Residents of two mobile home parks are under contract for a collective $42 million to buy the land under their homes from the corporate owners.
Utah-based Investment Property Group accepted offers from Aspen-Basalt and Mountain Valley Mobile Home Park residents on June 29, kicking off a 45-day due diligence period in which the parks will undergo property inspections.
Engineering inspections will be conducted on utility infrastructure like water lines and soil condition, largely to assure the lender that the asset does not have major liabilities.
“We don’t know what we’re going to find out in the engineering reports,” said Tim Townsend, director of resident-owned communities, or ROCs, for Boulder-based nonprofit Thistle Community Housing. Thistle is an affiliate of ROC USA, a national organization that helps manufactured home parks transition to ROCs.
“They very well could come back with an issue under the ground, like with water or something like that, which may be a $2 million concern,” Townsend said.
If that happens, Thistle is prepared to help residents source additional funds by seeking a construction loan or looking for more support locally.
Tom Snyder, the attorney representing the Aspen-Basalt residents, said that the residents’ offers had to match the short due diligence period (Thistle would have preferred 90 days, he said) and accept that the owner is selling the parks “as-is” for an attractive offer.
“If a liability were discovered, there would definitely be a lot of discussions amongst everyone about how we cover it,” he said. “It’s always the stuff under the ground that makes you nervous.”
For example, the Aspen-Basalt park is split between well water and municipal water services. If a problem is found with the well infrastructure, there would be a discussion about costs in switching to municipal water with tap fees and other considerations, Snyder said.
Even with uncertainty around infrastructure costs and final subsidies, Townsend is optimistic that the final financing package, which will guide future lot rents, will be in a reasonable range for residents to move forward with the purchase.
“We base everything on a worst case scenario and we’re very conservative in our planning,” Townsend said. “Once we get toward the end of that due diligence window, we’ll meet with residents to go over where their loan is going to land, based on the amount of subsidy that has come in, and based on the infrastructure.”
And Snyder is optimistic that the inspections will not yield any major surprises.
“The residents probably know more about the park than the owners do,” he said. “I think the concept of ‘as-is’ was not offensive to us at all.”
If the contract falls through, the residents’ risk losing earnest money and starting over in the contract negotiation process.
Residents first learned that their owner intended to sell the park in March. The Aspen-Basalt park price is $26.5 million and Mountain Valley’s is $15.5 million, set by another offer that appeared to be submitted by Dallas-based Axia Investments I LLC.
Lorena Vargas, who works for the city of Aspen and has lived at the Aspen-Basalt park near Willits for about 13 years, is cautiously optimistic now that they’re under contract.
“This is a really big milestone, and it’s worth celebrating the work that got us to this point,” Vargas said. “But also a lot of us are cautious to celebrate too early, right? Because we know we’re not at the end of it quite yet.”
Vargas and fellow residents have been working to secure $22 million in loan financing with the help of Thistle. A Thistle analysis found that the residents need $20 million in subsidies to keep lot payments comparable to current rates, even with financing from Thistle partner ROC USA Capital, a mobile home park-specific lender.
According to a June presentation from Thistle, a $15 million subsidy would mean a $1,950 average lot rent for an Aspen-Basalt resident, up from the current average rent of $1,322. For Mountain Valley (and their lower asking price and subsequent lower mortgage), the average lot rent would be $1,300 with the $15 million subsidy, up from the current average of $1,122.
A $20 million subsidy to the loan would mean an approximate $150 average monthly increase, according to Thistle.
As of Monday, approximately $14 million has been committed to the parks, according to April Long, executive director of West Mountain Regional Housing Coalition. Long has worked with Thistle to organize contributions to the residents’ ownership pursuit.
Of that, $11.1 million will come from Roaring Fork Valley governments. Pitkin County and the city of Aspen both approved $3 million in commitments. Eagle County approved $2.5 million as a $1.5 million grant and $1 million loan. Snowmass Village and Carbondale both approved $1 million and Basalt — the first to dedicate funds — committed $500,000. Glenwood Springs committed $100,000.
Garfield County heard a work session presentation in July with a suggested $1 million commitment, but did not sign a letter of intent to pledge funding.
Long said she’s working with local governments now to turn those letters of intent into usable funds for closing, largely discussing deed restrictions and/or covenants to protect affordability.
ROC USA Capital has its own strings attached to its funding to ensure long-term affordability. The property must remain a manufactured home community; the property must be sold to an affordable housing nonprofit if the ROC disbands; homes must be owner-occupied (with provisions for pre-existing circumstances) and more, Long said.
“Some of [the local governments] want to understand what kind of conditions are going to be placed on the funds to ensure the mobile home parks will remain affordable housing,” she said.
Private donors also committed funding, with Atlantic Aviation promising $1 million and Aspen One pledging $500,000. Long has worked with Aspen Community Foundation to secure funding from known local philanthropists, with their donations ranging from $25,000 to $500,000, she said.
Smaller donations have added up to about $10,000 toward the parks, Long said, with donations ranging in the $50-to-$1,000 range. Residents also have hosted community fundraisers.
Even with these contributions, residents still have about $6 million to raise out of their $20 million goal before the closing date, set for 75 days from the offers’ acceptance, to keep their lot rents from rising if the deal goes through.
“Now that we’re here, it’s even more crucial to get that money, because a lot of people in our community really do have a limited income,” Vargas said. “We don’t want them to feel scared or insecure and we want to make sure that we set ourselves up for success.”
Long said she’s focused on soliciting donations through the due diligence period and hopes to have final numbers by Sept. 1.
Thistle also is helping residents at Glenwood Springs’ Mountain Mobile Home Park, now formally called Glen Valley Cooperative, to buy their land for $4.5 million from current registered owner Karma Joy Kriz, a resident who still lives in the park, according to Townsend. The resident-led cooperative is under contract and is expected to close on the property on Aug. 20.
As of Aug. 4, there were nine parks in Garfield and Eagle counties listed for sale in the state’s mobile home park sales database. Thistle has been offering information to other residents in the region who are interested in purchasing their parks as a ROC cooperative, but the price tags on some properties have been too high for the nonprofit to work with.
Snyder said the word is out that interested buyers can overpay for mobile home parks, in the Roaring Fork Valley in particular, because they can make the money back through lot rents.
“It’s amazing that the local community, Basalt, Carbondale and Aspen [and more], came together like this and contributed this staggering amount of money,” he said. “But they can’t keep doing it.”
Instead, he sees long-term responsibility falling to the state legislature and local governments to keep mobile home parks affordable, possibly through acquiring land.
Residents and their partners are planning community screenings of “A Decent Home,” a documentary about mobile home parks and affordable housing. More details will be released later this month.
