Risk of Park Closings

Manufactured home parks provide one of the most important sources of affordable housing in Minnesota, providing homes to 150,000 individuals. But, as land values soar and redevelopment pressures build, parks are closing at an increasing rate. Under state law, these low-income homeowners are given only three options during a park closure: try to move the home to another park (or parcel of land) at a significant expense; leave the home where it is and pay for its demolition; or approach their municipality about adopting a park closing ordinance in order to obtain compensation. All Parks Alliance for Change (APAC) is releasing this report which looks at the vital role of parks, the impacts of closure, and the response of Minnesota cities over the last two decades.

“Manufactured home parks are a vital source of affordable housing. Many people can literally not afford to live anywhere else if their park closes,” said Dave Anderson, APAC executive director. “The closure of a park can be financially devastating for residents and most often means the loss of their homes and no where else to move within their means.” Homes are most often unmovable because of age, moving costs (averaging $5,000 to $15,000), shortage of available lots, or parks barring homes over 10 years old (71% of homes). “Owners of traditional stick-built homes are fully compensated when new development forces them to abandon their homes, but residents of parks are not,” added Anderson.

Rising land values, deferred maintenance and the desire to enlarge the local tax base increase the risk of park closures. During the last five years, the value of land has increased at a record-breaking pace in Minnesota. Prime developable real estate can sell anywhere from $15,000 to $50,000 an acre. In 2003, land prices in Minnesota increased more than 12%, the fastest growth rate in the nation. In the last five years, there have been 12 park closures totaling 219 households. There are currently 5 parks in the process of closing totaling 253 more households. There are another 16 parks at risk of closure adding another 1,626 threatened households.

“On the surface, park closures due to redevelopment seem like a natural mechanism of the real estate market – a parcel of land is sold by its owner to a developer that will put it to another use. Ostensibly, the park is brought to a use that is ‘higher’ and ‘better.’ However, there is much more to the story,” said Margaret Kaplan, APAC staff attorney. “Park closures not only impact the families living in the park, but this mass displacement can also have effects on their communities and local economies, including higher demand on social services, increased homelessness, and losses to the local work force and consumer base.”

State and local governments have a vital role in addressing this problem because they license and regulate parks, and restrictively zone manufactured homes to parks. In 1987, Minnesota passed legislation allowing cities to adopt park closing ordinances. These ordinances guarantee that when a park is closed, the park owner and/or buyer will pay reasonable relocation costs to move each home within a 25-mile radius. If a home cannot be moved, the owner/buyer buys out the home at its tax assessed or appraised market value. Twenty-one cities have adopted ordinances, which leave the residents in park neighborhoods of 380 other cities unprotected.

“The goal is to allow park residents to have a sense of security. They are 80 percent low to very low income; yet they have become home owners without any kind of public subsidy. They deserve a peace of mind,” said Daren Nyquist, the reports author. “Park closing ordinances do not seek to put limitations on the transactions of private property. They are simply a tool to ensure that the property interests of the owner of the underlying land are fairly balanced against the property rights of the homeowners.”

Park closing ordinances can bring some protection to manufactured home park residents. They provide a structural guide to park closings at the local level and allow the means for residents to transition to alternative housing. Additionally, in an effort to rectify some of the consistently occurring problems related to these ordinances, a new model ordinance was drafted in 2006 and is attached to the report.

During the 2007 Minnesota Legislative Session, APAC is seeking to establish uniform statewide standards that guarantee reasonable compensation for moving costs or a home buy-out. The proposed Manufactured Home Relocation Trust Fund was introduced as House File 1205, authored by Rep. Scott Kranz (DFL-Blaine), and Senate File 1196, authored by Sen. Michael Jungbauer (R-East Bethel).

In 2006, Rep. Kranz spoke with many park homeowners in Blaine; a fast-growing north metro suburb in which 14 percent of the city’s residents live in manufactured home parks. Blaine, however, does not have a park closing ordinance. “These communities are diverse, hard working, and make valuable contributions to society,” said Rep. Kranz. “Park residents are real people that deserve peace of mind.

Park Closing Ordinance Policy Report.pdf435.71 KB