Earlier this week, Michael Peirce fielded a final flurry of emails wrapping up the exacting, detailed process of purchasing the Sans Souci mobile home park in Boulder County. The president of the Sans Souci Cooperative board of directors finally felt confident that the sale to his residents group was a done deal.
He also was gripped by the intensity of the moment.
“Because the price tag is so high, it’s this kind of nervous excitement,” Peirce said. “It’s kind of like, ‘Great, we’re in charge … Oh, no! Can I afford this?’ There’s also a tremendous sense of accomplishment.”
With the $3.3 million purchase from Strive Communities, the resident group finally — after more than two years of hopes, dreams and preparation — on Monday took control of the scenic, almost 11-acre property near the foot of the Flatirons where some of them have lived for decades. The deal means the co-op, which includes most of the park’s 62 resident homeowners, now calls its own shots, determines lot rental rates and makes its own rules.
But it also means carrying the responsibility of a mortgage, imposing heavy short-term rent increases to make the sale work and assuming all the responsibilities that go with owning the property. Peirce noted that a resident-owned community — or ROC, in the vernacular — remains committed to residents’ welfare, whether that means finally dealing with an age-old standing water problem or ensuring trees are properly trimmed so they don’t pose safety hazards.
“There’s a lot more sense that things will be better for residents in terms of the needs getting addressed,” Peirce said as the reality of the purchase settled in. “The worry aspect of it is that we’ll become more like an HOA, and be at each other’s throats about neighbor-to-neighbor dislikes. But at least we did come up with rules that people seem to be OK with.”
State law provision opened the door
A growing number of Colorado’s more than 900 mobile home parks are either on the market or have changed hands in the past several months, according to a listing on the newly developed state website that tracks when mobile home parks are offered for sale. As of May 18, and counting this week’s sales of Sans Souci and River View mobile home park in Durango, 32 parks have been sold since July 2020, and 25 more announced their intent to accept a sale offer.
Sans Souci and the 120-unit River View park, which also closed its $14 million sale from Strive to a resident co-op on Monday, are the state’s fourth and fifth resident-owned communities — with others likely to follow. Such sales are significant, especially in the midst of Colorado’s current housing crisis, as mobile homes account for the nation’s largest inventory of non-subsidized affordable housing, and they’re home to an estimated 100,000 Coloradans.
Deborah Cantrell, a University of Colorado law professor who helped draft Colorado’s recently revised law governing mobile homes, noted that there has been a lot of activity on the mobile home park market across the nation. And while she wishes that the surge represented a major shift toward resident ownership, she suspects the real reason is driven by low interest rates that provide big investors a chance to raise capital and increase their mobile home park portfolios.
“One thing that is clear is that park owners have been able to ask very high purchase prices,” she said via email. “Because capital is cheap (for those who can play in the large scale money markets), there have been corporate buyers willing to pay high prices. That means homeowner residents are in a very tough position of having to think about notable rent increases on themselves in order to figure out their own financing and to be able to come up with a competitive offer.”
MORE: Read “Parked: Half the American Dream,” the Sun’s statewide look at the unique issues facing mobile home residents across Colorado.
But there’s little doubt that in Colorado and elsewhere in the country, resident-powered purchases are slowly gaining traction in a housing arena that traditionally has cast residents as captive tenants with little power.
For decades, mobile home owners have lived largely at the mercy of park owners, who own the land on which their homes (now often called manufactured homes) sit and charge them rent. Many actual housing structures tend not to be “mobile” any longer, either due to age or prohibitive moving expense. That often has meant that residents had little recourse around resolving disputes — whether over eviction, rent or community rules.
It also made mobile home parks an attractive investment.
Colorado lawmakers last June leveled the playing field with updates to the 1984 Mobile Home Park Act, offering relief to homeowners facing eviction while also providing a dispute resolution process through the state Department of Local Affairs. And significantly, the revamped law includes an “opportunity to purchase” provision that creates a chance (though no guarantee) for mobile home owners to move to become resident-owners of the parks where they live.
The opportunity-to-purchase provision requires a park owner to notify the state if it intends to sell. That triggers a 90-day period when residents have a chance to organize, perform their due diligence and pull together an offer.
Sans Souci, like River View and the other Colorado parks that have become resident-owned communities, relied primarily on ROC USA, the national nonprofit whose financing arm has facilitated purchases in 18 states since 2008. Monday’s twin closings marked the first two purchases that stemmed from Colorado’s new law — and brought ROC USA’s national sales total to 275 properties.
“Residents are the most eager buyers, they know what they’re getting, and the sale is more important to them than anyone else,” said Mike Bullard, ROC USA’s communications and marketing manager. “In Colorado, overall, you’re seeing the cost-of-housing pain more than most places, so it’s even more important for folks there. Because if they lose this neighborhood of affordable places to live, there are fewer and fewer options for the same amount of money.
“This allows the residents a seat at the closing table,” he added. “If the results in Colorado mirror the results everywhere else we have seen this legislation come to pass, you’re going to see a lot more resident-owned communities there.”
ROC USA works in tandem with the Boulder County-based nonprofit Thistle, a certified technical assistance provider that helps residents navigate the process of purchasing their mobile home parks, and then provides assistance for 10 years to ensure the co-op’s stability. Thistle is already expanding in anticipation of more Colorado mobile home owners wanting to pursue the co-op route, now that the opportunity-to-purchase provision provides a framework.
