Six years ago someone wrote what proved to be a very timely and popular article on how to invest in mobile home parks and turn them into “cash cows.” But as the corporate entities who’ve been taking over Huntington Beach’s parks since around that time have shown, this author was a piker.
This author didn’t seem to know, or at least failed to mention, how California’s otherwise strong and protective land lease law had an exception for mobile home space, which – combined with Surf City’s 2002 plebiscite against any rent control – makes the limit on how high and suddenly you can raise the rent on an HB mobile home owner… the limits of a greedy investor’s imagination!
He didn’t mention how lucrative it can be to change a park that had long been a seniors-only park into a more-profitable “all-ages” park, which happened several times in HB until the Council finally outlawed that back in March (over Mayor Matt Harper’s “ideological” objections.)
And he didn’t mention the most wondrous and profitable trick of all, which you aren’t gonna believe:
Driving Seniors Out with Exorbitant Rent and then Seizing Their Homes!
This has happened to well over a hundred seniors that we know of, in one park alone – Huntington Shorecliffs, after it was bought by John Saunders in 2008 – or should I say John Saunders LLC? Yes, Saunders walks and talks, goes to council meetings and sometimes tries to convince people he’s a nice guy, but he’s also a CORPORATION, with all the rights and limited liability of one.
Let’s back up a tad – there are 18 mobile home parks in Huntington Beach. At this point, 10 of those are senior parks, 8 are all-age. Until the corporate rush a decade ago, all of them were family-owned; now only four are. I know we progressive types sound like broken records when we talk about the evils of (unregulated) corporations, but this is the fact: Parks that are still family-owned have had no problems or controversy, continuing to raise their rents 2-3% a year as they have for decades; only the ones taken over by corporations, with their relentless and brutal pursuit of profit, have suffered the crimes against humanity we’re documenting today.
Another thing – proud and sensitive, these mobile home owners want me to emphasize that again, they are homeowners, who pay property taxes. The only thing they lease, of necessity, is a patch of dirt or concrete (like the one to the right) where they park their homes, which in most cases represent their life’s work and can be worth anywhere from $50 to $300 grand – likely as much as YOUR home.
But, TWO OTHER things: it’s something of a misnomer to call these structures “mobile,” as it’s so complicated and difficult to actually move them that it often costs as much as the home itself – prohibitively expensive. And the law puts them essentially under the park owner’s “eminent domain.” Except, it’s actually WORSE than eminent domain, as the park owner is not a democratically elected government.
When the homeowners are driven out by sudden, exorbitant rent increases – as seems to be the actual goal of owners like Saunders LLC or Kort & Scott – they technically have the option of attempting to sell their homes so they can afford to live somewhere else. BUT, incredibly, the park owner has the right to refuse any buyer who doesn’t pass their absurd and arbitrary approval process. So eventually the homeowner, no longer a homeowner, is forced to abandon their property, which becomes the property of the park owner, and the senior shuffles off in shame and penury, sometimes never to be heard from again.
Saunders swooped into Shorecliffs in 2008 like a tornado, with his attorney Robert Coldren, (famed for fighting against mobile home park rent control up and down the state.) Coldren immediately announced to all the seniors, some of whom had been there for decades, that they’d “lived here too long and too cheap, and we’re going to do something about that!” True to his word, he immediately raised rents 400 to 500 a month, got the park designated “all age,” and began his slow pogrom: Over 130 seniors now forced out, living with family, homeless, disappeared, dead. And Saunders’ profits soared!
Path of the Storm: Saunders moves down to Pacific!
So, fresh off his spectacular Shorecliffs achievements, John Saunders looked a half mile southwest and saw opportunities at Pacific Mobile Home Park. A family park mere steps from the beach, Pacific had been run as long as anyone could remember by a pair of brothers who rarely raised rents much. But the moment Saunders got his hands on the place last year, longtime residents got the same lecture from his Star Management flunky Michael Cirillo that Shorecliffs residents had gotten from Robert Coldren: “You people have been paying too little for too long, and we’re going to take care of that!” Most rents went up by $100 last summer, and then by another $400 in January, for a total of 62%.
