With rents rising precipitously, stoking fears of “economic eviction” within their long-established community, residents at the Sans Souci mobile home community in Boulder County sought to embrace a relatively new strategy in Colorado: Buy the park from its owner and run it themselves.
A handful of other parks have done it, from Cañon City to Longmont, by creating a cooperative that gives them control over everything from rent to rules. But becoming a resident-owned community — or ROC, in industry shorthand — involves a lot of moving parts, helpful financial partners and, the toughest hurdle, a willing seller.
So, in a financial climate buffeted by the coronavirus pandemic, the homeowners association of Sans Souci — which translates from the French as “carefree” — has taken its quest public, laying out its concerns in an open letter to current owner Strive Communities and looping in legislators, county and state officials and the media. Its hope is to jumpstart a process it flirted with more than a year ago, shortly after the park was purchased from its longtime owners.
That early overture never gained traction.
Now, bolstered by the emphatic voice of an HOA and even more fearful that neighbors might be forced out of the community, residents have hit the reset button with the goal of more fully exploring the purchase option — and crunching numbers that might be both palatable to home owners and attractive to Strive.
“When we sent the letter,” Sans Souci resident Michael Peirce said, “it was to spark a renewed effort.”
MORE: Read The Colorado Sun’s work and stories from a statewide collaboration that explored the state’s mobile home industry in PARKED: Half the American Dream.
It won’t be an easy process. Strive, which has mobile home parks in several states, hasn’t owned Sans Souci for long and has not been actively seeking a buyer. In fact, Strive COO Jayson Lipsey notes that it already has begun a $1.5 million infrastructure project to address problems with Sans Souci’s water and wastewater systems.
Peirce said he wasn’t aware of the water project until he was told by a reporter, adding that lack of communication continues to distress residents. But the HOA’s biggest complaint in its letter earlier this month had to do with a 37% rent increase in less than three years — two consecutive 12% hikes by Strive on the heels of a 9% increase by the previous ownership.
Under the people who’d owned the park for decades, Peirce said, rent increases tended to be in the 2-3% range. That made Sans Souci an affordable option even for residents on fixed incomes.
“When folks planned retirement, they planned on that,” he said. “When new owners came in, that really wrecked their plans. There’s not a lot of places for them to go.”
Residents fear unaffordable future
Mobile home parks present a different challenge than traditional rental agreements. Residents generally own their homes, which have been anchored to lots controlled by the park owners, who collect rent and make the rules that govern the community. In most cases, “mobile” home is a misnomer, since it can be logistically difficult or economically burdensome to move the homes elsewhere.
Peirce rattles off the names of neighbors, most of them older, longtime residents on fixed incomes, who would have difficulty meeting the new prices for lot rent. They could face the option of selling a home that likely has diminished in value or walking away. Purchasing Sans Souci as a cooperative would likely mean an initial rent increase, but generally speaking, rents stabilize and often remain below market.
“If we own the park, our rents are effectively a mortgage payment,” Peirce said. “The other part that’s super important is the autonomy aspect, the ability to be the authors of the rules of the community. Community standards aren’t imposed by people outside the community who have goals other than the homeowners.”
The HOA’s letter said the rapid rent increase has been a concern even for those in stable economic circumstances and that the pandemic has caused income instability for some residents, including those who have owned homes in Sans Souci for years. Continuation of the increases will result in “economic eviction,” the letter added.
It also claims that the quality of life at Sans Souci has “dramatically decreased” under Strive ownership and suggested as a solution selling the park to residents at a price that allows Strive to profit and also returns “stability and control” to residents. No numbers were mentioned.
“Short of that,” the letter said, “we predict that your pursuit of your goals will force us, your current residents, to leave our identities, our roots, and our most indispensable real possessions: our homes. We find it hard to be okay with that.”
Owner pulls back on rent hike
In response, Strive apologized for what it called an “ill-timed” imposition of the latest rent hike and said it is canceling the rent increase through July and will re-evaluate how to proceed in August. In an interview, Lipsey denied residents’ claims that the company plans to achieve “market rates” with its increases.
“I’d not say that’s our overarching objective,” he said. “What we’re trying to do is determine needs from a capital standpoint, ongoing operating expenses, and how we compare to other alternatives. That’s more a check on fairness. These (parks) are in competition with one another. Striking balance with what’s fair is no easy task. Our guiding principle is to take into serious account our residents when we make decisions.”
