Is turning manufactured housing parks into resident-owned cooperatives a key to preserving Oregon’s stock of affordable housing?
To hear Travis Blythe and Dan Fountain talk about the Vida Lea Mobile Lodge, you’d think it is the most beautiful place in Oregon, if not planet Earth.
“It’s in the mountains,” says Blythe, 67. “This park is still in the tall pines, and it’s still on good well water, instead of city water. It’s above the fog level of the valley, but it’s far enough down where it’s below any heavy snows. It’s one of the prettiest parks around.”
Vida Lea is located just off the McKenzie River Highway between Eugene and the Willamette National Forest. A single lane road curves up a small hill with single and double-wide manufactured homes on each side of the street, nestled into the trees. Residents can walk down the hill and across the street to the MacKenzie River and a nearby park.
But Vida Lea has deteriorated in the past few years to the point that it “just drops my jaw,” says Fountain, 59, who has lived in the park for eight years.
The road is cracked and needs repaving. A windstorm from last March felled a number of trees that stuffed the culverts and blocked drainage. Its septic system is close to failing. Fountain also says blackberry bushes have slowly grown throughout the park, becoming an eye sore in an otherwise beautiful area.
Vida Lea’s residents are ready to take control of their park. On Saturday, Jan. 20, 17 residents sat down together in a meeting room located in Leaburg’s fire station. Present were staff of CASA of Oregon — Community And Shelter Assistance Corp. — a nonprofit housing developer that runs the Manufactured Housing Preservation Program, whose goal is preserving manufactured housing parks as affordable housing by helping park residents purchase their park and become non-profit cooperatives.
It was the last of many meetings Vida Lea’s residents had together and with CASA’s staff since July to decide whether to purchase the park and become a cooperative, a decision both exhilarating and somewhat frightening.
After hearing CASA’s staff run through the financing allowing the residents to purchase Vida Lea — which includes low- or no-interest loans, grants, and a temporary rent increase the residents elected to impose on themselves — the 17 residents present, representing a majority of 24 residents willing to become a cooperative, voted.
It was unanimous.
“They’re ready to be in charge of their own futures,” says Julie Massa, CASA’s resident organizer, who has provided Vida Lea’s residents with countless hours of technical assistance, counseling and support.
CASA is now in the process of finalizing the park’s $1.25 million purchase, expected to close in mid-February. Vida Lea’s residents will then become responsible for the park’s maintenance, property taxes, legal issues, and all the other rights and responsibilities associated with being a property owner.
It’s not something many Vida Lea residents — all of whom are 55 or older — envisioned for themselves when they first moved to the small manufactured housing park, most often to downsize their lives and transition to retirement.
But like residents in other manufactured housing parks around Oregon who face yearly rent increases that strain their low or fixed incomes, or the threat of out-of-state landlords or companies that will evict them and demolish the park to redevelop it, Vida Lea’s residents feel the pressure of knowing that their homes may not always be there, much less affordable. It’s up to them to rise to the challenge of saving not only their homes, but their way of life.
Manufactured housing parks are planned communities made up of manufactured, or factory built homes. Not built on site, the homes are transported and deposited to the site and hooked to electricity, water and sewer.
There are between 1,000 and 1,100 manufactured housing parks in Oregon, making up 10 percent of all housing in Oregon. It is unknown with certainty how many people live in the parks, though estimates hover around 100,000.
CASA began working to convert parks into cooperatives in 2007, after a period beginning with the housing boom in the early 2000s and lasting until the real estate and housing market crashed, bringing the economy along with it. That period might be considered manufactured housing’s version of an apocalypse.
Between 2001 and 2007, 69 manufactured home parks closed, displacing approximately 2,800 people. In every case, the park owners sold the park to companies or individuals who demolished the parks and redeveloped the land.
“For three years, it was a mad house,” says John Van Landingham, a Eugene-based Legal Aid attorney who advocates for park residents. “I never anticipated that parks would convert to another residential use. Never. I just assumed that if someone built a park, it would stay a park forever.”
“We hadn’t seen anything like we saw in that time period,” says Andree Tremoulet, a research associate at Portland State University’s Center for Urban Studies. “Parks sometimes do close because they’ve reached the end of their life, or an owner dies and the family doesn’t want to keep it. That’s pretty unusual.”
It was pure, unadulterated capitalism happening right before their eyes.
The park closures were devastating to Van Landingham and others because manufactured housing may be the largest and most affordable type of housing in Oregon. Residents of manufactured housing parks tend to be low-income, elderly, on fixed income, or a combination. Tremoulet’s research found that almost 65 percent have incomes below $30,000 a year. Many parks, such as Vida Lea, require that residents be 55 years of age or older, making them an important source for seniors wishing to live independently.