I learned a new trick at Pacific that I hadn’t heard at Shorecliffs, a trick for preventing buyers from buying a tenant’s mobile home that they’re trying to sell. We’ve already seen Saunders and his folks come up with outrageous and arbitrary ways to disqualify prospective buyers, usually disqualifying all of them till the seller gives up. At Pacific they also have another method – maybe it’s an innovation of Star Management: They’ll tell the buyer, “Sure, you can buy this home, but your space rent will be $2000 a month (or something else exorbitant) and it could go up at any time.” That’s usually enough to scare away any buyers; one lady I met at Pacific did manage to sell her home under those threats, but only for half what it’s worth.
One thing Saunders was NOT reckoning on when he sunk his talons into Pacific was a Georgia spitfire name of Diane Atkins. The sheaf of pages she handed me at her kitchen table was not the letters she had written to politicians and officials in dispute of this outrageous rent increase, but the LIST of all such letters she’d written. Tireless, she seems to know nearly all 256 families in the park, each of their situations, the values of their homes, everything. She is Saunders’ and Cirillo’s worst nightmare, showing up at EVERY city council meeting, demanding action.
Diane quickly grew impatient with the park’s milquetoast “HOA,” which seems stuck in a cycle of trust and credulity with the slimy Cirillo, who knows how to forestall any action with smooth words and broken promises. Snaps Diane, “I had to find people I could stand shoulder to shoulder with and fight beside, so I started working with the Q-tips.” (That’s what she calls the seniors, particularly the canny feisty ones of Rancho Huntington whom we’ll meet soon.)
But first, let’s take a little car trip with Diane around Pacific Mobile Home Park, where we can’t go ten yards without someone stopping her and telling her their problems and concerns:
First we met Chris and Crystal Freiberg (right) and their two beautiful daughters. Chris and Crystal bought their home and moved into Pacific 14 years ago now. Chris works as an engineer on our celebrated Groundwater Reclamation System, for the OC Water District, something we write about a lot here. We enjoyed discussing the contrasts with the unaffordable and destructive desal plan Poseidon and their shills are trying to foist on us, and are both looking forward to the expansion of the GRS. Crystal worked as a cosmetologist, and the couple put off having kids until the mortgage on their home was paid off.
The plan, which seemed like a fine one, was that by the time their two daughters were born, Crystal could afford to be a stay-at-home mother. That used to be the American Dream, didn’t it? And they deserved it. But it won’t work now, with Saunders’ exorbitant rent hikes: Crystal’s going to have to go find a job again. Sorry little girls, mommy has to go to work now, to satisfy the mobile home park corporation’s bottomless hunger for profits.
Next aisle over, we met World War II veteran Bill Alvarez, who served in the North Atlantic on the USS Midway, and then served 45 years as a Los Angeles firefighter. A lot of veterans are getting screwed over in this bloodbath, and I understand that that’s what helped get HB councilman Dave Sullivan, a veteran himself, focused on the issue.
Bill somewhat sheepishly allows as to how this situation isn’t hurting him financially as much as most others, as he “has money set aside” from his firefighting years and lives alone, but it pains him morally. “All the despair and distress I see around me, I feel like I’m spending most of my time around here as a sort of social worker. That poor French lady, Colette, around the corner…”
Yes, I’d already heard of Colette, an elderly Frenchwoman who has lived alone in this park with her little dog for thirty years now. Caught in a convoluted situation where Saunders suddenly jacked up the price of her property absurdly in an apparent scheme to swindle extra money from the city related to their Atlanta Street expansion, she now must search through dumpsters for recyclable goods in order to feed herself. Diane recently caught her on camera doing just that (below right) and for the record, Colette doesn’t mind my posting this picture; she WANTS people to know what she and her fellow HB homeowners are dealing with.
The Equity Formula
Before we move on to the next park, I need to share with you what several of the smarter owner/organizers have explained to me about the rent hikes: “It’s not so much the rent, its the rent increase’s effect on our equity.” And there is a handy formula that’s proven accurate for calculating that: For every $10 of rent hike, there’s a loss of $1000 in equity – i.e. the home is worth $1000 less.
