News & Notes Archive - June 2007
Note: As The Grissim Buyer’s Guide to Manufactured Homes & Land describes, one of the downsides of living in a manufactured home land-lease community (a.k.a., mobile home park) is the park’s owner may sell to a deep pockets buyer who then closes the park and sells the land for commercial development, or converts the land to condos or a subdivision and sell the lots. Cases like this are particularly likely to occur in scenic coastal areas such as California where many parks were created on properties considered prime real estate and whose tenants are protected by rent control ordinances.
Increasingly, municipalities in these locales are facing well-financed legal challenges aimed at overturning rent control ordinances, or otherwise converting the park to other uses. One case that illustrates the issue has been unfolding in Goleta, a semi-rural coastal town just north of Santa Barbara, California. The following story appeared in the Santa Barbara Independent. Based on the lead paragraph, it would appear that the current owner hopes a conversion to condos will eventually yield a gross profit of $37 million. A great deal is at stake. As the report illustrates, this is hard ball. Personally, I’m very impressed with the stance the elected officials of the City of Goleta have taken:
Santa Barbara Independent
Mobile Home Mogul Muzzled
Goleta, CA City Council Demands EIR
By Martha Sadler
Thursday, June 7, 2007
The City of Goleta stood fast against an attempted end-run around its mobile home rent control ordinances—namely Daniel Guggenheim’s bid to subdivide his Rancho Mobile Home Park and sell its 150 parcels for about $250,000 each. It is a strategy that has been used successfully by park owners throughout California, led by activist Sam Zell. Several park residents said they were pleasantly surprised to see their City Council circle the wagons around a Goleta city staff report that could spell doom for the proposed condo conversion.
Those attending the June 4 hearing were not sure if the more business-oriented council majority elected last year would defend the parks as staunchly as did Goleta’s previous council, which successfully fought Guggenheim’s attempt to vanquish the city’s rent control ordinance in the courts. Two of those new council members, Eric Onnen and Michael Bennett, received considerable campaign contributions from Guggenheim before the election.
Despite threats of another lawsuit, though, the council seconded planning staff’s insistence that Guggenheim’s subdivision tract map requires an Environmental Impact Report (EIR). Clarke Fairbrother—president of Newport Pacific Capital Company, Inc., which manages the Rancho Mobile Homes property on behalf of Guggenheim—told the City Council that an EIR is uncalled for because Guggenheim is proposing no physical changes to the park and that the city’s approval is therefore a simple ministerial process. An attorney for Guggenheim, Thomas Casparian, threatened to sue for “millions of dollars” if the council directed staff to proceed with an EIR. None of the two dozen other municipalities where his firm’s clients have proposed such subdivisions has required an EIR, he said, and an EIR is no place for the city to vet “social and economic issues” such as the loss of affordable housing. He called the city staff’s position “extremely novel.”
Clark Fairbrother, center, with two other company employees
(Photo by Paul Wellman)
State law calls for environmental review because the project might displace affordable housing, said Goleta Planning Director Steve Chase. That would necessitate the construction of replacement housing elsewhere, said Chase, and that is an environmental effect. In addition, he said, approval of Guggenheim’s tract map would likely set a precedent so that in addition to the 150 households at the Rancho Mobile Home Park, those at Goleta’s three other rent-controlled parks would be affected.
Fairbrother claimed that there would “be no displacement.” Park residents would be offered “binding lease contracts” to stay at their current rent-controlled rates plus annual cost-of-living increases. However, for those who are willing, he said, his client is prepared to offer his tenants a “once-in-a-lifetime opportunity” to buy the parcels under their mobile homes. Fairbrother enumerated the government subsidies that can be used to assist low-income buyers, including loans that require no payments until the land is sold.
In that case, asked Onnen, “Why avoid the EIR?” Responding to implications that the city was using the EIR simply to stall and obstruct, Onnen said, “I can assure you the [EIR] was never about derailing the process. I can assure that that was never part of the discussion in closed session.”
Bennett asked how Guggenheim could be trusted to allow people to stay in their homes at current rents, since Guggenheim will make the profits he seeks only if people purchase. “To say he’ll look after everybody seems a little disingenuous,” said Bennett. “We don’t know how many can be financed through government subsidies for low-income,” Fairbrother admitted, “but we can’t go forward without the tract map.”
Noting that there is “no hard evidence that tenants would not be displaced,” Goleta planner Patricia Miller said that the EIR would create a process for “mulling, examining, weighing, and coming up with replacement alternatives if needed.”
The City Council, with Roger Aceves absent, voted 4-1 to proceed with the EIR.
©2007 Santa Barbara Independent, Used by permission
Interview: 15 minutes with...George Porter
Note: In my role as an industry observer and consumer advocate I speak with people at all levels of the manufactured home industry (MH) to gain insights I share with my readers to help them be better informed. Some I have interviewed for a one-page column that runs in an industry trade publication. In return the magazine runs an ad for the Grissim Guides. No money changes hands. I insist on this. Aside from book sales, I neither solicit nor accept a dime from the industry, and my readers have my assurance I intend to keep it that way. Here’s this month’s interview:
George Porter, Founder and President, Manufactured Housing Resources
Who: Founder and President, Manufactured Housing Resources, a Delaware-based consulting firm specializing in MH installation, training and certification. A columnist and author of two authoritative textbooks on installation (and a dozen videos), is considered the nation’s leading authority and trainer on MH installation.
