By BENNETT HALL Gazette-Times business editor Monday, April 23, 2007
With the cost of land rising rapidly, thousands of mobile-home owners around Oregon have found themselves forced to move as their parks have been sold for high-value redevelopment or to investors who jack up space rents to maximize returns.
A year ago, the residents of Lakeshore Estates near Corvallis thought they might be joining the sad exodus of displaced doublewides. Now they’re on the verge of becoming just the second group of mobile home residents in the state to buy the park they live in. “We’re hoping to close by the first of March,” said longtime resident Jim Foster.
Lakeshore Estates opened in 1969 on the banks of Colorado Lake, a cutoff stretch of old Willamette River channel that used to be a popular recreation spot for locals, with swimming, fishing, boat rentals and even dancing on warm summer nights.
The 44-space park still has a rural feel, with tall firs towering over a mixed collection of old and new homes laid out along winding asphalt lanes. The space rents are modest, averaging just more than $300 a month. “We’re like our own little city back here,” said Janice Statham, an 18-year resident with a lakefront space. “It’s quiet. We’ve got the geese on the lake, and we have herons and egrets. We have a visiting eagle.” The people who live here range from young families in starter homes to retirees who thought they’d never have to move again. But about a year ago the owners started talking about selling the 13-acre property, and residents started to worry.
“There’s no rent control on mobile-home parks,” Foster said. “A new owner, they could give 90 days’ notice and raise the rents to whatever the market would bear.” Relocating would be a serious hardship for most of the residents. Moving a mobile home is a major operation that can cost $5,000 to $10,000 — if you can find a place to move it to. The number of parks in Oregon is shrinking, and many won’t accept older units. As Foster put it: “Mobile homes are not that mobile.”
The problem has accelerated in the last five years. Since 2002, according to data compiled by the state, more than 60 mobile-home parks have closed around Oregon, taking nearly 2,300 spaces off the market. Those numbers are probably low; not all park closures are reported.
A creative solution
Until now, only one group of Oregon mobile home residents has bucked the trend. In 2003, the residents of Springlake Park, a 147-site community near Scappoose, pooled their resources to buy their park. The $6.6 million deal was put together by Beaverton lawyer Anthonie Woller and Deane Sargent of PMC Financial Services, a California company that specializes in the emerging resident-owned mobile-home park niche.
That’s where the Corvallis homeowners turned for help. As he did with Springlake, Woller helped the Lakeshore Estates residents form a nonprofit mutual benefit corporation, run by a co-op with Foster as president, so they could deal with the property owners as a single entity rather than separate individuals.
Sargent helped them put together an innovative financing package to buy their park, which worked out to around $2.1 million for land and transaction costs. “It’s essentially a fairly sophisticated, highly leveraged buyout of a mobile-home park by folks who’ve never done this sort of thing before,” said Sargent, who’s been involved in more than 30 park purchases around the country. “It’s held together by baling wire and rope and chewing gum and all these things, and you never really know what the final deal is going to look like until it’s all over.”
The centerpiece of the Lakeshore Estates deal is a $1.7 million mortgage from Column Financial, a subsidiary of Credit Suisse First Boston. That covered about 85 percent of the cost, but to get the mortgage and swing the rest of the deal, the residents had to come up with $400,000 in equity. To raise the equity, the co-op sold shares in the corporation. Priced at $13,000 apiece, the shares grant members a 99-year lease on the land.
Few if any of the Lakeshore Estates homeowners had that kind of money lying around, so they needed additional financing. That came in the form of share loans from ShoreBank Enterprise Cascadia, a community-development lender in Ilwaco, Wash.
The state of Oregon also helped out with a $100,000 loan to be repaid at closing.
To date, 31 of the park’s current 42 residents (two spaces are empty) have bought shares in the corporation. Residents who didn’t have much cash could buy in for a minimum down payment of $600, with the rest covered by loans. Those who don’t buy shares can continue to rent from the co-op.
Putting the transaction together involved a lot of work from the co-op board and other Lakeshore Estates residents, who found they had a million details to work out, from writing up bylaws to overseeing property-line adjustments.
“It’s been a long slog,” Foster said. “We’ve been meeting weekly for about a year.” The whole package will have to be refinanced 10 years from now, after the residents have built up more equity in the park. To get to that point, space rents are jumping up to $429 a month. But that increase is temporary. “Over time, those rents will come down,” said Bert Cleary, the co-op vice president.
And that — along with the security that comes with living in a resident-owned park — has suddenly made Lakeshore Estates a very attractive community for mobile-home owners. “We have two vacant spaces, and we’re already getting calls — I got one from Arizona and another from Sacramento,” Foster said. “Because this is a nationwide problem.”
By the numbers
1,342 – Mobile home parks in Oregon
67,650 – Open spaces in state
61 – Oregon parks closed since 2002
2,291 – Spaces lost in last 5 years
Source: Oregon Housing and Community Services Department
Editor’s Note: I’ve included this article even though it describes a situation in Oregon, not in California. It is a good example of the process by which residents can purchase their park. Residents now do not fear the future! They have a voice in the management of THEIR park. And they can take pride knowing they can improve their property.
CoMO-CAL supports such purchases. As soon as escrow closes, the HOA resident organization becomes the owner of the park. As noted in the article, rents have had to increase, but will come down over time.
We understand this situation does mean residents have to be more active in park affairs and take an interest in their park.
Deane Sargent can be reached at Deane Sargent, PMC Financial Services
650-375-8043 650-375-8132 fax