About 70 residents met on Monday, July 29, with consultants who have helped other mobile-home park residents purchase their properties, confirmed Erika Escalante, Buena Vista Residents Association president.
The possibility of going from being landless to the owners of a valuable piece of Palo Alto real estate has brought hope to many residents, Escalante said. But she cautioned that the idea is very much preliminary.
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.
David Loop, a real estate attorney from Aptos, and Deane Sargent of PMC Financial Services in Ashland, Ore., a consultant to residents wanting to purchase their mobile-home parks, have come up with a plan that they say could put the park property in residents' hands.
Loop has helped a number of residents in Santa Cruz County buy their parks; Sargent has helped residents in 50 parks in the Western U.S.
Sargent said he doesn't seek the parks out; he is usually contacted by someone at an endangered mobile-home park to help secure a buy. Attorneys for the Law Foundation of Silicon Valley, which represents Buena Vista residents, referred the mobile-homeowners to Loop and Sargent.
"It's not easy. The hardest part is getting the owner to pay attention. I try to find out fairly early in the process if we can get the transaction closed," Sargent said.
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.
But the Jissers "have 30 million reasons to beat on this process until somebody caves," he warned. That's how much the family stands to make from the deal with Prometheus. As affordable housing, Buena Vista's value is estimated at only $14.5 million, according to an appraiser's report done for the Jissers.
"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," Sargent said, adding that he would help them find financing.
At least two potential sources of mortgage financing could help secure funding. A U.S. Department of Housing and Urban Development (HUD)-guaranteed program could provide a 40-year, fixed-rate loan that is fully amortizing, Loop said. The longer-term loan allows for lower monthly payments and could include upgrades to utilities and roads and about $300,000 to $400,000 in emergency reserves.
HUD offers a program specifically designed for residents who are considering buying a mobile-home park. Loop helped residents of the 100-space Blue Pacific Mobile Home Park in Aptos purchase their park through the program in 2011, he said.
California's Housing and Community Development agency also has a Mobile Home Park Residential Ownership Program that offers long-term, low-interest-rate loans. The state loan would be used as a supplemental mortgage source on top of the federal program, he said.
The residents would also need to put in some funding, since the lenders want to see equity.
"These arrangements are very typical. Residents have to have some skin in the game," Loop said.
The funding would come from membership shares in a resident-owned cooperative that would be a nonprofit corporation. About 60 to 70 percent of residents would need to participate. Shares would cost about $3,000 per unit.
Sargent estimated residents would pay a $500 down payment and $25 monthly loan payment for the membership. On top of the membership, rents would likely be about the same rates residents currently pay, he said.
When residents own the land, it often changes the dynamic within a mobile-home park for better, Loop said. There is a pride of ownership; people fix up the houses, adding new paint and gardens. And someone who wants to bring in a new mobile home is more likely to join a park that residents own, he said.
"Gradually, older homes get replaced. The quality of life comes up. It's a much more elegant solution," he said.
The million-dollar question is whether the Jissers and Prometheus will want to sell to the residents. Joe Jisser said he hasn't heard about the residents' possible buyout, and he deferred to Prometheus when asked if he would consider the deal.
"We are in a contract with Prometheus. If the tenants want to make an offer, that would not involve us," he said, reiterating a statement he made in December.
Jon Moss, Prometheus executive vice president, did not return a request for comment.
Sargent said a proposal by the Palo Alto Housing Corporation to buy 1.15 acres at the back of the Buena Vista property for 65 units to house some of the residents wouldn't solve the problem, especially for the many others who could not be housed there.
Having an affordable-housing nonprofit corporation buy the whole property can work out well, but people still don't own the park, Loop said. The model also isn't necessarily less costly for residents.
The housing corporations "are still in it to make money — they have fees and charges. The rents will be higher," he said.
Candice Gonzalez, Palo Alto Housing Corporation executive director, said she is not sure if the rents would be higher than if residents were to purchase the property. She has not heard further from Prometheus regarding the housing proposal.
At Loop's own mobile-home park in Aptos, which he helped to buy, the park was under a rent-control ordinance prior to purchase, and residents paid $425 per month.
At the time that residents were considering a buy-out, an affordable-housing nonprofit group wanted to purchase the land. They estimated rents would rise to $625.
Residents purchased the park instead, and they initially paid $525 a month. That sum has since gone down to $500, he said.
"For eight years we've had stable rents, and we expect it to stay stable for several more years," he said.