ECONOMIC AND SOCIAL BENEFITS OF MANUFACTURED HOME PARK COOPERATIVES Presented by: Jolan Rivera School of Community Economic Development Southern New Hampshire

ECONOMIC AND SOCIAL BENEFITS OF MANUFACTURED HOME PARK

COOPERATIVES

Presented by: Jolan RiveraSchool of Community Economic DevelopmentSouthern New Hampshire University

NASCO Institute, Ann Arbor MI8 November 2008

COURSE DESCRIPTION

A cooperative mode of ownership of manufactured home parks (MHPs; also known as mobile home parks) provides certain advantages that translate into social and economic benefits. This course will share results of a couple of related studies on the experience of residents MHPs in New Hampshire that transitioned from renters to owners through the process of cooperation.

PRESENTATION OUTLINE

INTRODUCTION

PART 1: Summary of a qualitative study of the social and economic benefits of cooperative MHPs in New Hampshire

PART 2: Summary of quantitative study of value appreciation of MHPs in a city in New Hampshire

PART 1: Qualitative Study of the Social and Economic Benefits of Cooperative MHPs

PURPOSE OF STUDY

To illustrate how a socio-economic problem is addressed by an intervention that has both economic and social dimensions to produce economic and social benefits

Specifically, to illustrate how limited access to fair and affordable housing is addressed by cooperativism and policy advocacy to produce homeownership and a sense of community


PROBLEM CONTEXT

Typical manufactured home park Owned and developed by individual/corporate landlord Consists of tract of land mapped into individual plots where park

tenants place their owned manufactured homes Tenants pay monthly rent determined by landlord; NH doesn’t have

rent control laws Landlord responsible for installing and maintaining park facilities

and infrastructure Landlord stipulates park rules and regulations which include land

use, resident behavior, and eviction Park rules and regulations tempered by federal, state and local laws;

in NH, RSA 205-A


PROBLEM CONTEXT

Characteristics of NH mobile home park residents 1 in 12 NH households live in mobile homes Approximately one-half of NH mobile homes are located

in manufactured home parks Residents generally low-income Residents generally don’t have access to financial

capital, except sub-prime Residents act individually; most are not organized


ECONOMIC DIMENSIONS OF PROBLEM

Vulnerability to rent increases No rent control laws in NH High demand, low supply Landlord’s profit maximization motive

Insecurity of land tenure Change in park ownership potentially means significant rent increases Threat of land use conversion Difficulty of moving mobile home structure

Poor park facilities and infrastructure Absentee landlord Cost minimization


SOCIAL DIMENSIONS OF PROBLEM

Lack of sense of community No shared resources Limited opportunities for joint activities

Negative “outside” perception “Trailer trash” stigma Perception that “trailer parks” devalue abutting properties Residents are perceived to inequitably share cost of public services

Lack of voice Unorganized residents Threats of eviction discourage group dissent Perception of powerlessness leads to exclusion from larger community’s

political dynamic


EXAMPLES OF PROBLEM

The Meredith Case 14 low-income households in a seasonal recreation-based

economy Resident-landlord under economic (and welfare policy)

pressure to dispose of assets in preparation to going into a nursing home

Tenants want to buy the park but didn’t have enough financial resources

Landlord is resident-friendly


EXAMPLES OF PROBLEM

The Milford Case 57 low- and middle-income households at the edge of the

southern-tier economic expansion Park to be sold for conversion to shopping center Tenants don’t have realistic options to preserve housing

availability - no opportunity to relocate homes to nearby sites; very limited other forms of affordable housing

Absentee landlord


EXAMPLES OF PROBLEM

Other Typical Cases Uncontrolled rent increases Landlords not reinvesting in park infrastructure Threat of eviction as a strong-arm tactic Short eviction notice


PROBLEM STATEMENT

If nothing is done, low- to moderate-income residents of manufactured home parks will be deprived of affordable housing


ROOTS OF INTERVENTION

The Meredith Case Tenants responded by forming the Meredith Center Cooperative

(MCC), developed a business plan, and hired a lawyer to negotiate purchase of park

MCC approached 5 banks for financing, but were turned down; MCC’s plan was seen as risky venture

MCC was introduced by a CED graduate to the NH Community Loan Fund (NHCLF)

