1. The Independent Cities Lease Finance Authority issued the bond to Millennium that will be used to fund the purchase of Marineland. This required approval by HB City Council, which was given (by unanimous vote) at the June 8th city council meeting.
2. Millennium can only sell the park to another non-profit. Any sale of the park by Millennium would also require city council approval.
3. About half of the Marineland residents have leases. Most of these leases allow for limited pass through increases in certain operating expenses, such as property taxes, but restrict any rent increase by new ownership.
4. Rents:
a. Rents will increase in the next 90 days for homeowners that are month to month, or whose leases do not restrict pass-through of the new owner rent increase (A.3).
b. For homeowners with leases, rents will increase per terms of the lease or for the pass throughs.
5. The trash fee will be reduced to $15 for those residents whose rents are being increased (A.4.a).
6. Millennium will provide rent assistance to eligible residents, based on income.
7. The
issue of rent based on lot size is muddled by the fact that many of the lot
line markers were placed arbitrarily, inappropriately moved by park management;
or have been asphalted-over.
George Turk has spoken to Larry McDermott about doing an engineering survey.
McDermott will charge $10,500 to $12,000 to find the lot line markers using a
metal detector. An aerial plane photo of the parks costs $2400.
8.
Millennium has not
made a final decision on J & H management. The issue of Les Rogers depends
somewhat on the management company decision, i.e. a new management company may
want to make up its own mind on how to staff the park. Millennium is leaning towards continuity for
now, but this is still being discussed. J&H management fees are $19,000 per year.
J & H probably makes more on home
sales than on management fees.
Millennium does not like having the management competing with the
homeowners in home sales, so will likely stop the management company from home
sales, other than the ones already in the pipeline.
9. Millennium will give residents a major say in park policies.
10. Millennium prefers all homes be owner-occupied, no sublets. Owners who currently sublet are encouraged to sell.
11. Millennium normally budgets $1/space/month for resident activities, social clubs or homeowner organizations.
12. Marineland was purchased by Millennium for $6 million Millennium plans to spend about $1 million on improvements and rent assistance in the first 10 years.
1. Marineland homeowners may purchase the park from Millennium within 10 years for $8 million, plus any costs to prepay existing bonds. After 10 years the price would be 8 million plus a cost of living increase.
2. Millennium can only sell the park to a non-profit or to residents. The resident HOA would not necessarily have to be a non-profit. Usually in smaller parks the residents own the park in the form of a cooperative corporation rather than a condominium/individual space form, because the small lots may not conform to the Dept of Real Estate rules. In a Coop, the participating residents own shares in the corporation that owns the park, much like an investor group.
3. Advantages to the homeowners purchasing the park later (5+ years) versus sooner are:
a. The property will have increased in value relative to the $8 million price, making it easier to receive funding.
b. The closer to year 10, the smaller the prepayment penalty (see B.1). However, depending on interest rates there may be a time where there is little or no penalty.
c. Millennium will be making improvements to the park in the next few years (see A.12).
d. More time will give the HOA the opportunity to gain experience with Millennium and to establish a track record of working together.
4. Interest rates are also an important consideration for when to buy the park.
5. The Millennium deal also includes the Right of First Refusal. This means that Millennium could not sell the park to anyone other than the homeowners, without first giving a homeowners organization the right to purchase the park themselves.
6. Due to the use of public bonds, zoning issues, non-profit ownership and Marineland’s low-income status, buying or selling of the park by any party will require approval of the Hermosa Beach City Council.