Manufactured Housing : Home Owners

The New Hampshire Community Loan Fund (NHCLF) is a private non-profit organization whose main activity is to assist low and moderate income families to work together to preserve affordable housing. The NHCLF also lends in the areas of child care, nonprofit facilities, job creation and self-employment. The Community Loan Fund was established by volunteers in September of 1983 in response to the need for access to capital by tenant groups and community based non-profit organizations.

In 1984, a group of thirteen families at the Meredith Manufactured Housing Park tried to obtain financing to purchase their park as a tenant's cooperative. However, all five banks denied financing their purchase. The Community Loan Fund made its first loan to the Meredith group and they bought their park.

The Community Loan Fund offers two services to assist resident and community groups: technical assistance and loans to help finance the downpayment. The NHCLF is governed by a 19 member Board of Directors and has 39 staff members (see the list of current Directors in this guide).

The NHCLF is a non-governmental agency and depends on individuals and private organizations such as churches, foundations, and businesses for its loan resources. By lending and contributing to the NHCLF, investors large and small direct their savings for the purpose of supporting local efforts among tenants to gain control over their housing needs.

The loans made to the Community Loan Fund are invested by individuals and organizations who expect that these funds will be loaned to community groups to preserve affordable housing. For example, a typical loan from an individual to the Community Loan Fund might be $5,000 for five years at 4% interest, while a church might lend $20,000 at 3%, and a national insurance company $50,000 at 2%. The Community Loan Fund would combine these to make a $75,000 loan to a co-op at 9%. These funds constitute a pool of otherwise unavailable capital that enables tenants working together as a group to purchase their park.

The operating budget (i.e. wages, office expenses, etc.) of the NHCLF is supported by three sources. First, half the budget comes from tax deductible contributions by charitable foundations, churches, individuals and businesses. Second, interest income is earned through the difference on what money is borrowed for and the rate for which it is lent. For example, the Community Loan Fund might pay a lender 4% on their loan and then lend funds to borrower groups at 8%. The difference between the two is called an interest "spread" (2% is the goal) and represents 30-40% of the budget. The smallest portion of our revenue is earned through technical assistance fees. There is a contract and sliding scale fee for our technical assistance. These fees represent about 5% of our budget.

In the year 2000, NHCLF made five loans to manufactured housing park co-ops totaling $3,061,191. These loans would not have been made by conventional banks and are used by groups to keep the rents affordable in manufactured housing parks. For example if a cooperative has to raise $500,000 to buy their park, a bank, when it agrees to provide financing, usually lends 75-80% of the appraised value of the park (say $400,000). Then the bank requires the residents to come up with the remaining 20% ($100,000) as the downpayment. This would require the cooperative to raise the initial membership fee beyond what is affordable to most residents. Instead, the NHCLF can usually loan the portion of the downpayment that the cooperative is unable to raise and therefore make a resident purchase possible.

NHCLF Technical Assistance

To begin, the NHCLF informs residents of the possibility of organizing a cooperative–that there is an alternative to paying higher and higher rents as the park is sold from one owner to another. After an initial meeting with the residents to answer questions and describe the process of converting into a resident-owned manufactured housing park, the NHCLF can assist in the creation of a cooperative by guiding the residents through the conversion process and providing technical assistance.

Generally, there are three areas of assistance important to the development of a successful cooperative: financial, organizational and infrastructure. The Community Loan Fund has expertise in all of these areas.

The NHCLF provides financial assistance. For example, assistance is provided with a feasibility study, preparing for negotiations with the seller/owner, preparing a business plan to take to the banks, budget formulation, and establishing a bookkeeping system.

Cooperatives hire their own corporate attorney to assist with the development and ongoing management of the park and corporation. An accountant is also hired by the co-op for auditing and tax services. Many co-ops are also hiring a company to collect rents, write checks, and do bookkeeping.

The NHCLF also has staff who focus on the organizational development issues of a new cooperative. For example, assistance is provided training the Board of Directors, clarifying job responsibilities, managing successful meetings, developing by-laws, and creating effective committees and policies.

We can also help the co-op to assess the state of the park’s roads, water and septic systems. The NHCLF Project and Management Services Director may help the co-op apply for grants to upgrade theses systems when they are available and to formulate a long-range capital improvement plan.

The goal of NHCLF is to build the capability of the cooperative so that it becomes self-sufficient and responds effectively to the needs of its members. We help develop an effective decision-making process within the park so that the members can make informed and responsible decisions as a group to deal with problems and opportunities. As the capability of the cooperative builds, the need for our assistance gradually diminishes.

NHCLF/MHP Cooperative Services Contract

This is a contract between the New Hampshire Community Loan Fund, Inc., of 7 Wall Street, Concord, NH, 03301 and _________________________________________ (the Co-op), of _________________________, entered into this _______day of ________________, ________. The contract will remain in effect for five (5) years from this date, or while any loan obligation exists between the Co-op and the NHCLF, whichever is longer.