Hence those $500 hikes of Saunders translated into a $50,000 loss of equity to each homeowner, and the jackal knew it. That’s why his parks, where we’ve already looked, are full of for sale signs AND homes that already belong to him.
But let’s not just pick on John Saunders LLC; there are plenty of other corporate crooks nearly as abusive in the HB mobile homes business. For example our friends at Rancho Huntington have the privilege of being reamed by Kort and Scott.
The Fighters at Rancho
When I trekked a couple miles northeast to Rancho Huntington near the Fountain Valley border, the park under the occupation of Buena Park tycoons Kort and Scott, the park known as the hotbed of HB mobile home activism, I met or heard tell of:
- a nearly-senile lady who was so shaken by the new owners’ strong-arm tactics that she panicked and sold her expensive home at a fraction of its worth;
- more than one chipper lady in their 70’s who are now looking for work so they can pay their new exorbitant rents (George W Bush would no doubt blurt out with a cackle: “Only in America!”)
- TWO MORE World War II vets not as well off as Pacific’s Alvarez, who are really in danger of going homeless any month.
I also very much enjoyed chatting with Q-tip hell-raisers Bruce Binder and Betsy Crimi, folks of unmistakably northeastern-Semitic stock who probably imbibed activism and organizing with their mothers’ milk.
When Kort and Scott came leering around looking to buy up the dirt these folks were parked on (Scott a gambling magnate with an over-$10-million north county spread worth more than what the duo paid for this whole park) our friends formed a REAL Homeowners’ Association – one that actually fights for the rights of homeowners. And they’ve managed to catch and/or stop Kort and Scott in several illegal acts so far:
- This corporate gang’s favorite tactic being to coerce and intimidate octogenarians into signing highly unfavorable 25-year leases, it was illegal for them to promise temporary lower rents in that pursuit;
- When folks considering these leases or contracts requested a copy to bring to their lawyer they were denied copies, and told “you sign it here or not at all”
- Glengarry Glen Ross fans know that you’ve got 72 hours after signing a contract to change your mind; Kort and Scott would secretly sign it as many as 72 hours before having the tenant sign it, and then say “No, it’s 72 hours after WE sign it, and that’s long over!”
All kindsa sleazy shit like that, I’m getting tired of writing about it and want to move on to the remedies, at any rate the big crime is the rent increases and the seizure of homes. So let’s find out…
What has the HB City Council done about all this?
Not much until the last year or two.
It’s taken that long for us to get a council majority in this town that cares about the struggles of working class people (or the environment either.) Dominated until 2012 by conservative ideologues, corrupt Republicans, and craven “business Democrats” like Keith Bohr, the council’s reaction to the abuses of mobile home parks was to affect great “ideological” deference for “property rights” (screw the property rights of the mobile home owners) while coincidentally collecting fat campaign checks from the park owners’ lobby groups.
As I remember – since I was there, walking precincts for him – one of the first local politicians to take an interest in the plight of these homeowners was Joe Shaw, during his first (unsuccessful) council race of 2006. By now he enjoys rock star status in some of these parks, having advocated for the homeowners for years, first on the planning commission, then on council beginning 2011.
It still wasn’t until Jan. 2013 that the current bipartisan 5-member humane majority finally took power (co-incidentally the same five members who oppose Poseidon’s desalination boondoggle – Shaw, Sullivan, Boardman, Katapodis, Hardy.)
This enabled them to finally pass the prohibition in March against senior parks becoming all-ages parks; now they are taking the first steps toward untying the Gordian knot preventing rent control (*cough I mean “rent stabilization”*) in the parks – first step to be completed at the Monday Aug. 4 meeting! If the initiative gets successfully put onto the ballot tonight, then the people of HB need to do two things this November – okay the initiative, and return enough members of the humane council majority to actually finish the job – specifically Joe Shaw and Connie Boardman.
Joe’s opposite on council would be our shiny-eyed, uncontrollably giggly Mayor Matt Harper – the closest thing we have to a conservative ideologue, now that the slightly more credible Don Hansen and Devin Dwyer have temporarily moved on. Carrying the water for Poseidon under one arm and the water for park owners under the other, with a jug on loan from developers balanced on his gleaming head, he finds even discussing the grievances of homeowners so onerous that he once tried to disband the toothless Mobile Home Advisory Committee.
