Mobile Home Park Mastery: Episode 64

Getting Dirty With City Government

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How far are you willing to be pushed around? That’s a question many mobile home park buyers and owners have to ask themselves sometimes. In this fifth segment of our six-part series on “Dirty Jobs” we’re going to address the A to Z of dealing with governmental agencies that refuse to play by the rules. Learn the insider secrets that $500 per hour attorneys have taught us regarding fighting for our rights and doing so in an efficient and 100% legal manner.

Episode Transcript

Standing up for your rights. In the mobile home park world, that does not mean political activism. What it does mean is getting what you need done regarding grandfathering and code violations. This is Frank Rolfe with Mobile Home Park Mastery podcast series. We're in our fifth installment of dirty jobs the mobile home park owners have to do, and this one is all about working with city government.

It shouldn't be a dirty job. They should be supportive of the cause of affordable housing, but unfortunately, most city governments don't see it that way. What they see is a use on their property within their city boundaries that costs them money. That does not always produce the most upscale residents and that they hear complaints about all the time from all the other people in the town. So let's go over each of the two main ways that you can have problems and those dirty jobs that are created and then how you fix them.

The first one is grandfathering. So what happens in grandfathering? What does that term even mean? Well, what it means are there're three types of mobile home parks out there and there're only two of them you can buy. The first is called the legal conforming park. That means that you could build the park back again today and it exactly means all current city laws and you'll probably never see one of those in your lifetime because most mobile home parks were built back in the 50s, 60s and 70s, and they don't meet any of the current ordinances. And on top of that, the city doesn't want them today anyway,

The next kind is called legal non-conforming. That means it was legal when it was built, but now it's non-conforming. It does not meet the current city rules and regulations and that kind of park is a called a grandfathered park, which we'll go over in a minute.

And then the third kind is the one that was built without any permit at all. It's called illegal. Has No right to exist. You would never want to buy one of those parks, but probably at least 90% of all the existing mobile home parks in the US, are legal non-conforming grandfathered. So what does that mean? What does the grandfathered in a mobile home park mean and then how can you have problems with it?

Well, what it does mean is that any use in that city that was built at one moment in time only has to obey the rules of everything in effect at that one moment in time, anything passed after that deflects it. You don't have to follow it because it was passed after the fact. If you did not have grandfathering you would have complete anarchy in cities. Every time they passed a new ordinance, every time they pass new zoning, they'd make you go through and rip down everything in existence and clearly, that would not work. For the sake of property rights nationwide, the concept of grandfathering was born. And mobile home parks have a very unique grandfathering issue and that's why it is so difficult for some city employees to understand.

Here's what happens. If you have a stick-built house, let's say that stick-built houses is on a residential lot and that lot requires today a 40-foot setback. But when it was built back in 1925, it was only a 10-foot setback. Everything's fine with the house. You can live in it forever. You can buy it, you can sell it, but one day it burns down, Burns all the way down to the ground. Now, can you put the home back on that lot? And the answer is no, because when that home burned down, it lost its grandfathered rights, and most city codes when the property is destroyed beyond a certain percent of value, it loses it's grandfathering.

So if you want to put a home back on that lot now, you can't do the 10-foot setback that was there in 1920s, but you have to go now to the 40-foot setback. Well, you may say, "Well, I don't want to build a house with a 40-foot setback on that lot." And it's up to you. You can take your insurance money and go build a house somewhere else. But the bottom line is on most real property, when it's burned to the ground or it blows down in the storm or whatever happens to it, all of your rights to be there are lost and that's how most of your city employees are taught because almost everything in the city limits is real property. Stick-built houses, apartments, office buildings, self-storage, hotels, motels. It doesn't matter. They all fall under that guideline. But there are two unique folks in every city that don't have to meet that clearcut a definition of grandfathering.

One of them is a parking lot, like a parking lot downtown or a parking lot at the airport. And the other is that other mobile home park parking lot for them. And that's what we do, mobile home parks. So how does that work? Well, the use itself is what's grandfathered. The actual parking lot is what's grandfathered. What's on those parking spaces, whether they be cars or mobile homes, those are not real property. Those are personal property. So they can come and go at any time. It has no bearing at all on the real property, which is simply the parking lot.

So what that means is you can't lose your right to operate unless you do a couple things. First, you'd have to have no mobile homes, not one single mobile home in the mobile home park. Number two, you'd have to turn off your phone numbers. Cease all marketing efforts because think about it, you could have an active mobile home park with nobody in it because your lot rent is too high or you never answer the phone or you have no sales ability, so for that reason, you have to do both items. Nobody in the park, nobody answering the phone or attempting any form of marketing, and even then it has to be that way for over six months.

