Across the country, private equity firms and real-estate investment trusts are buying up manufactured home communities from local owners and charging residents more to remain there.
But in Vermont, with major help from the state — through education about their rights and millions in funding from two state agencies — residents are standing up to this trend.
“The private-equity game is to take over a community for a short period of time,” said Joe Cicirelli, director of housing at the Cooperative Development Institute, an organization that helps manufactured housing parks, also known as mobile home parks, turn into cooperatives. “They raise lot rents.”
Since 2011, the Cooperative Development Institute has helped roughly 1,300 Vermont homeowners purchase their 16 manufactured home communities. Before 2011, said Jeremiah Ward, cooperative development specialist at the Institute, only four other manufactured home parks had gone co-op: Williston Woods and three communities in Brattleboro that formed Tri-Park Co-op.
Over the past decade, nearly a quarter of the country’s manufactured home parks have been bought up by investors, said George McCarthy, president of the Lincoln Institute of Land Policy.
“Everybody’s looking at these as cash cows,” McCarthy said.
Investors buy the land while the residents, as a rule, own the homes but must rent the land. But across the United States, 3 million owners of manufactured homes who live in parks also own the land.
When investors buy communities, they also start charging residents for utilities once covered by the previous owners of the parks, Cicirelli said, such as trash collection, water and sewer.
“I think these private equity firms are sitting on a lot of cash right now and housing is providing a fantastic return to them, because they’ve got residents in the park living in what were formerly known as mobile homes,” Cicirelli said. “They’re living in these manufactured homes that aren’t really mobile, and they’re a captive audience.”
Under Vermont’s “Opportunity to Purchase” law, residents of a manufactured home community get the first opportunity to buy their community or have a nonprofit buy it on their behalf. A park owner must provide notice to residents of an offer to buy the property. The residents, in turn, have 45 days to notify the owner they intend to match the offer, and another 120 days to come through with their offer. The owner is not obligated to accept the residents’ offer but must negotiate in good faith.
“Vermont values manufactured housing as one of the solutions to the affordable housing crisis,” Cicirelli said. “So when a park goes up for sale, the state steps in and they hold a meeting with residents. They educate them on what their options are.”
The Vermont Agency of Commerce and Community Development lists 67 nonprofit and resident-owned parks around the state.
The Cooperative Development Institute recently helped two Colchester communities, Breezy Acres and Hillcrest, stave off a sale to investors and turn themselves into cooperatives.
Residents of Breezy Acres closed on the deal to buy the 38-acre, 190-home park at the intersection of Route 2 and Creek Road from longtime local owners Mark and Philip Brault in February.
The residents, who owned their homes but leased the land, paid the Brault brothers $11 million for Breezy Acres, which worked out to about $57,800 per site, dramatically more than the $39,000 per site offered in the four previous sales of communities in Vermont. That indicates, Cicirelli said, the increased desirability of manufactured home communities as investments.
While the residents bought the property for $11 million, they took out a loan for $11.9 million to cover closing costs and the cost of starting reserves and opening bank accounts. The Cooperative Development Institute worked with Breezy Acres residents to identify needed repairs and updates to their community, Cicirelli said. The cost of repair and replacement was factored into the financing for the purchase of the community.
Skip Horner, the secretary of the new cooperative that now owns Breezy Acres, said the sale provides security for residents of the park.
“I’m going to be here probably the rest of my life because we own it and a private guy can’t come in and boot us,” Horner said. “That could have happened.”
On a recent tour of the community’s eight streets, Horner said the cooperative is charging its residents $489 a month in rent per lot. He explained that the cooperative had to raise the rent from the $460 the Braults were charging to cover the purchase of the community and the improvements that are being made.
“Still worth it,” Horner said.
“The infrastructure isn’t so great, but we’re starting to get there on it,” he added. “We just did $4,000 of road repair.”
The community has been around since 1963. Horner has lived there for 21 years, but he says “a lot of people” have lived there longer. Over the years, immigrants have joined the community. Nine Vietnamese families and one family from Myanmar now live there, according to Horner.
At Breezy Acres, residents were able to buy their own community thanks to a 3.2% bond for $10.1 million issued by the Vermont State Housing Authority, Ward said.
The Vermont Housing Conservation Board granted another $1.1 million, Ward said.
Maura Collins, executive director of the Vermont Housing Finance Agency, said the agency did not finance Breezy Acres but said it has stepped in to help communities go co-op by assuming the biggest part of the loan made to communities when they buy themselves.
“It’s been really successful in getting really low-cost loan dollars to these communities,” Collins said.
Community Development Block Grants have also been used to assist communities in going co-op, according to Housing and Community Development Commissioner Josh Hanford.
At Breezy Acres, owners appear to show pride in the small modifications they have made, including flower gardens and decks. Horner takes pride in the little lawn he made in front of his home by putting up some boards that trap water running down hill when it rains.
“I got bumble bees coming here,” he said.
He points to his morning glories.
“It’s nice to know that your house is going to be here for the rest of your life,” he said.