I think the most important thing to remember throughout the eminent domain process is YOUR GOAL — that your group is trying to acquire your park – to gain control of your lives, to stabilize site rents, to fix up the park – all of that stuff.
And eminent domain is merely a legal vehicle whereby you might be able to accomplish that goal.
But using eminent domain is hard. You have to get everyone lined up and embracing the task – the City Fathers, your group, the attorneys, the lenders, and finally the owner (your target). That’s all really hard.
However, as in everything you face when you are dealing with your park owner, you are in a NEGOTIATION..
Frankly the most important impact of the threat of the use of eminent domain COULD BE as a tool to force the park owner to negotiate with your group. You’re playing POKER and a really important card in your hand might be a credible threat of eminent domain proceedings against your park owner. (Even if you never have to actually play that card.)
FOR EXAMPLE, several years ago, I did some consulting for a County Housing Authority (HA) on the California central coast. The HA was being screamed at by a bunch of residents in a park owned by our good friend Sam Zell (Equity LifeStyle Properties – ELS). The ELS philosophy appears to be that if the park is full and home prices are high, then, obviously, rents are too low and the residents are stealing from ELS by not paying enough.
In researching the situation, I studied the Securities & Exchange Commission (SEC) on-line filings for ELS, available because ELS is a public company. Interestingly enough, I came away from that process with the conviction that ELS does not fear resident groups, and does not fear publicity about how sleazy they are, and does not fear rent control.
But the threat of eminent domain scares the hell out of them.
And my impression is that ELS believes that the eminent domain threat is very real, and would ultimately result in the park getting acquired for its “AS IS” VALUE. In other words, the price paid by the City/group would be based upon the low rent-controlled value, not on the value as envisioned by ELS with all the residents paying ‘market’ rents. Very, as they say, interesting.
As it turns out, the HA didn’t do much and the park continued to be a dump. ELS can be very intimidating, they have a big (BIG) war chest, and they will fight like hell to prevent condemnation. (But they know they will lose, if their opponent is determined and tenacious.)
But the lesson remains.
If your group wants to acquire your park, eminent domain is a valid alternative in some circumstances and can actually work if you deal with all the issues.
But the main benefit may be to force your owner to negotiate with your group.
And a lot of the same folks you have to deal with during the eminent domain process will still be around as participants in the negotiated purchase.
So good luck. If you want to talk about your situation, contact me.
I’ll be in touch,
Deane
Deane Sargent and PMC Financial Services have been helping mobile home park resident groups and cooperatives to organize and find financing to buy their parks for over 20 years.