This afternoon the Senate Committee on Human Services amended HB2004A with a dash 9 amendment that DOES NOT include rent stabilization, rent control or the elimination of the preemption of local rent control. The dash 9 amendment is attached below and replaces all of the language from the original HB 2004 that was introduced in January 2017. The bill moved this afternoon out of the Senate committee on a party line vote. Some Portland Democratic Senators have expressed their disappointment that the bill contains no rent control. That may ultimately doom the bill but not likely.

MHCO will have Phil Querin review and prepare a full analysis if the legislation passes the Senate and House. With just 6 weeks left in the legislative session time is getting short. MHCO will continute to monitor legislative developments and send updates when necessary.

A copy of the dash 9 amendment is posted at the top of this article.

 We are in the home stretch of the 2017 Oregon Legislative Session. The target adjournment date is June 23rd, the constitutional deadline for adjournment is July 10th. The actual date will fall somewhere between the two - most likely in late June. Significant budget, tax, transportation issues still need to be haggled over as the legislative session draws to a close.

Nearly all legislative proposals MHCO has been tracking (mostly opposed) have died in committee.

Click Here or at the top of this article  "MHCO Legislative Update"  for links to bill drafts and the status of all bills actively tracked by MHCO.

Two significant legislative proposals addressing manufactured home communities are on their way to the Governor's desk for signature. Here is a summary of these two bills:

SB 277A - This is the landlord tenant coalition bill that was negotiated over several months and addresses changes to disrepair and deterioration. The bill provides clear definitions of disrepair and deterioration as well as making it clear that cosmetic or aesthetic concerns are not disrepair or deterioration. The 30 day cure period is extended to 60 days. The bill also clarifies the responsibility of new residents who purchase an existing manufactured home in the community for repairs including cosmetic or aesthetic concerns as long as those concerns are included in the community rules and the community owner gives written notice to a prospective purchaser before he or she becomes a new resident.

HB 2008A - this bill caused a great deal of anxiety for community owners when it was introduced in January. The original bill contained nearly every legislative concept that MHCO has been fighting against for the past 20 years. MHCO negotiated with John VanLandingham (Lane County Law Center) and Representatives Marsh, Fahey and the House Speaker to reach a compromise that removed nearly all of HB 2008 and replaced it with three issues.

The first issue increases the amount homeowners are compensated when a community CLOSES from $5,000 (single wide), $7,000 (double wide), $9,000 (triple wide) to $6,000 (single wide), $8,000 (double wide), $10,000 (triple wide) and tied future increases in compensation to CPI.

The second issue in the compromise addressed resident-owned communities. USDA Rural Development would like to pilot their 502 1% loan program in resident-owned cooperatives, however, they won't if there are restrictions requiring a lien holder to remove an abandoned or foreclosed MH after 12 months. The compromise will give resident-owned cooperatives the flexibility to negotiate storage terms with lien holders that are beneficial to the cooperative. This, in turn, will allow the cooperative to attract lenders who offer extremely affordable loan products to manufactured homeowners in cooperatives who wish to replace older or unsafe homes with new, energy-efficient ones.

The third issue, when a community sells the new community owner will need to report to the state - the number of vacant spaces and homes in the manufactured dwelling park; the final sale price of the community; the date the conveyance became final; and the name, address and telephone number of the new owner.

Finally, the other issue of great concern to all landlords is RENT CONTROL. HB 2004A (the rent control bill) is in the Senate. In March the HB 2004A passed out of the Oregon House and has had a public hearing in the Senate. Final action on the bill (work session) is scheduled for the end of May. There is no indication what the Senate will do, but a number of Democratic Senators have expressed opposition. At this time all eyes are on the Senate - we should have a good idea later next week on what direction the Senate will take on rent control and the elimination of 'no cause' eviction. We will keep you posted on any developments - all should be revealed within the next two weeks.

MHCO Legal Counsel Phil Querin will do a complete analysis and provide practical advice for all MHCO members (managers and community owners) on these new laws later this summer. In addition all necessary changes to MHCO Forms will be made as well.

If you have any questions or concerns please feel free to contact the MHCO office at 503-391-4496.  

