Business

Rent hikes hit Iowa City, West Branch mobile home parks

Park acquisitions in Iowa dovetail with nationwide trend

Robert Parsons of West Branch stands in the kitchen of his mobile home in West Branch Village on Tuesday, April 23, 2019. Utah-based Havenpark Capital recently raised the lot fee for Parsons’ home by about $100. 



KC McGinnis for The Gazette
Robert Parsons of West Branch stands in the kitchen of his mobile home in West Branch Village on Tuesday, April 23, 2019. Utah-based Havenpark Capital recently raised the lot fee for Parsons’ home by about $100. KC McGinnis for The Gazette
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Stephen Frantz is no master of divination. He doesn’t own a crystal ball and isn’t versed in reading tea leaves.

Even so, the 53-year-old resident of Sunrise Village mobile home park in Iowa City accurately called out new community owner Havenpark Capital’s plans, a few days before the Orem, Utah-based real estate investor unveiled them.

”They’re going to give us a little thing, and they’re going to say ... the rent increase is going to be in effect,” Frantz said earlier this month. “They’re just going to hit you with it.”

He paused, before gesturing around the community he’s called home for 23 years.

“A lot of these people don’t even know this is happening,” he said.

That was Friday, April 19. The following Monday, staff at Sunrise and West Branch Village mobile home parks distributed letters from Havenpark, announcing lot rents would go up starting July 1 at the two parks, which the company bought from Hames Homes of Cedar Rapids in April.

Rent will increase from $355 to $455, or 28 percent, at Sunrise, and 24 percent to 33 percent, to $385, from its current range of $210 to $310 at West Branch, the letters said.

Residents at West Branch also will pay $25 “premium fees” if they have a corner lot or a double-wide home.

Those are smaller jumps than Havenpark is pursuing at two other Iowa mobile home parks it acquired in March — Golf View Mobile Home Court in North Liberty and Midwest Country Estates in Waukee.

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There, the company will raise the respective lot rent from $284 to $450, or 58 percent, and from $295 to $500, or 69 percent, also beginning July 1.

Havenpark delayed implementing the higher rent by one month at those parks, after some residents enlisted housing-rights groups for help in organizing and negotiating over the increases. The residents also have been in touch with some state officials, who now are considering legislation they say will better safeguard the mobile home park residents.

These groups acknowledge Havenpark is well within its rights to raise the rent, and the company itself says it will be charging residents rates consistent with those of other mobile home community operators.

But the specifics — such as how large an increase, and whether it’s incremental or all at once — matter a great deal to the park residents, including some identifying as low-income, elderly or disabled.

For those who rely on the parks for low-income housing in the area, even small hikes in rent can hang over their heads like the sword of Damocles.

AT THE LOCAL LEVEL

In purchasing the Sunrise and West Branch mobile home parks, Havenpark brought a combined 291 lots with 733 residents under its umbrella, according to the parks’ latest occupancy statistics.

Sunrise resident Frantz said, in his experience, that park stands out as a friendly, respectful community of neighbors.

“You walk down the street, somebody makes eye contact, ‘Hey, how you doing?’” he said.

When Robert Parsons, who lives alone in the West Branch park, first heard about a possible rent increase from a neighbor, before it was announced, he said, “I didn’t know if he was just kidding me or giving me a bunch of baloney or if he was serious.”

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Then, the 61-year-old university custodian heard a similar story from a park employee and wondered, “How can people live here if they do that?”

Barbara Hames, president of former owner Hames Homes, said the rent was on track to increase at the two parks, regardless of whether Havenpark bought them, due to necessary upgrades to the sewer lagoons used in their wastewater treatment.

The upgrades, required under the Iowa Department of Natural Resources, would have cost around $1 million at Sunrise alone, she said.

Hames, whose parents owned the parks since the 1970s, said, “There’s a personal relationship there that’s hard to let go of, but ... with the wastewater treatment issues, how expensive and time-consuming that was going to be, most (residents) understood why we sold.”

“They weren’t happy about it, but they understood.”

Another West Branch park resident, Fred Moore, said he likely will have to find additional work, on top of his employment with a local publishing company, to cover the increase on his lot, where he lives with his wife, daughter and mother-in-law.

“I really don’t want to leave. ... This is my hometown,” said Moore, who has lived in his current site since 2002.

Moore described paying family bills as “robbing Peter to pay Paul sometimes,” but said Havenpark’s ultimate 24 percent to 33 percent increase could’ve been worse.

“At least it’s not $100 more. It’s still a lot for the senior citizens here,” he said.

‘WE’RE HUMAN BEINGS’

Though he did not attend, Moore said West Branch park residents were invited to attend a recent meeting in North Liberty, where their Golf View counterparts formed a community association to push back against their own rent hikes.

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Don Lund, one of the association organizers, said he was not sure whether the group could persuade Havenpark to adjust its proposed rent increases, “but I’d rather go down fighting than not do anything at all, at least to make sure they know we’re human beings and we are a community.”

