Mobile home park is no snug harbour now

If it wasn’t paradise, it was close enough. Tucked into 15 1/2 acres in west Huntington Beach, within hailing distance of Huntington Harbour and the Pacific Ocean, and graced by Southern California weather, the mobile home park residents generally considered themselves lucky to be where they were.

But there was something even better than geography and weather for the senior citizens who lived in Huntington Harbour Mobile Estates: a 1971 lease with a 55-year life span that became a financial security blanket.

Under the lease, rents could be raised only at five-year intervals and the land under them was zoned for mobile homes, greatly mitigating potential rent increases that would have resulted if it were zoned for other purposes.

A sweet deal for the residents? You bet.

At least, it was.

Now the 180 residents are finding that even the cost of paradise is negotiable.

Last December, Burnham USA, a commercial real estate investment firm in Newport Beach, bought the land for $19 million.

And in the year since, residents say, the company has made their lives miserable.

After hiring inspectors, it has cited the residents for more than 400 violations of state code, according to Howard Cook, a board member of the residents’ corporation that essentially manages the property.

Most of them were frivolous, Cook says, but some came with threats to cancel the lease if there was noncompliance.

But even the frivolous ones, he says, sometimes require money to fix.

But those were mere sidelights, Cook says.

Burnham’s most serious challenge is to the lease itself. The company contends it shouldn’t be interpreted to mean that appraisals should be based on mobile home zoning.

Rather, its attorneys say in an Orange County Superior Court suit against the residents, the lease language specifies for “fair market value” appraisals of the premises “based on their highest and best use exclusive of buildings and improvements. . . .”

The sentence concludes, however, with these words: “. . . and consistent with the zoning classification existing or obtainable” when the appraisal is made.

To the layman, the sentence seems to say conflicting things. Is the land to be appraised as vacant land and at its highest possible use or on its current status as a mobile home park?

That’s why it’s going to court.

If the residents lose, Cook says, many won’t be able to afford the potential rent increases.

In a meeting Tuesday night, he says, the company suggested a monthly hike from their current payment of $370 to around $1,650 per unit.

But it’s not just the proposed increase, he says. Many residents believe Burnham’s strategy is to harass them -- through the lawsuit and the inspections -- into moving out so the company can redevelop the property.

A large rent increase alone might accomplish that, Cook says, but residents also are being hit hard by the protracted pace of the legal case. Since July, he says, residents have been paying an extra $500 a month in anticipation of having to make a large payment to Burnham when the issue is resolved.

There’s a final whammy: even if residents wanted to sell their units now, Cook says, they can’t because potential buyers likely would be scared off by the lawsuit. Still, about 25 of the 130 units are for sale, he says.

Burnham President Therese Hotvedt says the residents have it all wrong.

“We have no intention to break the lease,” she says. “We have no intention to redevelop the property. We have met with the [residents’] board and made it clear that we’re amenable to a proposal from them. We’re not in the business of suing people; we just want them to adhere to the terms of the lease and [for the two sides] to get clarification on the lease language. We couldn’t get their attention, so we had to move forward on this basis.”

The company acquires and develops commercial real estate properties in California and Arizona, Hotvedt says. The company does not own any other mobile home park properties, she says, adding that properties usually are bought as long-term investments.

She doesn’t apologize for the company’s legal position on the lease. The language specifies “best use,” she says, noting that the residents have had “a very nice long-term rent that’s been low.”

She concedes she doesn’t know the financial situation of “each and every person in the park. We understand the rent is going to increase. What kind of impact, no, we weren’t aware of that. But, yes, the rent is going to increase.”

That’s where things stand: residents convinced the property owner wants to squeeze them out and the company saying it’s merely setting fair rents in accordance with the existing lease.

Here’s what I don’t get: Burnham didn’t get blindsided when it bought the property. It knew it was buying land under a mobile home community. It knew the property had been zoned for mobile homes since 1971 and had provided low-rent security for senior citizens. It knew a successful challenge of the appraisal method in the lease would jack up the rents.

From there, it surely could have imagined the consequences of a significant bump in rent for senior citizens. And if some were forced to move out because of that, it surely knew that a reduced tenant roster would require those who remained to pay more each month to make up the difference for those left in the residents’ corporation.

In short, I don’t see how it possibly could have foreseen a benign outcome.

Among the 180 residents in the community, Cook says, 10 were born between 1910 and 1920. Another 35 were born in the 1920s, another 80 in the 1930s.

In other words, this is an aging community, largely populated by people on fixed incomes and hoping to stay where they are at a price they can afford. They thought the lease, now 36 years into its natural life, granted them that security.

I find myself asking what would motivate a company, mindful of all that, to target the property and then immediately set out to put those likely effects in motion.

I think I know the answer, but I don’t want to type in the words.

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Dana Parsons’ column appears Tuesdays, Thursdays and Saturdays. He can be reached at (714) 966-7821 or at dana.parsons@latimes.com. An archive of his recent columns is at www.latimes.com/parsons.