The headline, “Senate OKs bill to protect manufactured-home renters,” on the front page of the Delaware State News on June 3 is not the good news it would appear to be.
Unless the House can amend Senate Bill 9 to remove the loopholes, this bill is a legal gold mine for community owners.
If SB 9 becomes law as it is, Delaware may be the first state in the union to force low-income tenant homeowners, seniors and retired military to pay a minimum of 3.5% compounded-yearly increases, up to a maximum of 7%, based on one-half of the Consumer Price Index for All Urban Consumers’ inflation rate mentioned in the article. In truth, based on verbiage in the bill, the increase could be unlimited because of ill-defined “market rent.” It ends rent justification.
It appears to me that our state senators are willing to give away the money of tenant homeowners to community owners who are a recession- and inflation-proof industry with these two lines: “In determining market rent, relevant considerations include rents charged to recent new homeowners entering the subject manufactured home community or by comparable manufactured home communities, or both.”
This is the landowners’ equivalent of the shell game. When a community owner takes over a home for any reason, including failure to pay rent, they can and do sell homes below the selling price of a homeowner’s sale of a home. The community owner does not make money on an empty home. If a prospective buyer does not qualify because of the 8% or more chattel loan rate on a house, the community owner can sell the house at a lower price and charge a higher rent.
Under SB 9, if that rent is higher than other rents in the community, this new law requires you to pay the highest rent in your community or any other comparable community. SB 9 does not mention the market value of the houses being sold by the homeowner, only the land. The compounded rents only increase the value of the land when it is sold. You cannot stop a community owner from selling or changing land use. Both of those things are happening in Delaware now.
Every single Delawarean loses because of the millions of dollars in excessive rents leaving the Delaware economy every month that can’t be spent here because it goes to investors who don’t pay Delaware taxes.
Delaware is in desperate need of affordable housing. I can only hope the House will see through this facade of faux protection and amend SB 9 to actually protect leased-land homeowners.
Fred Neil represents the 3rd District on Dover City Council.