Of course, that never happens in real life. There's always one mobile home at least in any mobile home park, and there's always at least a working phone number for the mobile home park. So really there's no way to kill off an existing mobile home park and that drives city hall crazy because they don't like mobile home parks. Let's go over what they don't like mobile home parks, so we understand what the friction is.

You look at any mobile home park in America and you look at what the city gains in property tax, both real property and personal property. Let's just model this out. Let's say the mobile home park space is worth $40,000 and let's say that state is a 1% taxing state, so the city would get $400 in annual tax from the lot. Let's say the mobile home is valued at $20,000. They would get another $200 from the home. So they would get $600 per year for that space. However, let's say that they have just one kid in that home that goes to school. Tuition is $8,000, so already the city is behind the eight ball in the tune of $7,400 per year. Add on that health cost because many people in mobile home parks do not have health insurance and other social program costs because it's other social programs people may tap into that help with school lunches and different things like that.

So the bottom line is they're losing a lot of money and on sometimes on a 100 space mobile home park, if you really ran the math, if there're enough kids and they're going to school, the park might lose the city a million dollars a year. Therefore, you can immediately see the friction that on top of that, there're all those neighbors out there who blame everything on the trailer park because that's how Americans were brought up. That's a stereotype of the industry. So next thing you know, the city looks at the mobile home park and says, "Man, it's costing US money and everybody hates it. We got to get rid of it." But they can't. That's the problem is they can't by law.

Now, let's fast forward. You're looking at buying a mobile home park. It's got 10 vacant lots in it. You want to use those lots, you go down to city hall and say, "Hey, I'm going to use those lots. What's the procedure?" And they say, "Wait a minute, you can't use those vacant lots. There's not been any home on them for the longest time. Therefore, they lost their grandfathering," because they don't understand the fact that is the use that's grandfathered and not just the spaces themselves. Then on top of that, other cities they already know that they already know they can't stop you. They have or they just want to try and bluff you so you won't buy the mobile home park because they're hoping, they're praying that if they can keep every buyer at bay from ever buying it, mom-and-pop will just ultimately die and shut it down. So what do you do when the city says you can't use your mobile home park spaces as you know you legally can?

Now, you have the dirty job of enforcing your grandfathered rights. Now, you can go down to the city and roll up your sleeves and say, "I'm going to now explain to you in graphic detail why you have to let me have the permits on those vacant lots," but it won't be any good because the way cities operate, they are kind of like bullies. If you go down there, they're not going to give you any attention or any respect at all. They'll see you just as an angry individual who knows, they might even say, "Hey, don't come in my office, or I'll call the police," who knows, they're going to view you as an adversary to their mission. So what you'll have to do, typically, is you'll have to get a lawyer, but not just any lawyer. You've got to get a municipal lawyer. So what's it municipal lawyer you might ask?

Well, that's simple. That's somebody that sues cities. That's what they do. So where do you find them? Most every big law firm out there has, on their payroll, a municipal lawyer. You just have to call around and say, "Hey, do you have a lawyer who sues cities as their specialty?" And almost all the bigger firms they have them. And why do they exist? Because that's what developers use. So they are not there for mobile home park owners. They're there for the big office building developers, those kinds of folk. So then when you find the guy at the firm who does that, the next question is, can you sue the city of blank? And the reason being, many of those guys, in their former careers, and even currently to make money, they also serve as a city attorney for many cities, so it's kind of odd.

They sue cities on the one hand, and then they also represent cities on the other, but that's what they have to do to make a living. So if they have represented that city, a city attorney, they won't take your case, but if you call several of them, yes, you'll find the person who can sue that city that's giving you grief, and then what you do is you tell them the whole story, "I'm trying to buy the mobile home park and they won't let me use the lots." Or, "Maybe I already own the mobile home park and they won't let me use my lots." And then what do they do? They call up the city's attorney and they talk to them very frankly about where the city's at legally. They explained to them that the use is what's grandfathered that they can't block you using those lots. And they explain the damages. That if they won't let you bring a home onto those lots that you will sue them for, let's say in this example, $40,000 per lot of value lost. You could even have that trebled by claiming the city is doing this maliciously.

So what does the city do? Well, the city attorney listens to this. He knows it's the absolute truth. He calls up the city, whoever's involved in the zoning department or whoever it may be, and explains to them they have to back off and they have to allow you to use the lots because it's basically the law of the US.

Does it always work that cleanly? Not always. Sometimes you might even have to sue the city. However, when you sue the city, it doesn't mean you'll go to court. We have in one occasion had to go ahead and file the suit on a city. But here's what happened. We filed a suit on the city and as soon as they got served with the suit, the city's attorney called our attorney and immediately caved and said, "We don't want to go to court on this. Is not important enough for us to spend any dollars at all. You're fine. We quit. Go ahead and use the lots."

