U.S. Rep. Keith Ellison, D-Minn., wants to protect mobile home residents against the abrupt sale of the parks where they live.
A measure he proposed Wednesday would use a federal tax incentive to encourage mobile park owners to sell their property to residents or a nonprofit developer, while also ensuring the property is used for mobile homes for at least 50 years following the sale.
A companion bill was introduced in the Senate.
“I’m ... heartbroken for the thousands of families who were evicted from their communities when the land under their homes was sold,” Ellison said in a statement. “My bill gives residents a fighting chance to compete with developers and save their homes and communities.”
Ellison’s announcement came days after the Star Tribune chronicled the fate of the Lowry Grove mobile home park in St. Anthony and profiled Park Plaza Cooperative, a resident-owned park in Fridley. Nonprofit developer Aeon made a last-ditch effort to purchase Lowry Grove last year before it was ultimately sold for $6 million to a for-profit developer.
The legislation was named the Frank Adelmann Manufactured Housing Community Sustainability Act in honor of a resident of Lowry Grove who died by suicide days before the park closed last month.
“Maybe something good will come out of his passing after all,” said Adelmann’s sister, Carol Linders. “That would be the best-case scenario for us.”
The bill would give mobile home park owners a 75 percent federal tax credit for selling to residents or a nonprofit rather than for-profit developer. If an owner made a $1 million profit on a park sale, for instance, he or she would have to pay only $37,500 in capital gains tax instead of the full $150,000 value.
Several housing advocacy groups are supporting the bill, including All Parks Alliance for Change, Prosperity Now and the National Manufactured Home Owners Association (NMHOA).
Dave Anderson, the executive director of NMHOA, said a tax credit could motivate park owners to think twice before selling the land. “This is ... providing a positive financial incentive that you get from this kind of sale that you couldn’t from another kind of sale,” he said.
The tax credit would be particularly intriguing for mobile home park owners who want to retire but not at the expense of residents, he added.
Park owners often pass their property after they die to family members, who inherit it tax-free. As a result, the capital gains tax is seldom collected following a park sale, according to Ellison’s office.
Ellison’s staffers first studied the concept behind the bill after visiting Park Plaza in Fridley two years ago.
The U.S. Department of Housing and Urban Development has for decades set the standards for the design, construction and placement of mobile homes across the country. A tax credit, however, is “definitely new territory for the federal government,” Anderson said.
Some states, including Washington, Oregon and Montana, have their own tax incentives for mobile home park owners who sell to homeowners or nonprofits.
In a cooperative community, neighbors own an equal share of the mobile home park property and elect a board that manages its budget and day-to-day operations. There are more than 1,000 such communities in the United States.
In Minnesota, Northcountry Cooperative Foundation, a nonprofit that secures financing for residents and guides them through the purchasing process, has helped seven mobile home parks convert from for-profit businesses to owner-run cooperatives since 2004, including Park Plaza. A park in Rochester is expected to become the eighth later this year.
Staff writer Hannah Covington contributed to this story.