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The state’s new “opportunity to purchase” provision comes with no guarantees. And fledgling co-ops find that in the law’s early stages, resources are scarce.
When Colorado lawmakers recently turned their attention to mobile home parks for the first time in decades, one particular bill inspired some residents to start thinking big — beyond the chronic battles with park owners over rising rents and questionable evictions.
A new provision in the Mobile Home Park Act, which went into effect in June, gives residents the opportunity to purchase the property where they’ve parked their trailers — permanently, for the most part — and start calling their own shots as a cooperative. And now, some are seizing that opportunity, banding together and taking steps toward purchases aimed at preserving a lifestyle that represents the state’s largest nonsubsidized affordable housing option for more than 100,000 Coloradans.
But a process that in the best cases can be difficult is even more fraught in the age of coronavirus, when many residents’ economic health has been compromised as the need to secure housing certainty looms even more critical.
MORE: Read “Parked: Half the American Dream,” the Sun’s statewide look at the unique issues facing mobile home residents across Colorado.
Anecdotally, multiple mobile home parks across the state have announced to residents their intent to sell, as required by the new law. But the state Department of Local Affairs, which manages the Mobile Home Park Oversight Program, said that DOLA hasn’t yet determined the exact number of parks that have given notice.
However, residents currently testing this opportunity have confronted significant challenges — from gaining access to capital for multi-million-dollar transactions to taking on debt burdens that would price some of their neighbors out of their communities.
Residents tackling this new business and legal terrain are working on potential deals from the Western Slope to the Eastern Plains. But experts say that the resources and experience that have allowed states like New Hampshire, where about 30% of mobile home parks are resident-owned, to do these deals since the 1980s just aren’t in place yet in Colorado.
“It’s too early to say how this will work in Colorado,” said Doug Ryan, interim director of policy at Prosperity Now, a Washington, D.C.-based advocate for financial and housing issues. “They need to attract capacity building for residents, resident organizations and capital that’s available. Other states have been doing this longer, so there it’s a mature environment and industry.”
Ryan notes another factor that could work against Colorado mobile home residents hoping to buy their parks. Return on investment is so high, and financing so cheap, that in this environment park owners may be reluctant to sell. There also has been consolidation in the industry — many mom-and-pop operations have been gobbled up by investors with large portfolios. Now, those corporate entities may not only be better equipped to outbid resident co-ops, but also have the industry expertise to limit their expenses.
“You need communities up for sale,” Ryan said. “Absent a bunch of mom-and-pops, the big operators are not selling a whole lot.”
One group of Boulder residents working to purchase the Sans Souci Mobile Home Community from corporate owner Strive Communities, remains optimistic about its effort. But Michael Peirce, president of the Sans Souci Cooperative board of directors, noted that it will be difficult to make the purchase without what residents have been trying to avoid — a rent increase to cover the costs of financing.
And that inevitable increase could be too much for some residents to absorb.
In addition, he said, the pandemic has caused most public discretionary funding for housing to be channeled toward traditional rental assistance, which could make the park’s plan to seek additional financial help difficult.
“What would have been a fairly persuasive pitch last year at this time is not a persuasive pitch now,” he said, “just because they’ve got other priorities competing that are pretty substantial. We’re hoping that with relief coming from the recent federal bill helping out with rental assistance, that might take some pressure off local budgets.”
Sans Souci’s work toward park ownership predates the new provision in Colorado law, which Peirce figures may put his park in a better position than others that have launched their bids more recently. That said, he acknowledges that the state is still getting its bearings when it comes to managing the process.
But he still called his outlook “cautiously optimistic.”
“It seems like it’s in reach,” he said. “We’re hoping the county might have some ability to help us out and also hoping the state will. But the law is so new at this point that all of the pieces are not well engineered and in place yet. We may struggle to raise supplemental financing we need to keep people housed. We are worried that even if we’re able to purchase, some residents will get displaced.”
Peirce stressed that such a scenario isn’t inevitable, but largely depends on the assistance funds that might come available from government or foundation sources to make rent affordable for all of Sans Souci’s residents. The opportunity-to-purchase provision gives park residents a 90-day window to do its due diligence and make an offer, and Peirce said that’s a narrow time frame to cover all the bases, plus arrange government help.
“We’re in the early stages,” he said. “Everyone’s learning to swim.”
Strive Communities declined to comment on confidential business matters.
Residents of another Strive property, the River View mobile home park in Durango, are also trying to pull together an offer. That community is still in the process of forming its cooperative, according to The Durango Herald.
Deborah Cantrell, a University of Colorado Boulder law professor who helped draft Colorado’s revised law governing mobile homes — often called manufactured homes — points out that the opportunity-to-purchase provision doesn’t, on its own, solve the problem of capitalization for residents who embraced mobile-home living as an affordable alternative.
“This is where the law can create some space, but the law doesn’t create money,” Cantrell said. “That’s one of the real challenges. It’s not unique here, but it’s a challenge when you have folks who don’t have the easy, ready access to financing or existing capital and have to compete with entities that do.”
