“We Own It!” exults the sign at the entrance to the Manufactured Housing Community for over-fifty-five-year-olds, The Woods, in Little River. In a brave move, the residents pulled off a coup in the Real Estate world by buying their own land. The project required a lot of research, big decisions, trusting each other, and taking major risks on the tightest of deadlines and amid fierce competition. Read the hair-raising account of getting to “We Own It!”
When I arrived in Mendocino in 1972, just back from a two-year trip with my then partner, Gary Bachelor, we were road-weary and stone-broke. Gary, Fort Bragger, born and raised, and a wonderful photographer, thought we ought to start mak- ing brochures for local motels and restaurants as a way to get some money into our vacuous wallets. I forget whom I approached in my initial attempts at sales, except for one couple: Paul and Ruth Tay. They were unforgettable. Paul had been a well-known architect in Long Beach, California where he had designed extraordinary mid-century modern houses for well-to-do clients. Known as “Tay Homes,” they are considered architectural gems that today sell in the neighborhood of two million dollars, if you can find one for sale. He and Ruth had relocated to Mendocino and bought forty-three acres of primeval forest in Little River with a dream of making a unique housing development there. They were probably in their mid- forties, but to me, at twenty-six, they looked super-old, and I was amazed that people that old could be so madly in love with each other.
Paul said that one of his most important influences was Frank Lloyd Wright. During our inter- views for the brochure, he described Wright’s theory of designing spaces that were expansive and then flowed to smaller, more intimate areas and back out, to make living spaces that “breathed.” Tay often used floor-to-ceiling walls of glass and his houses invariably are described as being “flooded with light,” that they “bring the outside in,” so that Nature becomes part of the interior decor. He and Ruth dreamed of developing an affordable housing park that employed his architectural philosophy and aesthetic. They went on pilgrimages all over the country to find models for what they wanted to do, but each time they traveled to developments that boasted “unique,” “unparalleled,” “special” treatments, they found only disappointing parking lots with some little strips of lawn between tightly packed, treeless plots. To get to their dream, they had to make it up as they went, and The Woods was the vibrant outcome of their vision.
On one of their forays, they attended a trade show for factory-built homes and decided to purchase pre-built homes to sell on their property in Little River. The initial manufactured homes of The Woods were produced by Levitt International, a company known for one of the nation’s first planned communities known as Levittown, Pennsylvania. Much like Levitt International’s founder, Abraham Levitt, Tay’s goal was to establish a community of affordable homes, but in a natural forested setting.
The land, backed up to Van Damme State Park and across the street from the Little River Airport, was densely covered with towering firs, pines, redwoods, ferns, transition and pygmy woods, and was richly inhabited by wildlife. With Paul’s respect and love of Nature, they in- tended to leave as much of the forest alone as possible while situating reasonably priced homes amid the natural abundance. Paul described saving trees from chainsaws by painstakingly side-jacking the buildings into place. He reduced the number of planned houses to allow more breathing room between structures. He and Ruth would walk the property regularly to observe the best situations for new buildings and would position them this way and that to maximize privacy and views.
Gary and I got to have several meetings with them as we walked the newly paved roads that meandered artfully through the trees while I composed the narrative for the brochures and Gary planned out and shot the photos we would use at different times during the day and in various kinds of weather, so we got to be with the Tays in their home and see their peaceful, loving partnership in action as they went forward with their unique dream.
A foggy early morning shot was chosen for the cover. The copy inside the brochure described The Woods thus:
We put this quote from the Tays on the front panel: “…This is like no other mobile home park you have ever seen…We wanted it that way because we live here.” Since those earliest days, The Woods has consistently fulfilled the dream those poetic thoughts conjured and it’s syner- getic that I am running a story in this magazine, fifty years after I wrote those lines.
The Woods continued to attract new residents over the years, then the Tays sold it to the Presbyterian nonprofit that eventually was renamed Sequoia Living, in 1993. Last year, Sequoia Living let the residents know that the development would again change hands, and this raised concerns that, because residents owned the homes but not the land under them, whoever bought it could raise their rents and threaten the security of their future lives. It was a tense moment because the timeline they were given was extremely short and The Woods’ residents had to make a lot of risky, split-second decisions…and they had to trust themselves and each other, literally, with their lives and the future of their community.
