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HomeMy WebLinkAboutCOUNCIL - AGENDA ITEM - 04/13/2021 - HICKORY VILLAGE MOBILE HOME PARK SALEDATE: STAFF: April 13, 2021 JC Ward, Senior Planner Kyle Stannert, Deputy City Manager Ryan Mounce, City Planner Caryn Champine, Director of PDT WORK SESSION ITEM City Council SUBJECT FOR DISCUSSION Hickory Village Mobile Home Park Sale. EXECUTIVE SUMMARY The purpose of this item is to provide an update on the potential for Hickory Village Mobile Home Park (MHP) to become a resident-owned community (ROC) and to seek feedback from Council members on the desired level of City engagement in that process. GENERAL DIRECTION SOUGHT AND SPECIFIC QUESTIONS TO BE ANSWERED Staff is seeking direction from Council on potential short - and long-term engagement actions: 1) Does Council have any questions or feedback on opportunities for the city to engage as community conveners in the potential creation of a Resident Owned Community (ROC) for Hickory Village Mobile Home Park? 2) In recognition of the quick timeline to form ROC's and the complexity of the process, should City programs be developed to support future MHP sale/Resident Owned Community opportunities? BACKGROUND / DISCUSSION On March 3, 2021, the owner of Hickory Village MHP agreed to sell the park to a corporate operator. According to state law the potential sale triggered a 90-day window for residents to make an offer to purchase the park and become a ROC. Neighborhood meetings with the Hickory Village community have revealed that there is strong support to pursue this option. Staff from Neighborhood Services and Planning Departments met with representatives from Thistle, a non-profit affordable housing organization, which provides technical assistance and helps arrange financing for ROC’s in Colorado. With the high purchase price ($23 million) and short timeline, Thistle staff have expressed a desire for local support for the formation of a ROC. Hickory Village Sale Status and Timeline Hickory Village is one of nine MHP’s in Fort Collins and contains approximately 200 manufactured housing units, a majority of which are owned by their residents. In early March, residents and the City received notification from the owner of the intent to sell the property to a buyer for a purchase price of $23 million. Recently passed state legislation requires 90-day advance notice of the sale of an MHP and provides the opportunity for residents to submit their own offer to purchase the property, potentially leading to a resident owned community. The decision to pursue resident ownership requires the support of a large majority of Hickory Village residents as well as the ability to organize a cooperative, arrange financing, and submit an offer to the current owner. Timing is an especially critical aspect to any potential resident ownership decision, as residents and partners have as few as 90 days from the original notice of the intent to sell (March 3, 2021) to complete these tasks. Thistle, a ROC technical assistance provider, is meeting with Hickory Village residen ts and local partners to provide information about resident ownership and to ascertain what level of interest residents at Hickory Village may have in the idea of a resident ownership proposal. Key dates in the timeline thus far include: April 13, 2021 Page 2 • March 3: Notice of sale mailed/posted for residents; trigger date for state required 90 -day notice and opportunity to purchase period. • March 9: The City receives mailed notice of intent to sell Hickory Village. • March 15: Staff met with Mi Voz Leaders’ Council to discuss fears and outline potential paths forward. Resident leaders had a strong interest in becoming a ROC. • March 18: Staff met with Thistle to discuss the feasibility and process of Hickory Village becoming a ROC. • March 25: Thistle hosted a neighborhood meeting with 45 Hickory Village residents to provide information and resources on becoming a ROC. • April 3: Thistle hosted a follow-up neighborhood meeting with 125 Hickory Village residents to provide information and resources on becoming a ROC. The residents have formed an interim leadership board and are continuing pursuit of ownership. • June 1: The end of the state-required 90-day notification period and the earliest a sale of the property to another buyer could be completed. Resident Owned Communities (ROC) Overview Resident owned communities are a growing trend that gives manufactured housing residents greater control over the rules, operations, maintenance, and monthly lot rent within their neighborhood. ROC’s often form when an existing MHP is for sale as residents form a cooperative to own and operate the overall community. Residents still own their individual units, but they also have a share in the larger cooperative which sets park rules and lot rent which often are better aligned with the needs and priorities of its resident owners. While a growing trend, resident ownership can be difficult to achieve for a variety of reasons: • An existing MHP owner must be a willing seller and a large percentage of residents must agree to participate to form the cooperative and submit a competing offer. • In Colorado, MHP residents and ROC partners often have a limited time window to organize and find the necessary financing. • MHP’s are increasingly viewed as investment properties and residents and ROC p artners must often compete against large corporations and private equity firms to purchase a community. • Certain park characteristics may be needed to form a ROC, such as a minimum number of units, high resident ownership rates, and acceptable infrastructure conditions. • Although ROC’s typically stabilize rent long-term, at the time of conversion there may be a large one-time increase in rental prices. Process of Becoming a ROC 1. Either before or during a MHP sale, residents typically receive information and organizing assistance about resident ownership so they can understand the opportunities and challenges. At Hickory Village, Thistle, a certified technical assistance provider within the ROC USA, is currently working with residents and local partners. 