The sports writer later added, “Just because I don’t have a lot of money doesn’t mean I’m not important.”

Hames said she recognizes the concern among park residents but added, “Where else in Iowa City are you going to find housing for $455 a month? Even if the rent hikes seem steep, it’s still a real bargain compared to condos and apartments.”

In a statement, Jodie McDougal, an attorney representing Havenpark, said the company intends to make “well over $2 million” in investments into Golf View and Midwest Country Estates, including for new homes, road improvements and playgrounds for children, though she did not specify similar plans for the Sunrise and West Branch parks.

Havenpark also will offer services from its sales and leasing company to park residents who wish to sell their homes, and even could offer to buy some residents’ homes directly, the attorney wrote, though she did not mention pricing details.

Havenpark paid $2.8 million for Sunrise and $1.8 million for West Branch, according to property records and the county assessor’s office.

The company spent $12.3 million and $17.4 million, respectively, to buy Golfview and Midwest Country Estates, the records show.

THE BIG PICTURE

Lund, one of the resident association organizers, was one of seven residents from Golf View and Midwest Country Estates who visited the Iowa State Capitol in Des Moines on April 17, and spoke about the mobile home acquisitions at a news conference with two state senators.

The following week, Zach Wahls, D-Coralville, and Kevin Kinney, D-Oxford, began circulating a memorandum among lawmakers, proposing multiple new protections for mobile home park residents.

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State senators approved two proposals Friday — tripling the notification period for rent increases from 60 to 180 days and requiring park owners to show “good cause” when evicting residents — with state representatives also poised to vote as of press time.

Sen. Annette Sweeney, R-Alden, the bill manager, said the legislation was a “big bipartisan effort” among lawmakers and would give mobile home park residents “a little more security.”

“We talked about how it’s affecting some of our people and we want to make sure people are taken care of,” she said.

At the news conference, Wahls spoke critically of mobile home park owners like Havenpark.

“It is unconscionable that people are trying to take this approach, acquire the park, jack up the rent, evict people,” he said. “This is an incredibly traumatic experience ... . Fundamentally, this is not right.”

Havenpark’s purchases and rent hikes of mobile home parks mirror a nationwide trend, albeit on a smaller scale.

Havenpark’s website shows it owns 25 mobile home communities totaling around 5,000 home sites in nine states, though the site is not fully up to date.

Nationwide, there are about 8.5 million mobile homes, or 10 percent of the nation’s housing stock, per data from the Manufactured Housing Institute. Census data shows approximately 20 million Americans live in the homes.

The largest 50 companies that own and operate parks nationwide control an estimated 693,447 lots, up from 521,836 lots in 2015, the institute says.

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Equity LifeStyle Properties Inc., had the most sites as of last year, at 71,500, followed by Sun Communities Inc., with 71,129 lots, and RHP, with 54,200 lots.

A February report from the Private Equity Stakeholder Project and two partner groups suggests that the mobile home parks appealing for private equity and real estate companies to snap up because their residents have few affordable housing alternatives.

“For most residents, it is nearly impossible to move their homes — the structures cannot withstand the move, the costs of moving them are unaffordable and finding a new spot is untenable,” the report reads.

“When community owners raise the lot rents, residents are trapped, choosing between paying (higher) rent and abandoning their home.”

Lot rent increases generally have tracked with a 20-year trend of mobile home park ownership shifting from mom-and-pop enterprises to large, multi-state corporations, the report continued.

Sunrise Capital Investors CEO Kevin Bupp in a 2015 podcast encouraged investors to raise rents after purchasing mobile home parks, saying the extra lot rent “goes immediately to your bottom line.”

Parsons said even though a rent increase would be a “big deal” for him and likely strain his budget, he feels stuck in West Branch.

“Where else would I move? Nobody would want this place, especially if the rent went up that much,” he said.

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“You’re lucky if you can find a one-bedroom for $600 and the companies know it,” said Frantz, who pays $355 a month in lot rent for a three-bedroom, two-bathroom mobile home. “It’s like OK, we can go in there and raise the lot rent because it’s not cheap to move one of these, plus you’d have to find another place to move it to. It’s just an extreme hassle.”

Jodie McDougal, the Havenpark attorney, said that because the rent had not been increased for years at the company’s newly acquired parks, a mobile home community was no longer the “highest and best” use for the real estate, compared to luxury apartments or single-family homes.

As such, she said, Havenpark averted a “mass-eviction event from a potential developer” by continuing to operate the parks.

“In exchange for preserving the current housing at this property we expect our tenants to also pay a fair market rent when compared with other types of affordable housing in the area,” McDougal said.

Havenpark declined to comment on the proposed new mobile home legislation, its specific rent rates or future park purchases.

“We continue to acquire quality assets and invest in them to make them viable, affordable options throughout several states and markets throughout the U.S.,” its attorney said.

• Comments: (319) 398-8366; thomas.friestad@thegazette.com

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