A SUSPENSEFUL TIMELINE
James Kachik, who spent endless hours in the eye of this hurricane, sent this record of the hair-raising negotiations:
January 2021: A consulting real estate management firm hired by Sequoia Living (SL), a nonprofit organization that also owns a half-dozen other senior living and af- fordable housing operations in the Bay Area, assessed conditions and pro- posed efficiencies, recommending that Sequoia Living increase rents across the board at the maximum 6 percent permitted by law, reduce staff, and re- duce service levels. Parts of this report were shared by SL with residents. Like many commercial property owners, it is likely that COVID impacted Sequoia Liv- ing’s operating plans. The report sum- marized that The Woods as an asset had been steadily “underperforming,” i.e.: operating expenses were outpac- ing lot rental revenues, but its market value was relatively low (perhaps $5 million), and the losses could be offset with rent increases. Although Sequoia Living had been steadily increasing lot rents, another 20 percent of Woods residents were still paying rents under cost of operations. Recent prior lot rent increases by Sequoia Living ranged up to 20 percent. It appeared that more
March 2021: Sequoia Living surprised the residents in a ZOOM conference, announcing that The Woods will be offered to the commercial real estate market. Offers would be accepted for ten days beginning May 5. An offer by a resident group would be considered but would need to be “competitive,” and the resident group (and its representatives, the interim Board of Direc- tors, etc.) would be subject to a Non-Disclosure Agreement. The brokerage listing, issued in April 2021, gave a hint of our competition: “The Woods Manufactured Housing Community, 100 MH sites on 43 beautifully landscaped acres, Fantastic Mendocino County Coast Location, Clubhouse, Pool, Spa, huge sites, No rent control, 17 apartments redevelopment, Sales price $16,270,000, 4.1% Cap Rate.” (Boldface added.)
Two days after the March 11 announcement, James Kachik, then chair of the Woodlanders, a volunteer community group, was contacted by representatives of Resident-Owned Commu- nities-USA (ROC-USA) and the California Center for Cooperative Development (CCCD). ROC and CCCD had been in contact with Sequoia Living and were aware of its decision. They offered technical, programmatic, and financial sponsorship in support of the Community’s effort to achieve self-ownership as a cooperative.
WHO WAS AT THOSE MEETINGS?
For all the shock of learning in March 2021 that we were to be sold, we as a community came together and elected to take a significant risk. Since COVID protocols were still in effect, we relied on almost-constant ZOOM meetings of all sorts and lengths as we worked with our sponsors to put it all together. The overwhelming majority (95 percent or so?) of residents be- lieved we could band together to buy The Woods ourselves, that owning ourselves (The Woods) collectively would be a better outcome than trusting an unknown profit-driven landlord. A look around, a year later, at stories of other manufactured home communities proves this to be the correct choice. While the document restriction forced the Community to make decisions based on mostly verbal assurances, it was the correct decision.
ROC/CCCD, submitted an offer by the May deadline. A couple of offers were submitted and re- jected before the WCA’s “Best and Final” offer was accepted and the parties entered into a Con- tract of Sale. Later in the year, an appraisal commissioned by ROC-Capital stated The Woods’ “market value” to be above $14 million, and that Sequoia Living received “about a dozen offers” at or above the $16.1 million asking price.
From May through close of escrow on December 2, 2021, the WCA Interim Board worked with ROC/CCCD and the Community to develop our pro forma budgets and negotiate the terms of various contracts for property management services, our loans, and sponsorships.
Sequoia Living funded two programs to offset the inevitable lot rent increases. ROC-USA Capital funded our loans, whose terms are exceptionally good. Market inflation, since we closed our purchase, has already driven borrowing costs higher.
Following the economic laws of supply and demand, aggravated by the impact of COVID on the commercial real estate market, The Woods was an under-valued asset ripe for the picking. This competition drove up the purchase price, and competition among investors seeking captive renters’ income did the rest.
It could have been so much worse…
Yet, the residents prevailed, even though they offered the lowest bid. This was to be the first time ROC-USA would manage to pull off a deal in California. Nationally, ROC-USA has helped 270 mobile home communities buy their own parks, said Mike Bullard, spokesman for ROC- USA. Bullard says that ROC-USA has a strong record of helping to arrange financing for residents to buy their own park and keep rents down. Rents drop to market rate or below within five years when ROC-USA helps, said Bullard, concluding that, “This is done by taking the profit margin out of the equation.”
By buying the property, residents become owners, not only of their own homes, but also members of a non-profit that owns the park real estate, its water and electric systems, and much more. When they move, they can sell their homes, along with their membership in the community. Homeowners who don’t join can simply pay rents to the cooperative.
“Not one has failed or reverted to private ownership. There are very few downsides to the cooperative ownership model. One of the biggest upsides is that residents live their lives without the nagging fear that they are going to come home one day and find their park has been sold and they might have to move or pay much higher rent. That fear is gone once they become the owners,” Bullard said.
The increasing interest of predatory real estate investment groups in buying mobile home parks and raising rents has been a growing problem statewide, financial publications and real estate financers report. Some counties, including Sonoma and Humboldt, have enacted mobile home park rent stabilization ordinances. Humboldt County created a rent stabilization ordinance through an initiative process and a popular vote in 2016. Mendocino County does not have such an ordinance, although the city of Ukiah does.
TIP-TOEING THROUGH THE DELICACIES OF PAPERWORK, TRUST, AND COMMUNICATION
All residents had access to what could be shared without violating the non-disclosure agree- ment. Discussion about the COVID-driven real estate market forces was open and frank.
