1. ECONOMIC AND SOCIAL BENEFITS OF MANUFACTURED HOME PARK COOPERATIVES Presented by: Jolan Rivera School of Community Economic Development Southern New Hampshire University NASCO Institute, Ann Arbor MI 8 November 2008

2. COURSE DESCRIPTION A cooperative mode of ownership of manufactured home parks (MHPs; also known as mobile home parks) provides certain advantages that translate into social and economic benefits. This course will share results of a couple of related studies on the experience of residents MHPs in New Hampshire that transitioned from renters to owners through the process of cooperation.

3. PRESENTATION OUTLINE INTRODUCTION PART 1: Summary of a qualitative study of the social and economic benefits of cooperative MHPs in New Hampshire PART 2: Summary of quantitative study of value appreciation of MHPs in a city in New Hampshire

4. PART 1: Qualitative Study of the Social and Economic Benefits of Cooperative MHPs PURPOSE OF STUDY To illustrate how a socio-economic problem is addressed by an intervention that has both economic and social dimensions to produce economic and social benefits Specifically, to illustrate how limited access to fair and affordable housing is addressed by cooperativism and policy advocacy to produce homeownership and a sense of community

5. PART 1: Qualitative Study of the Social and Economic Benefits of Cooperative MHPs PROBLEM CONTEXT Typical manufactured home park Owned and developed by individual/corporate landlord Consists of tract of land mapped into individual plots where park tenants place their owned manufactured homes Tenants pay monthly rent determined by landlord; NH doesnt have rent control laws Landlord responsible for installing and maintaining park facilities and infrastructure Landlord stipulates park rules and regulations which include land use, resident behavior, and eviction Park rules and regulations tempered by federal, state and local laws; in NH, RSA 205-A

6. PART 1: Qualitative Study of the Social and Economic Benefits of Cooperative MHPs PROBLEM CONTEXT Characteristics of NH mobile home park residents 1 in 12 NH households live in mobile homes Approximately one-half of NH mobile homes are located in manufactured home parks Residents generally low-income Residents generally dont have access to financial capital, except sub-prime Residents act individually; most are not organized

7. PART 1: Qualitative Study of the Social and Economic Benefits of Cooperative MHPs ECONOMIC DIMENSIONS OF PROBLEM Vulnerability to rent increases No rent control laws in NH High demand, low supply Landlords profit maximization motive Insecurity of land tenure Change in park ownership potentially means significant rent increases Threat of land use conversion Difficulty of moving mobile home structure Poor park facilities and infrastructure Absentee landlord Cost minimization

8. PART 1: Qualitative Study of the Social and Economic Benefits of Cooperative MHPs SOCIAL DIMENSIONS OF PROBLEM Lack of sense of community No shared resources Limited opportunities for joint activities Negative outside perception Trailer trash stigma Perception that trailer parks devalue abutting properties Residents are perceived to inequitably share cost of public services Lack of voice Unorganized residents Threats of eviction discourage group dissent Perception of powerlessness leads to exclusion from larger communitys political dynamic

9. PART 1: Qualitative Study of the Social and Economic Benefits of Cooperative MHPs EXAMPLES OF PROBLEM The Meredith Case 14 low-income households in a seasonal recreation-based economy Resident-landlord under economic (and welfare policy) pressure to dispose of assets in preparation to going into a nursing home Tenants want to buy the park but didnt have enough financial resources Landlord is resident-friendly

10. PART 1: Qualitative Study of the Social and Economic Benefits of Cooperative MHPs EXAMPLES OF PROBLEM The Milford Case 57 low- and middle-income households at the edge of the southern-tier economic expansion Park to be sold for conversion to shopping center Tenants dont have realistic options to preserve housing availability - no opportunity to relocate homes to nearby sites; very limited other forms of affordable housing Absentee landlord

11. PART 1: Qualitative Study of the Social and Economic Benefits of Cooperative MHPs EXAMPLES OF PROBLEM Other Typical Cases Uncontrolled rent increases Landlords not reinvesting in park infrastructure Threat of eviction as a strong-arm tactic Short eviction notice

12. PART 1: Qualitative Study of the Social and Economic Benefits of Cooperative MHPs PROBLEM STATEMENT If nothing is done, low- to moderate-income residents of manufactured home parks will be deprived of affordable housing

13. PART 1: Qualitative Study of the Social and Economic Benefits of Cooperative MHPs ROOTS OF INTERVENTION The Meredith Case Tenants responded by forming the Meredith Center Cooperative (MCC), developed a business plan, and hired a lawyer to negotiate purchase of park MCC approached 5 banks for financing, but were turned down; MCCs plan was seen as risky venture MCC was introduced by a CED graduate to the NH Community Loan Fund (NHCLF) NHCLF was able to lend MCC good faith deposit money using Institute of Community Economics funds On 1 June 1984, MCC became NHCLFs first borrower NHs first resident-owned and –managed manufactured home park cooperative

