Affordable Housing Institute : US

No rezoning?!?

 

Even as I keep digging into mobile home recapitalizations, the evidence mounts that they are a critical element of local housing affordability (especially for elderly retirees).  As such, the lowly mobile home, once derided as the trailer park of yore, becomes integral to sustaining an income-diversified, tenure-diversified affordable housing local ecosystem. 

 

What then can a locality do when mobile-home affordability is threatened? 

 

Feb. 22–DAVIE — They came by the dozens, armed with a sense of urgency, pleading for their homes to be kept safe from development.

 

It’s not Briny Breezes, but it’s well located!

 

Via Knowledgeplex comes this interesting story from the South Florida Sun-Sentinel of another time-honored approach to policy crisis: Call time out!

 

That’s two minutes for rezoning

 

The Town Council did not disappoint Wednesday night [February 21, 2007 — Ed.], unanimously approving a one-year moratorium on the rezoning of the town’s 31 mobile home communities.

 

As we’ve previously seen, zoning is destiny, and the value of land (and improved property) rises and falls as property’s zoning changes.  Rezoning, in fact, represents a step-change, a quantum increase in value.  Let’s delve a bit deeper into this dynamic.

 

Let’s hope there’s no disseminating

 

Compared with other forms of improved property, mobile homes represent among a locality’s lowest-value uses, in fact quite possibly — in oceanfront Florida — lower value than unimproved land, for the simple reason that undeveloped land invites development, whereas displacing existing mobile home owners invites a political backlash. 

 

Most residents of mobile home parks simply can’t afford to rent an apartment or buy a home in Davie, where the median rent is $1,342 and the median home price is $382,000, Taylor-Prakelt said. In contrast, average rent for a lot in a mobile home park is $400 a month.

 

Let’s speculate, conservatively, that there are 13 spaces per acre (typical lot size 40 x 80 feet), and that operating the mobile home park spaces (real estate taxes, utilities) costs 30% of the space rent.  If so, an acre produces $44,000 per year of Net Operating Income.  At a 6.0% capitalization rate [Low rate, therefore high value — Ed.], as a mobile home park an acre is worth about $725,000.  That’s good, but if I can put 6 houses on the same acre, the land cost is $125,000 per house, and the built price is well above $382,000 — plenty of room for profit above construction costs.

 

As a recent comparable, the small town of Briny Breezes, a self-contained mobile home park community with a total area of roughly 260 acres (0.4 square miles), recently sold for $510,000,000, or $2,000,000 per acre.  (For AHI’s full story on Briny Breezes, see Part 1, Part 2, Part 3.)

 

It’s therefore entirely possible that blocking rezoning substantially diminishes, if not neutralizes, the conversion risk.

 

You’ll feel much better with that pesky rezoning itched neutered

 

Typically, changes in zoning are not as-of-right — owners typically have no legally enforceable cause of action.  In this, a zoning moratorium — like its cousin, the water-and-sewer moratorium — is not compensable, unlike moratoria that breach existing contractual obligations. 

 

The Town Council gave initial approval to the moratorium Jan. 17, two weeks after former town attorney Monroe Kiar said the ban could withstand a constitutional challenge.

 

While one finds out for certain only in the courts, I strongly suspect that legally, the Town Council is on very solid ground.

 

The move, unusual in Florida, delivers a temporary reprieve to the 23,000 people — a quarter of all Davie residents — who live in the town’s 7,400 mobile homes, the most of any city in Broward County.

 

One quarter of all residents of Davie!  That certainly is a critical part of the housing stock.

 

Kings Manor, Davie, Florida:

Notice the luscious highway running right by our property?

 

“A moratorium is a tool that will allow us to have a year to study solutions,” Shirley Taylor-Prakelt, the town’s director of Housing & Community Development, said before the meeting.

 

She wants to study solutions

 

“We’re the first community in South Florida to say we’re not going to let you throw our residents to the curb,” she said. “We’re the first to put in a moratorium. This problem isn’t just affecting people in Davie, it’s affecting people statewide.”

 

Last March, Marathon joined Islamorada and unincorporated Monroe County in passing a moratorium that temporarily halts the redevelopment of mobile home parks.

 

In the Federal-state-local hierarchy, the state is an appropriate nexus that needs to become involved — perhaps by a statewide real estate tax abatement program for post-preservation mobile home parks?

 

Davie’s push for a moratorium began in December, soon after 700 residents of Kings Manor and Sunshine Village in western Davie received letters from their landlord warning both parks might be sold or rezoned.  

 

Sunshine Village:

Just west of Kings Manor, but adjacent to that succulent highway

 

I speculate there is a Florida mobile home owners’ law mandating such a disclosure.  Required pre-activity disclosure is a further likely in a balanced and multi-tool statewide solution.

 

Residents turned to the town’s leaders, urging they find a way to save their homes.

 

The town lost another mobile home park last year, when the Seminole Tribe of Florida displaced 65 families from the Stirling Road Mobile Home Park in eastern Davie to build single-family homes.

 

Mobile home park, Stirling Road

 

The Law of Economic Gravity’s flip side is this: when a higher value is possible, sooner or later — usually sooner — property will be sold to someone who will take advantage of that higher value and drive the property to its use.  That’s the economic explanation for why zoning is destiny. 

 

“This is certainly a very emotional issue when you’re talking about people’s homes and way of life,” Taylor-Prakelt said, noting a surge in land prices has motivated mobile home park owners to sell their properties.

 

As a mobile home park, the land is probably worth no more than $725,000 per acre, as compared with the impressive $2,000,000 per acre paid for the better-located Briny Breezes.

 

Francis Ranski, 65, a resident of Sunshine Village, said he hopes the moratorium is extended beyond a year.

 

The moratorium, if sustainable, is a solution, but only temporary. 

 

Even if sustained, moratoria are only good for a while

 

Council members on Wednesday also appointed a 12-member task force of residents, renters and park owners.

 

To be permanent, a solution must realign incentives and give the residents the genuine benefits of homeownership.

During the next year, the group will recommend solutions to the town’s affordable housing crisis with help from Carras Consulting and the Metropolitan Center at Florida International University.

 

Let’s hope they have their thinking caps on.

 

I’m a consultant and I’m here to help you

 

 

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