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on Aug 2, 2013
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I don't get this:
- "They (the residents) can't afford to buy it for $30 million, but they can afford to buy it for the fair-market value of the park,"
- Buena Vista's chances "are remarkably high" if they can get the Jissers to agree and if they can buy the land for the fair-market value as a mobile-home park, he said.
How can the chances be "remarkably high" when they can't afford the $30 million the land is worth. The outlook is "remarkably low" unless they can match the actual value of the land.
You can imagine how everyone in the mobile park buys it for $14M and then turn around and sells it for $30M making a nice tidy windfall for everyone in the park.
This is fabulous for the entire Palo Alto community! Power to all the people :)
[Post removed by Palo Alto Online staff.]
If I'm understanding it correctly, the fair market value of the property is $14M. If the current owners evict the residents and build the high-end apartments, then it will be worth $30M.
I'm not sure why the current owners would agree to this, but if they did, it's wonderful for the families who get to stay!
Palo Alto needs affordable housing and to remain diversified. We don't, in my opinion, need more "high end" apartments or more parking.
Power to the resident's of Buena Vista, I hope you own your piece of land.
Just a FYI. This will not work because I know there be many people who will offer the owner $500k more than the best and highest offer of the tenants. Then flip it for 30m
Buena Vista Park is worth $30 million (less the cost of relocating the residents under the law) ONLY if the city of Palo Alto agrees to upzone the property. In what universe is this a good deal for the residents of Palo Alto? Why should we make such a gift to developers who don't even live in Palo Alto, when Palo Alto has such a shortage of affordable housing and is under major pressure from ABAG to increase it, not decrease it. Higher property taxes cannot offset the increase in traffic and reduction of very scarce affordable housing (as opposed to low-income subsidized housing, which costs Palo Alto money). I hope Palo Alto will make clear that there is no way they will upzone the property for market-rate housing. I do think leasing a portion of the park to PAHC to build low-income housing (similar to the way Stanford leases land for various purposes) would make sense and would provide funds to upgrade utilities and even provide low cost loans to bring the existing homes up to code. There also should be a way to specify the zoning of the property so the new owners also could not upzone it to flip it. Keeping the property a private cooperative would mean Palo Alto would continue to collect property taxes.
Any one know what the current rent for a trailer slot at the park is?
Confused> I don't get this: "They (the residents) can't afford to buy it for $30 million, but they can afford to buy it for the fair-market value of the park"
This is typical of this PA Weekly author's writing style. But to put it simply, the land value as a rent controlled trailer park is half the value of the same property developed into condominiums. No mobile home parks have been built in the metropolitan areas of California in the last 30 years. They aren't good investments. In fact, the Buena Vista owner claims that the parks appreciation was less than 1% a year over 14 years (see: Web Link page 45).
We've seen some pretty weird stuff from the attorneys "helping" the Buena Vista residents, but this one is definitely covering new ground. The park owner would give up millions of dollars and the residents would purchase the land. Presumably, the site would remain a mobile home park forever. Consequently, the Buena Vista residents would be sitting upon a very valuable piece of property from which they could never extract value. But, if they could sell the land, they wouldn't need to stay in a mobile park. So maybe selling would be okay for the residents, but not the owner? The logic of the resident's proposal makes Ms Dremann's writing style seem like Shakespeare in comparison.
The biggest problem with this proposal is the purchase of the lots themselves. If the residents intended to stay at Buena Vista, they should have filed a FTM (failure to maintain) lawsuit under California's Mobilehome Residency Law in 2011 or 2012. The owner and the City were on record about the 10 year remaining lifespan of the trailer park in 2000. The residents likely would have prevailed and forced the owner to pay for upgrades and reconfiguration of the park. By waiting until now, residents need to buy spaces and somehow reconfigure the same spaces to meet current building and safety codes, let along find room for amenity upgrades to the par. That seems impossible for 75 different low income owners, but a lot of nice work for a crafty real estate attorney.
Marie, selling the property to developers will be a great windfall for the City. That was the basis for the Buena Vista resident's attorney writing a letter threatening to sue the City under the CRA.
