After months of debate over how to balance the interests of landowners and tenants, San Jose officials will decide whether to ban mobile home park conversions.
The emergency ordinance on Tuesday’s City Council agenda would freeze conversions for up to six months, giving city staff more time to come up with a permanent policy. As an urgency ruling, the ordinance would require a supermajority vote (four-fifths).
City officials called for the freeze weeks after the owners of Winchester Mobile Home Park announced plans to sell by the year’s end. Closure would displace more than 100 mostly elderly, fixed-income seniors.
San Jose claims more mobile homes than any other city in California. More than 35,000 predominantly low-income people live in 11,000 units in 59 parks. While the city passed a mobile home conversion ordinance in 1986, the policy had never been tested until now.
Silicon Valley’s real estate market has doubled, even tripled land values. Property owners throughout the region have been courting developers willing to pay top dollar to convert mobile home communities into market-rate housing. But with average rents topping $2,500 a month, mobile homes have become the only affordable place to live for tens of thousands of people in the South Bay.
San Jose’s proposed urgency ruling comes as the impending closure of Palo Alto’s only mobile home park threatens to displace 400 low-income residents. After a controversial two-and-a-half-year review, the city’s elected leaders approved the landlord’s application to close it.
While Santa Clara County and nonprofits have offered to pool money to buy the 4.5-acre park located a stone’s throw from multimillion-dollar homes, it’s unclear whether it will be enough to compete with developers. Local real estate agents say the land could be worth as much as $55 million.
San Jose’s Winchester Ranch residents fear a similar outcome. For the past couple of years, the park’s residents have lobbied the city to bolster its existing mobile home conversion ordinance with stronger tenant protections.
Last year, city officials proposed an emergency moratorium in a subcommittee, but it never advanced it to the council because it would have been a challenge to secure a four-fifths vote to pass it. Then-Mayor Chuck Reed suggested updating the city’s general plan—its blueprint for future growth—with a provision to protect mobile home parks. But that proposal also fizzled out.
This past spring—under a new mayor and council—the Rules and Open Government Committee revived the conversation.
City Attorney Rick Doyle said that to opt for an urgency ordinance, the city would have to make a case that approving mobile home park conversions constitute a public threat. City staff raised several points to support that claim, including the risk of displacing people who wouldn’t otherwise be able to afford living in San Jose.
“Given the high cost of rents and low vacancies in the region, it is possible that the closure of a mobile home park may result in some residents, including senior citizens, becoming homeless,” San Jose’s interim Housing Director Jacky Morales-Ferrand stated in a memo to the council.
Of the 4,460 residential building permits San Jose processed in 2014, only 12 percent were for affordable housing. Virtually all income-restricted housing stock in San Jose has years-long waiting lists. Some 22,000 people are in line for the county’s Section 8 vouchers, which hasn’t added any new names since 2006.
Meanwhile, more than 22,000 low-income renters in San Jose spent half of their income on rent in 2010, according to the city. Options to relocate are extremely limited—San Jose’s rental market has a 4 percent vacancy rate.
“This indicates a continuing gap between the demand and supply of income-restricted affordable housing,” Morales-Ferrand’s memo said.
Councilman Johnny Khamis also directed city staff to include a "stay in business" alternative for park owners when it comes back to the council with a draft of a long-term conversion ordinance in early 2016.
More from the San Jose City Council agenda for August 25, 2015:
- The council will vote on a contract to restore police pay. Per the contract ratified by the Police Officers’ Association, officers will get an 8 percent raise and a one-time 5 percent bonus for sticking with the city.
- In a related proposal, the council will vote on a settlement to replace Measure B pension reforms with a negotiated deal agreed upon by the police and fire unions.
WHAT: City Council meets
WHEN: 1:30pm Tuesday
WHERE: City Hall, 200 E. Santa Clara St., San Jose
INFO: City Clerk, 408.535.1260
On the principle of ‘money doesn’t talk, it screams!‘, I suspect that the mobile home owners will be offered more money, maybe $100,000 for ‘moving expenses’.
The Council is going through its usual Kabuki Theater play, pretending to keep everyone happy — when the only ones they are determined to keep happy are the Council incumbents and the Mayor.
The owners and developer knows how it works, too. The original offer was the first move in the game. That will be increased. They will make a few $million less, but they will still turn a tidy profit, just like Summerhill did with the BAREC property.
The mobile home owners neede to keep the pressure on, in order to get the best deal possible. But the reality is, that property is nowhere near its highest and best use, and it generates extremely minimal property taxes. And since the Council is elected by Districts (a bad idea for any city), only one Councilperson has to worry about the mobile home owners votes. See what District elections do? They never benefit the city as a whole. They just create a bunch of fiefs.
So the curtain hasn’t risen on the closing act in this play. That will result in a buyout at a higher price. It will not make the MH owners happy, but very few tenants get a big wad of cash like that. Twenty years ago, they would have simply been evicted.
This is a sad thing for those affected. But to be honest, if they were charged rent based on what their space is worth today, they would probably be paying $5,000 a month. Or more.
My advice, as a long time (now retired) real estate broker: take that money and buy a house, or a duplex, etc., in a growing area in the central valley, like Manteca, etc. Somewhere fairly close to the Bay Area, and in the path of growth. California will not stop growing, and every year there are more restrictions on building (unless you’re a big time, big money developer; then see the ‘money principle’ in my first sentence).
Increasing regulation and a rising population will make your housing purchase pay off in time. You know you would have been better off buying a house any time over the past 30 years, instead of renting. You don’t have to admit it, I know you know that. Everyone knows that.
With a buyout, you have a rare second chance. Don’t let it go to waste. Mortgages are very cheap now. I recall 18%+ loans, and VA loans at 17.5%. I bought a 15-unit apartment in downtown Santa Clara in 1984. The interest rate was 25%. No kidding. And it cost far less than the average house there now: $525K.
So today’s 4% is nothing. With the gov’t printing $Trillions in new money, all those new dollars will be chasing the existing housing stock. House prices will rise, at least anywhere within driving distance of S.J. There will be temporary setbacks, but long term you will have something that increases in value, plus better tax deductions than you would get even with six kids — and no one can boot you out. Ever.
I would like to be wrong about this outcome. I would like to see the MH owners stay, or buy the land themselves. But unless they hit the Lotto or Powerball big time, that won’t happen. That land is worth $millions an acre now, and expecting the owners to be personally charitable to folks who just happen to be their tenants and not someone else’s is unrealistic. I doubt the Mayor or anyone else would go into the personal charity business if he happened to inherit a windfall like that.
My advice to the mobile home owners: take this as an opportunity. Because it is, if you look at it like that. Become an owner, not a renter. If you get a good buyout, it’s a one-time opportunity. It won’t happen a second time.