In a California manufactured home park, seniors asked to sign leases that may outlive them

On a hot evening in June, residents of the Glenbrook Trails manufactured home park for seniors in Loomis gathered outside in an empty site. Through their face masks, they discussed their fears about the new leases they’ve been offered.

The leases would last 25 years — a quarter of a century tied to the same management company.

“I’ll be 99 in 25 years,” said Sharon Fehling, a resident at Glenbrook Trails, in an interview with the Sacramento Bee. “It’s going to affect us for the rest of our lives.”

Mobile and manufactured home parks have long provided much needed affordable housing for low-income seniors in California. But as the cost of housing burdens renters across the state, many mobile and manufactured home owners have been faced with steep rent increases that have made their homes less affordable.

Long-term leases, like the 25-year lease offered to residents of Glenbrook Trails, are a tactic used by park management companies to avoid local rent stabilization and continue raising rent, said Linda Nye, the president of the Golden State Manufactured Home Owners League.

Fehling and her husband have lived in the Glenbrook Trails park for four years. They thought it would be their home forever. Now they’re not sure they can afford to stay, given the way rents have risen for the past few years and the way they expect them to rise in the future.

The lease says that rent will be increased each year by up to 120 percent of the change in the Consumer Price Index for San Francisco-Oakland-Hayward for the previous 12-month period, at a minimum of a 4 percent increase and a maximum of 10 percent.

Residents have also been offered leases for 12 months or less and month-to-month leases if they decline the long-term lease, but some said that they have felt pressure to sign the 25-year version.

The average rent increase last year in the park was approximately 5 percent, according to Steve Martini, a partner at Cabrillo Management, the company that owns Glenbrook Trails. Over the past three years, the average rent increase at Glenbrook Trails was approximately 3.87 percent, according to Martini.

“This 25-year lease is in line with prior rent increases and provides certainty for both homeowners and management with respect to future increases,” Martini said in an email.

Many of the seniors at Glenbrook Trails live on fixed incomes from Social Security, according to residents. The cost-of-living adjustment to Social Security in 2019 was 1.6 percent. For three out of the past ten years, there has been no cost-of-living adjustment to Social Security.

“We won’t be able to pay the rent, is the bottom line,” said Fehling.

Most residents of manufactured home parks own their homes, but pay rent for the land on which their homes sit. Rent increases are a particular hardship for manufactured homeowners, because some homes can cost up to $13,000 to move.

“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. When community owners raise the lot rents, residents are trapped, choosing between paying rent and abandoning their home,” says a 2019 report from the Private Equity Stakeholder Project.

Though manufactured homes are often referred to as “mobile homes,” the term “manufactured home” is more accurate, said Linda Nye.

“They’re no longer mobile,” Nye said. “There’s no way anybody’s moving them.”

Residents of Glenbrook Trails also worry that the economic impact of COVID-19 and rising park rents will make it difficult to sell their homes if they are unable to continue paying rent.

“Where do you go?” Fehling asked. “Are we going to end up homeless?”

The long-term lease loophole

Long-term leases in parks like Glenbrook Trails rely on a loophole in state law that exempts leases in mobile and manufactured home parks longer than 12 months from local rent controls. Under the current law, management companies can raise rents at whichever rate they set in the lease, even if it exceeds local rent stabilization ordinances.

Mobile and manufactured home owners are not protected under the statewide renter protections that went into effect on January 1, 2020. Under Assembly Bill 1482, landlords cannot raise the rent more than 5 percent plus inflation each year, at a maximum of 10 percent. A bill introduced by Assemblymember Sharon Quirk-Silva, D-Fullerton, in February would apply the same measures to mobile and manufactured home park residents if passed.

According to the Mobile Home Park Home Owners Allegiance, as of March 3, 2020, there were 83 cities and nine counties in California with local mobile and manufactured home park rent stabilization ordinances. Most of the local rent stabilization ordinances listed by the MHPHOA stipulate that rent must increase by less than 100 percent of the change in CPI.

Though residents of Glenbrook Trails are not currently protected under any rent stabilization, the 25-year lease would mean that any new local rent control ordinance applied in the wake of the COVID-19 pandemic would not protect seniors who signed the lease.

State Senator Tom Umberg, D-Santa Ana, proposed a bill in February that would close the loophole that exempts long-term mobile and manufactured home leases from rent control. The bill, SB 999, would ensure that long-term leases are subject to local rent control ordinances. The bill passed the California Senate on June 22 and is now awaiting committee assignment in the Assembly.

“I wanted to make sure that those who lived in mobile home communities, mobile home parks, if the locality enacted rent stabilization ordinances, that they would be protected just like everybody else in the community,” Umberg said.

Mobile and manufactured home parks are the last bastion of affordable housing in many places in California, Umberg said. According to the California Budget and Policy Center, more than half of renters in California are rent-burdened, meaning that more than 30 percent of their household income goes to rent. More than a quarter of California renters spend over 50 percent of their income on housing.

More than 22 million Americans live in manufactured homes, according to the Manufactured Housing Institute. As the tiny home trend sweeps the state, it’s clear that Californians are looking for affordable alternatives to apartments and houses.

Manufactured home park owners and advocates who oppose SB 999 say that the bill unconstitutionally interferes with existing contracts, which authors of the bill refute. Those who oppose also argue that long-term leases that are exempt from rent control can benefit both park owners and residents.

Vickie Talley, a representative from the California Mobilehome Parkowners Alliance, said that CMPA opposes SB 999 in part because it would take away residents’ options to negotiate with park owners by removing the incentive for park owners to enter into a long-term lease.