NHCLF was able to lend MCC “good faith” deposit money using Institute of Community Economics funds

On 1 June 1984, MCC became NHCLF’s first borrower NH’s first resident-owned and –managed manufactured home park cooperative


ROOTS OF INTERVENTION

The Milford Case Having no individual alternatives, residents responded to the threat

collectively; residents opted to collectively purchase the park Residents approached NH Legal Assistance (NHLA) to forestall eviction With no lots available to relocate their mobile homes, residents

threatened to park them in front yard of NH Housing Finance Authority (NHHFA)

NHHFA was able to put together needed down payment financing NHLA’s legal efforts led to legislation of policies extending eviction

notice period; also linked mobile home park residents to NHCLF NHCLF became source of down payment assistance, lobbyist for

changing legislation, and source of cooperative organizing and technical assistance to other home park residents


INITIAL LEASONS LEARNED

The Meredith & Milford cases brought to light: The need to legally recognize non-consumer forms of

cooperatives The need for alternative financial products and

guarantees The realization among tenants and the community-at-

large that cooperativation is a feasible way of preserving affordable housing

The negative consequences of a short eviction notice/process


ENHANCING THE INTERVENTION

Policy advocacy and legislation State law requires 18-month notice for eviction that is

due to change in land use 60-day notice for sale of park, with resident first right of

refusal $10,000 or 10 percent (of sale price) penalty (whichever

is greater) if not sold to residents Landowner must provide notice of intent to sell to

NHHFA



NHCLF’s role as catalyst Organizes residents into cooperative to strengthen social

capital Provides template for legal cooperation and provides

down payment assistance to enhance access to credit from commercial banks/financial institutions

Provides ongoing technical assistance to build human capital

Provides links to other funding sources (CDBG, USDA monies) to preserve quality of park’s physical resources



Characteristics of manufactured home park cooperatives Group ownership: individually owned homes, collectively

owned land and infrastructure Democratic control: one person, one vote; majority decision;

Board of Directors Open membership: all residents are cooperative members;

membership fee Limited equity: fixed share value pegged at original purchase

price; members who leave sell back shares at original price Participation: each coop develops own participation policy


RESULTS OF THE INTERVENTION

As of end of 2007: 86 resident-owned manufactured home parks Approx. 4,800 homeowners 20 percent of market share $140 Million in total acquisition lending CDBG/USDA monies for infrastructure improvements No change-offs No foreclosures


ECONOMIC BENEFITS

Rent regulation Testimonies of prevalence of lower and less frequent rent increases Rent discounts

Security of housing tenure Cooperative ownership of land Zero incidence of foreclosure or resale

Improvement in park facilities & infrastructure Improved roads, septic systems, wells and water distribution systems Construction of playgrounds, community rooms, cooperative office


SOCIAL BENEFITS

Enhanced sense of community Participation in park projects and activities Common concern and appreciation of shared assets

Improved “outside” perception From tenants to asset owners Improved facilities, infrastructure and aesthetics lead to recognition of

cooperative leaders Mutually agreed upon and enforced park rules improve peace and order

Attainment of resident voice Participatory decision making Park newsletters Political participation in larger community


UNANTICIPATED CONSEQUENCES

Unanticipated positive consequences NHCLF’s role as catalyst developed Public health and environmental benefits Investment in upkeep of homes Appreciation in the value of private manufactured home

units due to shared land ownership Unanticipated negative consequences

“Free riders” Leadership cliques and internal conflicts Burnout

PART 2: Quantitative Study of the Value Appreciation of Cooperative MHPs

STUDY TITLE

MODE OF OWNERSHIP AND HOUSING VALUE APPRECIATION OF

MANUFACTURED HOME PARKS: ROCHESTER, NEW HAMPSHIRE


RESEARCH QUESTION

Do households living in and around cooperative manufactured home parks in New Hampshire experience higher housing property value appreciation, compared to those in and around investor-owned parks?


CONCEPTUAL FRAMEWORK

COMPONENT 1: The main component of the study focuses on the difference in property value appreciation between housing units in member-owned and investor-owned parks.

COMPONENT 2: The exploratory component looks at how abutting properties are affected by their proximity to member-owned or investor-owned home parks.