Background: Age 63. Born in 1943 in Lewes, DE, where he still resides, attended junior college in KY (AA in ’63), followed by a year at sea as an ordinary seaman in the Merchant Marine aboard an old diesel oil tanker on its last legs, visiting Texas, South America, Africa (“I got to experience a lot of nifty things [laughs]—a fire at sea, sinking in the Tampa Bay harbor, limping into an African port with 12 pumps barely keeping us afloat. A month after I left, the ship was sold for scrap.”) In ’65, facing the draft, enlisted in the Army for flight school, becoming a helicopter pilot, joining an air cavalry unit headed for Viet Nam. There, he volunteered to fly a scout helicopter in the thick of combat, extremely dangerous duty with (“I found out years later”) a 71% mortality rate—“We flew low and slow, looking down into the jungle. Anybody looking back at you and you’re about to have a bad day.”) Shot down and wounded during the ’68 Tet offensive (leg and hand). Awarded the Purple Heart, the Distinguished Flying Cross and the Air medal. During stateside hospital recuperation in PA, met his future wife Pauline (the couple married in ’69).
Returning to civilian life, in ’71 enrolled in Embry Riddle Aeronautical University in Daytona Beach, FL to earn his B.S. and training to become a commercial airline pilot (“But the timing was bad—the month I graduated, TWA laid off 700 pilots”). With no pilot openings available, he accepted a local investor group’s offer to supervise the construction of, and later manage, a 394 unit planned land-lease community in Lewes, DE. (“When completed, the park had everything: paved roads, parking pads, street lights, a swimming pool.”) Managed the place for the next 17 years—“I supervised the homes, did most of the warranty work, sold homes, arranged for financing, picked out homes, chased cats, collected rent. It worked well. It was nice.”)
In ’89, the owners sold the community to a new investor group who in turn sold it two years later to a large conglomerate with management policies that didn’t work for Porter.
He quit in ’90, forming a MH consulting business, focusing on installation. A year later, at the urging of the late Jim Moore, exec. dir. of the PA MHA, he agreed to create a curriculum for an MH installation training course. The task took a year, following which he started leading training classes throughout PA. In ’91, when KY passed legislation mandating the first state certification program for installers, Porter was chosen to conduct the first twelve classes. Other states followed suit and his career took off.
To date, Porter has trained over 10,000 students in installation in 46 states, conducted workshops on installation and warranty service for many manufacturers, communities and retailers, and written and presented training videos for manufacturers. He has authored Installation and Repair of Manufactured Housing (widely used with licensing programs) and, for MHI, The Manufactured Housing Installation Guide. Working with MHI, he recently developed an online, interactive installation training certification course. The Porters have two grown daughters.
- Q: You credit the late Jim Moore (Director of the PA MHA) for not only inspiring your career, but for being an industry pioneer. How so?
- A: Jim knew that problems caused by improper installation were endemic throughout the industry, because there existed no institutionalized training structure on how to install. Nothing. Factories would have little seminars from time to time on counter tops, or siding, but never anything on foundations or set-up, ever. I guess the thinking was ’How stupid can you be if you can’t put a trailer together.” But Jim understood that faulty installation, not factory defects, were far and away the chief reason why manufacturers were paying so much for service costs. So he pioneered installer training. And used me to help implement his vision.
- Q: And now, nearly 20 years later, most states require installer training and your curriculum and textbooks are more or less the standard for certification training. Keeping you busy?
- A: Plenty busy. In addition to states bringing me in to train, I conduct workshops for manufacturers, dealerships and communities. But I’m not the only one. In the last two or three years there’s been a proliferation of training programs.
- Q: Is the slump in the site-built housing market affecting you?
- A: Yes. I see it as increasing our business. With the crash in sub-prime lending, people who can no longer qualify for site-built homes are having to look for a different, more affordable form of housing. And many are coming to us.
- Q: Which leads to the current industry debate over whether or not the installation standards developed by HUD under the 2000 Improvement Act should be made preemptive, just like the HUD code itself. Your thoughts?
- A: HUD says the Act prevents them from making the standards preemptive, but in my opinion installation standards, which are really performance standards, must be preemptive if you want the dern HUD building code to work. Instead, we’re heading to a situation where states and local governments will be free to develop their own installation criteria as long as they’re stricter than HUD’s. In short, there’s one HUD code, why not one install code instead of hundreds, or even thousands?
- Q: You’re concerned how this will impact installers?
- A: It already has. Do you know how many states reciprocate with each other in licensing installers? None. There are installers in northern Georgia, for example, who have to maintain eligibility in five states to work within a 200 mile radius. That makes them almost professional students.
- Q: Is there a solution?
- A: I believe there is. Three years ago, I partnered with MHI to develop an online interactive course to obtain certification and licensing. The cost is $195. We designed it to work with a dial-up modem, and it comes with a manual, workbook and a CD containing 17 videos. There are five open book tests to take, plus a final exam. And it’s really working. At least three states already accept the test results for licensing. South Carolina requires you to take the final under supervision by a third party tester but our program is now the only way you can get your ticket in that state. I believe over time all the states will adopt our program, allowing reciprocal licensing. I may have pioneered the concept but MHI made it available as a gateway portal. It’s been a great partnership. You can’t have too many smart people helping. We’re all very optimistic.