Joe, the RIR (linked above) says that the average rent is $685 a month on page 8.
Ok. I have in the last hour spoken to some friends. There are three interested parties who are will to offer the owner 500k more than the best and highest offer of the tenants up to 27million. They will be contacting to owner and developer shortly to documents this.
That being said. The value of the park in its as is condition will be at least 27.5m
Based on the City's website the value of Buena Vista is:
$14.5 million WITH the mobile homes on it
$29.2 million AS VACANT LAND at the CURRENT zoning
The City does NOT need to change the zoning the land to be worth $29 million. It DOES have to let the mobile home be converted to vacant land.
The land is worth $14.5 million as it sits and it is worth $30 million if the city changes the zoning. Clearly the city should charge $15 million to change the zoning. Not doing so is a huge windfall for the owners that encourages the displacement or 400 families. But seriously, the city should quit changing zoning.
If you want to know how changing zoning works out, look at Alma Plaza. How did that work out for you? Don't change the zoning and let the owners either sell it to the residents or to someone else who wants to run it as a mobile home park. End of problem.
@palo alto parent,
You believe that appraisal? No difference in value between the current zoning and the zoning that the developer insists on getting. That doesn't pass the smell test.
ITS ALREADY ZONED RM15!!!! STOP with the city should ..... The city doesn't own the land
I agree with Jane. Please leave the city out of this mess.
The city should turn it into a community vegetable garden.
I love it.. RM-vegetable .
I really poorly researched article by the weekly. Wpp
Only in Palo Alto.. Odd news!
I moved into my "mobile home" park 3 years ago after living in Palo Alto for 20+ years. I am now on a limited income along with the hundreds of others who live here. I can't imagine having to leave my home so a development company can take it over to build an ugly, but income-producing property. My heart goes out to those who live in Buena Vista. And I've been here a relatively short time. Think about those who have lived there on limited incomes for much longer, who built their lives there, who would be forced to move. I would opt in favor of the people affected, rather than the coffers of Palo Alto, which has has lots of money to spend on itself other than depriving people of their homes.
Could the city of Palo Alto buy the mobile home park from the owners, and become an enlightened landlord? Not long ago it was debating what to do with thousands of surplus dollars in its coffers. Helping save an underprivileged part of the Palo Alto community would be ethical.
Ok they could buy the park, then fix it up to modern standards and make it nice. What about all those old trailers that won't take the upgrade, and remember most likely the numbers of trailers will be reduced.
It is a wait and see.
BV is rent-controlled, so CPA would be taking a big hit financially if it were to buy BV. Also, the park is essentially unsellable to anyone except the residents with lots of help unless the mobile homes are removed.
Palo alto does not have rent control.
And PA is not and should not be in the residential rental business. Absolutely beyond the city charter.
I agree with Jane. What a poor job by the weekly. The first sentence starts with BV tenants "might" .... Really "might"!! Is that what reporting has come to.
Whoever is advising the BV residents, you are just making the public sentiment go against these residents. They appear greedy in their demands for higher compensation and not cooperative in allowing Mr. Jister to complete his paper work. Now they come up with the idea to buy land. Current Palo Alto residents cannot ensure future homes for their own children in Palo Alto.
Very few kids growing up in Palo Alto will be able to afford to live here when they begin their own families. Maybe we can allow apply for these "buena Vista" government loans for our kids who can't find jobs after high school and college. Why do residents of Buena Vista think they are so special that all of their generation have the right to live in Palo Alto, no matter what they can afford.
Buena Vista is a blighted area and needs improvement. Local Barron Park residents will be so happy when this area is improved. Thanks Promtheus for hanging in there, do not give up. You will be very welcomed into our community.
Here's the way I see it, there are 2 choices:
Choice #1: The city accepts the RIR, rezones to higher density and allows the slumlord to make a huge profit as he evicts the 'poors' from their homes and the last affordable housing in Palo Alto is replaced with luxury apartments. Nice legacy for the city.
