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Mobile Park Buy No Piece of Cake

August 16, 1987|BUSTER SUSSMAN | Buster Sussman is a Times real estate writer

One way to control your rent is to buy your home. But for the residents of the 338-space Rancho Escondido mobile home park that's proving to be easier said than done.

Last December, the residents formed a homeowners association and bought the park for $11.83 million. The problem is that not all the residents who said they would buy their individual lots have done so. About 50 spaces remain unsold and are occupied by renters.

Among the results are:

--The homeowners association finds itself the owner of 50 unsold spaces and is about $1.7 million short of what it needs to pay off the purchase price. An additional loan is being negotiated.

--The City of Escondido has lent the park so much money that it is having trouble helping other low-income projects.

--Some of the mainly senior citizen residents are becoming concerned that they may suffer financial losses or even be forced out of the park although this is denied by the homeowners association and the City of Escondido.

--Pressure is rising among mobile park residents and renters for a new rent control election in Escondido.

City Made Loan

The shortfall concerns the city because it loaned $2.1 million to help buy the park, as well as helping low-income residents buy their lots.

The residents also obtained loans of $8.3 million from First Interstate bank, $1 million from the state and $850,000 from the previous owner, George Garty.

According to Jamie Jameson, vice president of the Rancho Escondido Home Owners Assn. Inc., the desire to buy began in 1984, when an Escondido rent control ordinance was defeated.

In 1986, Garty said he wanted to sell, and the residents formed a homeowners association to negotiate with him.

While those who haven't purchased their property pay an average of $325 a month rent, this doesn't take care of the debt, said Clifford Mahler, former president of the association.Another problem is that renters don't pay homeowners association fees which pay for the park's maintenance costs.

Even so, the homeowner association doesn't want to--and legally can't--throw out their non-buying neighbors. The state has also required the association to build up a reserve, now about $60,000, to help relocate residents willing to move.

Eyes Bigger Than Pocketbooks

Mahler said that if he had to do it all over again he would try to get better forecasts of the different options the residents had in buying the park and the costs of fees.

Why haven't more of the residents bought their lots?

For some their eyes were bigger than their pocketbooks, said Jack Anderson, Escondido deputy city manager.

Others, he said, are too old and frail, and their families or advisers talked them out of buying.

The comparatively high percentage of low-income residents--30% compared with the state's average of 10%--also created an unusual problem.

Marie L. Malone, president of the 90,000-member Golden State Mobilhome Owners League Inc., said that the residents paid more than they should have, partly because they were afraid a new park owner would raise their rents.

Mahler agreed. He said the park had been appraised at about $9.5 million but that normally a mobile home park increases in value when it has been subdivided.

Space Rent Increased

Mahler noted that when he first came to the park about 10 years ago, his monthly rent was $85. At the time of the purchase, after a succession of owners, his rent was $325.

Mahler said that the previous owner bought the park about four years ago for $7.5 million.

The homeowners association is selling the lots for an average of more than $38,000.

From a purely business viewpoint its a good price, said Mahler who retired 13 years ago from Nassau in the Bahamas, where he was an assistant treasurer at Chase Manhattan Bank.

"Add to the lot the price of a coach at about $30,000, $80 a month homeowner fees and you have a life style you couldn't duplicate for three times the price."

Mahler said that some residents feel trapped because they have mortgages on their mobile homes but have incomes too high to qualify for low-income loans.

Some Coaches for Sale

What does the future hold for the park?

Anderson said that he expects that the number of unsold lots will be gradually reduced. Some renters have their coaches up for sale, but the buyers would have to move them or also buy the spaces from the homeowners association.

Don Omstead, mobile-home league vice president, said that his forecast is that within four years the park will largely consist of affluent residents.

Resident Richard Walker agreed, saying, "All this proves that the problem of how to help low-income senior citizens has yet to be solved."

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