On June 3rd, voters in California will go to the ballot box to decide upon two initiatives on eminent domain.  One, Proposition 98, would also establish provisions to gradually phase out rent control in California.

There are many counties and municipalities in California that have utilized some kind of rent control in the mobile home communities.  One list, from 2005,  attempts to catalog those communities here. (pdf)

This list is interesting for a number of reasons:

• In most places, rents are not fixed, but instead controlled in the speed of increases.   Many tie rent increases to changes in the consumer price index.
• Rent control is an idea that has lost some of its ability to draw new converts.  While Alameda County led the way with its 1965 ordinance, the last community to adopt a rent control ordinance on mobile homes was Pleasanton in 1993.
• Most were adopted as a city ordinance.
• Some allow rent increases upon a vacancy already.  This is one of the issues in Proposition 98.

Proposition 98 and 99 might appear very similar to the casual voter.  Since this is not a general election, turn out may be light.

One question that is worth asking is what would happen if both initiatives passed?  Since they both govern some of the same situations, it would not be possible to use both.  The answer is that only one can become law.  If both pass, the one with the most votes will be enacted.

For all of the opportunity provided by the low cost of buying a manufactured homes, other systemic issues foil the sector.  The lack of a fully functioning secondary market has been one of those issues.

Fannie Mae announced this weekend that they will participate in a pilot program in New Hampshire to buy loans at Lilac Drive Cooperative.  Two local banks, St. Mary’s Bank and Merrimack County Savings Bank, are working to originate the loans.  They will be standard 30 year fixed rate loans.  Right now, it looks like some of the mortgages will bear interest rates at or near 6 percent.  That is a substantial difference from the 9 or 10 percent that homes in the cooperative were getting elsewhere.

Lilac Drive, located in Raymond, New Hampshire, is a cooperative park owned by its residents.  It was developed under the system set in place by the New Hampshire Community Loan Fund.  A double wide in Lilac Drive Cooperative is currently listed for $117,500.

For years, some personal property loans on manufactured housing have been sold on the secondary (more…)

Recent quarterly reports show that the financial performance among the producers of manufactured housing are behaving differently than site built home builders.  Cavalier and Cavco have both released their 8-Ks in the last month.

In the case of Cavalier, the company swung to a profit of 1 cent a share, compared to a loss of 21 cents per share during the same quarter last year.  For Cavco, revenue was up 1.1 percent.  Operating profit remained in the black, but there was still a dip compared to last year.

Compare this to the performance of groups like Pulte (PHM), Toll (TOL) , or Hovnavian (HOV).  All of these firms are showing dramatic drops in sales and have been posting operating losses for the year.

Management at Cavco points to a few reasons for the disparate trend.  For one, many buyers are returning to manufactured housing because there are fewer alternatives to buy more expensive site built housing.  The easy financing that enabled those kind of purchases is drying up.

“The affordable housing we build should play an increasing role in serving our nation’s housing needs given the tighter credit markets and the absence of the aggressive mortgage financing of recent years that enabled a disproportionate number of buyers to consider more expensive homes,” said Cavco CEO Joseph Stegmayer in remarks prepared for their 8-K.

As well, producers have been able to keep their prices down.  Average prices actual declined at Cavco.

Opponents of Proposition 98 — the ballot initiative up in California on June 3rd that would restrain the use of eminent domain and eliminate rent control, simultaneously — have found another reason to be against the proposal.

A group led by the Association of California Water Agencies are pushing back against 98.  These groups believe that eminent domain might be a necessary tool to help communities satisfy their needs for water in the near future.

Other voices have emerged to support the often pilloried notion of eminent domain, on the grounds that some uses for land meet a higher civic need.  Los Angeles, for example, might never get another NFL team without the ability to capture land for a new football stadium.  This was the case in the event of the Staple Center.

The water group, which issued an editorial last fall, write that a number of important water projects could be imperiled by 98.  The believe that eminent domain will be needed to gain access to land for reservoirs, groundwater and surface water storage projects.  As well,

• it might prevent a new Delta conveyance system (More than 25 million Californians and 2.5 million acres of farmland receive water conveyed through the Delta)
• Right-of-way for pipelines and canals to deliver water to new homes and businesses.

It appears that their opposition is not against eminent domain in general, but to how it is written in Prop 98.  In fact, ACWA supports Proposition 99.

Then again, critics such as the Pacific Legal Foundation have pointed out the constraints against eminent domain contained with Prop 99 are very limited.

Raleigh’s Planning Commission has elected to wait on the rezoning application for Homestead Village Mobile Home Park.  As noted earlier, no study of the impacts of traffic has been completed.

The new rezoning would accommodate a proposal to build 1,355 new residences on the 38.58 acre tract in North Raleigh, near 540 and Capitol Boulevard.

The Commission indicated that the study should be completed in no more than 90 days.