rent collectors—often describe parks as “cash cows” to underscore their investment potential, a potential that is based on an unbalanced and undisciplined market relationship between landlord and tenant. Because homeowners in parks “cannot vote with their feet” the rents that one park owner charges are not impacted by “competing” park rents. To take advantage of the more attractive offer in the competing park—“to freely express yourself in the marketplace”—would require overcoming a host of obstacles.
First, manufactured homeowners face costs of $1,500 to $5,000 to move their home—if it can withstand a move at all. Spaces in other parks are scarce, and even if space is available, often park owners will place a new home on a vacant lot to generate a profit on its sale. In addition, restrictions exist in some New Hampshire towns that forbid homes older than six to ten years from moving in.
Moving a home to a private parcel of land is more expensive and problematic. The parcel plus water, septic, driveway and electrical improvements will cost between $35,000 and $50,000. These costs, in addition to the relocation costs eliminate this option for most manufactured home owners. Local governments have begun to restrict the placement of manufactured homes on private, single-family parcels. As a consequence, the option of placing manufactured homes on private parcels is slowly being eliminated, especially in the southern part of New Hampshire.
Because “mobile” homes really aren’t mobile, the economic relationship between park owner and tenant is unbalanced and undisciplined. The tenant-homeowner is effectively “captive” and is therefore ripe for economic injustices like unreasonable rent increases, poor maintenance, and unbearable park rules. The problems are exacerbated by a relative decline in sites available to homeowners.
Risk of Rent Increases
Rents are nearing $400 per month in manufactured housing parks in New Hampshire’s populated southern tier. In most cases, rents include water, sewer, and street access. Homeowners, in addition, pay property taxes on their home ($250 to $1,500 annually), debt service (at rates three or more points higher than stick-built home mortgage rates) on a home for which they paid between $5,000 and $75,000, along with other maintenance, insurance, and utility costs.
Rental rates have long been a problem for manufactured homeowners in parks, but recent history suggests that it can get (and is getting) worse!
Beginning in the 1990s, New Hampshire parks are increasingly being acquired by national and international investors. These investors have deep pockets and little local accountability—thwarting cooperative acquisitions at times and, as a result, exacting immense costs and disruption.
An international investor who acquired two New Hampshire parks in the last six years appears to use the following strategy: buy the park at whatever cost, charge sufficiently high rents to make the price work, impose unbearable park rules, and systematically evict older homes in order to replace them with new homes that earn a profit. This is a medium-term strategy that takes deep pockets and a high degree of callousness that is apparently accommodated by distance.
Park Closure Risk
A park owner can legally close a park to redevelop the property after only an 18 month “Notice to Quit.” The “highest and best value” analysis is a cold science that in the case of parks results in significantly benefiting a single investor over the interests of numerous homeowners-tenants. Even today, New Hampshire law requires no compensation or assistance to homeowners displaced by a park owner who closes a park—be it for a solid waste facility, retail development, or upscale residential condominiums. Some states do have compensation laws that offer displaced homeowners some relief.
Environmental and Public Health Problems
A park resident relies upon the park owner for sewer, water, and electrical services and road and drainage improvements. It will come as no surprise that absentee and profit-motivated investor owners often neglect one or more of these systems. The results can be effluent leaking from septic systems, poor water quality and low water pressure, exposed electrical lines, and pot holes “that would swallow your car.”
Two other factors can contribute to keeping failed systems from being fixed: a weak enforcement arm (i.e. a local health officer who is untrained or unmotivated) and pressure among homeowners to remain silent to avoid subsequent rent increases or retribution from a disgruntled park owner. Tenant activists are often times singled out—both by park owners and fellow tenants—for speaking out.
Manufactured housing parks are parcels of land on which two or more manufactured homes sit—what people have traditionally called “mobile home parks,” or worse, “trailer parks.” People who live in parks are both homeowners and tenants: they own their home and rent their lot.
Cooperative parks are a variation of the investor-owner model from a structural point of view: homeowners own homes and the cooperative owns the land and improvements. The homeowners control the cooperative through exclusive ownership of the cooperative corporation on the one member-one share rule.
Manufactured housing park cooperatives and related ownership structures are being used by homeowners in many other parts of the country to take control of their parks and housing. Florida and California lead the way in terms of number of cooperative parks. California has more than 100 cooperatively owned manufactured housing parks, and Florida has about 550. Rhode Island, New York, Oregon, and Washington are also home to numerous conversions.
Financing mechanisms vary around the country. In some states, residents are raising large sums of “down payment” capital for the cooperative through large share values (say $5,000 to $20,000) which they either pay cash for or finance on their own. In some instances, Title I FHA loans are being used to refinance homes and finance large share prices. The New Hampshire system again utilizes small share values that are “financed” internally by the co-op and blanket land loans provided by a local bank and the Loan Fund.
Some nonprofit organizations, especially in California, have been acquiring parks as a strategy for preserving affordable housing. Vermont is unique—the state has acquired parks directly.
“Rental parks are an obsolete idea. I’ve long believed that co-ops are the answer to our problems. It gives us the control over our destinies,” said Debra Chapman, chair of the National Foundation of Manufactured Home Owners.
For those interested in national lenders for senior and subordinate financing of park cooperatives, contact the NCB Development Corporation in Washington, DC, and the Institute for Community Economics in Springfield, Massachusetts.
Development Budget:
Purchase Price -- $1,000,000
Improvements -- $260,000
Other Closing Costs -- $40,000
Total Development Cost -- $1,300,000
Financing Package:
Bank (8.25% for 25 years) -- $800,000
NHCLF (8.25% for 20 years) -- $485,000
Resident Equity -- $15,000
Total Financing -- $1,300,000
back to top |
