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Thursday, April 21, 2022

Colorado mobile home owners could find rent relief, aid for park purchases - The Colorado Sun

Samantha Stegner’s love for mobile home park living in Fort Collins, where she now lives with her husband, Mike, and their three kids, shines through in the “blessing box” she built as a free food pantry to help neighbors. And in the Little Free Library to which she recently added some Spanish-language offerings. And in the pet pantry she operates with the help of a local shelter.

It’s also the only house she and Mike, a warehouse worker, could afford anywhere in Fort Collins. They’re among an estimated 130,000 people statewide who live in manufactured housing, as mobile homes are sometimes called — a population that, collectively, would rank as Colorado’s seventh-largest city.

“Here, you have your own space,” Stegner says. “The affordability factor is there for a lot of people. But not if rent continues to go higher. We can’t do that.”

Her concern joins a rising chorus that continues to catch the ear of Colorado legislators. Just three years after landmark changes to state law sought to bring equity to a relationship long weighted in favor of park owners, two bills currently in the legislative pipeline go even further by pushing back on corporate acquisition in the mobile home park market. 

The most sweeping legislation, House Bill 1287, includes a proposal to cap annual rent increases at either inflation or 3%, whichever is higher. Proponents call the measure “rent stabilization,” made necessary by park owners like private equity firms, real estate investment trusts and others attracted to a profitable and loosely regulated industry. Opponents call it “rent control,” which is prohibited at the county and municipal level, and claim that it could remove incentives for investment in parks, thus threatening the affordable housing source the law would hope to preserve. 

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Another bill, Senate Bill 160, was spun off from the first and would establish a loan and grant program aimed at assisting mobile home owners who collectively wish to purchase their parks, should they come up for sale. The legislation, based on recommendations by the state’s Affordable Housing Transformational Task Force, passed in the Senate on Wednesday and now moves to the house. 

A previous update to the Mobile Home Park Act included an “opportunity to purchase” provision that creates a chance for mobile home owners to submit purchase offers for their park (more than 40 potential sales are currently listed on a state website). A few resident groups have purchased their parks, but many have found it difficult to quickly procure adequate funding. This bill, which faces no organized opposition, would provide both $35 million for low-interest loans and other assistance to resident buyers to ensure long-term affordability.

A flurry of park sales to corporate interests has coincided with complaints from all over Colorado about rising lot rents that cut to the heart of the mobile home conundrum. Residents may own the mobile homes, but a park owner charges rent for the ground beneath them. Unlike apartment dwellers, mobile home owners rarely have the option of picking up and moving if the economics become untenable. Most of the mobile homes are either permanently affixed to the lot or the cost of uprooting them can be prohibitive.

The Eagle River Village mobile home park is shown in Edwards on Aug. 28, 2019. The park is less than 10 miles from world-class skiing at Beaver Creek Resort and represents one of the last bastions of affordable housing in the area. (AP Photo/Thomas Peipert)

Home owners see costs mounting

At Harmony Village in Fort Collins, where Stegner and her husband have lived since 2010, she worries that they’ll never be able to keep pace with annual increases that have ranged from $23 to $42 a month. New arrivals pay even more, she adds, and she’s concerned that the park’s corporate ownership might also move to bring older leases like hers into line with the current rate — which, she notes, doesn’t include additional costs for water, sewer, trash and electricity.

“And then remember, we’re homeowners, too,” she says. “So when something goes wrong on our home, we pay for that repair.”

As costs mounted, Stegner, 35, began surveying other parks in the area — and later, around the state — and discovered rising rates for lot rents and other fees that seemed to coincide with the corporate purchases of many of Colorado’s mobile home parks. 

MORE: Read the Sun’s 2019 comprehensive report: “Parked: Half the American Dream.

She and others in Fort Collins, including mobile home owners on fixed incomes, took their concerns to Democratic state Rep. Andrew Boesenecker, whose district includes a large slice of the city. About a year ago, he heard from residents of a local age 55-plus community that saw increases approaching 40% over an 18-month period. 

Last June, after fielding an influx of resident emails, he and fellow Democratic Rep. Cathy Kipp and Sen. Joann Ginal co-authored an op-ed sounding the alarm. “It really opened up the floodgates to hearing statewide what’s been known for a long time,” Boesenecker says, “that residents can be in a very precarious place due to lot rent increases.”

He also enlisted a team to compile statistics on corporate ownership using a variety of publicly available databases. It concluded that almost two-thirds of Colorado’s mobile home lots now operate under out-of-state/multi-state corporate ownership, with nearly 70% of residents finding their lot rents, fees and living conditions controlled by corporate owners with properties in multiple states.

Among the increases that followed purchases by corporate buyers were lot-rent bumps that ranged from 20% to more than 80% and in some cases separated water and sewer service from lot-rent charges, adding cost to the home owners.

The 2019 revamp of the state’s Mobile Home Park Act — its first major revision since the 1980s — seized on mobile homes as a long-overlooked linchpin of affordable housing in Colorado. A series of reforms, spearheaded by Rep. Edie Hooton, a Boulder Democrat, moved toward leveling the playing field through a variety of measures, including creation of a dispute resolution process that wouldn’t require mobile home owners to hire a lawyer.

Also, significantly, they created an opening for residents to bid on their parks, should they be put up for sale. But even at the time, advocates regarded those measures as only a first step toward preserving the state’s largest source of unsubsidized affordable housing.