CONCEPTUAL FRAMEWORK: COMPONENT 1

This study asserts that the mode of park ownership lead to differences in [1] rent payments (amount and rate of change), and [2] availability of financial products offered by NHHFA and NHCLF. These differences, in turn, affect the appreciation of housing values.



Property value appreciation is operationally defined as the annual percentage change in the value of a housing unit between two time periods. The change in value is equal to the difference between the base value (measured in the first time period) and the current value (measured in the second time period).

Annual % change in value = (current value – base value) x 100 base value

------------------------------------------- no. of yrs. bet. current & base periods



Appreciation of housing property value

Structural characteristics of housing unit

Age of housing unit

Park layout

Rent payments (amount; rate of change)

Availability of financial products offered by NHHFA

and NHCLF

Mode of park ownership(member-owned vs. investor-owned)

Location of park



The research examines whether or not manufactured home parks affect the value of abutting properties by comparing the annual percentage appreciation of housing values of abutting properties to that of the entire city where these properties are located.



All housing properties in city

Housing properties abutting MHPs

Member-owned MHPs

Housing properties abutting MHPs

Investor-owned MHPs

COMPARISONS OF ANNUAL PERCENTAGE APPRECIATION OF HOUSING VALUES ABUTTING MANUFACTURED HOME PARKS


SIGNIFICANCE OF STUDY

Theory: verification of the effectiveness of CED-type interventions (i.e., cooperation) in alleviating poverty via homeownership-based asset accumulation.

Practice: confirmation of the effectiveness of cooperative park management

strategies and NHCLF interventions in promoting access to affordable housing that, at the same time, provides a venue for wealth accumulation

cooperative mode of ownership and management can be a model for replication in other states.


SIGNIFICANCE OF STUDY

Policy: basis for advocating for less restrictive local zoning

laws that are presently biased against manufactured home parks

basis for advocating for more local, state and federal funding for the development and further enhancement of cooperative manufactured home parks

basis for advocating for greater access to financial resources from market-based institutions who might still perceive manufactured home park residents as non-viable segments of the housing market.


RESULTS

Cooperative MHPs have better housing characteristics. They are

newer, larger, have more rooms, are closer to commercial amenities and major

roads, and have better park layout.


RESULTS

Residents of cooperative MHPs pay lower monthly rents compared to those in investor-owned MHPs with comparable housing characteristics.

Residents of cooperative MHPs have access to non-subprime housing loans.

Homes in cooperative MHPs have higher values compared to those in investor-owned MHPs with comparable housing characteristics.


RESULTSHOUSING

CHARACTER-ISTICS OF HOMES

IN PARKS

Homes in Member-owned Parks

Homes in Investor-owned Parks

Statistics

Percentage of housing units below 20 years old

65% 42% χ2 = 196.80 (p < .01)

Percentage of housing units with 5 or more rooms

68% 40% χ2 = 100.80 (p < .01)

Finished area (in sq.ft.)

1,059 978 t = -6.10 (p < .01)

Index of park layout (range: 0 to 1; 0 = worst, 1 = best)

0.93 0.64 t = -31.24 (p < .01)


RESULTSHOUSING

CHARACTER-ISTICS OF HOMES

IN PARKS

Homes in Member-owned Parks

Homes in Investor-owned Parks

Statistics

Index of park location (range: 0 to 1; 0 = best, 1 = worst)

0.42 0.47 t = 10.50 (p < .01)

Average monthly rent amount

$278.42 $303.00 t = 14.70 (p < .01)

Annual rate of rent increase

3.9% 4.5% t = 6.83 (p < .01)


RESULTS

Manufactured home parks appreciate in value.

The appreciation rate for homes in cooperative MHPs is slightly higher than those in investor-owned parks.

However, the difference in appreciation rates is statistically insignificant.


RESULTS

Homes abutting manufactured home parks appreciate in value.

For the most part, the appreciation rate for homes abutting MHPs is slightly higher than those in investor-owned parks.

However, the difference in appreciation rates is statistically insignificant.

QUESTIONS? COMMENTS?

END OF PRESENTATION.

THANK YOU.

Documents

ECONOMIC AND SOCIAL BENEFITS OF MANUFACTURED HOME PARK COOPERATIVES Presented by: Jolan Rivera School of Community Economic Development Southern New Hampshire