The rental situation of park residents is unique. They own their home, and rent the lot space the home is located on, typically paying rent to someone who owns the entire park. Manufactured homes come cheap. They most often range between $35,000 and $60,000. Fountain bought his double-wide home for $45,000 using money from the sale of his previous home.
Living in a manufactured housing park is incredibly affordable (some would even say cheap). Fountain pays $380 a month to rent the space for his double-wide home, a 40- by 60-foot lot. Blythe pays $430 a month, which is as high as the rent gets at Vida Lea.
Because of manufactured housing’s affordability without relying on government subsidy, advocates think continued park closures would be “a huge blow to the stock of affordable housing,” Van Landingham says.
“It’s an asset that needs to be protected,” says Peter Hainley, CASA’s executive director.
Closures ceased with the recession, a welcome respite to Van Landingham and others, who immediately began thinking of ways to prevent future closures. Van Landingham visited New Hampshire, home of the organization Resident Owned Communities USA (ROC USA), that has converted 92 parks in the state into resident-owned cooperatives since 1984. The organization also provides training to organizations throughout the country interested in replicating the model in their state.
Van Landingham started working to create a similar model. He and other affordable housing advocates successfully lobbied for numerous changes in state law during the 2007 and 2009 legislative sessions, protecting park residents and encouraging the creation of resident-owned cooperatives.
The changes included allowing the creation of nonprofit cooperatives (before, organizations could become nonprofits or cooperatives, but not both), creating a capital gains tax break for park owners who sell parks to residents, creating a $5,000 tax credit for residents who move their homes if a park closes, creating a lottery-backed bond program helping finance park purchase, and a law requiring park owners to pay residents a moving stipend if the park closes. Depending on whether the homeowner owned a single, double or triple wide home, they would be paid $5,000, $7,000 or $9,000.
“That was a really big victory,” Tremoulet says. “It was a moment whose time had come.”
Van Landingham approached CASA of Oregon to gauge the organization’s willingness to become Oregon’s version of ROC USA. “It scared the shit out of me,” Hainley remembers. “We had never organized people to own their own homes.”
Not knowing what to expect, he and his staff created CASA’s Manufactured Housing Preservation program and began finding parks to convert into resident owned-cooperatives. The experience has been one of baptism by fire.
To date, CASA has helped convert three parks in Gold Beach, Redmond, and McMinnville. The process of purchasing Vida Lea is expected to be complete sometime in mid-February.
Converting manufactured home parks to resident-owned cooperatives is a multi-step process that takes months of work to secure the park’s purchase and enable residents to be prepared to own the park’s land.
CASA has a three-person team working together on park conversion: Chelsea Catto, the program’s director who works mainly to secure financing for park purchases; Mary Rose Ojeda, a real estate broker who communicates with sellers and real estate brokers, and finds parks that are for sale and could potentially be converted to cooperatives and Julie Massa, the program’s resident organizer who communicates and assists residents throughout the process.
Among the factors to be considered are whether the park is on city water and sewer, or a septic system; the level of deferred maintenance and repairs needed, and whether there is a high vacancy rate.
If CASA thinks the park can be converted, CASA submits an offer to purchase the park to the owner. At the same time, Massa and Ojeda meet with residents for the first time to introduce themselves and explain what it means to convert the park into a cooperative and ascertain whether residents are interested.
It’s resident interest that ultimately drives the park conversion process. “If at any point they decide they don’t want to purchase the park, the deal’s off,” Ojeda says.
CASA first contacted the Vida Lea residents in July. As with CASA’s previous park conversions, they were initially met with skepticism. “There were a lot of questions,” Blythe says. “They were skeptical of having to go out and borrow money and make these payments. It was hard to convince them until we actually got the figures down in black and white.”
“The more we learned about it and how it worked, the majority of us, I think, became a lot more interested in doing it,” Fountain says. “We could see the advantages to it. One of the advantages is having control over what happens to the park, and being able to control our rents.”
“The point we try to make to them is that the park is going to be sold to someone,” Catto says. “They’re more than likely to raise your rent.”
To be a resident-owned cooperative means that residents jointly purchase the park and own “shares” of the park.
CASA wants to have at least half of the park’s households agree to be co-op members as the park conversion moves along. Typically, Catto says, a little over half immediately become members. “Usually, there are holdouts who don’t think it’s going to happen,” she says, and once the sale gets the closer, the number of members nears 100 percent.
Park residents form an interim board of directors (a permanent board is elected after the purchase). Meeting at least twice a month, the board’s main responsibilities are writing and approving bylaws that set out how the park will be operate as a co-operative. It also gives the board the authority to purchase the park. They also act as liaisons between CASA and the rest of the park’s residents.