Apparently a Tourette’s sufferer, he attempted to lampoon the “special treatment” afforded to seniors and veterans with this cringe-inducing reductio ad absurdum: “What next, will we give special treatment to sex offenders?” (You know, seniors, veterans, sex offenders, the old slippery slope.) Fortunately Matt has made the rash leap to a probably doomed assembly race and cannot return to council soon.
But several powerful forces are gunning for Joe and Connie and would love to replace them with their own lapdogs. The internet noise is all about (what I consider phony) populist causes like plastic bags (“they took them away and won’t let us vote on it ourselves!”) Safe and Sane Fireworks (“they won’t let us vote on it and it’s too much work to get signatures!”) and styrofoam on the beach (“they ALMOST took it away until Katapodis backed off, thank God!”) [Fire pits and 405 toll lanes are non-issues, as ALL Huntington Beach politicians are in agreement on those.]
But the real money and venom attacking Joe and Connie this year will be from three usual-suspect sources: Poseidon, out-of-town developers who want to get their hands on Bolsa Chica, and the aforementioned mobile home park owners. So far it looks like they’ll be coalescing around conservative ideologues Barbara Delgleize and Erik Peterson*, who will give all three of those destructive interests everything they want. [*Update 2015 – I was wrong about both: these interests and others coalesced around Delgleize, O’Connell, and Posey, none of whom I would now call any kind of ideologues but servants of money; Peterson it turns out is an HONEST conservative, who probably would never have supported rent control but is good on a lot of other issues, like Sullivan.] So I wish some of the rock-throwers going on about fireworks and plastic bags (naming no names) would sit down and get their priorities straight:
In this microcosm of Huntington Beach mobile home park abuse, we see why we need government, why we need to look after each other, we catch a glimpse of the Dickensian world that lurks waiting for us just under the surface whenever predatory capitalism finds itself a regulatory black hole.
It show us what Class War is, and that we didn’t start it, but that the war IS joined.
Think on this in November, Huntington Beach, when politicians come at you promising plastic bags, fireworks, Poseidon, and “property rights.”
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COMMENTS
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my contact information is mahd33@csu.fullerton.edu
Thank you.
Funny, the mobile home owners don’t want their “investment” minimized:“It’s not so much the rent, its the rent increase’s effect on our equity.” And there is a handy formula that’s proven accurate for calculating that: For every $10 of rent hike, there’s a loss of $1000 in equity – i.e. the home is worth $1000 less.Hence those $500 hikes of Saunders translated into a $50,000 loss of equity to each homeowner, and the jackal knew it.”So, essentially it’s okay for the mobile home owners to sell their mobile home that would be worth maybe $10-50,000 OFF their site for $300,000 or more, but they want to LIMIT the PROPERTY OWNER’S PROFITS. The mobile home owners know it is location,location, location and they want the profits for themselves, how greedy. If they want to limit the property owner’s profits to 2 or 3% a year they should also limit their own to 2-3% on the resale value of their mobile home. Furthermore, these mobile homes ARE MOBILE, they can be moved.
Beach real estate is PREMIUM REAL ESTATE and not everyone can afford to live within a mile of the beach, there are many nice mobile home parks in more inland locations.Again, why should ONLY MOBILE HOME PARK OWNERS be SINGLED OUT and forced to subsidize these folks so they can continue to live in an area they really have been priced out of?It seems to me if the city wants to keep the rents below market the city should have to buy these mobile home parks and run them.
Closing down a mobile home park is horrendously difficult, the state is littered with lawsuits over that very issue.
And your right, the park owners essentially have to BUY THEIR OWN LAND BACK in order to close a park:” …the entire value upwards of $80,000 was paid per unit.”I’m sure that was for the LAND (remember these folks are only renting the space) and then they could take and move their mobile home to a new location.
Having a mobile home park on your property LESSENS THE VALUE of your land because of all the regulations and difficulties in shutting a park down.
The mobile home renters hold most of the cards in this game.
