What Are the Facts? #3 "They're Giving them Away!"

Decision Tree

Once more the HOA Board is playing fast and loose with numbers and facts.  At last night's meeting, they said that there have been "40 home sales in the past year … more than ever before."  That part is almost true -- there were 25 sales in 2013, however there were 23 in 2012 (I guess that takes it out of the realm of even "almost true."  Do they ever bother to even look at actual reports?)

Fallacy: Residents are "giving their units away."

Where the HOA Board's message really went off base, however, was when they said that the reason there are so many sales is because the conversion has scared the residents so badly that they are "giving their units away." 

I have been following park sales closely to try to determine what effect, if any, conversion is having on sales and sales prices.  I knew what the HOA Board was saying wasn't true as of October, 2013, but I wanted to make sure nothing had changed since then so I asked for a new set of official sales reports*.  I'll update this post as the 2014 sales are available.

Here's an interesting breakdown:

Year          Total Sales          High          Low       Average

2012                  23               200,000     22,500       82,124

2013                  25               142,000     30,000       75,722     

2013 AC*          16               142,000     30,000       82,950                                      

AC* - After Conversion - In other words 16 of the 25 sales made in 2013 were made after 7/1/2013 when buyers were informed of conversion.  Those sales had the low for the year as well as the high but the average sale price was actually somewhat higher than pre-conversion and the difference between 2012 and 2013 was minimal. 

At this point, I don't see that conversion is having much of an impact at all on sales, quantity or price.

Another thing to keep in mind is that, for a sale to take place, there is a seller and a buyer.  I've talked to a lot of the residents who purchased after the conversion was announced and they seem to be quite excited about the possibility of buying their lots, and for some it was a major consideration in making their purchase decision.

* Thanks Connie Winstead who reminds me that the numbers do not reflect "Sale by Owners" but says those are very rare.

Meetings

Last sunset of 2013

HOA Meeting Tuesday, 1/14/2014, 6:30 pm, upper clubhouse.  Maybe we'll hear some of the results of the committee meetings Jeff McAllister was hosting in December. 

Board of Supervisors Meeting, Tuesday, February 4, 9:00 a.m., 1055 Monterey St., Room #D170.  This is a public meeting focused on the conversion survey.

The question I've asked for months is:  what would a new survey accomplish? 

The only answer I can come up with is that it's just a way to stop the conversion.  However, since 166 of us seemed to understand the survey well enough to complete it, I don't understand why our votes are going to be tossed aside. 

What Are the Facts #2: The Space Rent Limit for Over-80 Residents Is Real! … or Was!

Just another January day at the beach.

I've had a number of residents ask me about the space rent limit for over-80 residents.  They report being told that it's "not real because it's not in writing." Or it's "not real because it's age discrimination so it would never hold up in court."

Balderdash!

#1.  Susy Forbath put this policy in writing in a green sheet she put out to all residents in the tubes on November 19, 2013.  (See below for verbatim wordage.)

#2.  If this is age discrimination, the same goes for McDonalds, the movies and every other business that offers senior discounts. (Some start at 55, some at 62, 65 or some other threshold determined by the business.)

#3.  In order for this not to "stand up in court," someone would have to sue.  What kind of a person would try to take away a benefit such as this from a senior citizen?  It would have to be a resident of this park to have any hopes of claiming "damages."  I don't think so … to at least I sure hope this isn't something that one of our neighbors would do.

Here's the statement that came out from Susy on  Gilchrist & Rutter stationery, November 19, 2013:

If approved by SLO County before January 1, 2014 and no appeal to the County is filed, starting the month after County approval, space rent for any resident homeowner 80 years of age or older at the time at the time of conversion will be increased by no more than 1% per year, not to ever exceed a compounded increase of more than $100 during the length of tenancy.

Officially … since the HOA and their lawyer appealed the conversion and succeeded in convincing the County to deem the application incomplete because of questions about the survey of support … this benefit to seniors is off the table.

However, conversations with Susy Forbath indicate that, if the application is deemed complete by the County, it will be reinstated.

Let Us Remember

Remembering

On this day, chosen to celebrate the birth of a child of wisdom, a day that grew big enough to include people of all lands and all faiths into a universal embrace of peace and goodwill, let us remember.

Let us remember the lonely who are far from loved ones; let us remember those who are no longer with us but touched us with their love and spirit; let us remember the sick and injured and those who sacrifice this day of celebration to care for them; let us remember all who left a piece of themselves on a foreign battlefield; let us remember those who have no homes filled with lights and ribbons and bows tied around bright bits of love and joy; let us remember the hungry and hopeless; let us remember all who stand just outside the warmth of all Hallmark moments.

Today I celebrate with a woman who spent last year alone in a wheel chair, wondering if she would walk again, wondering if life was worth the effort, and a man who recently lost his wife and finds this time more bitter than sweet.  Together we will watch the story of a man who lost himself in fantasy and remind ourselves to remember sweet times and be grateful for the beauty of this day and the gift of living it.

Let us take this time to remember ... and re-member our spirits, our bodies, our communities and our world. 

