Co-op ownership puts mobile home residents on solid ground
2022 03 14
This year, mobile home* park (MHP) co-ops of the USA will welcome their new owners – 20,000 resident families across 20 states.
As of 31 December 2021, 287 MHPs transitioned to resident-ownership through the ROC USA Network. By owning the parks they live in rather than just their mobile homes, the families have finally achieved home ownership.
There are about 45,000 MHPs in the US where families own the home but an outside family or corporation owns the land and rents the space to them. For the most part, the lease term of the space below a home is from a month to a year – and with mobile homes difficult and costly to move, these residents are at the economic mercy of the park owner. Each year, over 8 million people in the US hold their breath when the annual MHP rent increase notices arrive.
It’s likely to get worse as underlying land prices paid by MHP investors have been bid up 24% during 2021, and 36% since the start of the pandemic. Low-income homeowners are at the receiving end of this land speculation,
The mobile home world in the US is similar to medieval Britain. The lord owns the castle and the land, and you pay what the lord demands. You’d better bow when the lord passes, too, otherwise you may lose your livelihood and your home. Yes, 8.1 million people in the US live under similar conditions to those of feudalism in the Middle Ages.
But not every mobile homeowner was prepared to accept the yoke. In 1984, an unheralded transaction took place in Meredith, New Hampshire: 14 families got together to buy the park. Every bank in the county turned them down but they persevered – first trying their luck with the New Hampshire Community Loan Fund (NHCLF), but at just a few months into its existence it had no money to lend. The Sisters of Mercy stepped in and lent funds to the NHCLF, which in turn lent it to the co-op formed by the 14 neighbours.
They were to spawn a movement. NHCLF had just one staff member, Julianna Eades, who became its president and guide for 36 years – and turned that single transaction into a solid market. As of 31 December 2021, there are 140 resident-owned MHPs in New Hampshire.
Over time, calls came in from nearby states, and Paul Bradley, then vice president at NHCLF, knew this demand could not be served by a New Hampshire-focused organisation. A separate national organisation was needed.
There are two models of consumer co-op growth in the US that have created a similar successful structural framework. The credit union and rural electric co-op sectors were structured to take one model of co-op enterprise anywhere it was needed in the US. Most importantly, the two groups created institutional structures to support their sectors. In 1952, credit unions served only 2.8 million members. In 2021, there were over 5,000 credit unions in the US with 126 million members. There are now 900 rural electric co-ops serving 56% of the US land mass. They serve 42 million people and over 20 million businesses, schools, religious institutions, farms, non-profits, and homes.
Students of co-ops will know that Emilia Romagna, Italy, and Mondragon, Spain, have become paragons of co-op development by providing an institutional structure which creates co-ops and expands existing ones.
Out of those discussions, Bradley wrote a business plan and ROC (Resident-Owned Communities) USA was launched in 2008 – funded at $500,000 each by three entities, NHCLF, Capital Impact Partners, and Prosperity Now. Although not a member of the LLC, NeighborWorks America invested $500,000, and, very importantly, ROC USA was given enterprise capital by the Ford Foundation.
There are 45,000 MHPs in the USA. Through the early 1970s, the industry used to be mostly single parks owned by a single family.
But since the early 1990s, large investors have enthusiastically entered the MHP world. In the last three years, Bradley told me, another 200,000 home-sites (spaces) have been bought by large corporate consolidators. Reportedly, 800,000 home-sites of the existing 2.7 million are now owned by large portfolio companies.
Possibly the most crucial element of the sale of an MHP is how quickly the sale can be consummated. ROC USA has perfected the process: 120 days from the resident’s offer to the concluded sale.
Before the ROC USA structure, the resident purchase of a park could take two to three years. Only a few park owners had the patience to wait that long for their money. Resident purchases were one-off deals helped by people who had usually never done an MHP before and might never do another. That’s no way to build a co-op sector.
The structure uses the limited equity housing co-op model, which makes co-op ownership possible for communities with a high proportion of low-income families. They ensure that co-op member share buy-in does not exceed $1,000.
ROC USA provides development services, including expert assistance with organisational and project development through the purchase process and purchase financing. It also provides a forgiveable due diligence loan so the new co-op can hire its own legal counsel and engineer.
The organisational work is done by one of ROC USA’s 11 nonprofit affiliates in 20 states and by ROC USA’s national team in the remaining 29 states. (Hawaii has no MHPs). Training and technical assistance are provided pre- and post-purchase so the co-op has access to organisational coaching services and a peer network of co-op trainers and leaders.
Financing is provided nationally through ROC USA Capital, a US Treasury certified community development financial institution, which has the financial strength and capacity to:
- fund the outright purchase of a number of parks at the same time
- bring in other lenders as co-funders
- operate part of the permanent loans with others, including public, nonprofit and private sector lenders
Since its founding in 2008, ROC USA Capital has financed over 100 co-ops and originated more than $300m for co-op acquisitions.
Bradley explained how important brand trust is to this institutional model. “Through the great recession, I saw a new level of distrust of financial institutions, and I knew we needed to go further to ensure our ethics were institutionalised.” In 2013, ROC USA admitted the ROC Association as its fourth LLC member and, as Bradley says, “baked in community voting power” to the ROC USA board.
Each MHP co-op formed by ROC USA must be part of the ROC Association and votes on three peers to represent them on the ROC USA Board. In its current strategic plan, the member-centric model has gone further by placing its highest priority on supporting “ROC leaders as movement leaders.”
This model of co-op development has taken a creative approach to ensuring the co-ops it serves are formally connected and empowered to lead. Look for mobile home park cooperatives to be a growing co-operative sector in the USA for many years to come. Co-operators in Britain should look at this affordable ownership model.
Paul Bradley’s assistance in providing information for this article is most appreciated.