Sunnyvale Mobile Home Park Residents Protest Skyrocketing Rents — Every Saturday

Rick Valley is known for attentiveness to his Plaza del Rey neighbors; checking in on them, bringing groceries, running errands. When he sees something that needs to be done, neighbors say, he steps up and does it.

Last May, Valley decided to do something about skyrocketing lot rents at Plaza del Ray. So one Saturday morning he made some posters protesting the increases and set up a chair and a table on the street.

“I was just fed up with the $2,000+ [rents],” he said. “That’s higher than any other local park. On May 1^st I sat down with six signs.” Now, 50 to 100 people come out every Saturday morning on Lawrence, Tasman and Vienna Drive protesting the rent increases.

The demonstrations drew the Mercury News and Congressman Ro Khanna. Plaza del Ray owner Hometown America responded by kicking TV and newspaper reporters off the property. Residents say this violates the law, and suggest they might take legal action.

 

Hardship for Limited Incomes

At 25 percent of the price of conventional houses, mobile homes are affordable. But the home is only part of the cost. The other expense is space rent, making owners vulnerable as any other Silicon Valley renter to rising rents.

Two years ago, privately held mobile home park operator Hometown America bought Plaza del Rey from private equity firm Carlyle for $237 million — Carlyle paid $150 million for it in 2015.

Previously, rents averaged $1,000/month and didn’t increase when homes changed owners. After Carlyle took ownership, new owners’ rent increased 16 percent, 22 percent the next year, and 20 percent the following year — doubling in five years.

Since Hometown bought the park, new owner rent has gone up another 25 percent, current residents’ rent by 7.5 percent.

“Increases in most parks are nominal,” said Fred Kameda, Plaza del Rey resident. “But Plaza del Rey rents have continued to increase 4 percent a year.

“Forty percent of our residents are on Social Security or disability,” he continued. “The average Social Security check is $1,500. Many of our residents spend every penny and dig into savings.”

Even higher income owners are squeezed. Loan rates for mobile homes carry higher interest and shorter terms, resulting in higher monthly payments.

 

Rent Goes Up, Equity Evaporates

Rent increases have a double whammy. Each $100 increase reduces owner equity $10,000, Kameda explains. Homes linger on the market as prices steadily drop. Some brokers won’t list Plaza homes because they don’t sell. Mortgages are under water. 

“Buyers … can purchase a comparable home across the street in Casa De Amigos where the rent is $1,300,” Kameda said. “A comparable home in Casas sells between $100,000 to $120,000 more than Plaza.”

Virtually everyone knows someone who’s in danger of losing their home because they can’t sell or can’t afford rent.

“People are leaving the park because they couldn’t afford the increases,” said resident Cor van der water. “My neighbor was thinking of walking away. She has almost no equity.”

Resident Dorie Maciel tells a similar story about another elderly resident who needed to move. “She cut the price to get out of here, but she couldn’t sell, so she would have to leave it behind,” said Maciel. “If she doesn’t pay the rent the park takes it, she gets nothing.”

As residents’ equity dwindles, Hometown America’s equity rises based on growing income and land value — something that residents don’t share in. There’s no downside for Hometown America; they can rent the repossessed homes.

In April the Sunnyvale Council unanimously approved an MOU developed by Hometown American and Plaza owners, rather than imposing a rent stabilization ordinance. The Housing Commission MOU will consider the final draft agreement on July 13.

Hometown America says that the MOU will address residents’ concerns about rents and equity. “We’ve been working in good faith with residents, fellow park owners and the City on an MOU process, with the goal of bringing certainty and stability back to the market,” said a company spokesperson.

“We’re committed to this process and are happy to say we’re making significant progress. We believe we’re close to a resolution that will address the most pressing issues and provide immediate relief for residents.”

There’s a third option: homeowners or a public agency buying the park. In Palo Alto, the City and County Housing Authority bought Buena Vista park to protect that pocket of affordable housing. Plaza del Rey homeowners previously tried to purchase their park but came up short financially.

Recently, Congressman Ro Khanna introduced a bill to increase mobile home park residents’ rights, provide grants for residents to buy parks, and offer financial incentives for owners to limit rent increases.

Until there’s action, however, Plaza del Rey residents will be out on Vienna Drive every Saturday morning.