News & Notes Archive - June 2008
California voters reject initiative that would phase out rent control laws in manufactured home communities. But don’t look for this contentious issue to go away. What MH homebuyer’s should know.
On the same day that the Democratic presidential primaries ended, California voters on June 3rd. rejected a sweeping property rights initiatives that would have adversely affected tens of thousands of manufactured home owners in MH communities, especially seniors and others living on fixed incomes. The initiative, Proposition 98, was presented as an effort to prevent governments from using eminent domain to seize private property for private development. Backed by MH park owners associations, would also have wiped out a host of tenant protections, including rent control protections.
On the same ballot, and winning voter approval by a wide margin, was a competing initiative, Proposition 99, that also restricted the government’s power using eminent domain, but leaves rent control ordinances intact. Below is the full story, as reported in the June 4, 2008 issue of the North County Times (of San Diego County, California). My thanks to the Times for permission to reprint the story here. Please see my comment following the article:
Voters endorse Prop. 99, reject Prop. 98
By GARY WARTH - staff writer, North County Times
North County voters aligned with the rest of the state in their rejection of Proposition 98, a broad property rights initiative that would have shielded most property owners from government seizures and phased out rent control.
Local and state voters also lined up with voters statewide in voting to pass Proposition 99, an alternative initiative that will restrict the government's power to seize private property through eminent domain.
With 100 percent of precincts reporting statewide, Prop. 99 won with 62.5 percent of the vote and Prop. 98 failed with only 39 percent support.
In San Diego County, with 100 percent of precincts reporting, Prop. 99 had 56.95 percent of the vote and Prop. 98 had 45.3 percent.
Prop. 98 organizers conceded early Tuesday night as the wide margin became apparent. As dueling propositions, the one with the most support overrides the other, even if they both garnered more than 50 percent support.
Jon Coupal, president of the Howard Jarvis Taxpayers Association, one of Prop. 98's architects, said voter confusion was partly to blame for the initiative's failure.
"By placing a second eminent domain measure on the ballot, opponents of private property rights created enough confusion between the ballot measures to defeat Prop. 98," he said in a prepared statement. "Prop. 99’s loopholes will allow eminent domain abuse to continue.
"Coupal said his group would be willing to work with Prop. 99 organizers to add greater protection against eminent domain seizures.
"We would gladly join such efforts with the governor and the legislature to protect all homes and all private property -- including businesses, family farms and places of worship," he said. "If the legislature fails to act, we will consider qualifying another ballot measure.
"San Marcos resident Tim Sheahan, president of Golden State Manufactured-Home Owners League Inc., called the outcome "a big relief."
"We were terrified of thinking of the consequences if 98 were to pass," said Sheahan, who lives in the Villa Vista Mobile Estates in San Marcos. "We think it's a victory for all the taxpayers in the state.
"Bob Markley, who lives in a rent-controlled space in the Rancho San Luis Rey mobile home park in Oceanside, also was relieved.
"If 98 passed, I would not lose rent control here as long as I own the place where I live, but if I sold it, whoever bought it would not have rent control," he said about the initiative, which would have phased out rent control. "It would be difficult for me to sell it. Anybody who is going to buy it will want to know what the rent is for the land, and if it's high, then they're not going to be able to spend much on the mobile home.
"Both ballot measures called for limiting governments seizures of homes for private development projects, like shopping malls, hotels and housing.
Prop. 98, the California Property Owners and Farmland Protection Act, also would have prohibited governments from exercising the right of eminent domain to seize private property to develop a shopping center, industrial park or other private use.
In a more controversial aspect, the initiative also would have phased out rent control in California. Residents now living in rent-controlled units would not be affected, but landlords could raise rent on the units once the tenants move out.
The provision led Gov. Arnold Schwarzenegger, a Republican, and U.S. Sen. Dianne Feinstein, a Democrat, to oppose Prop. 98.
It also triggered a wave of criticism from groups representing senior citizens, minorities and low-income renters. Critics said Prop. 98 also would have struck a host of tenant-protection laws, making it easier for landlords to evict renters.
Although rent control is at the center of the dispute, Prop. 98's radio and television advertising made no mention of that provision. Both initiatives called to continue to require government to pay property owners fair market value if their land is taken for roads, schools, hospitals and other public projects.
Sponsored by the California League of Cities, Prop. 99 only slightly altered existing law to respond to a 2005 Supreme Court decision. In that case, the court upheld the growing practice of local governments condemning homes to advance private redevelopment.
The Supreme Court decision triggered a wave of initiatives across the country during the 2006 elections to limit the use of eminent domain. Among those measures was Proposition 90 in California. It was defeated after critics said it would gut environmental protections and strip local governments of their power to pass local land-use ordinances.
End of North County Times article.
My comment: As described in The Grissim Buyer’s Guide to Manufactured Homes & Land, one of the potential down sides to moving into a manufactured home community, a.k.a., mobile home park, is you don’t own the land under your home, and it is subject to being sold, and/or subjected to rent increases you may not be able to afford. Moreover, in many cities with rent control ordinances to protect seniors living in affordable housing in MH parks (of which California has quite a few), some park owners are challenging those laws in court with increasing success. Their argument is, land values are skyrocketing and they have the right to increase their rents to reflected the property’s value. That argument is not unreasonable, and it reflects a built-in institutional tension between homeowner tenants and landlords. I’ve heard of some cities throwing in the towel because they don’t have the deep pockets to cover expensive legal fees to defend their ordinances.