What Are the Facts: #1 "18 Inches of Dirt"

Christmas Pumpkins

Last night's HOA meeting was, overall, a gentler meeting than we've experienced in the past. Questions and strong opinions were exchanged and a few new voices were heard.  If we could continue to meet in this manner, we might eventually establish a bedrock of facts that we could all stand on confidently. 

In the meantime though, we still seem to be focused primarily on opinion, fear and speculation. Large, public meetings do not give us enough time to explore thoroughly the facts that these complex questions require. 

I believe we all want the same thing … reliable information that will help us make our own decisions, an understanding of our rights and protections and a sense that we are being treated fairly.  We want to know that none of our neighbors are going to be hurt by the conversion and that we will not lose value in our homes or have our space rents go up beyond the annual increases called for in our leases.

With the hope that we can all begin to separate fact from fallacy, I'm starting a series focused on some of the issues we seem to talk about most and each issue will be a separate post for easy reading.  Please feel free to comment … together we're smarter than any one of us.

FALLACY:  "We're buying 18 inches of dirt."

Words can sometimes lead us astray … this molehill of fact is used to distract us from a mountain of truth.  

Mesa Dunes is a 50-acre mobile home park where almost 40% of the park is devoted to common space, including 2 clubhouses, 2 pools, a BBQ picnic area (with a fabulous view), a playground, green space, walking trails, guest and RV parking space, a laundromat, roads, water system, sewer system and all those "substandard" lights Jeff mentioned last night.

FACT:  Details of the 19.01 acres of common space is spelled out in The Department of Planning and Building New Project Referral document which was posted some time ago on the blog for your review.  Click here to view - page 4.   

FACT:  The "18 inches of dirt" is actually the depth marker of our individual lots … under that 18" lies not only more dirt but also the underground utilities that we all own in common.

Rumor has it that Jeff thinks the price for our "18 inches of dirt" should be in the $60-65K range.  He didn't mention that number last night but did allude to "much lower prices."  Just to be clear, I would gladly vote for him for King if he could pull that price off.  

So far, I have not been able to find even one data point that would let me believe that the reality of lot prices could be anywhere near $60,000.  While fantasy is a wonderful thing, when it comes to financial dealings, I prefer reality.  And, here's the reality I've found:

• Sunrise Terrace … shares (roughly equivalent to lots) $200,000 … years ago the shares started at  about $30,000 … land, or a share in land, tends to go up in value, especially when it's California Coastal real estate.

•  Bolsa Chica (on 227) … land values average $150,000.

•  Rancho Colinga (Morro Bay) … recent corner lot for sale $185,000.

•   Knollwood (Santa Maria) … lots are in the $120,000 - $140,000 range.

•   Pismo Beach (across from beach) … $250,000 for share price, again equivalent to a lot.

Let's negotiate the best prices we can get … but expecting the owners to sell lots for 1/3 of their actual market value just doesn't make sense. 

Affordable Housing

Paddle boarder at Shell Beach

This week's SLO Sunday Tribune features an article "High Housing Prices Lock Many Out of Ownership" stating that a buyer needs an income of at least $100,180 to afford a median priced ($487,500) home in SLO County.  A year ago, 37 percent of homebuyers in the county could afford a median priced home, now only 23 percent can. In spite of that, homes are selling so rapidly that the supply is severely limited.

The article is filled with interesting data, some of which will be listed below.  However, the important information for us here in Mesa Dunes is how this affects our thinking about the value of our homes, both before and after conversion. The primary driver in the change is the supply and demand for housing … right now there is more demand than supply.

South county tends to be more affordable than San Luis Obispo but it's location near the water and temperate climate keep it in the most desirable category.  Right now Oceano has a median price of $356,000 and Grover Beach's median is $382,900.

We've guesstimated that lot prices will fall in the $200,000 range.  With discounts for early purchase, prices could be closer to $175,000.  Add an average price of $100,000 for your coach and the average package price for a home in Mesa Dunes could be in the $275,000 range … or well under the median price range … especially when you consider the location and amenities of our park.  

Of course, if you have a greatly remodeled coach or extensive decking and a view, your home could be worth more, however, it would then compete with higher-end homes and still be attractive.

It's hard to imagine people buying properties in this price range, especially if our home was purchased many years ago.  However, while California real estate went down in 2008 when the building boom created a glut and the economy tanked throwing many people out of jobs and their homes, if I were going to put money on where prices would be ten or fifteen years from now, I wouldn't want to bet against the upward trend.

There are no guarantees in the world of real estate and investments, but this article makes it seem like Mesa Dunes will continue to be affordable housing even after conversion.

Today's Listings in Sunrise Terrace: (where the HOA is $175 per month)

Some people say that Mesa Dunes does not compare to Sunrise Terrace because their amenities are better.  They have lovely amenities and a beautiful club house.  However, if you haven't driven through it, I suggest doing so.  Somehow, it has a sun-baked feel to me and I much prefer Mesa Dunes.  Plus, it is an over-55 park, something I personally do not prefer.

