Cheap Rent, but Who Owns It?

With real estate prices skyrocketing around them, the 125 tenants of the Seal Beach Trailer Park welcomed the news three years ago that a nonprofit housing corporation, with help from City Hall, was buying the complex and would maintain affordable rents.

But now, control of the property is being contested in three lawsuits by nearly half the park’s residents, who say they were promised that, in time, they would be owners of the park.

City officials acknowledge that there may have been confusion over who would ultimately control the trailer park. The dispute has escalated to such rancor that some residents complain that their property has been vandalized by other residents who disagree with them over the question.

If there is any consensus, it’s that everyone wants to preserve low rents, which average about $550 a month. “I could never sell this place,” said Karen Ferretti, who has lived at the park for 24 years. “I couldn’t afford to live in Seal Beach if I didn’t live here.”

Tucked into about 7 acres just south of Long Beach, next to the San Gabriel River and near the ocean, Seal Beach Trailer Park is a collection of silver and white travel trailers and single- and double-wide mobile homes.

Many have been transformed over the years into two-story homes with decks and skylights. In many cases, stucco, balconies and pitched roofs have all but obscured the original structures.

But other homes have retained their original size and stature, often with small porches or awnings. The result is a mixture of modest homes and relatively grand ones, all with rents far below market value.

When the trailer park was bought for about $3 million in 1998 by developer Richard Hall, monthly rents averaged about $300, residents said.

Hall’s efforts to raise rents 36% were blocked by City Hall, which invoked trailer park covenants protecting the residents from huge rent increases.

Hall sued to remove the covenants, and the city’s legal advisors said he stood a good chance of winning, said Councilman Paul Yost.

To preserve the park as the city’s largest source of affordable housing, city officials and residents recruited Linc Housing, a Long Beach-based nonprofit operator of affordable housing, to buy the park from Hall.

A price of $7.4 million was reached, financed mostly with tax-free bonds but with a $1-million loan from the city.

Two weeks after the deal was closed in December 2000, the first rumblings of discontent were heard, said Linc CEO Hunter Johnson.

Questions were raised about rent increases, long-term leases and -- the most disputed and confusing point -- who would own the park.

That question carried long-term ramifications, including control over rent and the prospect that, in time, the residents could cash in on their newfound equity.

“From Day One our proposal always said the park would be owned by a nonprofit,” said Johnson.

But a group of residents led by Ken Williams said that Yost and Mayor Patty Campbell both said at City Council meetings that the residents would eventually own the park, because their monthly rent payments were being used to pay off the bonds. Trailer park fliers and resident newsletters perpetuated that belief.

A newsletter distributed by the resident owners association three years ago noted, for instance, that “Linc Housing is purchasing the park on our behalf.... At the end of a specified time, ‘we’ will own the park.”

Said Williams, “We’re not asking for anything other than what we were promised.”

Other residents say they don’t believe they’re in line to take over park ownership. “I’ve heard from the beginning that when the [purchase] bonds were paid off, we’d have control [of the housing corporation] but we wouldn’t outright own the park,” said Ferretti. “How could we?”

That position is bolstered by documents, including the 2000 agreement that laid out the terms of Linc’s ownership of the park.

The documents state that the residents would eventually control the nonprofit trailer park corporation but gave no indication that they would directly own the park themselves.

Yost concedes that the issue was not clarified at the time.

“The only way we could do this and keep it affordable would be to set it up as a nonprofit on behalf of the residents,” Yost said. In hindsight, he added, “I wish I had spelled it out clearly.”

The dispute has triggered the filing of three lawsuits contending that Linc officials misrepresented the transaction and the ultimate role of park residents.

The lawsuits are winding their way through preliminary stages in Los Angeles Superior Court.

Campbell is incensed, and a saddened Yost says the city’s attempt to help the park’s residents has turned into a good deed going punished.

“We found a way to save those homes,” Yost said, “and if you think it’s a bad deal, ask them what they’re paying for rent.”