Choice #2: The city does not accept the RIR, does not rezone to higher density and the slumlord makes a normal profit by selling the park to the residents so that an historic mobile home park, diversity and affordable housing are preserved in Palo Alto. The city celebrates being on the right side of history.
I believe #2 is the correct moral and ethical choice.
In several instances mobile home parks have been purchased by their cities on an interim basis, and then sold to a non-profit housing corporation such as Millennium Housing, Jamboree Housing, and Resident-Owned Parks. This approach might work.
"Historic" mobile home park? ROTFLMAO.
Even if the RIR is not accepted, the owner can still sell the land to a developer under the current zoning and still make a higher profit than selling it as a mobile home site.
Crescent Park Dad, under current zoning a developer can construct only 89 units, so no developer would want to buy it unless the zoning is changed.
The park is historic, it began in 1926 as an overnight stop for travelers.
If the RIR is not accepted, the park cannot be converted. I don't know of any developers who would want to buy and run a mobile home park.
I'm sorry - I was unaware of the state, county or city declaration of historical designation. I'm surprised any sale would,be allowed if BV is a historical site.
Please provide a link to the official website so I can read about the designation. Thx.
Maria - pretty much anything new in Palo Alto sells for at least $1,000,000 a unit, (more like 1.2-1.5 usually) so selling $89 to $130 million dollars of real estate is a pretty good deal (89 unit at at least $1,000,000 each). Especially if you can the residents help keep the purchase price around $14 million...
From what I understand, the City (and presumably, the residents of BV) has known that the Jissers's intended to convert this to salable land since 2000 when they informed the City that there was 10 years of usable "life" for the Park and that after that, they intended to convert the land. Why did the residents wait 13 years to do anything?
And I'm curious how there are "400 families" in a complex with just over a 100 units.
No designation has ever been sought or granted to my knowledge. There ia a historian in Barron Park though who can be contacted through the Barron Park Association and who could probably give you some deeper background.
There is reference to the park's inception on the city Buena Vista web site.
Its 400 people, not 400 families. :)
According to Jisser's letter with the re-submitted RIR, CPA passed what was essentially rent control in 2000: they limited the yearly increases in rent in mobile home parks in PA (i.e. BV, the only mobile home park in PA). He claimed that this low revenue stream did not allow him to pay back his former partners and make the desired upgrades to BV. Consequently, there's no incentive for him or anyone else (besides the current residents) to own this property as a mobile home park.
Don't believe the claim of low revenue stream, the park is a cash cow for Jisser. He admitted in a deposition that he kept 2 sets of books. The reason he had to pay back his former partners is because they caught him cheating them out of profits and had to sue him to get redress, even though they were relatives by way of marriage.
Complete information is available via court documents, some of which I have seen.
Maria, do you agree that there is essentially rent control at BV mobile home park?
Maria - your options above 1 & 2 are really silly in nature. The city cannot deny the owners RIR. That in itself will be the biggest law suit in PA history. Furthermore. If the city attempts a rezone the property. The owner will sue and win the case in months. It's against state law for cities to change zoning on owners just to low the land cost.
This property is on life support. And the owner has just pulled the plug. There is no Saving the park.
re: rent control, the city's Mobile Home Ordinance sets limits on rent increases, based on the bay area CPI + 6 percent.
Jack, the city already denied the RIR and the owner re-submitted it. Re-zoning would increase the value of the land, not decrease it. The owner wants the city to re-zone the park, so he can rake in the dough from the developer.
Haven't followed this for a while because of the ridiculous claims to prevent the rightful owners from selling this, but the one that I found creative and laughable was that this is a "historic" property. PLEASE, let's get real here. Don't assume Palo Altans are that stupid to fall for this.
The City didn't deny the RIR, it sent it back as incomplete.
I actually read through the whole appraisal. The property is worth the same amount under its current zoning as it would be under R-40 zoning. The only caveat is the land should be vacant. If by re-zoning, Maria means removing the Park, then she is correct. If by rezoning, she means change the existing R-15 to R-40, that does not change the value according to the appraiser (although it does to Prometheus).