Tony Petosa and Nick Bertino - Wells Fargo Multifamily Capital

From both a global and national perspective, we are in the midst of witnessing major change unfold as President Trump takes over the reins from the Obama administration. It is undeniable that material shifts in policy are in the works, social and economic alike. Some of these will likely have an effect on the commercial real estate lending environment, including financing for manufactured home communities (MHCs). The Trump administration is already taking a new approach to banking regulations, which may at some point include working with Congress on the future of the government-sponsored entities (GSEs), Fannie Mae (FNMA) and Freddie Mac, both of which are active lenders to the MHC sector. More immediately, the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd- Frank) is under review by the new administration in an effort to scale back regulations enacted during Obama's presidency. And, as if we didn't have enough change going on, many economists are predicting higher interest rates this year.

In 2016, FNMA and Freddie Mac continued to be reliable lending sources for multifamily and MHC properties while having remained in conservatorship since 2008. MHCs in 2016 were again excluded from the annual lending cap placed on the GSEs by their regulator, the Federal Housing Finance Agency (FHFA), and consequently MHC loans were generally priced with interest rate spreads well inside of those for conventional apartment properties. In December 2016, the FHFA announced that MHCs would continue to be excluded from the lending caps in 2017, which came as welcomed news to MHC property owners and lenders alike. Since Freddie Mac and FNMA will not have a limit on the volume of MHC loans they can originate this year, we anticipate they will continue to price MHC loans aggressively.

While we appear to be in a state of business as usual" with the GSEs in the near term

We are now well into the second half of the 2017 Oregon Legislative Session.   There finally is some good news - most of the bad legislative proposals that MHCO has been tracking have been defeated.  There are four remaining bills - two that MHCO supports and two that MHCO opposes that are still in play at this point in the legislative session.  The two bills supported by MHCO are the result of significant work and represent compromises that the MHCO worked on in order to keep more detrimental legislation from moving forward.  In a perfect world where the the legislative process is more business friendly these compormises would not have been necessary.  Sadly, that is not the legislative environment we are currently dealing with this session.

HB 2008 - this lengthy bill originally proposed everything MHCO has been fighting against over the past twenty years - from 'enforcement' to 'rent justification' and much longer timelines notifying residents when the community is to be sold.  All of HB 2008 was deleted and replaced with an amendment that addressed three items:

1. Increase park closure reimbursements form $5000/$7000/$9000 to $6000/$8000/$10000 for single/double/triple when a community is CLOSED.  Also eliminated a proposal that the community owner pay up to $20,000 in relocation costs per home when the community closes.
2. Addresses cooperatives (communities owned by residents).   Owner (resident in a cooperative) is not required to remove the home if the cooperative agrees with the owner to waive or extend the deadline by which the buyer or subsequent buyer must remove the home or store the home in the space for a specific period of time.  This only applies to homes in communities owned by the residents.
3. Upon sale of a manufactured home community the following information will be provided to residents:
   1. The number of vacant spaces and homes in the      community
   2. The final sale price of the community
   3. The date the conveyance became final

HB 2008 passed out of the House Committee on Human Services and Housing on Tuesday, April 18th with a vote 7-2 in favor.

SB 277 - This bill is the landlord-tenant coalition bill that was negotiated over several months by landlord and resident organizations.  This is the result of the controversies this past summer over disrepair and deterioration issues in communities that had received extensive media coverage.  The proposal increases the time residents have to make improvements from 30 to 60 days.

 The legislative proposal also clarifies disrepair and deterioration and addresses aesthetic" issues which are different from "deterioration" and "disrepair."  For example

There are several significant deadlines in the Oregon Legislature that start to willow down the life span of legislative proposals. The first of these deadlines was last Friday, April 7th. As of midnight on last Friday any bill in a committee in the chamber of origin (Senate bills in the Senate and House bills in the House) must be scheduled for a hearing and work session or the bill will not be considered any further during this legislative session. The exceptions to this rule are bills in Revenue Committees, Rules Committees and Ways and Means Committees which stay open the duration of the legislative session. The remaining bills will need to move out of committees by April 18th.

