Manufactured Housing Park Debate, Continued...

My goal in this post is to follow up on the consequences of raising rent in mobile home parks, which I explained in my previous post. The basic stakeholders that need to be considered in this situation are the renters, the park owners and the city or community in which the park is located. The noise from the differing opinions in the issue is growing rapidly. With more and more park owners raising rent, and more tenants getting squeezed out of the park, cities and counties are being forced to mediate. The interesting trend that has come to light though, is communities supporting the mobile home owners, in spite of some significant legal victories by the park owners.

Essentially, there is an asymmetry of wants here. Park owners want rapid return on their investments. Renters want reasonable rent prices that they can handle on a fixed income, and some sort of guarantee that the prices won't suddenly raise to heights they can't afford. The community wants low-income housing to be available for their residents who need it - this prevents them being added to welfare for the city. The way things stand now, a compromise is nearly impossible to foresee - something has to give.

In areas (California and Texas especially) where rent control laws have been passed, park owners are consistently suing the city, alleging that the ordinances are illegal. They have won some of these cases, and lost others. Astronomical amounts of money and time have been spent on these suits, both by the park owners and the cities and counties. They tie up the legal system and force funds away from projects that could benefit the whole community. These unproductive suits will continue until some kind of uniform national precedence is set.

Some "compromise bills" that have resulted from disputes between the stakeholders have made progress. They include: requiring approval from a special city commission when park owners want to increase rent beyond a certain percentage every year, allocating a relocation fund for residents who are forced out of the parks due to financial reasons and being transparent in their business practices. In areas where these laws have passed, the renters and land owners have benefitted mutually. Park owners don't have to spend money and time in litigation and renters can have some assurance that if rent gets out of control, they have an out.

However, other - more predatory - park owners have largely ignored these examples. They crow about the high returns they can get on their investment due to the lack of legislation on the matter. However, while it might be the case that they can raise rents consistently and outrageously, after a certain period of time they run into trouble. Their tenants can't afford the rent and can't afford to move. They default on their payments. They can't sell the home because no one wants to live in the park. The park falls below capacity. They stop seeing those great returns. They decide they want to sell the park, but first they have to pay for the remaining tenants to be relocated. This can cost up to several hundred thousand dollars for all the park residents. They have to lobby to get the zoning permit changed on the land. They then have to find a buyer. At the end of the process, have they really gained anything?

I think the best example today of a functioning relationship between owners, renters and the community is that of the compromise bill I mentioned earlier. It's not ideal; residents are still being squeezed and are subject to rent increases - albeit lower increases than before - and owners are still grumbling about the legality of it all. I think it's high time the federal government speaks out about the issue and sets some guidelines.