Glenwood Springs City Council voted Thursday to move forward with a $1.5 million contribution from the city’s 2C workforce housing fund to help residents of Mountain Mobile Home Park form a cooperative and buy the land beneath their homes.
The 40-unit park, located along U.S. Highway 6 adjacent to Bighorn Toyota, was recently listed for $4.5 million. More than half of its residents earn less than 20% of the area median income, according to city Housing Development Manager Kevin Reyes.
If purchased by a private investor, Reyes warned, the park could face significant rent hikes or redevelopment. Currently, there are no zoning protections or...
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Read how flaky the financial construction of this deal is – and this is just the DOWN PAYMENT:
The $1.5 million city contribution will be split into two installments. The first, up to $750,000, would be disbursed at or near closing. The second would be available no earlier than September, when additional 2C revenue is expected to become available. Thistle confirmed that the cooperative would take out a short-term bridge loan to cover the full closing cost, repaid once the city’s second tranche is issued.
If they can’t even come up with the cash to close, can you imagine how complicated and screwed up the note would be on this deal? Who’s going to personally guarantee the debt when the tenants have zero skin in the game and even the down payment is in the form of an IOU? I’d put the odds of the tenants pulling this off at the usual 1%.
And then there’s this little addition hidden in the bottom of the story:
The project’s financial pro forma, included in council packets, estimates an average lot rent increase of $135 per month for residents with the full city contribution factored in …
So the rent is going up $135 per month on day one of the tenants buying the park? Did anyone bother to tell the tenants that? A corporate buyer would not go up nearly that much in rent.
As usual, this non-profit virtue signaling simply leaves the tenants with a more than uncertain future – with basically higher lot rent, poorer management, and probably a loan default within 5 years (just like those 4 parks already in foreclosure in Canon City, Colorado with ROC, featured in the last few weeks).