MORE ON CONDO CONVERSIONS
Condo conversions have become a hot button issue. This month we present several articles (pages 4-9) on this subject. First off, we feel Gene Maddus, Staff Writer for the Carson Daily Breeze, has done a terrific job describing this new tactic used by park owners to get around rent control. Remember, you may feel safe today if you live in a rent control area, but the park owners are always looking for new ways to circumvent the protections you now enjoy. We applaud those Ventura residents who came out on February 6th to support their county supervisors bid to stop condo conversions. And thanks for the efforts of Merle Pitman and his organization Mobile Home Owners Coalition (MHOC). Let’s see activity like this in other areas! We need help from our representatives in Sacramento.
JUST WHAT IS A ‘CONDO CONVERSION’?
Gene Maddaus, Staff Writer, Carson Daily Breeze
Question. What does it mean to “condo-convert” a mobile home park?
Answer. First, what it doesn’t mean: it does not mean razing a mobile home park and building condominiums in its place. Condo conversion is a process whereby a park is subdivided and the spaces are sold off to park residents.
- Why do many residents oppose condo-conversion?
- In many cities, including Carson, space rents are strictly controlled by a city rent control board. Many park residents are on fixed incomes and rely on rent control as they plan their financial futures. When a conversion takes place, city rent control no longer applies.
- Can a park owner raise rents as high as he pleases once city rent control is eliminated?
- No. State law restricts the amount of allowable rent increases after a condo-conversion takes effect. For low income tenants, the owner can raise rents each year by an amount equal to the average of the last four allowed increases or the Consumer Price Index, whichever is lower. For moderate income tenants, the park owner is allowed to increase the rent to market rate in increments over four years. After the four years, there are no controls on rent for moderate-income tenants.
- Define low income.
- A single person who earns less than $38,800 per year, a couple earning less than $44,350 per year or a family of three earning less than $49,900 per year.
- What is the difference between rent-controlled rates and market rental rates?
- Residents of Carson Harbor Village and Colony Cove, which are subject to Carson’s rent control ordinance, pay about $500 and $400 per month, respectively, in space rent. Residents of Dominguez Hills Estates in nearby unincorporated Rancho Dominguez, where there is no rent control, pay $750 to $800 per month.
- That’s a big difference.
- It is, but tenants of rent-controlled parks say it evens out, because they pay a premium up front when they buy a mobile home subject to rent control. Homes at Colony Cove can sell for as much as $100,000, much more than homes at parks not subject to rent control.
- When a conversion takes place, do tenants have to buy their spaces?
- No. But many residents may decide that it makes more sense to seek financing to buy the space than to wait around for rents to increase sharply. They also will have to pay homeowners’ dues to finance maintenance and improvements to common areas.
- If they don’t like it, why don’t they drive their homes away?
- Most of these homes are mobile in name only. They are large, sometimes with three bedrooms, and most have not been moved since they were installed 30 years ago. It would be economically prohibitive, if not physically impossible, to move them. That’s why the mobile home industry is rebranding itself with the term “manufactured homes.”
- How much does a mobile home space cost?
- Figures have not been released for Carson Harbor Village or Colony Cove, but residents estimate spaces will cost in excess of $120,000.
- How can a senior citizen whose only property asset is an old mobile home finance a $120,000 loan?
- The state and the city are expected to assist with financing, but many seniors do not want to saddle their heirs with debt when they die. Many are likely to move rather than buy.
- Who benefits from a condo-conversion?
- The park owner benefits most directly. Colony Cove residents estimate that the park owner will sell lots at a price as much as three times what he paid for them. On many of the lots that do not sell, he will be allowed to increase rents much more than he would under the city rent control ordinance. Those tenants who choose to buy their lots may benefit from appreciation in the value of their land, but that is speculative.
- Can anything be done to stop a condo conversion?
- Not really. An appellate court ruling severely limited the restrictions that cities can impose on park owners during a conversion. Many residents are lobbying their cities to fight conversions in court, but cities have been reluctant to take on what they see as a losing proposition. The likeliest avenue for relief is a change in state law.