Residents of a mobile home park in north Durango have asked the city for a $500,000 loan that would be used to help keep rents affordable while the park works through the final steps of purchasing the mobile home park land from a private corporation.
Residents at River View are under contract to purchase the 14.5-acre, riverfront property along Animas View Drive. They are buying the park to stabilize rents, which have steadily increased as different owners have taken control of the park over the years. But purchase of the park will come with one more price increase, necessary to pay the 30-year mortgage.
City councilors considered the request for the $500,000, but had significant concerns: namely that it would essentially be a high-risk, unsecured loan.
“We all know this is obviously very untraditional. ... We are still trying to be fiduciarily responsible with taxpayer funds. We do need to understand, I feel like, all the risks associated,” said Councilor Melissa Youssef. “Or be willing to just say this is a worthwhile ‘mission’ project ... and we’re willing to do this pretty much unsecured position because of the value it provides for these homeowners.”
Residents in mobile homes own or rent their homes and pay rent for the land underneath, called lot rent.
In March, the average lot rent was about $708 per month. That’s a 102% increase from the rent in 2015, $350, when the park transitioned from being family-owned to corporate-owned.
As of May, residents expect to pay $850 each month in lot rent once the ownership transition is complete.
“When we first started looking at this thing ... it looked like it could be a $300 bump in rent,” said John Egan, a River View resident of more than eight years.
The Animas View MHP Co-op will go forward with the property purchase with or without additional financial assistance.
But the expected monthly rent increase to cover mortgage expenses will be too much for some residents to afford, according to the co-op board. While resident-ownership would keep rents stable for the next decade, some people expect they will have to move.
They have until the contract closing date, June 23, to secure additional financial assistance, Egan said.
“Our goal has been to make it affordable to the point where no one has to leave. ... We think we’re getting to the point where we can just about cross that finish line,” Egan said. “We’re looking for help on that.”
The Animas View MHP Co-op members have already secured a $500,000 commitment from HomesFund, a mortgage assistance nonprofit.
The nonprofit will provide a mortgage loan, at 3% interest with interest-only payments, to help save the community money on a monthly basis, said Lisa Bloomquist Palmer, HomesFund executive director.
“It’s part of a much bigger picture. The real stars of this are the residents who came together to make this happen,” she said. “But HomesFund is really proud we can be a community partner in this.”
If the city also contributes funding, each resident would save an average of $389 per year on lot rent for the next 10 years, according to a HomesFund analysis.
The money could come from the fee-in-lieu program under the city’s Fair Share ordinance, a local affordable housing law passed in 2009, which already routes through HomesFund, Bloomquist Palmer said.
City councilors debated the idea for an hour Tuesday night before unanimously directing city staff members to finalize the financial assistance agreement for future consideration by council.
Overall, city councilors supported the residential ownership initiative and said it could be a way to further the city’s affordable housing goals.
Councilor Barbara Noseworthy asked how long it would typically take HomesFund to help 116 households. Five years, said Bloomquist Palmer.
Mayor Kim Baxter asked if the land could be legally designated for affordable housing, if the city agrees to offer funding.
The park is required in resident-ownership contracts to remain a mobile home park in perpetuity, said Andy Kadlec, a representative for the park residents.
Councilor Jessika Buell questioned giving $500,000 to a private group. Councilor Olivier Bosmans said the HomesFund calculations were “misleading.” By his math, residents would end up saving $39 annually on rent over 30 years.
“I would kill this whole option if I could,” Bosmans said. “I would vote against any study being done on this topic because I think it is not in the benefit of those residents in the mobile home park, nor for the city.”
He later voted in favor of exploring the option further.
“I do have reservations. I also see a possible opportunity here,” Baxter said. “I just don’t see any reason not to learn more about it.”
smullane@durangoherald.com