2. If residents decide to pursue resident ownership, a cooperative must be formed, and an interim Board of Directors selected. The resident cooperative is the entity that purchases the property. Typically, 70 -80% of residents need to agree to participate. 3. Due diligence is completed on all aspects of the property. Financial scenarios are reviewed while the cooperative and its partners secure financing and submit their purchase offer to the park owner. 4. If successful, the cooperative becomes the landowner and helps manage future operations, rules, and lot rent. April 13, 2021 Page 3 Colorado ROC Trends ROC’s are in operation across the country, with larger concentrations in the Northeast and Pacific Northwest. ROC’s are relatively new to Colorado with several formed in the past several years in Canon City and Longmont. Based on media reports and information from Thistle, several aspects appear to be common to the formation of Colorado ROC’s thus far: • Subsidies, grants, and other financial partnerships are often invol ved as part of financing a ROC. In Colorado, this amount has been close to 25% of the purchase price. These grants, no/low interest loans or other subsidies are typically used to help keep rents lower upon the transition to resident ownership. Key partners in previous deals have included the Colorado Division of Housing, Colorado Health Foundation, and the support of other local partners or jurisdictions where the MHP is located. • Residents have a buy-in amount to help form the cooperative. The maximum buy -in amount is typically limited to a maximum of $1,000 per household. • The overall process for resident ownership generally takes 90-150 days. While it can extend longer, recent Colorado legislation only requires a minimum of a 90-day sale notice and opportunity to purchase. As of April 13, the Hickory Village sale is 41 days into this timeline. Summary of Colorado Mobile Home Park Act Section 38-12-217 • MHP owners are required to provide notice of their intent to sell to all tenant homeowners and the municipality or county where the park is located. • Within 14 days of the MHP owner listing the park for sale, they must provide notice to each tenant homeowner, any homeowners association, the municipality or county where the park is located, and the Colorado Division of Housing. • Within 14 days of a MHP owner intending to make a final, unconditional acceptance of an offer for the sale or transfer of the park, they must give notice to each tenant homeowner, any homeowners association, the municipality or county where the park is located, and the Colorado Division of Housing. • After each notice above, a MHP owner must give tenant homeowners a 90 -day opportunity to make an offer to purchase the park. MHP owners must negotiate in good faith with any group o r association of homeowners or their assignees who submits an offer to buy the park. Violations of state law for Mobile Home Park Act Oversight or Residents’ Right to Purchase are enforced by the Department of Local Affairs Mobile Home Park Oversight Program, which began in May 2020. However, It is unlikely that DOLA could take action to stop the sale of a park, were DOLA to become engaged in this matter. And, although it would seem appropriate for a delay in the sale to be an available remedy for a failu re to give required notices, Colorado Revised Statutes Section 38-12-217(15) says DOLA and the office of administrative courts do not have the authority to issue injunctive relief in response to a complaint alleging a violation of the statute, or to delay a transfer or transaction involving the property. ROC Benefits ROC’s stabilize rent for residents (after initial increases at the time of purchase) and maintain rent at or below the rents of nearby commercially owned communities, due to the absence of a profit margin in community costs. Additionally, ROC members sign perpetual leases, meaning they can live in the ROC as long as they choose so long as they pay rent and follow the rules. Therefore, ROC’s serve as one method of securing affordable housing options, while providing residents with collective decision-making power regarding park rules and community initiatives. These attributes align ROCs with City policy goals for affordable housing, residents’ rights, and manufactured housing preservation. A ROC also helps meet Council and City priorities for the preservation of manufactured housing and stabilizing residents’ housing. As owners of the land underneath their homes, residents have the direct input and control over the future of the property they traditionally lack when living within a non-resident owned community. A sale April 13, 2021 Page 4 and potential closure of the property in a ROC could only occur through the consent of its resident owners. The direct resident decision-making authority