It may be hard to believe, but in the red-hot housing market of the Bay Area, there are some homeowners who may still lose money when they sell their homes. Thousands of mobile home owners are feeling the squeeze from a corporation that owns the land beneath their homes. Four years ago, retired law Professor Herb Rossman got the shock of his life. “It was our yearly letter telling us about the increase,” Rossman says. “I got to the end of the letter and I like, did a double-take. They said the market rate on our space here would be 5000 dollars a month. ”Professor Rossman and his wife Anita are homeowners in Santa Cruz. But their house is a mobile home, so they only own the structure, and not the land it sits on. They were asked to pay $5,000 a month for a 70-foot long patch of dirt. It was more than five times what they had been paying. What’s worse, the rate hike would make it extraordinarily difficult to sell the place.
The landlord for their plot is a company chaired by billionaire Sam Zell, 24th on Forbes Magazine’s most recent list of the world’s wealthiest people. Zell’s known as the nation’s biggest landlord. His company holds interest in Bay Area landmarks like the San Francisco Ferry Building, San Jose’s Skyport Center, Walnut Creek’s Treat Towers, and Concord’s Corporate Center. His company is also the largest owner of mobile home parks in the country. The company wants to cash in on the rising cost of Bay Area real estate, so they are raising Bay Area rents by up to 68 percent. In area’s where there is rent control Zell’s company Manufactured Home Communities, or MHC sues the system. George Kevocevich defended Santa Cruz against MHC for two years, and the city’s legal bills soared.
Eventually, Santa Cruz had to weigh the interest of just a few hundred people against the enormous costs of fighting further. “You got to enter that into the equation, is this a disproportionate expenditure of funds,” says Kevocevich. Santa Cruz agreed to a settlement that will keep MHC from charging that $5,000 rent until the Roosmans sell their home. But MHC is still looking for big profits in other places, using its resources to wage legal war on cities often hampered by budget trouble. Now homeowners in another Bay Area community are counting on their city to stand between them and MHC.
Tineke Colenbrander bought her mobile home in San Rafael’s Contempo Marin Neighborhood. It was supposed to be her nest egg. But MHC has sued San Rafael, and if they’re able to break the city’s rent control rules, rates could double. Tineke and many of her neighbors will be priced out. But with skyrocketing rents to pay who would want to buy the homes? We tried to ask Sam Zell if his company was taking equity that belonged to homeowners, but he cancelled our interview. When we caught up with him at a conference in Beverly Hills, he warned us he would leave if we brought up the issue. Zell’s lawyer tells us the equity is attached to the land, and therefore belongs to the company.
San Rafael hired Attorney Michael Von Leowenfeldt to defend its rent control. He says the city believes the value of that equity should be shared. “The landlord gets a fair return on their investment. And that’s, frankly, I think all they should get in terms of fairness,” Von Leowenfeldt says. “And the homeowner gets a fair chance to sell their home for more than they bought it for, just like anybody else who owns a home. “That’s a wrenching balance for Tineke and other tenants who now find themselves torn between the two strongest forces in America – Owning a piece of it, and maximizing its wealth.
“They acted very imperiously, very high-handedly. Basically they told us, you know, this is our place and as far as you having any equity, you don’t have any equity. All the equity here belongs to us,” says Herb Rossman.If you’re wondering why homeowners don’t just move their houses when rents go up, modern mobile homes really aren’t very “mobile” once they’re set in place. In the meantime, tenants got some help last month when the U.S. Supreme Court upheld the right of local governments to set rent controls for places like mobile home parks.
THE ABOVE NARRATIVE IS FROM A CBS CHANEL 5 BROADCAST DATED JUNE 10, 2005
http://cbs5.com/30minutesbayarea/local_story_162010247.html (click on the “Manuel Ramos reports” to the right of the story headline after the website pops up to view the video)