Renters Buy Out Owners of Mobile Home Park
Retired aerospace worker Frank Molloy didn’t get mad last summer when the rent for his mobile home space jumped by $35 per month.
Molloy got organized. He rallied 214 neighbors to buy the Seminole Springs Mobile Home Park in Agoura for $4 million and turn it into a resident-run cooperative.
Residents expect to close escrow on the 55-acre park in six weeks to cap months of negotiations with the owners and with state and local officials. Government agencies authorized first-of-their-kind loans to assist the purchase.
The unusual buy-out has gone so smoothly that housing administrators for the state and Los Angeles County expect it to become a model for similar takeovers by mobile home park dwellers.
Growing Financial Woes
By all accounts, the Seminole Springs purchase is coming just in time to save the park from crippling financial headaches.
Seminole Springs residents say that life at the park on Mulholland Highway has been idyllic for most of its 16-year existence. Nestled in the Santa Monica Mountains about 15 miles southwest of Woodland Hills, it is named for a sulfur spring that feeds a lake and mineral spa that is popular with the approximately 350 people, many of them retired, who live in the 215 homes there.
But Los Angeles County rent control for park residents ended last Dec. 31, clearing the way for unrestricted rent increases this year.
Even more threatening to residents was the discovery that park owners were being courted by developers who wanted to convert the property to condominium-style ownership.
Such a move would have forced Seminole Springs space renters to come up with as much as $40,000 each--without government help--to buy permanent parking rights for coaches that they already own. They also would have been liable for maintenance fees.
If they couldn’t afford that, they would have had to uproot their coaches and move.
Molloy said Wednesday that as many as half of the park’s residents would have been forced out if the condominium plans had gone through. Stiff rent increases would have squeezed out other pensioners, he said.
“The 12 1/2% rent increase we received last August literally took the food off some of their tables,” Molloy, 72, said.
“I figured that, in another few years, I’d be done for,” retired high school teacher Warren Knowles, 73, said. “I’ve lived here 14 years and have no place else to go. Everything has gone up but my pension.”
The Seminole Springs residents moved into high gear after one of them, 67-year-old insurance man Irv Helfman, heard about a nonprofit group that specializes in assisting low-income clients.
That group, the Los Angeles Community Design Center, suggested that the residents form a limited-equity cooperative to purchase the park. A senior planner for the center, Otis Ginoza, negotiated with the state and county for newly authorized housing loans.
Ginoza managed to win $116,000 from the county and $301,000 from the state. Officials said these were the first such loans for a mobile home co-op, although the state has two others in the works.
The county’s share will go to help 26 low-income Seminole Springs residents make the $4,500 down payments that will guarantee them a share of the new co-op. The residents will not have to pay back the interest-free loan until they move or die and their mobile home is sold.
7% State Loan
The state’s loan comes with a 7% interest rate, although no debt-service payments will be required of residents for 10 years. The money will be used to help reduce low-income residents’ monthly co-op payments. That helps assure mortgage lenders that park residents can make their mortgage payments.
Residents are negotiating with two banks for the bulk of the $4-million mortgage, Ginoza said. Monthly co-op mortgage and maintenance payments are expected to total about $280, slightly higher than the $255 monthly rent now being paid, he said.
The advantage for the homeowners is that they can get their money back when they leave, perhaps with a profit.
State and county officials who are handling the Seminole Springs loans said Wednesday that the Agoura deal seems headed for success.
Residents ‘Well Organized’
“It was very smooth. The residents were very well organized,” said Victor Grgas, director of development planning for the county’s Community Development Commission. “They have to be to pull something like this off.”
Grgas said the Seminole Springs purchase is important because “there is a demand for this type of housing out there and there are very few alternatives. It’s tough to move a mobile home.”
Jerry Rioux, mobile home program manager for the state’s Department of Housing and Community Development, said 90 of California’s 5,900 mobile home parks closed last year.
“They are an important affordable housing resource,” Rioux said. “But, in the past, park owners have not felt the residents could afford to buy them, or could not get organized to buy them. Our money is ‘gap money’ that makes it possible for residents to get a bank loan.”
Seminole Springs is owned by a partnership that includes two California businessmen and the Northwestern National Life Insurance Co. of Minneapolis, Minn.
Kent Warden, the company’s vice president for real estate investments, said his firm was also impressed by the residents’ efforts.
“We could have probably done better if we had put the park on the market,” Warden said. “But we felt that, all other things being equal, we’d rather sell to the residents.”
Things are going to be even more equal from now on, park resident Wayne Albers, 62, predicted Wednesday. He is a retired banker who worked on the park purchase committee.
“Now we can sit back and relax,” he said. “If we have a rent increase from now on, it’s going to be because we voted for it.”