The Community Loan Fund provides technical assistance and low-interest loans to not-for-profit community organizations working in the areas of affordable housing and community economic development. The Community Loan Fund’s purpose is to "provide access to housing and productive resources for low-income households." Due to limited resources and its charitable purposes, it is necessary for the Community Loan Fund to make benefit to lower income people a priority, and charge fees that reflect its purpose.

For the consideration agreed to in this contract, the Community Loan Fund agrees to provide the following services:

1. TECHNICAL ASSISTANCE

1. guidance through the Co-op Conversion process, including financial analysis, sample documents and sample management systems;
2. preparation of preliminary cash flow analysis and other information helpful to negotiations with seller/owner;
3. referrals to interested and able Attorneys;
4. draft legal documents, including Articles of Incorporation, Bylaws, Membership Subscription Agreement, Occupancy Agreement, and Membership Certificate (Co-op Attorney should review the Co-op’s final draft of these documents);
5. assistance in preparing the Bank Financing Proposal, including formulating the business plan;
6. assistance with securing the financing to purchase and improve the mobile home park;
7. assistance in establishing the Co-op’s bookkeeping system, and monitoring of monthly cash flow for the life of this contract;
8. ongoing technical assistance in procedural and operations matters, including training and education programs for Co-op membership and leadership; and
9. assistance in the development of Co-op Policies, Procedures, and Park Rules.

Note: Preparation of originals is provided for in this contract. Cost of duplication for distribution among residents is the Co-op’s additional responsibility.

LOANS

The Community Loan Fund will consider Co-op loan requests for refundable deposits needed with purchase contracts, for down-payment and improvements financing, for Co-op financing of membership fees for lower income households, and for other uses that are in accordance with the Community Loan Fund’s purpose.

Receipt of technical assistance from the Community Loan Fund is a favorable factor in reviewing a loan request, but loan approval is not specifically guaranteed as a result of this contract. Loan approval requires a positive vote by the Community Loan Fund Board of Directors and is determined both by the funds available and the Community Loan Fund’s lending priorities. These are: (1) lower income benefit, (2) long-term benefit (e.g. equity limitation, deed restriction, or low-income prioritization), (3) organizational strength of borrower group, (4) financial viability of project, and (5) leveraging other funds.

NOTE: This contract is not required prior to a loan request, but it is a condition of any loan approval.

For the services provided above, the Cooperative agrees to:

I. FEE PAYMENT

The Co-op will make a payment of $50 with this signed Contract, which is non-refundable.

At closing, the Co-op will pay a one-time service fee of $100 per unit for co-ops where 50% or more of the residents are "lower income." Where the percentage of "lower" income residents is less than 50 percent, the one time fee will be $200 per unit, and also paid at closing. To gather income data, the Co-op will circulate a Confidential Income Survey and the results of the survey will determine the fee level. This service fee is due at the Co-op’s real estate closing whether or not a loan is needed or approved from the Community Loan Fund.

"Lower income" means those households whose annual income falls below 80% of the area’s median income as defined and published regularly by US Department of Housing and Urban Development.

II. COOPERATIVE ORGANIZING

To ensure the long-term success of the Co-op, the Co-op agrees to the following procedures:

1. to invite every resident homeowner on the property to join the Co-op, and to keep this invitation open at all times;
2. to incorporate the Co-op and to hold democratic elections to determine the Co-op’s Bylaws, Park Rules and Board of Directors;
3. to hold open meetings, allow open discussion of issues, and encourage membership participation except in rare cases where executive Board sessions are prudent and appropriate;
4. to disclose information regarding the Co-op and park operations to all residents and the Community Loan Fund;
5. to establish Finance, Maintenance, and other Committees needed to assist the Board with park management;
6. to participate with the Community Loan Fund and other manufactured housing park cooperatives in training and education programs for membership and leadership;
7. to work with the Community Loan Fund to develop the Co-op’s Bank Financing Proposal, including formulating the business plan and meeting with bankers;
8. to work with the Community Loan Fund to find other financing sources for initial purchase and for later re-financing (if needed);
9. to submit monthly budget variance reports, minutes of all Board of Directors and General Membership Meetings, annual financial reports, copies of policies, park rules, membership handbook, and other information to the Community Loan Fund. This information is needed for the Community Loan Fund’s monitoring services after the park purchase.

III. LOWER INCOME HOUSEOLDS

In order to provide lower-income households with current and future opportunities of cooperative benefits, and as a requirement for eligibility for a loan approval, the Co-op agrees to:

limit the equity in the membership interest to a fixed amount (as a "limited-equity cooperative");

allow lower-income new members who lived in the park, prior to the Co-op taking ownership, to sign subscription agreements to finance their membership fees if they want, and to extend to them full voting rights and Co-op benefits in the meantime; and

refrain from making policies that would inhibit or exclude lower-income households from membership.

THE PROVISIONS OF THIS CONTRACT ARE AGREED TO BY BOTH THE CO-OP AND THE COMMUNITY LOAN FUND.

List of Resident-Owned Manufactured Housing Co-ops in NH

Map of Cooperative Parks

  
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