“We’re working to increase our ability to work, hiring staff to play catchup with this process,” Thistle project manager Andy Kadlec said. “There are a handful of (Colorado) communities interested in purchases. We’ll close on another park in 2021.”
The conversion to a ROC doesn’t mean there won’t be rent increases. Generally, residents need to absorb an initial increase to help afford the financing of the purchase. But the usual plan is for that increase to stabilize in a few years and then remain below market rates.
But some residents at Sans Souci will feel the impact of early rent increases, which are tied in part to necessary infrastructure upgrades to the water and wastewater systems as well as costly issues related to about two dozen units lying in the South Boulder Creek floodplain. Lot rents will rise about 25% immediately, to $750 from $606, then increase to $800 next year and $856 the following year, before stabilizing with 1% annual increases for inflation.
“It’s going to be tough,” Peirce said. “I know that for a number of residents that will be a significant hardship. But rents were already headed to what they are now and would continue to rise. The sale price was good enough to be better than the alternative. But that doesn’t make it affordable.”
Will Watts, who moved into Sans Souci four years ago as an affordable place to live while he worked on his physics degree at the University of Colorado, served as secretary of the co-op board. He described the completion of the deal as “bittersweet.”
“It’s a victory because it happened,” he said, “but we’re nowhere near the end. Functionally, in terms of people stressed for money, it’s the same as with a private owner. We’re hoping we can find funding to reduce costs to make it sustainably liveable on the price point a lot of people moved in for.”
When she moved to San Souci in 1994, Karen Finch paid $212 a month in lot rent. Even with the immediate increases she figures she’s better off here in the long run.
“Some people are saying, ‘I can’t afford it anymore.’ But they’re just getting priced out of Boulder, period,” she said. “That’s another issue than just this park. Everything has been blowing up for a while. I feel like it’s exciting that I can stay someplace where the rent remains as reasonable as it can be.”
The co-op will continue to search for rental assistance that might help some residents bridge that gap. Meanwhile, Kadlec noted that the immediate shock of the rent increase would ultimately lead to a more stable future.
“It’s the last time the park will ever sell, the last time they’ll see a big increase like that,” he said. “We see long-term benefits there, and people have to think long term.”
Early planning gave a head start
Monday’s deal closed the loop on a dream that began more than two years ago, though residents’ early flirtations with the idea of a sale never quite took hold. But they pressed forward — starting the requisite homeowners association that would allow residents to speak with a unified voice and becoming even more active as continued rent increases threatened to displace some longtime residents.
A year ago, the Sans Souci HOA released an open letter to Strive Communities that laid out its concerns and looped in a variety of potential allies, including state legislators and county and state officials. The HOA’s letter also detailed residents’ complaints about an anticipated 37% rent increase in less than three years, dating back to before Strive purchased the property. The usual 2-3% increases had suddenly jumped to double digits, potentially imperiling longtime older residents whose fixed incomes could absorb the lower rent bumps.
Strive apologized for its “ill-timed” rent increase during a pandemic and temporarily canceled it. The company added that while the park wasn’t for sale, it would still consider serious offers. But even then, Thistle’s Kadlec sounded skeptical, calling a resident purchase “a shot in the dark.”
Some of that early planning paid off, though. Once the opportunity-to-purchase provision of the new state law gave notice that Strive was ready to sell (in fact, the company has offered its multistate portfolio of parks), much of the organizing of residents had been done.
Shifting the residents from an HOA to a co-op required a lot of planning and decisions on rules, policies and procedures, plus a new property management company to collect rent and handle maintenance.
“The whole process of setting up the co-op was very intense,” Peirce said. “ROC USA had us on a breakneck schedule to get policies and procedures in place before closing. The workload that went into it, and the burnout factor, went over the edge of the envelope.”
Meanwhile, much of the 90-day period in which they could cobble together an offer focused on determining what the co-op’s operating costs — and a reasonable purchase offer — would look like.
Details like lighting, water systems, grounds maintenance, age of infrastructure and necessary capital improvements coalesced into an operating budget, which then led to a market analysis to determine the property’s value. Once the resident co-op made an offer, which Strive quickly accepted, the process moved into its due diligence phase, a more thorough evaluation of the property and a sharper estimate of operating costs.
Strive also released its rent rolls so the buyer could gauge how many were current on payments and how many were in arrears to home in on the park’s debt load. That was a revelation.
“Actually, it was a pleasant surprise,” Peirce said. “We saw that a lot more residents were up to speed on rent than we thought, which was kind of nice. People who were behind were behind in a way that it seemed like they could catch up.”
ROC USA’s Bullard said that while the 90-day window in the opportunity to purchase can be tight, it’s fairly standard in states that have similar sale provisions. And it doesn’t seem to deter residents ready to grab control of their housing future.
“These are motivated buyers,” Bullard said. “With our track record and working with Thistle, we’ve got a process down that’s effective and efficient. Specialized, ready-to-go financing. It’s a rush, but not a daunting thing that should concern sellers.”
Now, the residents of Sans Souci who pursued the purchase have placed a sign on a fence visible to all who enter.
It says, simply: “We Own It!”