Slow expulsion from Paradise: Part 2, the war of attrition
[Some previous posts on Paradise Park may be found in Part 1, Part 2, Part 3, Part 4, Part 5]
[Continued from yesterday's Part 1.]
With
At least, because we think we’ll win
As we saw in yesterday’s how we got here, you’d be wrong. From the Paradise Park Homeowners Association ‘dear friends’ letter:
Finally, 2 ½ years after the residents began, they have reached the New Jersey Court of Appeals:
Not all of those who originally sought protection are still pursuing the case. From Ms. Dibble’s email to me:
The war of attrition is been hot and heavy. We originally had many more homeowners. Mr Bollerman has gotten about 15 of the homes. Some through the death of the homeowner, at which point he then says that the lease is canceled. Then the estate needs to sell and there are no buyers because everyone knows that the park has been purchased by a developer, so they end up selling dirt cheap to Bollerman – one home went for $4,000.
Unique among real estate asset classes, mobile homes do not appreciate in value. As my friend in government Mr. E. put it:
Put these three factors together and you find that virtually every one of the six homeownership attributes can be compromised, or entirely confiscated, by an unscrupulous mobile home park operator.
1. Unlimited appreciation can be eaten by higher space rent.
2. Right to sell can be economically neutered by higher space rent to an incoming tenant. (Many states have laws prohibiting move-in or move-out fees, but changing the rent on turnover accomplishes much the economic same thing while conforming legally.)
3. Financeability. I have heard numerous horror stories that, in general, lenders will not refinance an existing mobile home because the aging collateral is not economically recoverable.
4. Controllable occupancy cost. Clearly absent in any year-to-year space rent situation.
5. Improvability. Available to some limited degree.
6. Secure tenure. Only if you can cope with rising space rent.
A modern double wide, a vastly improved physical structure
The scorecard? One half out of six. As I commented in the homeownership attribute post:
US counterexamples, as we have seen, are in mobile homes, which sit atop land leased to the home owner by the mobile home park operator. It should be no surprise, therefore, that some states and localities have adopted anti-eviction laws or relocation benefit requirements, or even rights to buy at negotiated or formula prices. To do otherwise places the mobile home owners at risk of the cruelest blow of all — being evicted.
These impossible economics revealed themselves in
When a seller does find a buyer he discourages the buyer or refuses to qualify them for a lease and argues the price downward. He has used his first option to purchase several times to prevent a pending sale.
As a general rule, I dislike rights of first refusal, which chill markets and inhibit owner value. Here the park owner has a stacked deck: he has a right to match the last price, and he has a right to approve any buyer.
Make a bid, any bid
He can guarantee he’ll win the game by refusing to let anyone capable play against him.
The homes had been left empty but recently he has started to rent them out to a lovely class of people. Most of the people who he has leased to are friends and relatives of the resident super for the park. The super has had a brisk business selling off or accumulating the fixtures, furniture, and other household goods of the people whose homes his employer has leveraged the purchase of.
The images so conjured are horribly Dickensian.
‘Street urchin’ sounds much better than ‘homeless child,’ don’t you think?
Then there are these charming details:
Elsewhere in the world, we speak of anti-poor governments, and it’s with a shock that we discover them right here at home, cloaked in the arcana of zoning:
Only I know the mysteries of the zoning laws
One of the things that happened in the re-zoning of the park is that they removed manufactured housing as a use in the zone and now we are a non-conforming use. We would like the council to add MH housing back into the MD zone as a permitted use. That would be better for us when we win!
From the perspective of pure real estate economics, mobile home parks are a high-cost, low-benefit use, as I pointed out to a local reporter (whom I later quoted on the blog):
Mr. Eaton would serve both his clients and the city well if he produced a memorandum of law and fact setting forth the situation at
However, from a purely financial standpoint, Smith supports the intellectual underpinnings of those seeking to rezone the mobile home park. Citing a 2001 study [More like an analytical essay — Ed.] by Richard Genz entitled “Why Advocates Need to Rethink Manufactured Housing“, Smith said that with an average mobile home community, a municipality typically pays more to provide services than the property produces in tax revenue. This can be explained because the typical mobile home park does not produce a great deal of real estate tax revenue while it consumes a great deal of utilities and typically places a high number of children in the school system.
To be completely clear, my point is simply that, if a locality is an economic enterprise – which it is – then there are better investments for its land than mobile home parks.
From the municipality’s perspective, Smith argues “more or less any other use of the property has a better cost-benefit analysis.”
The park’s existence on this magnificent site is a historical accident … but that having been said does not ipso facto give the locality the right to evict the residents without regard to their legitimate expectations and their rights under the law.
Given that it has an obvious conflict of interest, one has to wonder at the town’s impartiality:
The other major thing that you don’t know is that the town also rezoned the other MH park in
Local economics running roughshod over principle?
People were outraged about it and they mounted the same petition challenge that
When one can’t get the votes, change the number of votes you need!
Or let some people vote twice
Fighting local tyranny often requires outsiders:
This is one of the reasons that a nationwide organization called RocUSA [Short for resident-Owned Communities – Ed.] Paul Bradley, President, has been developed (based on the
New Hampshire has strong resident-protection laws; many other states (like California) do not. There are some preservation efforts:
Carolyn Carter of the National Consumer Law Center […] just helped the MH homeowners in Delaware to draft a law that is much better than New Jersey’s and which was just signed into law.
But all the technical assistance in the world doesn’t help if we can’t enforce the opportunity to purchase law in
Ms. Dibble’s ‘dear friends’ letter does a good job framing what is at stake, not just for her community but throughout
I wanted to clear something up. We have never wanted to leave the park. We argued for the compensation in the event that we lose and have to go.
Even if the legal process calls a halt to eviction and conversion, and grants the residents a shot at buying their land, they have another hurdle to surmount:
We are still hoping to purchase the park but we have had to go back to our potential lenders and ask about different loan scenarios, if we purchase the park we will not have the same income as we thought we would have originally.
The seals are just nice and I can see them in the winter from my front porch.
If I can give you any more information I would be happy to do so.
Thank you for all of your help and please wish us luck.
Good luck, Lori.
It is necessary that the decent people stick together and stay under cover. – Voltaire.
And have the scratch to buy back your rights
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