CASE STUDY – MUTUAL BENEFIT CORPORATION
Springlake Park, Scappoose, OR
The residents of Springlake Park, Scappoose, OR, purchased their park in September 2003, through their newly created resident corporation, Springlake Community, Inc.(SCI). This was the first resident corporation park purchase in Oregon.
PMC Financial Services was engaged to provide organizational consulting and arrange first mortgage and share loan financing for the purchase.
Springlake Park is a 147-site, 5-star, “55 & Older” manufactured home park located about 20 miles northwest of Portland. The park includes a 3500 sq. ft. clubhouse, two small lakes, and RV storage with electrical outlets. The park was built in several phases from 1986 to 1998 and contains primarily doublewide homes with attached, two-car garages. The property had 23 sites that had never been occupied. SCI was formed to purchase the property.
The purchase was completed when 83 residents each purchased a membership in the corporation for $15,000. 36 residents funded their membership out of personal funds. Share loans were provided to the other 47 participants. The share loans were available to any resident without regard to income or credit history, and provided 95% of the share price. SCI also provided down payment assistance loans, if needed.
This equity, combined with a $5.83 million first mortgage loan, enabled the group to purchase the property for $6.6 million (about $44,900 per site or $53,200 per occupied site).The Oregon Department of Housing and Community Services (HCS) provided critical initial pre-development funding through a $100,000 loan to the resident group.
The residents developed an organizational and financing plan. There were three (3) goals:1) have a membership group of at least 60% of the occupied sites,2) have a total average monthly payment (including share loan payments) after acquisition of not more than 120% of the prior site rent payment, and,3) have a down payment, for those residents borrowing the membership price, of less than two months site rent. The goals were achieved with 67% participation, member payments 19% over the average site rent of $395, and a down payment of $750 for those members financing their share. Member payments are expected to decline in the future as the vacant sites are leased.
The SCI Board approved the plan in April 2003 and signed a Purchase & Sale Agreement with the owner in late April. About 4 & 1/2 months later, the transaction closed. The first mortgage loan was originated with an interest rate of 5.83%, with a 25-year amortization and 10-year term.
For additional information, contact Deane Sargent (deane.f.sargent; 415-271-3919)