Manufactured-home owners get noticed
Law gives tenants chance to own land cooperativelyAugust 31st, 2023
A new state law in Washington aims to give tenants of manufactured housing communities the opportunity to purchase and own the lots they rent from landowners.
“Manufactured home communities are often sold off-market,” says Victoria O’Banion, Spokane-based marketing and acquisitions specialist with Northwest Cooperative Development Center. “When the park wasn’t listed, residents didn’t know what was happening and that the park was being sold.”
The legislation, known by some as the Notice of Opportunity to Compete to Purchase bill, was signed into law on April 6 and now requires owners to share their intentions to sell with residents, giving residents a fair opportunity to compete to buy their manufactured housing community’s land, she says.
Chester Baldwin, executive director of Manufactured Housing Communities of Washington, which advocates for owners and managers of manufactured housing parks, adds that the law gives the tenants 70 days to take the steps necessary to purchase the park, form a group, or partner with an organization to purchase the property.
“Everyone had the opportunity before this bill passed to at any time make an offer and potentially purchase the community,” says Baldwin. “But this makes a formal process by which, if they are interested in owning their community, they have the timeframe and can put a group together to do that.”
O’Banion says the new law also requires an owner of a manufactured home park to give residents two years’ notice to vacate—up from one year, previously—in the event the owner intends to close the park. If owners want to speed up that process, they will need to give each tenant a certain amount of funds to relocate based on taxable value or number of lots in the park, she says.
Robert Cochran, a property manager at Contempo Spokane Mobile Home Park, says he has always supported tenants banding together to purchase a manufactured housing community. However, he anticipates park owners will now have to make additional preparations in the event they want to sell their properties to prevent any complications with potential buyers.
“Another option would be to issue a notice of opportunity to compete to purchase a long time before placing a private or public listing of the (manufactured housing community) for sale,” he says.
He anticipates the 70-day waiting period will deter potential investors and drag out negotiations to four months or more.
James S. Black III, a real estate investment specialist with Spokane-based NAI Black, says demand has been high historically for owning mobile home parks, because they have been good investments.
“For every one park there are 10 buyers,” Black says.
With the new law, however, Black anticipates seeing fewer transactions and owners holding properties for longer periods. Potential investors might also be deterred by the red tape, he says.
Baldwin says there have been many iterations of the Notice of Opportunity to Compete to Purchase bill over the past 15 years, and many of the concerns with past drafts have been addressed.
Baldwin and O’Banion were among a group of landlord representatives and tenant advocates who helped craft the legislation.
Baldwin says, “I think the version we finally passed is actually a balanced piece of legislation that we had bipartisan support for.”
As previously reported by the Journal, manufactured homes differ from traditional homes in that they historically don’t appreciate in value, aren’t backed by mortgage loans, and generally are placed on rented land. The earliest version of such housing—originally known as a mobile home—was first introduced to provide quick and efficient housing for military personnel following World War II.
O’Banion says manufactured home communities also were formed by companies that wanted to provide housing for their workers, and they are among the most affordable housing options today.
Spokane County has 82 parks with a total of 5,000 manufactured homes, she says. Of those, only one park, Tekesa Village, in Mead, is tenant-owned. In Kootenai County, there are about 32 parks with over 2,700 manufactured homes. None are tenant-owned, she says.
Residents who are interested in forming a group to purchase their communities can partner with eligible organizations that can assist them with funding and other resources, O’Banion says.
Resident Owned Communities Northwest is a program of Northwest Cooperative Development Center that aims to build and retain affordable housing through cooperative ownership in Washington and North Idaho, says O’Banion.
It uses the New Hampshire-based ROC USA model that was developed 30 years ago, she says. In 2008, ROC USA decided to expand the program nationwide and contracted with Northwest Cooperative Development Center.
O’Banion works with tenants to create an assignable purchase-and-sale agreement and go through the necessary steps and due diligence to purchase a community.
“Just like any lender, any investor, we’re going to do a site inspection, an environmental assessment, and secure financing based on that information,” she says.
ROC USA Capital, of New Hampshire, provides funds for ROC acquisition, refinancing, and construction loans. Seattle-based nonprofit Impact Capital provides funding for pre-purchase expenses. The Washington Community Reinvestment Association and the Washington state Housing Finance Commission provide permanent financing, O’Banion explains.
During the financing process, residents select a five-person board of directors that will work with ROC Northwest staff to establish a cooperative community, and residents will then pay a one-time membership fee of $100 to $200, she says.
“It is a limited-equity model,” says O’Banion. When residents leave the manufactured housing community, “the only equity they are giving back is that membership fee.”
When residents acquire a mobile home community through the ROC program, they will continue to pay a lot fee, which covers the cooperative’s monthly mortgage and operating expenses, she says.
In addition to working to retain manufactured home communities, O’Banion says the organization also seeks to create more parks, specifically in Spokane.
She is working with Ben Stuckart, of Spokane Regional Land Holding Properties LLC, to help identify land, and with Jennyfer Mesa, executive director of Latinos en Spokane, to create a cooperative community, she says.
O’Banion also is working with the owner of a parcel of land that is zoned for manufactured housing in Airway Heights.
“These are affordable homes that also create generational wealth,” she says.
Baldwin says state Department of Commerce data shows Washington has an 800,000-unit housing shortage that will grow to 1 million by 2040. The quick and efficient way in which manufactured homes and communities can be assembled can provide some assistance creating more housing, he says.
“We know that it’s not favored by local governments, and that they don’t want manufactured home communities, but the truth of it is, this is one of the fastest forms of housing that we could get on the ground and get people into,” he says.
Like tiny home villages can come together within 30 to 60 days, the same can be done with manufactured homes, he says.
Manufactured Home Communities of Washington will introduce a bill this year that would allow for park owners to create more lot spaces on their properties and allow more manufactured home communities to be built, says Baldwin.