The landlord must give you at least 60 days’ advance notice if the rent increase is greater than 10 percent of the rent charged at any time during the 12 months before the rent increase takes effect.http://www.dca.ca.gov/publications/legal_guides/lt-2.shtmlMobile home park owners operate under a whole separate set of restrictive laws under HCD.
The rents have to be commensurate with the purchase price of the property, i.e., cap rate.
A mobile home park is a business, and as a business needs to be profitable. I think it is UNFAIR to single them out, again MAKE THE CITY STEP UP AND BUY THESE PARKS and then they can subsidize the rents.
“cap or eliminate private land owner profits or use rights”.Secondly, what is really happening here is that these parks for whatever reason are being sold (for less than they’re probably worth if it were just bare land) and the new owners have to raise the rents to cover their investment, that’s capitalism. It’s also probably true that many of these parks rents were under-market and now are adjusting for inflation. Some of these mobile home owners could probably move their units to another mobile home park inland and STILL sell their “space” and some will have to sell and move on. Doesn’t the same thing happen to apartment dwellers when there is a condo-conversion or a change in ownership? Why not force rent control on apartment owners too?Lastly, I don’t know about “unconscionable contract and promissory estoppel” perhaps you can cite case law where it has been used successfully in this type of situation. It seems to me if the abuses that Vern alleges are true, the courts are the proper venue for redress and all the other mobile home park owners should not be singled out for punishment too.
Free tip: You have to do more than just string together some big words, they have to make sense too.“This kind of robber baron market manipulation was eliminated by the GOP at the turn of the last century.”Then who and what caused the stock market crash of 1929?” The tenant in this case has substantially more capital invested, as well as intangible attachment included, in the parcel than the landlord.”I could slice and dice this, but that would be too easy. I’d rather have Ryan try and FACTUALLY back up this incredibly absurd statement.“Your argument presupposes the same condition that would allow an employer to refuse to negotiate with an employee union: it’s my business and I do what I want.”Happens all the time, it’s called union busting, as in using scab labor. Not relevant anyway.“Commerce isn’t that simplistic. If we allowed that kind of abuser to profit from failing to negotiate in good faith, you’d end up with real socialism because the social contract won’t support that inequity.”Why don’t you try being a bit more specific. I’m addressing rent control, usually landlords can raise their rents (if there isn’t a lease or rent control ) to whatever the market will bear. Are you disputing that?“The guy bought a mobile home park. If he wants to convert its use to something else, he can buy out his tenants investment at fair market value. He can’t push everyone out on the cheap by being an asshole.”Ca Mobile Home Law already addresses that issue, sometimes individual cities add on even more regulations (I thought you conservatives hated that kind of stuff), but what does that have to do with rent control?
And there are no guarantees for ANYONE that their investment will make money, many, many homeowners have lost money in this economy.
But it is very different when the government steps in and singles out one type of property owner and unduly burdens them with the city’s (in this case, affordable housing) responsibilities.I also take issue with this:“The plan, which seemed like a fine one, was that by the time their two daughters were born, Crystal could afford to be a stay-at-home mother. That used to be the American Dream, wasn’t it? And they deserved it. But it won’t work now, with Saunders’ exorbitant rent hikes: Crystal’s going to have to go find a job again. Sorry little girls, mommy has to go to work now, to satisfy the mobile home park corporation’s bottomless hunger for profits.”Why should the property owners be responsible for Crystal’s dream? How many people work in Orange County but live in Riverside County over affordability issues (many of them apartment dwellers)? If Crystal wants to stay home, let them move their mobile home to RC where there are many, many mobile home parks that are more affordable. I would’ve loved to raise my kids in Laguna Beach, but I couldn’t afford it, should someone have been forced to take less for their house so I could have my dream? That would be ridiculous, but somehow when it comes to mobile home parks the ridiculous seems rational, why?
suggestion. The subtleties of the legal mind are equal to the
emergency. The thing is really quite simple–the insertion of a
single word will do it. Let it stand that every fairy shall die
who doesn’t marry a mortal, and there you are, out of your
difficulty at once!”
of everything that’s excellent
it has no kind of fault or flaw
and I, my lords, embody the law.”What’s not to like?
