A group that represents manufactured housing park owners filed suit against the state of Washington over rent control.
In its lawsuit filed last week, Manufactured Housing Communities of Washington says the state’s rent control law, which passed last year, is already forcing their parks to shut down.
Though most people own their manufactured homes, they typically rent the land underneath them. The law now caps increases to those “lot” rents to 5% per year.
The organization says this makes it unfeasible for owners to operate parks and make enough profit. MHCW says it’s especially difficult that there’s no appeal process if owners have to pay for big expenses like major infrastructure upgrades and would need to raise rents to do it.
The statewide association filed its suit in Spokane County Superior Court since many affected parties are in eastern Washington.
Guy and Lori Milton sold their small manufactured housing community in Spokane Valley last November.
“It was meant to be our retirement income,” Guy said. “Our intent was to never sell it.”
But Guy told SPR that after the park’s utility costs went up about 22%, he and his wife decided they could no longer make enough money. Plus, as laws kept changing, they said they were afraid of accidentally misstepping.
“We felt like we should call an attorney to make sure that we were on the right track, because otherwise then you're hit with attorney general fees and, you know, that kind of thing,” Lori said. “It got to just be kind of scary and overwhelming. And for a small park, we can't absorb those kind of costs.”
Guy said he expected only to be taking home about half of his park’s income in a few years.
To certain business owners, that might seem like a good profit margin. But Victoria O’Banion, who works for the Northwest Cooperative Development Center, said investor-owners operators expect to pocket 70% to 80% of a park’s income. She said a park that spends 40% of its income is considered bleeding money.
“I've said to counties, ‘Are these landowners really suffering that much?’” she said. “The answer from what I've seen is actually, no. It would be really hard for me to believe that 5% reduction in what you're bringing in on an annual basis is going to really hurt your financial bottom line as an individual.”
O’Banion is skeptical that Washington will see a wave of park sales thanks to rent control.
But if owners do decide to get out, Washington requires owners to give tenants a notice of sale. Those notices allow tenants to consider forming a cooperative to buy the land underneath them, which usually makes their living expenses more stable.
If more parks do decide to sell, it could be an opportunity for tenants to take more control over their housing.
But forming a co-op can be intimidating, and tenants’ offers don’t have to be accepted.
The Miltons considered selling to their tenants, but eventually sold to the developer that owns apartment buildings next to the park. They said their broker told them the mobile home park will stay as is, for now.
Most mobile home parks were built in the 1960s, ’70s and ’80s, O’Banion said. Often, their sewer and water systems are reaching the end of their usable lives.
“At a certain point, the landowner may choose, rather than doing the repairs…they may just be forced—or elect to make the decision—that they close the manufactured housing community and then rebuild and repurpose that parcel to a housing development,” O’Banion said.
She quickly pointed out that hasn’t happened anywhere yet.
“We feel terrible for the tenants if it doesn’t continue to operate as a mobile home park,” Lori Milton said. “It was a very, very difficult business decision that we had to make.”