14. PART 1: Qualitative Study of the Social and Economic Benefits of Cooperative MHPs ROOTS OF INTERVENTION The Milford Case Having no individual alternatives, residents responded to the threat collectively; residents opted to collectively purchase the park Residents approached NH Legal Assistance (NHLA) to forestall eviction With no lots available to relocate their mobile homes, residents threatened to park them in front yard of NH Housing Finance Authority (NHHFA) NHHFA was able to put together needed down payment financing NHLAs legal efforts led to legislation of policies extending eviction notice period; also linked mobile home park residents to NHCLF NHCLF became source of down payment assistance, lobbyist for changing legislation, and source of cooperative organizing and technical assistance to other home park residents

15. PART 1: Qualitative Study of the Social and Economic Benefits of Cooperative MHPs INITIAL LEASONS LEARNED The Meredith & Milford cases brought to light: The need to legally recognize non-consumer forms of cooperatives The need for alternative financial products and guarantees The realization among tenants and the community-at- large that cooperativation is a feasible way of preserving affordable housing The negative consequences of a short eviction notice/process

16. PART 1: Qualitative Study of the Social and Economic Benefits of Cooperative MHPs ENHANCING THE INTERVENTION Policy advocacy and legislation State law requires 18-month notice for eviction that is due to change in land use 60-day notice for sale of park, with resident first right of refusal $10,000 or 10 percent (of sale price) penalty (whichever is greater) if not sold to residents Landowner must provide notice of intent to sell to NHHFA

17. PART 1: Qualitative Study of the Social and Economic Benefits of Cooperative MHPs ENHANCING THE INTERVENTION NHCLFs role as catalyst Organizes residents into cooperative to strengthen social capital Provides template for legal cooperation and provides down payment assistance to enhance access to credit from commercial banks/financial institutions Provides ongoing technical assistance to build human capital Provides links to other funding sources (CDBG, USDA monies) to preserve quality of parks physical resources

18. PART 1: Qualitative Study of the Social and Economic Benefits of Cooperative MHPs ENHANCING THE INTERVENTION Characteristics of manufactured home park cooperatives Group ownership: individually owned homes, collectively owned land and infrastructure Democratic control: one person, one vote; majority decision; Board of Directors Open membership: all residents are cooperative members; membership fee Limited equity: fixed share value pegged at original purchase price; members who leave sell back shares at original price Participation: each coop develops own participation policy

19. PART 1: Qualitative Study of the Social and Economic Benefits of Cooperative MHPs RESULTS OF THE INTERVENTION As of end of 2007: 86 resident-owned manufactured home parks Approx. 4,800 homeowners 20 percent of market share $140 Million in total acquisition lending CDBG/USDA monies for infrastructure improvements No change-offs No foreclosures

20. PART 1: Qualitative Study of the Social and Economic Benefits of Cooperative MHPs ECONOMIC BENEFITS Rent regulation Testimonies of prevalence of lower and less frequent rent increases Rent discounts Security of housing tenure Cooperative ownership of land Zero incidence of foreclosure or resale Improvement in park facilities & infrastructure Improved roads, septic systems, wells and water distribution systems Construction of playgrounds, community rooms, cooperative office

21. PART 1: Qualitative Study of the Social and Economic Benefits of Cooperative MHPs SOCIAL BENEFITS Enhanced sense of community Participation in park projects and activities Common concern and appreciation of shared assets Improved outside perception From tenants to asset owners Improved facilities, infrastructure and aesthetics lead to recognition of cooperative leaders Mutually agreed upon and enforced park rules improve peace and order Attainment of resident voice Participatory decision making Park newsletters Political participation in larger community

22. PART 1: Qualitative Study of the Social and Economic Benefits of Cooperative MHPs UNANTICIPATED CONSEQUENCES Unanticipated positive consequences NHCLFs role as catalyst developed Public health and environmental benefits Investment in upkeep of homes Appreciation in the value of private manufactured home units due to shared land ownership Unanticipated negative consequences Free riders Leadership cliques and internal conflicts Burnout

23. PART 2: Quantitative Study of the Value Appreciation of Cooperative MHPs STUDY TITLE MODE OF OWNERSHIP AND HOUSING VALUE APPRECIATION OF MANUFACTURED HOME PARKS: ROCHESTER, NEW HAMPSHIRE

24. PART 2: Quantitative Study of the Value Appreciation of Cooperative MHPs RESEARCH QUESTION Do households living in and around cooperative manufactured home parks in New Hampshire experience higher housing property value appreciation, compared to those in and around investor-owned parks?

25. PART 2: Quantitative Study of the Value Appreciation of Cooperative MHPs CONCEPTUAL FRAMEWORK COMPONENT 1: The main component of the study focuses on the difference in property value appreciation between housing units in member- owned and investor-owned parks. COMPONENT 2: The exploratory component looks at how abutting properties are affected by their proximity to member-owned or investor- owned home parks.

26. PART 2: Quantitative Study of the Value Appreciation of Cooperative MHPs CONCEPTUAL FRAMEWORK: COMPONENT 1 This study asserts that the mode of park ownership lead to differences in [1] rent payments (amount and rate of change), and [2] availability of financial products offered by NHHFA and NHCLF. These differences, in turn, affect the appreciation of housing values.