Residents who don’t join the co-op are unable to vote, be on the board or committees and don’t have any say in the operation or maintenance of the park. They are also charged a slightly higher rent — $25 per month more, for instance — that creates an incentive to get people to join. Once the park becomes a co-op, any new person moving into it is required to become a member. “You’re moving in because you bought into the whole idea,” Catto says.
CASA updates residents on the progress of the purchase. “It really takes a lot of time,” Catto says. “Residents like face-to-face time. It takes so long to learn, and it’s such a unique process. You’re not just doing development work. You’re doing counseling, mediation, conflict resolution, and you’re dealing with specific personalities.”
“There’s lots of questions about the process,” Ojeda says. “We just meet with them as often as needed.”
While the interim board is laying the foundation for the co-operative with Massa’s help, Ojeda continues to communicate with the park’s seller. And Catto works to put together a financing package to pay for the park’s purchase. Purchasing the parks is completely dependent on CASA’s ability to secure loans and grants; the park’s residents do not have the income or savings to pay for the purchase. The purchase price for the parks CASA has converted have been between $800,000 and $1.5 million; the purchase price of Vida Lea is approximately $1.25 million.
The goal, Catto says, is to purchase the park at as close to market value as possible. “Lenders aren’t going to approve much over market value,” she says.
Among the financing for the Vida Lea purchase is a $600,000 grant from the Oregon Housing and Community Services department, a loan from the Network for Oregon Affordable Housing (NOAH), an affordable housing developer, and other sources. The residents also agreed to a small rent increase of between $15 and $25 per month. “It changes,” Catto says. “I’m always searching for different financing sources.”
The process has not been without its setbacks or challenges. There were some points when it seemed that the seller was no longer interested in selling the park. And during a routine assessment of infrastructure, which CASA does as part of the conversion process, it was discovered that Vida Lea’s septic system is, Massa says, “going to fail at any moment.” New septic tanks and drainage fields will be needed, to the tune of between $250,000 and $300,000.
Perhaps the biggest challenge to Blythe and others was simply calming the nerves of residents who worried the financing would not come through, which jeopardized the entire deal. Until residents received word that Oregon’s Community and Housing Services department would be giving them the grant, many doubted it would actually happen.
“We wouldn’t have been able to buy it,” Blythe says. “The monthly payment for a loan would far exceed the input from the rent.”
The process to purchase Vida Lea is nearly finished. Members of the board, along with CASA, will make presentations to the various organizations providing grants and loans. After that, the money will be released. And by mid-February, CASA will assign the purchase and sale agreement to Vida Lea’s co-operative, allowing them to formally purchase their park.
Is turning parks into resident-owned communities the solution to preserving manufactured housing? Even the CASA staff think it’s not possible to convert every park in Oregon. Some owners won’t be willing to sell them, and the purchase price of some parks, such as Hayden Island’s, may be too large to secure financing.
Rita Loberger lives in Tigard’s El Dorado Mobile Villa park and is a board member of Manufactured Housing-Oregon State Tenants Association (MH-OSTA), a group that advocates for manufactured housing park residents. She thinks it’s impossible to convert her park.
“The park has the original plumbing in it,” she says. “They have never been replaced and are becoming very porous. They’re leaking. It would be millions of dollars.”
Van Landingham says there will be residents who will be happy in their retirement and unwilling to do the work needed to sustain a cooperative. Peter Ferris, a park resident in Waldport and uncompromising manufactured housing park advocate who created and headed up the organization Oregon Manufactured Homeowners United until he recently resigned, says that if CASA converts one park a year every year, it will take until 5030 to finish. “It’s piecemeal” against the forces of powerful and rich real estate, he says.
There is at least one more law Van Landingham would like to get on the books that would give tenants an “opportunity to purchase,” a sort of right of first refusal that would give them the first opportunity to buy the park if it went on the market.
“The park is beautiful now, but it’s going to be really beautiful when we get through redoing everything,” Blythe says.
In the coming months, Blythe will help oversee all the maintenance and repairs at Vida Lea. “I want to make sure that the park is run in a proper manner and that all our goals are completed in a timely manner,” he says.
Fountain says it is important for the repairs to take place right away. “We’re all low-income people,” Fountain says. “We can’t afford any big hits down the road. (When) we get it fixed and updated … we won’t have any major expenses hanging over our heads.”
Another goal of the co-operative’s members is to replace the RV section of the park with units that are more permanent so that all of Vida Lea’s residents live at the park on a permanent basis. “That is our goal,” Fountain says. “It’s going to take a few years, but I think we can get there.”
