Below is an FAQ that covers a variety of topics, including what it means to become a resident-owned cooperative, what has happened so far, and what to expect from here in terms of the acquisition process. If you have additional questions, please feel free to reply to this post or make a new post in the Q&A forum!
-Shawn Furst, CASA Acquisition Organizer
Some Basic Information
About CASA
CASA is a not-for-profit community development and human services organization. (casaoforegon.org)
CASA helps communities stay affordable by connecting them with banks that lend to not-for-profit financing lenders. Lenders include: the Network for Oregon Affordable Housing (NOAH); Banner Bank; Craft 3 and others
CASA has helped 20 Mobile Home Communities in Oregon through the whole process of becoming a co-op. CASA assists the residents to run the community through the entire acquisition process.
Columinate is a consultancy that assists co-ops around the country. CASA has contracted with them to provide organizing support to Cedar Glen through acquisition. (columinate.coop)
What are the benefits of becoming a co-op?
There are a variety of benefits to community ownership:
Park rules will be determined by the membership (you!).
Members vote on the annual budget, which means that
You see all the money coming in and going out. None is used as overhead to create individual profit.
The membership decides what’s important to them, and therefore what to put money towards.
The membership votes on their rents.
The Board’s power flows from the membership. This means that the people in charge of the operations of the park work for you!
What it means to be a co-op park
In a Resident Owned Community, the park is run by a volunteer Board of Directors, elected by the membership (residents of the park).
The co-op will choose an outside property manager to do all daily duties, like collect rents and manage finances.
Members vote on the budget each year. Therefore, residents control the rent, and approve any rent changes.
Any surplus rents are re-invested in your community. The membership decides how to spend any surplus to fix up the community.
There are no personal loans to pay off. Residents continue to pay rent as normal, but instead pay to themselves (i.e. the co-op) as opposed to an outside investor. We still have a mortgage to pay off and operating expenses, that’s why we still have to pay space rent.
Not every homeowner needs to join the cooperative for the process to move forward. However, a majority of homes need to be in the co-op.
The Process from Here
You have elected a temporary/interim Board of Directors to serve. The task of this interim Board is to work with CASA to first ensure this is a good deal for purchase. This means getting an attorney first, and the board interviewed attorneys and selected the best fit for the park’s residents. The attorney then produced a fair purchase contract, the Board worked with CASA to hire an appraiser to ensure market value, and then determined the cost of community infrastructure fixes with an engineer. This investigation work was funded without anything from your pocket. CASA offers a forgivable loan for this, meaning that if the residents decide at the end of the information gathering process that it is not feasible to convert to a co-op, no one owes anything. If you decide to purchase with over half of the community voting in favor as co-op members, you will become resident owned!
Basic Cost Information
Homeowners pay a one time joining fee of $5.
If you successfully purchase, then each household pays a $100 membership fee to the co-op (the $5 joining fee is deducted from this $100 membership fee). The interim board will allow a payment plan for the full membership fee.
The $100 membership fee is returned to you if you sell your home or leave the community.
Important Dates
The owner has provided the residents until July 11th to build co-op membership and close on the property. If you have questions, please contact your interim Board or post on this forum. If you are interested in becoming a member, please contact Michelle Fielder, Unit 19.
Interim Board Members
Interim Board Member Office / Term Unit Email
Michelle Fielder President 19 cedarglenestatescoop@gmail.com
Gaynell Thornbrough Vice President 16 gmthornbrough@gmail.com
Rachel Vance Secretary 32 seejanesit@hotmail.com
Greg Estes Treasurer 49 greg2estes8@gmail.com
Phil Clark Ops Manager 48 clarksharks97@gmail.com
Questions about the Acquisition Process
Who pays for all the legal fees, appraisal fees, etc. during the process before closing?
CASA covers the cost of the legal services until closing and all inspection reports, appraisal fee and earnest money (or arranges with other organizations to do so). Our lawyer’s firm often bills for legal services at closing. If the members end up not approving the purchase financing/rents, etc., CASA absorbs these costs. If the purchase goes through, the costs are added onto the final purchase price and CASA is paid back.
Who is on the advisory board now?
Please see the list of interim Board members above.
I want to be sure we’re doing this in a business-minded way. Is there someone providing that knowledge?
CASA has been developing affordable housing and community facilities throughout Oregon for more than 30 years. In 2008, it expanded its programs to include preserving manufactured dwelling communities through conversion to resident owned communities. They will provide financial and logistical help throughout the process. They’ll work with Cedar Glen Estates Co-op’s interim Board of Directors to bring all the necessary information and decisions to the community. Financial feasibility is one of the biggest considerations for CASA and Cedar Glen Estates Co-op in deciding whether to move forward with acquiring the property.
How will communication about this acquisition work?
The interim board will be communicating with the members/residents their progress being made on the inspections, appraisal and financing plans. Residents can also listen in to the interim board meetings on Thursdays at 11am for roughly two hours or so online via Zoom at the following link: https://tinyurl.com/cedarglenestatesco-op. If you need assistance coming to a meeting, please contact a board member.
How will the final decisions be made? Who will make them?
The decision of whether or not to purchase the community as a resident-owned co-op will be made by a majority vote, either in person or via mail-in ballot.
How will I be able to participate and have my voice heard?
The membership empowered the interim Board to make decisions on your behalf. The board is figuring out how to create more transparency and ongoing communication with co-op members and residents as a whole, and will get back to the community about that. Many major decisions (e.g. bylaws, community rules, the decision to purchase) must be undertaken by a quorum of the membership (a quorum represents at least a third of the membership).