The rule here is, before you move into a MH community, be sure to thoroughly check out the history of rent increases and make sure you can afford step increases for the foreseeable future. And if you will be covered by a rent control ordinance, be sure to verify that it is not under attack. This said, be aware that the vast majority of MH parks are stable communities whose owners understand that their tenants are sensitive to rent increases, and treat everyone fairly. Moving into a rental community can be an excellent choice, but I strongly recommend following the research guidelines outlined in chapter 6, “Leasing a home site in a manufactured home community.”
Interview: 15 minutes with...Charlotte Gattis
Note: In my role as an industry observer and consumer advocate I speak with people at all levels of the manufactured home industry (MH) to gain insights I share with my readers to help them be better informed. Some I have interviewed for a one-page column that runs in an industry trade publication. In return the magazine runs an ad for the Grissim Guides. No money changes hands. I insist on this. Aside from book sales, I neither solicit nor accept a dime from the industry, and my readers have my assurance I intend to keep it that way. Here’s this month’s interview:
Charlotte Gattis, President, Georgia Manufactured Housing Association
Who: President of the Georgia Manufactured Housing Association (GMHA)
Background: Born and raised in Monroe, GA, 60 miles northeast of Atlanta. After graduating from high school, she was accepted to nursing school. However, she said, “I decided I didn’t like the sight of blood, so I went into the manufactured housing industry instead” (laughs). She moved to Athens, GA and went to work as an administrative assistant for Southern Realty in Athens while taking classes at the University of Georgia. The owner of Southern Realty owned several AAA Enterprises MH sales center franchises.
After four years, she moved to Atlanta and worked at the AAA Enterprises corporate office.In 1971, she started working with GMHA as the assistant to the executive director. In 1975, she assumed the position of executive director and established the GMHA as a powerful, effective GA lobby for MH, responsible for numerous regulatory and court victories. In June, 2008 she will retire, but will continue to represent GMHA interests as the head of her own lobbying firm.
- Q: As arguably the most senior executive in the MH industry, you have witnessed a lot of history, with the GMHA often in the thick of things. Why so?
- A: Georgia has always ranked in the top five producers of MH in the nation. Along the way we’ve encountered problems that pulled GMHA into the political arena. For example, during a five year period in the late 70s-early 80s, we went from 68 plants down to 15 because the Georgia Department of Transportation, which at the time was a powerful fiefdom, banned the transporting of the popular 14-wide sections, claiming they would tear up the highways. This was a huge issue—devastating the economy of many rural communities where the plants were located — and it forced GMHA to get involved politically, to lobby the Legislature to change the law, which they did. Our success is owed to some incredible industry leaders in Georgia who worked tirelessly on this effort.
- Q: You also took the national lead on zoning issues.
- A: Yes, we did, because Georgia is unique in that our Constitution gives total zoning authority to local governments, which means the legislature can’t pass laws preventing discrimination against manufactured homes. GMHA’s strategy was to bring lawsuits against local zoning ordinances to prove they were unfairly restricting where manufactured homes could be sited. Some counties wouldn’t even allow them on private property. We carefully choreographed each law suit, from the piece of dirt we used in the suit, on up through the appeals process. Over a 15 year period, we spent close to two million dollars in legal fees, expert witnesses, and research. It took years, but eventually the State Supreme Court ruled that local governments could not zone out manufactured homes in all residential areas, that they had to allow them where they were compatible in appearance with other residential homes in the area. Unfortunately, in 2001, the Supreme Court overturned the decision as a result of another case that GMHA had no connection with. And with the industry in its current situation, we don’t have a million dollars to mount another court challenge.
- Q: Does the issue today revolve around the public’s perception of what a manufactured home looks like?
- A: Very much so. Ironically, most manufactured homes in Georgia are sited on private property and people drive by them every day and don’t know they’re HUD-code homes. But they see a trailer park filled with old single-section homes and that’s it for them. The reality is, manufactured housing today has become a viable housing option rather than an alternative, and that’s something I believe the industry need to promote.
- Q: In recent years there has been a lot of industry self-examination by some very thoughtful people. Have these voices demonstrated a good handle on the challenges?
- A: Definitely. A lot of industry people know exactly what the issues are. The problem here in Georgia and elsewhere is, too many are still waiting for the industry to go back to where it once was, and that’s not going to happen. Again, we are not in the alternative housing business; we’re in the housing business, and until we start promoting ourselves as such we’ll always be crippled.
- Q: Some observers say before any promotional efforts can succeed, the culture of the industry has to change, that even a great TV ad won’t convince many people to visit a sales center.
- A: Bingo! I have said many times that I’m afraid to put on an ad campaign because the FCC will sue us for false advertising (laughs). It all goes back to ‘Do you want to be in the mobile home business, or the housing business?’ Yes, we used to provide housing to the first and second rung of the economic ladder, but now we’re building for the third, fourth and fifth rung. That may leave the first rung people behind, but I’m sorry, that’s not this industry’s issue. We’re not Habitat for Humanity, or dedicated to housing for the homeless. We’re in business to put people in housing who can afford housing. I see this reflected even now, when I’m working at the legislature. I belong to an informal lobby group of site-builders, modular builders, realtors, bankers, all who embrace manufactured housing, and we all work together hand in hand.
- Q: Your thoughts on the industry’s future?
- A: The future of factory-built housing is huge, although I can’t predict what form it will be. During the housing boom, we’d get calls once or twice a week from site-builders wanting to buy trusses and other factory-built components, because skilled workers were no longer available. Add other advantages, such as buying materials in bulk, and future site-built homes will have less on-site construction and will contain more and more pre-built components. It’s going to be very exciting.