Mobile home park conversion nears decision time for the Town Council

Officials must determine what fair-market value is

Apartments, condos eyed

By Nathan R. Huff

If there's one thing that can be agreed upon by all sides of the pending Los Gatos Mobile Home Park Conversion permit, it's that no one envies the position in which the Town Council will soon find itself.

The Feb. 22 council meeting showed that, despite the work of a town-hired negotiator, little progress has been made in the ongoing compensation mediation between park owner Douglas McNelly and the individual mobile home owners. The council has indicated that it will discuss the compensation "matrix" for potentially displaced residents at its March 6 meeting. What that matrix will be is anyone's guess at this point.

Differing views over what constitutes "fair-market value" is the central problem facing the council. A number of mobile home owners from both Los Gatos and Bonnie View mobile home parks presented their own research to the council. The mobile home owners said compensation should be based on selling prices of mobile homes in surrounding areas. McNelly insists, however, that those prices are a result of rent control and escalating land value and that park residents do not own land.

Even if the council is able to come up with a compensation formula, whether or not it will ever be applied is yet to be determined.

McNelly must apply for a zone change to convert the park, traversing through the Planning Department regulations and a possible return to the council.

McNelly, who has willingly entered negotiations with park residents, stated to the council his growing frustration with being designated the town's "affordable housing provider." He said the family has been trying to convert the park for years.

"I take exception to the idea that one individual property owner can be required to shoulder the burden so singularly that his property becomes dedicated to that purpose," McNelly told the council. He added that the town had already changed the park's zoning, instituted rent control, vacancy control, a conversion process and affordability requirements, all without the McNelly family's consent.

Bonnie View Mobile Home Park owner George Mirassou echoed McNelly' objections, saying policies like rent control had not benefited park owners and home owners equally. "With the recent spike in land value, that land value goes to the mobile home owner mostly, and not to the park owner," Mirassou said. People pay a steep price for a mobile home, he said, because with rent and vacancy control, the monthly housing cost stays fairly constant. Without rent and vacancy control, the mobile homes would fetch much less, he argued.

Residents, on the other hand, said they felt they were getting the short end of the stick, being forced out with no affordable place to relocate. Several said mobile home owners purchased their homes with an understanding of permanency.

"Park owners decide to make a business out of renting space with the full acknowledgment that purchasers are looking at the homes that sit on that property as permanent," Bonnie View resident Lorraine Hogue said.

McNelly, however, said that the lease for the Los Gatos Mobile Home Park has stated since 1985 that the owners' intent was to eventually convert the park. "Because the town has so long frustrated our conversion attempts, people stopped believing it," McNelly later said. "It was kind of like crying wolf."

If the situation already wasn't complicated enough, a number of the park's homeowners would like to explore the possibility of buying the park from McNelly, or having the town purchase the park and then sell it back to the residents. Residents said they were looking into state-backed low-interest loans, as well as other funding options. Mirassou and several council members expressed a willingness to explore that possibility.

Even if the town considers buying the park, the issue of land value returns. Councilwoman Linda Lubeck said McNelly would most likely have a very different view than the town on the price of his land.

"He has an inflated view of what the land is worth based upon his assumption that he'll be able to get it rezoned," Lubeck later said. "But he may not."

McNelly later said that while talk existed of a resident buyout, he doubted whether it was an "economic reality." McNelly is working with developer Barry Swenson on some kind of apartment, townhouse or condominium project, with at least some units priced below market value.

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