He points to the company’s decision to defer rent increases because of the coronavirus and adds that Strive has programs to help people who have short-term difficulty paying rent or need assistance making home improvements.
And while Sans Souci currently isn’t for sale, qualified, written offers will always be considered, the company’s response letter said. It noted that none had been received even after Thistle, a Boulder County housing nonprofit that seeks to facilitate such sales, approached the company in February 2019.
“To be direct, we would need to transact at a number that made sense,” Lipsey said. “We’re not wanting to sell at some significant loss. It’s not a recipe for a good business model. But whether or not there’s some price that makes sense for both parties, it’s hard to say.”
Peirce has his doubts about Strive’s willingness to sell.
“Unless they’ve got some other incentive, I’m skeptical,” he said. “I’m worried that they’re not as willing to sell as we need them to be. The goal is to have something where we both win, where residents here now can stay and Strive can walk away with reasonable profit. That’s what I’d like to do if they’d be up for it.”
Andy Kadlec, program director for Thistle ROC, has been in touch with residents to schedule a time to update their situation and consider how to move forward.
“At this point,” Kadlec said, “we don’t have terms. It’s a shot in the dark.”
One typical model for pursuing a sale involves forming a cooperative with at least a majority of residents, then doing due diligence like engineering reports, surveys and estimating an operating budget. Even that can be expensive, though risk-free loans are available to help.
One key to this type of ownership transition has been ROC USA, a New Hampshire-based organization that partners with local groups to help residents organize, purchase and run their communities. ROC USA worked with Thistle on the Cañon City and Longmont deals.
In many cases, ROC USA finances the sales. The organization also makes a 10-year commitment to help the newly minted ownership get off the ground and reach a point of financial stability.
In the current legislative session, Colorado passed “opportunity to purchase” legislation — it hasn’t yet been signed by the governor — that gives mobile home park residents the chance to make a purchase offer in most cases if the existing owner decides to sell or change use of the land. A handful of other states have similar laws, and a few states have incentives for park owners to sell to residents, such as a capital-gains tax cut. Colorado offers no incentives.
“The biggest hurdle is the willing seller,” said Mike Bullard, ROC USA’s communications and marketing manager. “With what we call aggregators, who have large portfolios, typically the only opportunity residents get to purchase their park is if it comes up as part of a portfolio sale, which makes it even more difficult. You’re looking at a deal of tens of millions of dollars, if not more. It’s another complicating factor in what sounds like a difficult position they’re in already.”
Difficult but not impossible
Which is not to say it’s impossible. Bullard points to a sale of a 68-unit mobile home park in Austin, Texas, to its residents. The park is of comparable size to Sans Souci and also is located in an expensive market not unlike the Boulder area. That deal, with Colorado-based corporate owner RV Horizons, was worth about $6.5 million, Bullard said, and the financing deal requires that it remain affordable housing for 99 years.
RV Horizons bought the park for $1.5 million five years ago. Since then, residents had complained of exorbitant rent increases and other alleged abuses and even filed a lawsuit against the company. Eventually, RV Horizons agreed to sell.
Some Sans Souci residents suspect that RV Horizons maintains an ownership take in their park, but in both its letter to the HOA and a subsequent interview, Strive sought to dispel any connection to RV Horizon or owners Frank Rolfe and Dave Reynolds, who gained notoriety when their Mobile Home University was featured in an unflattering segment on “The Daily Show.”
“Our guiding philosophy is at all times to place the needs of residents first, serve them well and run great communities that are well operated, places they’re proud to call home,” Lipsey said.
USA ROC’s Bullard points out that Rolfe has written favorably in a trade magazine about selling properties to park residents — and has been part of three such deals, including the Austin transaction.
“That’s a win for us and the home owners,” Bullard said.
Will Sans Souci reach an understanding with Strive on a sale?
“If they want to discuss and pursue this, we’re more than happy to entertain that conversation,” Lipsey said. “We’ll do everything we can to fully evaluate what it entails. We have expertise managing communities all over the country. We’re happy to bring that to bear as their service provider, or shed light on the realities of owning.”
Although the logistics could prove difficult, Peirce remains hopeful that the residents can obtain assistance from county and state programs, as well as nonprofits, to somehow make a deal.
“I don’t think it’s undoable,” Peirce said. “I think we need an audience with them where they’re actually concerned about us. And I’m not getting that impression yet. But I’m an optimist. Where there’s a will there’s a way.”