27. PART 2: Quantitative Study of the Value Appreciation of Cooperative MHPs CONCEPTUAL FRAMEWORK: COMPONENT 1 Property value appreciation is operationally defined as the annual percentage change in the value of a housing unit between two time periods. The change in value is equal to the difference between the base value (measured in the first time period) and the current value (measured in the second time period). Annual % change in value = (current value – base value) x 100 base value ------------------------------------------- no. of yrs. bet. current & base periods

28. PART 2: Quantitative Study of the Value Appreciation of Cooperative MHPs CONCEPTUAL FRAMEWORK: COMPONENT 1 Appreciation of housing property value Structural characteristics of housing unit Age of housing unit Park layout Rent payments (amount; rate of change) Availability of financial products offered by NHHFA and NHCLF Mode of park ownership (member-owned vs. investor-owned) Location of park

29. PART 2: Quantitative Study of the Value Appreciation of Cooperative MHPs CONCEPTUAL FRAMEWORK: COMPONENT 2 The research examines whether or not manufactured home parks affect the value of abutting properties by comparing the annual percentage appreciation of housing values of abutting properties to that of the entire city where these properties are located.

30. PART 2: Quantitative Study of the Value Appreciation of Cooperative MHPs CONCEPTUAL FRAMEWORK: COMPONENT 2 All housing properties in city Housing properties abutting MHPs Member- owned MHPs Housing properties abutting MHPs Investor- owned MHPs COMPARISONS OF ANNUAL PERCENTAGE APPRECIATION OF HOUSING VALUES ABUTTING MANUFACTURED HOME PARKS

31. PART 2: Quantitative Study of the Value Appreciation of Cooperative MHPs SIGNIFICANCE OF STUDY Theory: verification of the effectiveness of CED-type interventions (i.e., cooperation) in alleviating poverty via homeownership-based asset accumulation. Practice: confirmation of the effectiveness of cooperative park management strategies and NHCLF interventions in promoting access to affordable housing that, at the same time, provides a venue for wealth accumulation cooperative mode of ownership and management can be a model for replication in other states.

32. PART 2: Quantitative Study of the Value Appreciation of Cooperative MHPs SIGNIFICANCE OF STUDY Policy: basis for advocating for less restrictive local zoning laws that are presently biased against manufactured home parks basis for advocating for more local, state and federal funding for the development and further enhancement of cooperative manufactured home parks basis for advocating for greater access to financial resources from market-based institutions who might still perceive manufactured home park residents as non-viable segments of the housing market.

33. PART 2: Quantitative Study of the Value Appreciation of Cooperative MHPs RESULTS Cooperative MHPs have better housing characteristics. They are newer, larger, have more rooms, are closer to commercial amenities and major roads, and have better park layout.

34. PART 2: Quantitative Study of the Value Appreciation of Cooperative MHPs RESULTS Residents of cooperative MHPs pay lower monthly rents compared to those in investor-owned MHPs with comparable housing characteristics. Residents of cooperative MHPs have access to non- subprime housing loans. Homes in cooperative MHPs have higher values compared to those in investor-owned MHPs with comparable housing characteristics.

35. PART 2: Quantitative Study of the Value Appreciation of Cooperative MHPs RESULTS HOUSING CHARACTER- ISTICS OF HOMES IN PARKS Homes in Member- owned Parks Homes in Investor- owned Parks Statistics Percentage of housing units below 20 years old 65%42% χ2 = 196.80 (p <.01) Percentage of housing units with 5 or more rooms 68%40% χ2 = 100.80 (p <.01) Finished area (in sq.ft.) 1,059978 t = -6.10 (p <.01) Index of park layout (range: 0 to 1; 0 = worst, 1 = best) 0.930.64 t = -31.24 (p <.01)

36. PART 2: Quantitative Study of the Value Appreciation of Cooperative MHPs RESULTS HOUSING CHARACTER- ISTICS OF HOMES IN PARKS Homes in Member- owned Parks Homes in Investor- owned Parks Statistics Index of park location (range: 0 to 1; 0 = best, 1 = worst) 0.420.47t = 10.50 (p <.01) Average monthly rent amount $278.42$303.00t = 14.70 (p <.01) Annual rate of rent increase 3.9%4.5%t = 6.83 (p <.01)

37. PART 2: Quantitative Study of the Value Appreciation of Cooperative MHPs RESULTS Manufactured home parks appreciate in value. The appreciation rate for homes in cooperative MHPs is slightly higher than those in investor- owned parks. However, the difference in appreciation rates is statistically insignificant.

38. PART 2: Quantitative Study of the Value Appreciation of Cooperative MHPs RESULTS Homes abutting manufactured home parks appreciate in value. For the most part, the appreciation rate for homes abutting MHPs is slightly higher than those in investor-owned parks. However, the difference in appreciation rates is statistically insignificant.

39. QUESTIONS? COMMENTS?

40. END OF PRESENTATION. THANK YOU.