Now, there have been no less than five Supreme Court cases regarding this issue. If you Google up Mississippi Supreme Court Mobile Home Park, you'll see the most recent case from 2015 in which a park owner in Mississippi was denied the right to use their lots. They filed a lawsuit. It worked its way up to the Mississippi Supreme Court and the park owner won. In fact, the park owners won five straight times. The city has never won. The current score is five to zero. The suit before that, before Mississippi, was in my home state of Missouri.

If you Google up Missouri Supreme Court Mobile Home Park, and then add in the word Heck, H-E-C-K, because that was the plaintiff, you will then find that Supreme Court case for the state of Missouri, which again, the park owner won. Basically, it's unlikely today most cities are going to want to go to court because if you were to go to court, exhibit A would be the five Supreme Court cases, which are all identical nearly if you read them, it all comes to the identically a near nearly identical conclusion, which is a city in all cases cannot stop you from using your lots.

Down in Texas, they took it a step further when they saw those five Supreme Court cases coming down the pike to eliminate it ever go into the state Supreme Court in Texas and wasting people's time and money. They changed the state law. The people, the Mobile Home Association in Texas got them to amend their law and now the cities don't have no ability whatsoever to deprive you of your rights of grandfathering. So it's a dirty job, but yet, it's fairly clean because they rarely go to court, and normally the only thing you have to do to get dirty is you have to go find a good municipal lawyer and then have them enact your will with the city.

Now, there's one other dirty job that comes up with cities and that's code violations. Sometimes cities think, "Well, I can't stop you through grandfathering, but maybe I can harass you to death and maybe then you'll want to abandon that park and turn it into something more profitable for the city. Once again though, it doesn't work. When the city comes to you and starts giving you code violations, which is pretty rare. We've only had this happen a couple times in over 20 years, but when they start doing that, you have two options. The first thing you should do is try and be as nice as you can to resolve these code violations and code violations are just things like litter on the ground, non-running car, that type of thing.

So you want to have them fixed. You don't want those things going on in your park. You may be aware that they are happening. You really don't want them to be happening, so the first thing you do is you try and make it right. You go in there and you try and get that fixed. However, you'll know it's simply a harassment mechanism when you fix those violations and they just give you another stack of violations.

Now, here's the dirty secret you can do if they're going to try and be unrelenting on the violations. If you turn those violations around and file for jury trials, that punishes them severely because you see there's kind of a gentleman's code between the judge and most cities and the city itself that the judge is going to go ahead and support the city in any endeavor it does. Look at where they're located. The judge is typically, his building is either adjacent to the city hall or sometimes even in the cities building, so clearly it's a racket. If you get an inspection issue, he's going to rule for the city every single time. Same as you have with a speeding ticket. I've never seen a judge that sides with the person who has the ticket, they always side with the police because obviously logically that's the way their business model is constructed.

However, when you bring in a jury trial, that changes the setting enormously because the average American hates city hall, so by having the decision made by people who already hate the city, to begin with, it completely changes the playing field around 180 degrees. Now the judge, who had an in the bag that he would definitely rule in the favor of the city before, realizes as does the city, that is more than likely that the jury will find the other way around because he innately the jury hates city hall.

So if you ever get a code violation issue, the best way to tame that is to file for jury trials. I have done this many times. I know other park owners who have done this and that is the secret solution to the dirty job of beating back code violations. Now, again, if you can do it friendly, do it friendly. If there's just a few and you never see the inspector again, well, fine and dandy, but if it's a harassment campaign, then take the other course.

One other observation on what I just said, if what they want you to do is nominal and very inexpensive, even though you don't have to do it, you might just do it anyway just because you don't want to pick that battle to fight. So you aren't going to always push back on code violations, but you definitely are if they're trying to take advantage of you.

So that's basically the dirty job of dealing with city hall, dealing with the government. Basically, you'd use your smart, you try to be as nice as you can and if it's all failing then you get as mean as you can, which typically involves bringing in lawyers. But the good news is you always seem to win in the industry because you are exactly always in the right because basically, our federal property rights support the park owner and they don't support the city. Certainly when they're trying to take away your legal right through grandfathering or trying to harass you through code violations.

Now, in our sixth and final segment of our series on dirty jobs, we're going to be talking about the truly dirtiest jobs of all, natural disasters in mobile home parks, all those kinds of things that can happen from fire, Tornado to hurricane, and went back again next week to go over that. Thank you very much and we'll see you next week.