A number of bad legislative bills that MHCO has been fighting were stopped by last week's legislative deadline. However there are three bills that remain 'alive' that are of great concern:

HB 2004A: Prohibits landlord from terminating month-to-month tenancy without cause after first six months of occupancy except under certain circumstances with 90 days' written notice and payment of [relocation expenses] amount equal to one month's periodic rent. Provides exception for cer- tain tenancies for occupancy of dwelling unit in building or on property occupied by landlord as primary residence. Makes violation defense against action for possession by landlord. Requires fixed term tenancy to become month-to-month tenancy upon reaching specific ending date, unless tenant elects to renew or terminate tenancy. Requires landlord to make tenant offer to renew fixed term tenancy. [Repeals statewide prohibition on city and county ordinances controlling rents.] Permits city or county to implement rent stabilization program for rental of dwelling units. This bill passed the Oregon House and is now being considered in the Senate.

HB 2008: Requires landlord of manufactured dwelling park to pay tenant necessary relocation costs or applicable manufactured dwelling park closure penalty, as determined by Office of Manufactured Dwelling Park Community Relations, upon closure of park to convert to other use. Requires owner of manufactured dwelling park to give notice of final sale to office upon sale of park. Prohibits landlord from terminating without cause, unless under certain circumstances with 90 days' written notice, month-to-month tenancy consisting of rental of manufactured dwelling of float- ing home owned by landlord on space in facility. Requires fixed term tenancy consisting of rental of manufactured dwelling or floating home owned by landlord on space in facility to become month-to-month tenancy upon reaching specific end date, unless tenant elects to renew or terminate tenancy. Requires landlord to make tenant offer to renew fixed term tenancy. Requires office to produce materials to inform tenants of rights and adopt rules to require landlords to post materials in manufactured dwelling park public spaces. Directs office to establish and administer landlord-tenant dispute resolution program. Requires office to submit annual report on progress of program to interim committees of Legislative Assembly related to housing and human services for five years. Authorizes office to impose penalties for violations of landlord-tenant law against landlords of manufactured dwelling parks. Scheduled for a legislative work session on Thrusday.

HB 3331: Directs Office of Manufactured Dwelling Park Community Relations to establish and administer landlord-tenant dispute resolution program for disputes arising from notices of certain rent in- creases. Scheduled for legislative work session on Thursday.

We will be sending updates on the status of these three bills as they move through the legislative process. We are expecting significant amendments to HB 2008 but not enough to change MHCO's opposition. We are also expecting significant amendments in the Senate on HB 2004A. Again, the amendments will likely not change MHCO's opposition.

MHCO was successful in negotiating a landlord-tenant coalition bill (SB 277). This bill will be significantly amended on Wednesday in the Senate. We were also successful in exempting manufactured home communities from HB 2511. Obviously, all the bad bills left behind so far this session are a success - but we still have a lot work ahead. 

We have reached the halfway point of the 2017 Legislative Session. Unlike past legislative sessions this one looks to be a ugly and nasty fight to the end in July.    

A detailed list of bills currently being tracked by MHCO is attached - just click above the title.  

By Zach Koucos

Director, Holliday, Fenoglio, Fowler (HFF)

The second half of 2016 and early 2017 signaled a great amount of uncertainty regarding the future of fiscal and regulatory policy in the United States. While everyone is trying to figure out what the impacts of policy changes by the Trump administration will be on the economy, the stock market has surged and interest rates have climbed. Both of these occurrences reflect a positive reaction to the election in the financial marketplace, however the effect on real estate and income property values remains a concern for owners.

Higher interest rates certainly impact the feasibility of borrowing money, which in turn affects the purchasing power for real estate acquisitions as well as property values. Most fixed rate lenders price their loans based on US Treasury yields. Many borrowers have been focusing on rising benchmark interest rates, however the good news is that US Treasury yields today are still far lower than their long term averages. As of March 7, 2017, the 10 year US Treasury yield stood at 2.51%, compared to 1.83% on November 7, 2016, the day before the election. The 10 year US Treasury yield began 2016 at 2.24%, and 2015 at 2.12%. To provide some perspective, below is the average yield on the 10 Year US Treasury during the last 5 decades, and so far in the 2010's:

1961 - 1969:  4.73%

1970 - 1979:  7.50%

1980 - 1989: 10.59%

1990 - 1999:  6.67%

2000 - 2009:  4.46%

2010 - 2016:  2.38%

We have definitely enjoyed some very low interest rates over the last few years, which has benefitted borrowers and helped to support increasing property values. Most economists are predicting that ultimately Treasury yields have to return closer to these long term averages shown above, citing the Trump administration's mix of reflationary policy initiatives. Rates can always go down in the short term, however if the United States is successful at growing nominal gross domestic product (GDP) over the next few years, Treasury yields could likely follow. Given this outlook, today's still historically-low interest rate environment offers an extraordinary opportunity to evaluate your near and long term financing objectives.

