Neil: How GA helped engineer Pinewood Acres sale

(I)t is the latest example of how Delaware’s legislature has unintentionally transformed leased-land housing into a profit-guaranteed investment vehicle for corporate owners, while leaving low- and fixed-income families exposed to rent inflation, opaque financial practices and the absence of any regulatory oversight.”

Fred Neil is the president of Dover City Council.

When RHP Properties announced its purchase of Pinewood Acres — a 346-home manufactured housing community in Dover — the press release framed it as a win for “affordable housing.” In reality, it is the latest example of how Delaware’s legislature has unintentionally transformed leased-land housing into a profit-guaranteed investment vehicle for corporate owners, while leaving low- and fixed-income families exposed to rent inflation, opaque financial practices and the absence of any regulatory oversight.

Pinewood Acres residents will now join the seven other RHP-owned communities in Delaware, where homeowners routinely face “iffy” management, inconsistent lease transfers and settlement day surprises that force new buyers into higher lot rents. This is not an accident. It is the predictable outcome of a policy framework that guarantees profits for corporate landlords, while providing no mechanism to protect the people who actually live in these communities.

The only two guaranteed profit industries

Delaware utilities operate under a commission that reviews expenses, audits claims and sets rates based on documented need. Leased-land communities operate under no oversight at all.

Yet both industries enjoy guaranteed profit.

The difference is accountability. Utilities must justify their costs. Leased-land owners can hide profits behind administrative fees, management charges, intercompany transfers, debt service obligations and property tax pass-throughs.

All of it is baked into monthly rent — and compounded annually.

Not a single member of the Delaware legislature can tell you:

• How much rent money leaves Delaware each year.
• How much profit corporate landlords extract.
• What expenses they claim.
• What income tax they actually pay.

The governor may not know either.

How the legislature unwittingly boosted corporate sale prices

Legislators were told that lot rents were “below market,” though no one ever defined what “market” really meant. Community owners warned that, without higher rents, they might sell or redevelop their properties. Some did. The legislature accepted the argument.

To “stabilize” communities and discourage sales, lawmakers enacted annual rent increases of 3.5%, plus half of the regional consumer price index for all urban consumers, during an inflationary period.

With compounding and no oversight, this policy did not stabilize communities — it inflated their value. It guaranteed rising revenue streams for any corporate buyer. It made every leased-land community more attractive to private equity firms, like RHP.

The result:

• The Pinewood Acres seller walked away with a windfall.
• RHP financed the purchase with a loan that tenants will repay through monthly rent, along with investor profits.
• The legislature did not prevent the sale.
• And Delaware continues to claim it is “adding affordable housing,” while the existing affordable housing stock is being priced out of reach.

The human cost

For older adults, disabled residents and working families, leased-land housing was designed to be an affordable option in Delaware. Today, it has become unaffordable precisely because the state engineered a rent increase system that rewards corporate ownership and penalizes the people who live there.

Compounding rent increases mean:

• Fixed income that older adults cannot keep up.
• Families facing rising housing insecurity.
• Communities losing stability, as turnover increases.

This is not “market forces.” It is policy failure.

A path forward

If Delaware wants to preserve what is meant to be affordable, it must regulate these communities like utilities.

1. Establish a rent board. A statewide board should review actual expenses; audit maintenance and administrative costs; set noncompounding annual rent increases; and require transparency in profit reporting. Landlords would still earn a reasonable return — but not an unchecked, investor-driven windfall.
2. Protect communities during sales. If a leased-land community or apartment complex serving low- and fixed-income residents is sold, it should be eligible for purchase only by a nonprofit dedicated to permanent affordability or by tenant residents, with professional management and a resident oversight board.

Delaware must decide whether leased-land housing and apartments remain a lifeline for low- and fixed-income families or a profit engine for corporate landlords.

Right now, it is the latter.

Reader reactions, pro or con, are welcomed at civiltalk@iniusa.org.