From the appraisal report posted by the City "the current use of the subject property is an under‐improvement and should be razed."
If the tenants (renters) buy the place for $14M, will that be the basis of property value assessments? If you can pull it off, will Palo Alto be guaranteed of getting these property taxes? Note: I don't know the answer to these two questions, thus it is just an honest question by me.
Can you assure us that CPA will not become involved in a property owner law suit? Is your group willing to purchase an indemnity bond against such a possibility?
Owner will never accept 14m. An offer of 27.5m as is has already been made.
[Post removed due to same poster using multiple names]
Just re-read the article. Jisser's deal with Prometheus requires the rezoning to R-40 so if he can't get it rezoned, he doesn't have a deal BUT with or without the zoning, Jisser can potentially sell the land for the appraised value of $29 million.
Per Deane Sargent of PMC Financial Services, the only way that the residents can purchase the Park is IF Jisser agrees to sell it for $14.5 million. Why would he do that?
I agree with jerry99. the owners made a deal over ten years ago with the city. its time for that place to go.
Jack, what was the deal the owners made with the city 10 years ago?
" The Jisser family, who own the property, announced plans last November to convert the 4.5-acre parcel at 3980 El Camino Real into 187 high-end apartments. They signed a contract with Prometheus Real Estate and Property Management to develop the property, contingent on the city granting a zoning change. "
THAT IS THE MOST IMPORTANT STATEMENT IN THE ARTICLE!!!
Now the P.A. citizen will see who city government actually works for!
NO ZONING CHANGE, NO DEAL!
That is the big gamble when it comes to affordable housing THAT ALREADY EXISTS without a developers help. PROMETHEUS MADE THE GAMBLE AND TOOK A RISK!
Now the players are under the P.A. Citizen's microscope and are no longer " flying under the radar ". The next step will prove many important facts about the true motives of all who are involved.
Prometheus took a $16 Million gamble...or was a fix already in place?
Now the people of Palo Alto will know the real FACTS about affordable housing and the players involved. That might be pretty ugly.
There was an issue back about 10 to 12 years ago. The owner purchased the park and raised the rent shortly after. The tenants went nuts. The owner and the city agreed too preserve the park for ten more years. The owner withdrew his rent increase. I remember this clearly because I wanted the park too close (it was an eyesore then). Later the tenants and the city drafted this ordinance. It's been more than ten years and now the city is still screwing with this guy. I was upset that the park didn't close but the deal seemed fair enough.
punisher - if the zoning doesn't change, the deal with Prometheus may fall thru, but the value of the land, per the appraiser, is the land is worth $29 million as long as the mobile home is demolished. Another developer would be happy to purchase the land, even at R-15 zoning.
I don't think the owners were really selling. I think they ate teaming with the developer.
Apartments buildings can sit on long term leased ground. Doesn't matter how many of us will be around in 99 years.
Instead of nit-picking the value of the property, why don't you good people (or the good people among you) contact city hall and have them work with one of these three entities to help the residents buy and fix-up their community while giving the property owner a fair return on his investment:
It really comes down to what people define as fair....which apparently is at a $16mil gap between the BV association and what the owner has been offered. $16mil is not a nitpick amount of money.
Crescent Park Dad - thanks. I agree - a "fair" amount for a piece of property is what it will sell for, in this case the land would sell for $14 million as a mobile home park and potentially $29 million as vacant land.
Retired staffer -It sounds like the residents have some help to potentially purchase the property, they are just "nit-picking" over a $13 million dollar difference in the purchase price.
Again the owner is sitting on a $27.5 million offer. Why are
People still bringing up 14m
Let the experts work it out. They've been down this road before.
It would have been nice if Ms Dremann or the Weekly would do some background on Mr Sargent (Web Link - you'll love the photo!) and Mr Loop (Web Link - you'll love the web site name!). Are the residents going to pay these men to develop a plan for purchasing Buena Vista? The story makes it seem that their plan would be absolutely perfect if the owner would sell for the right price. According to Ms Dremann's article, the Buena Vista owner didn't say "no."