of a ROC provides an enhanced layer of protections and preservation support beyond the City’s recent adoption of a manufactured housing zone district. Considerations for the City Potential short-term City roles for Hickory Village MHP Sale • Take no action: City staff would not actively participate in this process other than to direct inquiries regarding this process to agencies involved. • Be a convener: The City’s Neighborhood Services and CPIO departments can provide engagement support; connecting residents, community partners such as Housing Catalyst, The Family Center-La Familia and Thistle, and park owners (if/when appropriate). • Be a convener and financial partner: The City can provide engagement as described above, as well as financial support. Potential long-term City roles Staff could create a program to assist in future conversions to ROC’s. This may include supporting residents in the formation of residents’ associations and the creation of a plan for becoming resident -owned should the opportunity arise. Staff can also continue their engagement with property owners, ensuring they fully understand state laws regarding MHP sales and are aware of all selling options. Other financial support considerations could be explored to include creation of a grant, loan, or other funding program to prepare for future MHP sales. ATTACHMENTS 1. Powerpoint Presentation (PDF) April 13, 2021 Hickory Village Mobile Home Park Sale ATTACHMENT 1 2 Direction Sought 1)Does Council have any questions or feedback on opportunities for the City to engage as community conveners in the potential creation of a Resident Owned Community (ROC) for Hickory Village Mobile Home Park? 2)In recognition of the quick timeline to form ROC’s and the complexity of the process, should City programs developed support future MHP sale/Resident Owned Community opportunities? Overview: Hickory Village Sale §Hickory Village Mobile Home Park §Located along Hickory Street, west of N. College Ave §Approximately 205 units §Notice of sale published on March 3, 2021 §Recent state legislation requires a 90- day notice before sale occurs §Sale price: $23 million 3 Resident Ownership Opportunity §90-day sale notice also provides opportunity for residents to submit an offer to purchase. §If accepted, offer would create a resident owned community (ROC). §Thistle, a ROC technical assistance provider, is meeting with Hickory Village residents and local partners. §Education & training §Determining interest & feasibility §Prior involvement in other Colorado ROC's 4 Sale / Opportunity to Purchase Ti meline §MAR 3:Notice of sale. Triggers 90-day notice & opportunity to purchase period §MAR 9:City receives mailed Hickory Village sale notice §MAR 15: Staff meet with Mi Voz Leaders’ Council to discuss Hickory Village sale and outline potential paths §MAR 18: Staff meet with Thistle to discuss sale and feasibility/history of other ROCs in Colorado §MAR 25: Thistle meets with Hickory Village residents to discuss ROC process §APR 3:Follow-up meeting between Thistle and Hickory Village residents.The majority of participating residents want to pursue a ROC. §JUN 1: End of 90-day opportunity to purchase period 5 ROC Overview §Resident Owned Communities (ROC): §Resident cooperative is formed to purchase and operate their mobile home community §Cooperative owns the land and operates the community; better alignment with resident priorities §Lot rent, park rules, maintenance & amenities §ROC's promote City policy goals: §Preservation / stabilization of existing manufactured housing §Alignment and accountability to resident priorities §Residents’rights and livability improvements 6 ROC Challenges §Difficult to organize and arrange financing within 90 days §Hickory Village ~42 days into process (as of 4/13/21) §Need a willing seller and must compete against private buyers §Seller is not required to sell to residents, only to consider the residents' offer in good faith §Ty pically requires a large majority of resident support / participation §One-time buy-in required to form cooperative §A r ent increase upon transition to a ROC is likely §Few local examples §First ROC's in Colorado began several years ago §Financial assistance by state and local entities have been required 7 City Engagement Roles:Hickory Village §Ta ke no action: §No longer participate in this process §Direct all future resident inquiries to agencies involved §Be a convener: §Connect, facilitate, and support residents,community partners, and park owners through process 8 City Engagement Roles:Hickory Village §Be a convener and financial partner: §Provide engagement and facilitation throughout the process §Connect residents wi th community partners and MHC owners §Financial support §Low or no interest loans §Grants §Down payment assistance 9 City Engagement Role:Long-Te rm §Resident Engagement: §Organizing resident associations §Roadmap to ROC §Owner Engagement: §Clarity on state law and selling options §Financial Support: §Designated ROC fund, loan, or grant program §Partnerships with community funding organizations 10 11 Direction Sought 1)Does Council have any questions or feedback on opportunities for the City to engage as community conveners in the potential creation of a Resident Owned Community (ROC) for Hickory Village Mobile Home Park? 2)In recognition of the quick timeline to form ROC’s and the complexity of the process, should City programs developed support future MHP sale/Resident Owned Community opportunities?