374 Sunrise … $220,900 (with membership), 1440 square feet … probably 1970s unit

378 Sunrise … $174,500, 1440 square feet … probably 1970s unit.  This looks like a great deal.

816 Eaton … $265,000, 1640 square feet … upgraded

820 Innesley … $279,500, 1368 square feet

807 Muirfield … $295,000,  1440 square feet, remodeled and bonus room

350 Sunrise … $319,000, 1570 square feet, remodeled

251 Sunrise … $359,900,  1600 square feet

Taking One Question at a Time

The dunes in bloom.

On a pure numbers basis, the "for conversion" group lost last night at the South County Advisory Council meeting as a hand vote showed about 40 against, 8 for and 8 abstaining.  Of course, most of the park wasn't there to register their opinions one way or the other.

The public comments were passionate and, except for some opening remarks stating that "many people will lose their homes," and characterizing the law firm handling the conversion as "anything but honest," and "downright immoral," most of the comments seemed to be heart-felt statements displaying the spectrum of emotions around this issue … from fear and anxiety to anticipation about the conversion options. 

When it was all said and done the Council reiterated that the owners have the right to sell their property and voted to recommend approval to the Board of Supervisors … with three recommendations (detailed below). Unfortunately those recommendations don't follow state code which carefully prescribes the step-by-step process of conversion.

Metaphors are very powerful and one we've heard a lot was repeated last night: "I wouldn't buy a car if I didn't know the price."  It's a bad metaphor … for one thing a car is actually for sale, our lots aren't.  Right now, we're just going through a process that will turn them into legal real estate that can be purchased a couple of years from now.  The law, and simple fair dealings, require that we be fully informed about the process as soon as it officially begins so that we will have the time required to make our own decisions.

A better metaphor would be building a new house.  Imagine walking into an architect's office and saying, "I might want to build a house.  How much will it cost?"  A whole lot of questions would have to be answered first … how big? what style? when? where? and so on.

Conversion is like that … there are a whole lot of questions that have to be answered before the lots are legally mapped and appraised, the infrastructure evaluated and required reserves calculated, and budgets are drafted to establish homeowners' fees. It's going to take time and a lot of work to answer these questions.  

At this stage of the process, however, the County is tasked with answering two questions in order to deem the conversion application complete:

     Is this a real conversion rather than an attempt to break rent control?  In other words do at least some of the residents actually want to buy their lots? Mesa Dunes only has 36 rent-controlled spaces so we know this is not just a rent control ploy. 

     Is the conversion applicant following all the state and county codes, especially with regard to protection of lower income residents? The owners have filed a Tenant Impact Report with the County outlining the protection for all residents and the basics of how the conversion process will follow the steps determined by code.

The Council listened patiently to the presentations by Susy Forbath and John Wallace as well as the comments of lots of residents and then voted to recommend approval of the application with the following recommendations:

1.  That the planning committee develop and implement a new survey.

We already know some residents want to purchase their lots, assuming the lot prices are fair compared to similar properties.  The first survey demonstrated that and park meetings have confirmed it.  The park could do another survey … but what is the County going to do when only half the residents complete a new survey … just like only half of them completed the first one?  

The original survey had a 55% response rate … somewhere between adequate and good for a mail survey according to the University of Texas's Instructional Assessment Resources.

Are we going to just keep doing surveys until "they" are satisfied?

2.  That the infrastructure is evaluated.

This is a mandated aspect of conversion which was outlined in some detail by both Susy Forbath and John Wallace last night.  However, according to state code, this is done after County approval.  This is not a simple, quick look inspection, it is an in-depth evaluation done by professionals to determine the state of the infrastructure and the level of reserves needed. (See timeline below.)

3.  That the lot prices be made available to the residents.

How can lot prices be determined before there are lots to price?  We don't have legal lots right now … we have rental spaces with guideposts for placing mobile homes. Again, according to state law, lot valuation only happens after the following steps have been done:

• Obtain Application Completeness letter from County (1-6 months);
• Obtain Hearing date from County (1-3 months);
• Provide Tenant Impact Report to all resident household (15 days prior to Hearing);
• Obtain County approval of Tentative Map (1-12 months);
• Prepare and file Final Map Application with County (2-6 months);
• Obtain Completeness letter from County (1-4 months);
• Obtain Hearing date from County (1-3 months);
• Obtain County approval of Final Map (1-6 months);
• Obtain park inspections report (2-4 months)
• Obtain budget for future Homeowners Association and park operations (2-4 months)
• Prepare formation and governing documents for future Homeowners Association;
• Prepare purchase, financing; and transfer documents;
• Obtain lot valuations; 

        (For the full Timeline, click here.)

There are a lot of unknowns in the process of conversion and that uncertainty makes people anxious and fearful.   However, the state and county have spent a lot of time creating codes and processes that rationally and step-by-step answer these questions.

In the meantime, we need to remember that no one has to buy their lots and 263 out of 299 residents have the option of staying on their leases with its current terms and conditions … basically “no impact.”  

And, if you happen to be one of 36 residents not on a lease, talk to Joanne Mancarella about getting one before conversion happens.  You could be pleasantly surprised at how much protection you have available to you.