From the time our offer was accepted, in May 2021, to January 2022, the non-disclosure restrictions imposed by Sequoia Living during the sale limited our ability to share almost every- thing. Key documents were restricted, including our financial projections, the broker’s listing, the contract of sale, appraisal documents, the surveys by outside consultants, and anything relating to Sequoia Living’s management of The Woods prior to sale. Since January, when we could share those details, it appears that the majority of the community accepts that we got the best outcome under the circumstances.
This was a large, complex, multi-million-dollar commercial real estate transaction completed by a community in which only a few of us had any awareness of how these are completed. We could not have succeeded without ROC + CCCDs’ knowledgeable and infinitely supportive staff, and their funding.
The Community elected to trust our representations. We were as open as possible with the community, held lots of meetings to advise progress, solicit input and opinion, and communicate the general outlines of the plan to achieve ownership. The credibility of ROC and CCCD helped, but residents had good reasons to be skeptical. Earlier this year the non-disclosure agreement was withdrawn, and we were able to share the key details.
While there may be some question whether the cooperative model of self-ownership would be our choice if we’d been given one, it was realistically the only choice we had, given the time limitations announced by Sequoia Living. There was no negotiation to be had on the timing of the offer deadline. Hopefully everyone is comfortable with this now.
GETTING TO “WE OWN IT”
It was a great moment to celebrate our success and the community collaboration that enabled it. I would be remiss not to mention that our current challenges are no less complex than the purchase process. Although we control our own destiny, so to speak, that control comes with a price. We are, through our board and community process, partners in the management and operation of a small business (The Woods). We have to continue to collaborate and “cooperate” to adapt in a different way than before. To borrow a phrase, “it takes a village.”
NOT YOUR GRANDMOTHER’S TRAILER PARK
When Harvey Chess and his partner Sandra Jean Baldocchi moved to The Woods in 2006, they did so with the belief that they had found the ideal community to age in place. The Lodge, an assisted living facility, was located on the same grounds as The Woods manufactured home park. The couple determined that if either one of them became infirm and needed specialized care, the other would be living close by. Unfortunately, the cost to run The Lodge consistently surpassed its revenues and it was forced to close in 2013. Although the closure of The Lodge was a huge disappointment for Chess, Baldocchi, and many of the other Woods’ residents, they chose to stay because of the beauty and enchantment of living in a such a peaceful and natural place and with such a strong community. According to Chess, the fact that he was living in a manufactured home park was never really a part of his consciousness because it was unlike any of the parks of its kind that he had ever seen.
A PLACE FOR HERMITS AND SOCIAL BUTTERFLIES
Some Woods’ residents prefer their own company, while others like to socialize with their neighbors, but in any event, there are lots of opportunities to engage socially. Communitywide events include an annual barbecue, flea market, and holiday gatherings. Some of the weekly activities that were suspended during Covid are now up and running again. These include bridge and exercise classes that are also open to seniors in the local community. A swimming pool, spa, and exercise room are available for the sole use of residents and their guests. The Woods boasts quite a few professional musicians who periodically put on free concerts for the com- munity to enjoy, and many accomplished artists who continue to create in their retirement. Friendliness seems built into the infrastructure. Morning, noon, and evening, people are walking their dogs or strolling amid the beauty, stopping in for a coffee or a drink at someone’s place, visiting and keeping up with the news along the way.
DODGING A BULLET
Buying a home in a manufactured or mobile home park has long been viewed as one of the most affordable paths to home ownership. Many of the original mobile home parks in the U.S. were owned by “mom and pop” operations who kept their space rents low so that tenants could afford to live there long term. Eventually, word got out to investors that owning these types of parks could be very lucrative and institutional investors and private equity firms started piling into the space. One of the largest mobile home park owners is Sam Zell Equity LifeStyle Proper- ties. This company has over 140,000 manufactured home parks in its portfolio. One of Warren Buffet’s acquisitions includes Clayton Homes, one of the largest manufactured home builders in the U.S. Generally, when parks are purchased by investors, the space rents and operational fees start to go up quickly and aggressively, so it’s not uncommon for owners to be priced out of their homes. Although they are often referred to as “mobile home parks,” this is a misnomer, as owners who are forced to sell might have to leave their homes behind if they are unsuccessful in finding a buyer. If a home is attached to a foundation or will cost thousands of dollars to move, then it is not truly mobile.
With the expert help of ROC-USA, the residents of The Woods were triumphant in their bid to buy The Woods and at the end of 2021 the park officially became a Resident-Owned Commu- nity despite fierce competition from a variety of investment groups. As an LEHC (Limited Equity Housing Cooperative) the lot rents or “carriage fees,” as they are officially known, will have the best chance of keeping this gem of a manufactured home community affordable for years to come.
For the people who live in this vibrant community, “We Own It!” isn’t just a catchy motto. What’s telegraphed in those three little words represents an amazing accomplishment: follow- through on a commitment to their own agency in the world. They risked taking this on with grit, grace, trust, and courage, they prevailed, and they are rightfully proud.