But the relationship between a park owner and a resident is fundamentally asymmetrical, authors and supporters of SB 999 say. Residents don’t have much leverage to negotiate because moving a manufactured home is so difficult and they don’t have many options other than to accept rising rents.

“The landlord has a great deal more leverage over you in terms of the lease, in terms of your tenancy, than they might if you lived in an apartment or if you owned a home,” Umberg said.

One of the four parties that opposed SB 999 was Cabrillo Management, the San Jose-based real estate company that owns Glenbrook Trails.

Glenbrook Trails is part of a growing trend across the country of corporations buying mobile and manufactured home parks and increasing rents for the people who live there, making homes less affordable for those who live in corporate-owned parks.

Norma Condo, a 91-year-old resident of Glenbrook Trails who has lived in the park since 1995, said that the park was owned by a “generous and kind” family for many years. The owner “had so much respect for the senior citizens,” Condo said.

Glenbrook Mobile Estates bought the property in 2005. Park Brokerage Inc., the company that handled the sale of the park, noted in a 2005 press release that the previous owners had kept the rent very low and that there was no rent control in Placer County. In 2018, Glenbrook Mobile Estates sold the property to Cabrillo Management, property records show.

Manufactured home parks are a profitable business for corporate owners. Clayton Homes, the nation’s largest builder of manufactured homes, is owned by Warren Buffet, The Guardian reported. The Carlyle Group and The Blackstone Group, two of the world’s leading investment firms, both acquired manufactured home parks in the past three years.

There’s even a “university” — Mobile Home University — to teach corporate investors how to make money managing mobile and manufactured home parks. MHU is owned by Dave Reynolds and Frank Rolfe, who once said that a manufactured home park is like a “Waffle House in which customers are chained to their booths,” the Private Equity Stakeholder Project reports.

“With over 20 percent of Americans trying to live on $20,000 per year or less, the demand for mobile homes has never been higher — and the big winners are the owners of the mobile home parks,” says the MHU website. Reynolds and Rolfe are the fifth largest owners of manufactured home parks in the United States, according to the website.

Benefits and burdens of a long-term lease

Steven Martini, a partner at Cabrillo Management, said that the 25-year lease Cabrillo is offering residents would not only benefit the company, but would also benefit homeowners. Residents are often concerned about what their future rent increases will be, said Martini.

A long-term lease “puts that concern aside for 25 years for both the residents and management,” Martini said in an email.

“We would never consider offering a lease that we felt was burdensome to residents,” Martini said in an email.

Some residents at Glenbrook Trails feel that the 25-year lease would not only burden them, but burden their children, too. In California, death does not end lease obligations. When a resident dies before their lease expires, their estate is responsible for rental payments until the end of the lease unless the estate relinquishes the space to the landlord and the landlord is able to re-lease the space to a new tenant.

Cabrillo’s 25-year lease specifies that any person who moves into a home after a sale or the death of the original owner may be subject to a rent that equals the highest rent in the park plus 30 percent, a stipulation that residents fear would make it difficult for residents to sell their home or for their child, if they were older than 55, to move into the home.

Martini said that it is “extremely unlikely” that in every transaction the rent would increase by 30 percent.

“If the rent increase based on this formula exceeds the prevailing market rent in the community, then management may implement a lower increase,” Martini said in an email.

Part of the problem with long-term leases, GSMOL representative Linda Nye said, is that some manufactured homeowners feel that they have no other option but to agree to a lease that could outlive them.

“They get scared into signing,” Nye said.

Sharon Fehling agreed. “It’s scary, and I don’t scare too easily,” she said. “There are some people in here who are really fragile — they’re disabled, they’re using walkers, or they’re in wheelchairs, and they’re sensitive. Some have already started with their dementia.”

Many older residents have had trouble understanding the lease without assistance, said Deb Koss, Sharon Fehling’s sister, who owns the manufactured home where her sister and brother-in-law live.

“About zero percent of people understand the lease,” said Koss.

Cabrillo Management has made it clear to residents that the long-term leases are elective, said Martini. Cabrillo Management provided alternative leases for a term of 12 months or less or on a month-to-month basis, which is what residents have currently.

Cabrillo Management “proactively provided resources to help people get their questions answered, including making our Regional Manager available for one-on-one meetings and providing answers to frequently asked questions,” Martini said in an email.

The company wrote in a letter to all residents on May 20 that rent increases may take place based on tax expenses and “upcoming improvements” after 13 months if residents do not sign the long-term lease, a line that made some residents fearful of what could happen were they not to sign.

“The possibility of rent increases based on increased tax expenses and upcoming improvements exists today for everyone,” Martini said in an email. He said the long-term leases provide assurances about future rent increases in a way that short-term leases do not.

The timing of the lease offer has taken some seniors by surprise.

“I feel that they are taking advantage of the COVID-19 pandemic,” said Koss.

Residents were unable to meet in person to discuss the lease when they found out about it in late May. Without the ability to make sense of the lease with their neighbors, it was difficult for some residents to decide if they wanted to sign.

Many seniors at Glenbrook Trails were already experiencing emotional and financial stress due to the pandemic when they were told about the 25-year lease. Sharon Fehling said that the cost of grocery delivery throughout the pandemic has already made it more difficult to pay rent for her park space.

“It felt like they came in here like a swoop,” Fehling said. “It felt like we’re right on a cliff, and they’re getting ready to push us off.”