Notwithstanding recent volatility due to the political climate and rising interest rates, the marketplace for income property financing remains very healthy, with no shortage of capital. Lenders remain optimistic for 2017, and most are planning to equal or exceed their loan origination volume from 2016. This includes lending for manufactured home communities (MHC's), an asset class of ever-increasing interest to capital providers. Volatility forces commercial lenders to gravitate towards lower risk, stable, income-producing real estate. Manufactured home communities are increasingly high on their lists, since the cash flow is consistent and demand for affordable housing is strong.

Numerous institutional and private owners of manufactured home communities and other commercial real estate have taken advantage by locking in historically low fixed rate loans. In several cases, refinancing existing loans with prepayment penalties still made economic sense given the savings realized with today's low interest rate financing. If you've been considering a refinance to lower expenses, access additional capital to fund overdue projects, or facilitate additional acquisitions, it's still a great time to take a look at the programs available in today's market.   

The pool of varying capital sources deepened even further in 2016. Lender demand for existing, stabilized real estate transactions remains strong, despite escalated regulatory practices imposed on the industry. Over $1 Billion in commercial real estate loans will be maturing daily through the end of 2018, and the necessary lender appetite is present to service this need. Owners of manufactured home communities will benefit from this activity, as the capital marketplace for MHC's continues to expand and lenders are seeking to deploy capital on lower risk housing assets.

An overview of community financing options for 2017:

As a result of Dodd-Frank Wall Street reform policies and Basel III regulations imposed on banks, construction and high risk" lending is tightening. Thus

We are now into the fifth week of the 2017 Oregon Legislative Session. 

Last week MHCO held a very successful Lobby Day on Wednesday, February 22nd. We have a great turnout - 93 attendees - who met with 76 Legislators. Thank you to everyone who made the effort to attend and visit with their Senator or State Representative. Attendees came from as far as Michigan! Face to face meetings with legislators are still important in the digital age - your efforts make a difference. Thank you to everyone who participated!

Here are some highlights of bills introduced last week or changed status since the last report: 

o HB 2008 - We mentioned this in the last report as LC 2997 It is a lengthy bill changing park sales, establishing an enforcement agency that can investigate landlord actions with up to $10,000 fines. It contains nearly every bad legislative idea that MHCO has fought against for the last 20 years. MHCO STRONGLY OPPOSES 

o HB 2009 - Advances sunset for subtraction for sale of manufactured dwelling park to certain entities. Creates personal income tax credit for sale of park. Provides that calculation of credit for taxes paid to other state allowed to nonresident taxpayer or allowed to estate treated as resident of another state occurs before allowance of credit for sale of park. MHCO is currently has no position - waiting to see what the Legislature wants in return. 

o HB 2990 - Increases time period during which tenants of manufactured dwelling park must identify or form tenants committee for purpose of purchasing park from 10 days to 60 days. Provides tenants committee with 15-day right of first refusal for offer or agreement to purchase park. MHCO Opposes. 

o HB 2165 -Requires building official to inspect small home for compliance with recreational vehicle program standards if home is not intended for use as residence or is not permanently sited. Requires building official to inspect small home intended as residence and permanently sited for compliance with Low-Rise Residential Dwelling Code. MHCO testified against and has been sent back to legislative counsel. 
 

By: Arthur Grebow, founding partner of Grebow and Rubin,?LLP

There is an old Chinese curse which says: May you live in interesting times." While sometimes taken as a blessing

The City of Portland upped its economic attack on the city's landlords last week by passing a tenant relocation assistance" ordinance. The ordinance requires landlords in the City of Portland to pay relocation expenses to tenants evicted for no-cause