Many of these parks are older and have aging infrastructure that can be extremely costly to fix and/or maintain.3) What were the terms of these “25 year leases”?
Usually a “lease” is protection against rent increases, whereas month-to-month rentals offer less protection.4) Are all the new corporate owners large corporations?
Not ALL “corporations” are huge wealthy conglomerates with lawyers and lobbyists at their disposal, some are just mom and pop operations who’ve incorporated to protect themselves from lawsuits.5) Have the park residents sued either the new owners or the former owners?
Fear of lawsuits or actual lawsuits from residents can be the final impetus for a “family owned” park to want or have to sell.6) How much did the new owners have to pay for these parks?
We all know that real estate in Huntington Beach is extremely pricey, shouldn’t the residents have expected a rent increase, after all a mobile home park is a business and not a charity?
Of course the original or long term owners could keep the rents lower as their original investment was smaller, but as land values have skyrocketed the new owners have a much larger investment (millions) they have to make that money back. If the city wants to keep these parks for low or middle income housing they should purchase them or help the residents do so.7) If illegal shenanigans are taking place shouldn’t they be addressed in court via a LAWSUIT? Why punish all mobile home park owners for the (possible) illegal actions of a few?
Many of these parks are older and have aging infrastructure that can be extremely costly to fix and/or maintain.[BB] Speaking for parks of the two worst owners, there have been NO capital improvements.3) What were the terms of these “25 year leases”?
Usually a “lease” is protection against rent increases, whereas month-to-month rentals offer less protection.[BB] The leases are 6% minimum increase with no cap, pass throughs of operating expenses, 5 year rent reevaluation based on rents in a 100 mile radius, 10 year 20% increase and 20% increase at end of lease. 21 pages of fine print that took myself and an experienced lawyer in mobile home park leases many weeks to ferret out.4) Are all the new corporate owners large corporations?
Not ALL “corporations” are huge wealthy conglomerates with lawyers and lobbyists at their disposal, some are just mom and pop operations who’ve incorporated to protect themselves from lawsuits.[BB] No they are not. But the Saunders and Kort & Scott have led the way in devastating their parks.5) Have the park residents sued either the new owners or the former owners?
Fear of lawsuits or actual lawsuits from residents can be the final impetus for a “family owned” park to want or have to sell.[BB] There were never any suits. Everyone was quite happy before the robber barons moved in.6) How much did the new owners have to pay for these parks?
We all know that real estate in Huntington Beach is extremely pricey, shouldn’t the residents have expected a rent increase, after all a mobile home park is a business and not a charity?
Of course the original or long term owners could keep the rents lower as their original investment was smaller, but as land values have skyrocketed the new owners have a much larger investment (millions) they have to make that money back. If the city wants to keep these parks for low or middle income housing they should purchase them or help the residents do so.[BB] While this is true, the amount they paid and the failure to make improvements does not justify what they have done with rents.7) If illegal shenanigans are taking place shouldn’t they be addressed in court via a LAWSUIT? Why punish all mobile home park owners for the (possible) illegal actions of a few?[BB] If this writer would like to fund us, we would love to sue. Our owners have very deep pockets.Enough FACTS for you anonster?
Like it or not the truth of the matter here is that a lot of these mobile home park residents were paying under-market rents for years and when the parks got sold the rents started readjusting to reflect the true cost of the real estate.I still contend that affordable housing is a COMMUNITY VALUE AND RESPONSIBILITY and as such the cost should be born by the entire community and not pushed off onto some private individual(s). If cities or the state want to keep and maintain their mobile home parks as low income/affordable housing then they need to step up and either help the residents buy them or they can buy them and run them.As for the senior only part your right, I misunderstood, although I still feel that affordable housing opportunities should be available for all ages. I know too many young people who are struggling with low wages, high rents and huge student loans and I’d like to see them get some breaks too.
If you know something please let me know…
Thanks
One bedroom apartments in Huntington Beach rent for $1810 a month on average and two bedroom apartment rents average $2225.Source: https://www.rentjungle.com/average-rent-in-huntington-beach-rent-trends/
Check out the Rancho La Paz story at http://www.fullertonobserver.com