ECONOMIC AND SOCIAL BENEFITS OF MANUFACTURED HOME PARK COOPERATIVES

1. ECONOMIC AND SOCIAL BENEFITS OF MANUFACTURED HOME PARK COOPERATIVES Presented by: Jolan Rivera School of Community Economic Development Southern New Hampshire University NASCO Institute, Ann Arbor MI 8 November 2008

2. 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.

3. 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

4. PART 1: Qualitative Study of the Social and Economic Benefits of Cooperative MHPsPURPOSE 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

5. PART 1: Qualitative Study of the Social and Economic Benefits of Cooperative MHPsPROBLEM 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

6. PART 1: Qualitative Study of the Social and Economic Benefits of Cooperative MHPsPROBLEM 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

7. PART 1: Qualitative Study of the Social and Economic Benefits of Cooperative MHPsECONOMIC 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

8. PART 1: Qualitative Study of the Social and Economic Benefits of Cooperative MHPsSOCIAL 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

9. PART 1: Qualitative Study of the Social and Economic Benefits of Cooperative MHPsEXAMPLES 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

10. PART 1: Qualitative Study of the Social and Economic Benefits of Cooperative MHPsEXAMPLES 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

11. PART 1: Qualitative Study of the Social and Economic Benefits of Cooperative MHPsEXAMPLES 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

12. PART 1: Qualitative Study of the Social and Economic Benefits of Cooperative MHPsPROBLEM STATEMENT If nothing is done, low- to moderate-income residents of manufactured home parks will be deprived of affordable housing

13. PART 1: Qualitative Study of the Social and Economic Benefits of Cooperative MHPsROOTS 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

14. PART 1: Qualitative Study of the Social and Economic Benefits of Cooperative MHPsROOTS 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

15. PART 1: Qualitative Study of the Social and Economic Benefits of Cooperative MHPsINITIAL 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

16. PART 1: Qualitative Study of the Social and Economic Benefits of Cooperative MHPsENHANCING 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

17. PART 1: Qualitative Study of the Social and Economic Benefits of Cooperative MHPsENHANCING THE INTERVENTION • 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

18. PART 1: Qualitative Study of the Social and Economic Benefits of Cooperative MHPsENHANCING THE INTERVENTION • 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

19. PART 1: Qualitative Study of the Social and Economic Benefits of Cooperative MHPsRESULTS 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

20. PART 1: Qualitative Study of the Social and Economic Benefits of Cooperative MHPsECONOMIC 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

21. PART 1: Qualitative Study of the Social and Economic Benefits of Cooperative MHPsSOCIAL 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

22. PART 1: Qualitative Study of the Social and Economic Benefits of Cooperative MHPsUNANTICIPATED 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

23. PART 2: Quantitative Study of the Value Appreciation of Cooperative MHPsSTUDY TITLE MODE OF OWNERSHIP AND HOUSING VALUE APPRECIATION OF MANUFACTURED HOME PARKS: ROCHESTER, NEW HAMPSHIRE

24. PART 2: Quantitative Study of the Value Appreciation of Cooperative MHPsRESEARCH 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?

25. PART 2: Quantitative Study of the Value Appreciation of Cooperative MHPsCONCEPTUAL 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.

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

27. PART 2: Quantitative Study of the Value Appreciation of Cooperative MHPsCONCEPTUAL FRAMEWORK: COMPONENT 1 • 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

28. Appreciation of housing property value Structural characteristics of housing unit Age of housing unit Location of park 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) PART 2: Quantitative Study of the Value Appreciation of Cooperative MHPsCONCEPTUAL FRAMEWORK: COMPONENT 1

29. PART 2: Quantitative Study of the Value Appreciation of Cooperative MHPsCONCEPTUAL FRAMEWORK: COMPONENT 2 • 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.

30. All housing properties in city Housing properties abutting MHPs Housing properties abutting MHPs Member-owned MHPs Investor-owned MHPs COMPARISONS OF ANNUAL PERCENTAGE APPRECIATION OF HOUSING VALUES ABUTTING MANUFACTURED HOME PARKS PART 2: Quantitative Study of the Value Appreciation of Cooperative MHPsCONCEPTUAL FRAMEWORK: COMPONENT 2

31. PART 2: Quantitative Study of the Value Appreciation of Cooperative MHPsSIGNIFICANCE 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.

32. PART 2: Quantitative Study of the Value Appreciation of Cooperative MHPsSIGNIFICANCE 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.

33. PART 2: Quantitative Study of the Value Appreciation of Cooperative MHPsRESULTS • 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.

34. PART 2: Quantitative Study of the Value Appreciation of Cooperative MHPsRESULTS • 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.

35. PART 2: Quantitative Study of the Value Appreciation of Cooperative MHPsRESULTS

36. PART 2: Quantitative Study of the Value Appreciation of Cooperative MHPsRESULTS

37. PART 2: Quantitative Study of the Value Appreciation of Cooperative MHPsRESULTS • 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.

38. PART 2: Quantitative Study of the Value Appreciation of Cooperative MHPsRESULTS • 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.

39. QUESTIONS? COMMENTS?

40. END OF PRESENTATION. THANK YOU.