So what exactly do the Buena Vista residents want? Do they want to stay in the mobile home park? Is this just another scheme from the Buena Vista lawyers to drag things out and get more compensation from the owner?
Why doesn't the City or the Weekly take a poll of the Buena Vista residents and find out? When the owner resubmitted the RIR, he said residents wanted to know when they could get their settlement and leave. But the Weekly didn't print that. Instead they turned that event into a Bill Cinton-style story about the meaning of the word "comparable".
Retired Staffer says: "Let the experts work it out. They've been down this road before."
Yes, we know. A former city staffer says "sit down and shut up". Where have we heard that before?
Again. A really bad article by the weekly. An apology should be issued
Mayor Greg Scharff was formerly Director of Acquisitions at Prometheus Real Estate Group: Web Link
22years ago !!! I'm sure he left in 1991 purposely to become mayor today to screw with the city.
I would be very curious to know how this will affect the continued presence of Jim Davis Automotive, operators of the Valero station on the corner of El Camino and Los Robles. Theyre fantastic, honest, hardworking, and dependable. They've been there longer then the trailor park, and their station is on the same lot as that being discussed. They pay rent to the slumlord of Barron Park too.
He's gone, the owner sold the park, the station and all. Its all gone. [Portion removed.] Glad to see them go.
@Joe-- [Portion removed.] All I'm saying is that there are ways to go that haven't been explored by the City. Please click on the links I provided above and please urge the City government to explore these options. And please don't put words in my mouth. Thank you.
[Portion removed,] They're just looking for a payoff as a departing gift. When Prometheus went into contract, the property was worth $30M. Since then, the value has probably shot to about $40M. This fact isn't lost on the mobile home owners and the attorneys and other "stakeholders" pushing lawsuits and the such.
Prometheus just needs to step up, pay them $5M to go away, and get their project off the ground before the market turns.
Retired Staffer: Oh my, that not what I intended to say at all, so please don't take offense. My point is that the conundrum surrounding Buena Vista was primarily created by the City's poorly written closure ordinance and City's prolonged lack of willingness step up and broker a solution. Asking elderly, infirm or undocumented residents to take on a quarter of million dollars in debt over the next 40 years, as described in Ms Dremann's story, isn't a workable solution even if the owner was willing to sell to the residents at a bargain price.
At some level we're in agreement. However, you seem to believe that the City might still be persuaded to help the residents while I believe that the City decided to give up on the park back in 2002. That was the total meaning of my comment.
1. Palo Alto is way short of the required number of "affordable" housing units required by law.
2. Buena Vista represents an opportunity for PA to retain some of the necessary affordable units.
3. This can be done with the use of a non-profit housing company (very similar to Palo Alto Housing, except that they are experienced in mobile home parks).
4. This can be done with little or no permanent financial involvement by the City. Temporary assistance may be necessary. Such temporary assistance has been used in Santa Cruz and San Diego Counties. Temporary is the operative word. The City and residents take on no permanent obligations. The nonprofit buys, refurbishes, and leases back the community to the homeowners. There is one such community in Morgan Hill.
5. GO NINERS!!
Below market rate housing generally has prohibitions & limitations on flipping. Most of any profit goes back into the BMR housing fund from which the financing came.
The property is not worth $30 million unless the city gives the owner the Planned Development zoning, which could double the value to $30 million. The developer has been appealing to the owner's greed with a pie-in-the-sky $ figure. If the owner is smart, he will go for a quick, government-facilitated sale. Does he really want the entire Barron Park school community to show up at the approval hearings?
Margaret, per the City's info on Buena Vista, the appraiser said the property is worth 30 million with the current zoning or with the change in zoning, as long as the land is vacant.
Do you people ever listen to yourselves?
That was going to be only comment. But then I had to choose my "Neighborhood" from the drop-down menu.
We've got 19 neighborhoods for a hamlet of 65k people?? Does that seem normal to you? It shouldn't.
Hamlet - noun. A small village.
Population 65K is a small village?
34 neighborhoods. You didn't scroll down.