Key to the current effort, says Hooton, who’s a co-sponsor on this year’s House bill, is expanding the time residents have to organize and find financing for a park purchase so that it’s more consistent with other states that have opportunity-to-purchase laws in place.

“What my endgame is, and it has been since I began this mobile home odyssey, is to see communities self-owned and governed,” Hooton says. “And they don’t have to live with that constant fear of not knowing when lot rents are going to be raised and to what extent and living month to month, not knowing whether or not they’re going to be able to afford to keep their home or continue to live in their community.” 

Samantha Stegner, who lives in Harmony Village, a mobile home community in Fort Collins, worries that rising lot rents under corporate owners will price some residents out of their communities. (Valerie Mosley, Special to The Colorado Sun)

Park owners push back

Tawny Peyton, executive director of the Rocky Mountain Home Association, a trade group for manufactured housing, told lawmakers last month in a House committee hearing on House Bill 1287 that park owners are still trying to become familiar with the changes in the Mobile Home Park Act since 2019.

“That was a lot of regulation to pass on an industry in just three years,” she said. “To this, add a pandemic and all of the restrictions and regulations of the pandemic, and ask yourself, ‘What of those regulations work? Which ones don’t?’ We don’t even know. … I’m asking for more time for our industry to learn these changes to educate the residents, the owners, the operators.”

Drew Hamrick, general counsel for the Colorado Apartment Association, noted that while his industry is a competitor to mobile home parks — “When we see a mobile home park, frankly, we see it as a desirable site to build an apartment complex” — he sees the bill triggering the unintended consequences of discouraging construction of new parks or improving existing properties.

That’s the way rent control works. It motivates an owner to change the use of the property, not to make it nicer. I don’t want to change the use and I do want to make it nicer. But rent control disturbs the incentives.”

Robert Rosenfeld, Summit County mobile home park owner

“It’s the rent control piece that concerns my industry so much because artificial price controls affect the willingness of out-of-state investors to raise money and affect the willingness of developers to build new units,” he said. “I will not tell you it is catastrophic, but it is impactful.” 

Summit County park owner Robert Rosenfeld, an investor from St. Louis, pushed back on the narrative of large rent increases when he testified remotely at the committee hearing, saying that for the first 13 years under his ownership, his park had only four rent increases, the largest being 5%. He said he made several improvements when he first acquired the park and is considering more — but won’t move forward with them if there’s “rent control.”

TODAY’S UNDERWRITER

“That’s the way rent control works,” he said. “It motivates an owner to change the use of the property, not to make it nicer. I don’t want to change the use and I do want to make it nicer. But rent control disturbs the incentives.” 

Boesenecker contends that most of the so-called “mom and pop” operators he’s spoken with about the bill are already doing what the bill prescribes, even if they’re not thrilled with the idea of rent stabilization. But in the bigger picture, he says, most mobile home park owners are not relatively small-time operators anymore. 

Still, the concerns voiced by remaining mom-and-pop owners should be taken seriously, he adds. “But what we’re really up against are folks who have interest in Colorado only due to that lot-rent piece, and the equity that they’re able to drive through their investments,” he says. “That’s a very different calculation, I think, for those folks.”

Michael Peirce, left, and Doretta Hultquist stretch out a banner declaring their Sans Souci mobile home community in Boulder County to be resident owned on June 22, 2021. (Andy Colwell, Special to The Colorado Sun)

Protecting residents, returns

Boesenecker also disputes the idea that lot rent stabilization would discourage potential park owners from continuing to invest in mobile homes. Even at 3% increases per year, he figures the return on investment remains attractive. He says the bill’s proponents have reached out to the mobile home park industry “very heavily,” but that some park owners have been reluctant to even engage on the issue of rent stabilization. 

“What we hear from park owners who do engage, outside of trade organizations, is that they try to do 3-5% (rent increases) in any given year,” he says. “And that seems very reasonable to us. So I think there’s always room for conversation, always room for negotiation. We want to make sure that we provide resident protections while ensuring that fair return for our owners.”

Another key feature of the House bill that could aid residents interested in acquiring their parks is the right of first refusal for a public entity. Although residents alone have no such right to match a seller’s competing offers, the bill would permit a residents group to assign their purchase rights to a public entity — like local, tribal or state government or even a nonprofit organization. 

The public entity could then negotiate on behalf of the mobile home owners and retain the right to match any offer. In the event of a sale, the homeowners and the public entity would craft an agreement regarding ownership and management of the park and allow those organizations to preserve affordable housing within their communities.

“I think what that’s going to do is really build on the momentum that we’ve seen,” Boesenecker says.

The bill, which next comes up for consideration in the full House and appears to have the votes to pass, could face some modifications when it moves to the Senate, says Sen. Faith Winter, a Westminster Democrat. “I think the heart and soul of the bill is passable,” she says, “and it will stay intact, including the rent stabilization piece.”

Hooton, who sees lot-rent stabilization as a “bridge” to resident ownership, says she anticipates that scarce inventory and rising housing prices in general eventually will trigger demand for broader, local control over rent, but acknowledges that such a hot-button change isn’t going to happen this year. She sees no problem with curbing high rates of return that attract corporate investors to mobile home parks.

“If that makes investing in mobile home communities as a commodity less attractive to them, I’m sorry about that,” she says. “But there are many ways to invest without taking advantage of people who can’t afford annual lot rent increases, just to provide profit to a large corporation.”


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Colorado mobile home owners could find rent relief, aid for park purchases - The Colorado Sun
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