If you have questions about the process, you can participate online via Cedar Glen Estate Co-op’s online forum. You can access the questions and answer section of the forum here: https://tinyurl.com/cedarglenquestionsandanswers. You can also see past minutes by clicking on the “Minutes” tab at the top of that website. The board decided to make that page password protected so the general public couldn’t access the Co-op’s minutes, but you can just ask one of them for the password to view that page.
How the Co-op will Work Once it’s Bought the Park
The cooperative holds the mortgage and is responsible for paying bills, property taxes, repairs, maintenance, etc. So does this mean if a person is a part of the coop, they are responsible for the loan and will it go on our credit reports, or could other possible contractors sue me for financial issues that may arise?
No, the co-op will be responsible for the loan as well as any other financial and legal issues. No individual member is ever held financially responsible for cooperative costs.
Who and where are the offices of the Co-op going to reside? Who is going to man the phone for emergency repairs? Where are the files going to be kept, and who sees our private information? Where is the money coming from for Computers, Phones, Stationary, Legal Corporate Fees?
Where the files will reside will be up to the co-op. Part of the loan agreement will be enlisting a property manager to have a 24 hour phone line for emergencies, perform repairs and maintenance, field incoming residency requests and collect rents. Money for office supplies, etc. will be paid collectively via the rents collected from residents.
Will homeowners be able to collect equity on their property if they leave?
The cooperative will collectively own and control the land, infrastructure, and any homes if there are any that are park owned. The homes that people own will still remain theirs and if they leave should be able to leave with their equity when their home sales.
Infrastructure
How will we address infrastructure issues like our crumbling streets and sidewalks and sewer system repairs?
Needed infrastructure improvements were discovered during an engineering assessment performed by an outside agency hired by the interim Board. As part of these investigations, estimates were created to repair the issues that were discovered and the estimates to repair will be included as part of the price to acquire the park. CASA is looking for low interest loans, tax credits, and if available grants to help cover the costs of repairing your infrastructure.
Incorporation, Legal
Do you have an attorney for forming the co-op?
The Co-op has hired an attorney and CASA also uses Brian Dasso, ready to help. He has ample experience working with co-ops, and provides his services at a discounted rate. CASA covers these costs through acquisition.
Financing & Property Value
What will the loan process look like?
The community purchase is scheduled to close with short term bridge financing on July 11th. This assumes members agree to proceed with the purchase and there are no significant delays with the purchase process. Permanent loan financing will occur within 12 months after the acquisition of the park by the residents.
Who will be giving us the loan? How is CASA involved?
CASA is seeking loans from Network for Oregon Affordable Housing (NOAH) and CASA of Oregon for bridge financing to purchase the park. The park’s current owner, Mike Wells, is also loaning the Co-op money for the bridge financing. Permanent loans will likely be from NOAH and CASA of Oregon. Both NOAH and CASA are Community Development Financial Institutions (CDFIs) which are dedicated to delivering responsible, affordable lending to lower income communities.
Will there be an appraisal?
An appraisal was completed to determine the “as-is Market Value” which for manufactured dwelling parks takes into consideration rental and other income, current expenses and condition of the property. The appraiser prepared a thorough analysis of the community and compared recently sold comparable properties to reach a conclusion on the appraised value. This is the valuation the lender will use to determine the amount of loan they can provide for the property.
I’d like to see a financial forecast including taxes, water/sewer, power, attorney fees, and insurance cost. I’d also like to know what the ballpark monthly expenses will be.
Financial information will be given to co-op members during the process and before a final go/no go vote. Taxes, utilities, fees, and insurance will be part of these financials. Rent increases will cover increases in these costs as well as loan financing and closing costs.
How will the price of the homes be determined?
Just like currently, those who’d like to sell their homes will use a broker to determine the selling price. The final purchase price will be negotiated with each buyer, subject to the usual inspections and financing approvals.
Cost to Residents
Will residents be responsible for paying the same utilities they pay now?
The board has decided that individuals will continue to pay the utilities they currently pay, and the Co-op will take over paying utilities that the current owner carries.
Will there be space rent increases? If so, what will they be? Will we be able to afford to continue living here?
Rents will be set by the co-op year-to-year in line with the park’s needs in order to keep the park afloat financially. While rents may rise, the board will work with co-op members to balance the needs of individual residents with the needs of the whole community. If rents do rise, the purpose of the increases is for the benefit of the park, not individuals.
Members control the monthly rent. Site rent for non-members will often be set higher than rents for members. Is this the plan for this park if residents decide not to join the coop?
Non-member rent increases will proceed according to Oregon law. See below for more details on non-member rents.
Will we be required to sign new lease agreements with the Co-op, and will there be a deposit and cost to credit checks, background checks?
New lease agreements will need to be signed with the new co-op. The co-op will decide whether to require deposits, credit checks and background checks, although most “grandfather” in existing homeowners/renters.
I thought that rents could not be raised for a year according to state law.
Since members will soon become proprietary lease holders (your term lease will be for 50 years and renews for up to 99 years), the cooperative members are arguably exempt from this state requirement (i.e., Members, as partial owners of the park, are voting for their space rent increase). Non-members are limited to the current ~10% rent increase each year (this percentage varies a little bit each year), and we make this financial assumption in your budgets. Everyone, however, will get a 90 day notice of a rent increase before their increase goes into effect. The interim Board will explain how all the numbers work to the members before the vote on the budget and rent increase.