Some Briarcrest residents skeptical that a cooperative could handle $10M of debt & still keep rents low & upkeep high
LACONIA — The impending sale of Briarcrest Estates has divided residents of the manufactured housing community. Some have formed Lakemont Cooperative in an effort to purchase the park for the tenants while others, apparently the majority, support the preference of the owners, Mark and Ruth Mooney of Belmont, to sell to a Florida corporation.
In July the Mooneys tentatively accepted an offer from Maple Holding and Redevelopment, LLC of Orlando to purchase the 183-acre park with 241 home sites for $10 million. However, state law entitles the tenants to make a counter offer by presenting a purchase and sales agreement within 60 days of the first offer.
On the eve of the deadline, Lakemont Cooperative, consisting of a minority of the residents, bid to acquire the park by matching the offer Maple Holding and Redevelopment, LLC. The statute grants the cooperative "a reasonable time beyond the 60-day period, if necessary, to obtain financing for the purchase" and, in the meantime, requires the owners to bargain in good faith with the cooperative.
Jim Cowan, president of the cooperative, insists "if we don't own the land, we don't control our destiny." In particular, he fears for the lease agreement, which limits the annual increase in park rents to the increase in property taxes and special assessments, such as the trash collection contract, and, at the discretion of the owner, the percentage increase in the consumer price index (CPI).
Orrie Gibbs, who has lived at Briarcrest for the past 21 years, is among those who favors the sale to Maple Holding and Redevelopment, LLC. She doubts a cooperative can service the debt required to purchase the park without either raising rents beyond the limits set by the existing agreement or reducing operating expenses by cutting services, which would impair the quality of life in the community.
A real estate paralegal, Gibbs dismissed Cowan's concern for the lease agreement, claiming that "whoever owns the park must honor the lease agreement." Instead, she said that cooperative ownership posed a greater threat of higher rents.
Gibbs said that ROC-NH, a program of the New Hampshire Community Loan Fund, which has assisted and financed the conversion of 107 manufactured housing parks to cooperative ownership, has proposed a financing package. The cooperative would borrow $5.1 million at near 5 percent for 20 years from the New Hampshire Community Loan Fund and make only interest payments for the first five years, but repay both principal and interest afterwards. She said the cooperative would likely refinance the loan after five years at a higher interest rates, noting that "rates have already begun to rise." A commercial lender, most likely a bank, would finance the balance of the purchase price at a market rate.
"I am concerned by the magnitude of the amount of money the cooperative wants to borrow," Gibbs said. Stressing that the lease agreement not only caps rent annual increases but renews automatically each year, she questioned how the cooperative could service a debt of $10 million while honoring the lease agreement. Furthermore, she noted that "the cooperative must make money, enough to pay its bills and keep reserve fund for unforeseen expenses."
Gibbs acknowledged that while parks have converted to cooperative ownership, most are much smaller with different lease agreements and, above all, incurred far less debt and far fewer expenses than would be required to acquire and maintain Briarcrest.
According to Gibbs, only a small minority of the 231 tenants at Briarcrest favor cooperative ownership. When the cooperative voted to submit a purchase and sales agreement, only 31 tenants voted, she said, and two of them voted "no." She said that when the Mooney polled the tenants 176 opposed cooperative ownership and favored the sale to Maple Holding and Redevelopment, LLC.
Last week, on the strength of the poll results, attorney John Giere, on behalf of the Mooneys, petitioned the Belknap County Superior Court to find that they had met their obligation to bargain in good faith with both parties and that by refusing to accept the cooperative's offer they would not be liable to penalties. The statute provides that owners who fail to bargain in good faith may be subject to a penalty of $10,000 or 10 percent of the sale price, whichever is greatest, or in this case $1-million.
Attorney Brenda Smith-Weiss, who represents Lakemont Cooperative, said that she has not yet been served, but would prepare a response to the Mooneys' filing in due course.
Briarcrest Estates is located off Rte. 106, just outside the Laconia Bypass.