Another thing that will take a few years is something you don’t hear very often when you talk about rental housing: lowering the rent. Blythe says that once repairs are complete, maintenance costs will be low enough for the co-operative to start building a trust fund that can be used to subsidize rent payments. “We’re a nonprofit. We don’t need to make a profit,” Fountain says. “Our whole goal is affordable living.”
“I’m really looking forward to it.”
Rent control eludes manufactured housing residents
A phrase on the tips of affordable housing advocates’ tongues when talking of ways to preserve manufactured housing parks is a government regulation and reform that is anathema to landlords and the real estate industry: Rent control.
“Rent control has been the Holy Grail for park residents (for years),” says John VanLandingham, a Legal Aid attorney who advocates for manufactured housing residents.
Rent control allows local government, through an ordinance or law, to regulate and control the rent of rental housing. Governments can thus create a rent ceiling, prohibiting landlords to charge rent that is higher. Local government can vote to raise the rent, usually in accordance with inflation as defined by the Consumer Price Index.
Advocates say that by controlling rents, people on fixed or low incomes are able to stay in their homes, rather than be forced to move when the rent becomes too high for them to pay.
The state legislature passed a law in 1985, amending the state constitution to prohibit rent control. The majority of states have similar laws, while five, including California, have laws allowing local governments to control rent.
In Oregon, there is no limitation on how often rents can be increased, or by how much. The only requirement is that landlords must give residents 90 days notice of a rent increase.
“They can just raise them at a whim,” says Herman Kachold, a resident of the Hayden Island Mobile Park, located in North Portland. “They don’t have to give any reason.”
Rent increases at manufactured housing parks vary from park to park. Pam Ferguson has lived at Hayden Island Mobile Park for eight years, and says her park has “seemed to get a rent increase every year.” Typically, the increase is $10 a month; $120 for the year. One year, however, her rent increased another $35 a month, and the rent of residents living along the Columbia River increased by $55 a month. “That was huge,” Ferguson says.
In contrast, Ferguson rented a house in Gresham for two and a half years. The rent at that house never increased.
“There are too many people in our community who are being squeezed,” Ferguson says. “That extra $10 going to their prescriptions, toward the electricity, toward the water.”
Rita Loberger says the rent of her home in Tigard’s El Dorado Mobile Villa has increased nearly 33 percent during the 14 years she has lived there. Originally, she paid around $400 in rent. Now, she pays $650 a month.
El Dorado has been owned for the last 10 years by a California-based company that Loberger thinks is solely interested in profit-making through collecting rent. “It’s pure greed, but they can do it,” she says. “And we can do nothing, because we don’t have rent control.”
Peter Ferris, who is a manufactured housing resident and recently resigned as the executive director and lobbyist of the advocacy group Oregon Manufactured Homeowners United, agrees with Loberger.
“Their strategy is to purchase these parks … hold on to them, do as little as possible (in maintenance) and raise the rent,” he says.
Residents that cannot afford to pay increased rent often move, but at a high cost. Manufactured home owners could move their home, but the homes are often so old that moving them would damage them permanently. It costs between $20,000 to $35,000 to move the home to another site, money many residents don’t have.
“They’re probably going to lose their home,” VanLandingham says, or “sell for a song.”
Legislation allowing local rent control has been introduced in almost every legislative session, but failed to gain traction because of opposition from the real estate industry and landlords.
“(Rent control) sends a chilling message,” says Chuck Carpenter, the executive director of Manufactured Housing Communities of Oregon, which represents park owners. “It is a signal to the owners that government is better able to determine how an investment should be managed.”
Last year’s legislative session saw two bills related to rent control. Ferris worked with Rep. Peter Buckley (D-Ashland) on a bill that would have required landlords to raise the rent once a year, according to inflation as defined by the Consumer Price Index. Additionally, it would have created a program facilitating a dispute resolution process between landlords and tenants in regard to rent increases.
The bill died a quick death. “The Republicans just wouldn’t even give us a hearing,” Ferris says.
And Rep. Tina Kotek (D-Portland) sponsored a bill allowing local governments to enact rent control laws for manufactured home parks. The bill received one hearing, and died in committee.
Kachold thinks landlords should at least be required to justify their reason for rent increases. “I don’t see the corresponding increase in their costs,” Kachold says, whose rent has increased by $100 since moving to the Hayden Island park in September 2007. “Did their taxes go up? Did they have to hire more personnel? Did they have to increase the costs to maintain the park?”
But Loberger can see how rent control could have negative consequences for manufactured home park residents, particularly when it comes to the owners paying for maintenance and upkeep. “There’s going to be a number of those owners who say ‘sorry, I can’t fix that water pipe because I don’t have the money,’” Loberger says.