Not far from the Sans Souci community, residents of the Table Mesa Village mobile home park also are hoping to purchase their property. Susan Gibson, vice president of the residents’ newly-formed co-op, noted that 38 of the park’s 47 residents have signed on to the group.
She said residents got no response to their initial purchase offer and now they’re past the 90-day window prescribed by the new law’s provisions, which feels like uncharted territory. Park owner Zane Blackmer declined to comment.
“We’re just kind of in limbo,” Gibson said. “I don’t know whether to be optimistic or pessimistic, or both. People are feeling stressed already, and the idea of increasing our fees in order to buy the place is terrifying. But he could sell to someone worse, which is also terrifying.”
Gibson did note that the co-op has started a GoFundMe account since public assistance is hard to come by during the pandemic. Residents also have approached their individual banks about possible funding help and have even written letters to churches — anything to augment assistance from the nonprofits that have helped other parks in Colorado become resident-owned communities.
This is where the law can create some space, but the law doesn’t create money.
“The state of Colorado is also low on tax revenue and does not have anything to help us right now, so we are hoping that the greater community will help us,” the GoFundMe page says.
“We have your teachers and therapists and plumbers and electricians and single parents and artists and wise elders living here and most of us will not be able to afford the rent increases that occur due to the fact that we do not own the land.”
So far, the page has raised $440 — more than half of that pitched in by Gibson herself — toward a down payment on what figures to be a multimillion-dollar price tag.
“Nobody has any money right now,” Gibson said. “It’s been really weird timing. We’re doing this after everyone has been stressed out by COVID for most of the last year, so nerves are already frayed.”
Colorado’s resources for these types of transactions may not be fully developed, but the state does have some key players.
Thistle, a Boulder nonprofit, works with the national Resident-Owned Communities (ROC) USA to help mobile home resident groups organize and connect with financing to become resident-owned communities. Thistle has already helped three Colorado mobile home parks, two in the Cañon City area and another in Longmont, make the transition before the current law went into effect.
And they’re also guiding the efforts of both Sans Souci and Table Mesa Village.
Andy Kadlec, Thistle program director, said that while currently parks are in various stages of negotiation — and park owners can require that information surrounding offers remains confidential — no potential deals have yet fallen through.
“We have a lot of concerns, but haven’t gotten to the point where any of the communities have failed in their efforts to purchase,” Kadlec said, noting that some elements of the new law may need to be litigated for clarity. “We just don’t know yet. In a few months, we’ll have a much better idea of how this works.”
In drafting its law, Colorado looked at 16 other state statutes as well as national organizations that do a lot of work in the mobile home park arena to zero in on best practices, said CU Boulder’s Cantrell.
“Then we tried to draft a statute that came as close as we could to what is understood as the gold standard, from residents’ point of view,” she said. “Then we went forward with what we thought would be politically feasible as well.”
For instance, there’s a reason the law specifies an “opportunity” to purchase rather than a right — as in a “right of first refusal” that would essentially require that the park owner sell to residents if they offered a deal comparable to other bidders. Instead, the Colorado law prescribes “good faith” negotiation.
Where mobile homes are concerned, she said, no other state law specifies right of first refusal. With the mobile home generally being owned by one party, who then pays rent to keep it parked on land owned by another, state laws have traditionally favored the owner of the real estate.
“That has made (deals) politically more challenging, particularly in states that have firm commitments to private property rights,” Cantrell said. “Mobile home parks don’t fit into traditional notions.”
Colorado’s legal provision requires that a park owner, if they anticipate selling the property or changing the use of the land, give notice to residents, who then have 90 days to make an offer and secure financing. For residents, often the first step in this process is creating an association or cooperative that represents more than half of the home owners, which is required in order to make the purchase.
Park owners must file an affidavit of compliance with the appropriate local agencies, though the sale provisions don’t apply if the sale is to family members or others already closely affiliated with the property.
So residents operate within two key parameters: the narrow 90-day window to take care of due diligence (i.e. making sure there aren’t hidden costs, such as failing infrastructure) and financing; and the assurance that the park owner will negotiate in good faith.
The latter could eventually require a court decision for fine-tuning.
“One thing I’d predict would happen is that there will be some deal where mobile home residents put forward an offer to the park owner, and the offer is absolutely competitive,” Cantrell said. “But the park owner declines and accepts a different offer when there seems no justification other than spite. I think that kind of thing will have to get litigated.”
Still, she noted that the presence of Thistle and its connection to ROC USA offers residents access to critical expertise in Colorado’s nascent mobile home sales ecosystem. Residents will need to be patient while these early attempts at deals run their course, and reveal whether litigation or a legislative fix is needed, or if the current law “shows its strength,” Cantrell said.
Meanwhile, Colorado still has DOLA, which also has created a dispute resolution program to settle owner-resident conflicts without the expense of court action that disproportionately favored well-heeled owners.
“It’s already terrific to know that because of the dispute resolution program, there’s a place to go to get some help,” Cantrell said. “The state can’t stop a sale, but it can confirm that everyone does what the law says.”
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Kevin Simpson is a co-founder of The Colorado Sun and a general assignment writer and editor.
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