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Sunny Oaks Mobile Home Park tenants hit nonprofit owner with lawsuit over Los Osos sewer hookup

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In 2005, Sunny Oaks Mobile Home Park pitched a painless hookup to the soon-to-come Los Osos sewer system—with funds secured to pay for the construction—to its age-55-and-older residents. Eleven years later, that agreement has all but deteriorated, and on May 6, bitter park residents filed a lawsuit against their nonprofit landlord.

Resident Owned Parks (ROP), a Sacramento-based nonprofit that owns eight mobile home parks in the state and claims to “guide mobile home owners through the complexities of a mobile home park acquisition,” purchased Sunny Oaks, a 65-unit park on Los Osos Valley Road, in 2005 with San Luis Obispo Housing Authority-backed bonds.

At the time of the purchase, ROP entered into a written agreement with park residents—via an advisory board called the Sunny Oaks Mobile Home Park Resident’s Association (SOMPRA)—that promised to transfer park ownership to SOMPRA in 2030 after the mortgage was paid off.

“Essentially, the residents are paying off the debt,” said John Fricks, a SLO-based lawyer representing five tenants and SOMPRA in the lawsuit against ROP, which was filed in SLO Superior Court. “They’re paying above-market rents, but with the idea that that’s going to go away, and they’re going to be self-owned and self-controlled [by 2030].”

In 2005, ROP allotted $225,000 to finance the sewer connection that was expected to take place in 2006. But after the decade-long delay of the Los Osos Wastewater Project, the cost for connecting ballooned, according to Maurice Priest, president of the ROP board of directors.

Throw in the new water piping system for the park viewed by ROP as necessary, and Sunny Oaks is staring down the barrel of a $700,000 contractor bill.

Scrambling for ways to pay for the looming project, ROP decided in October to refinance the Sunny Oaks mortgage, taking out a $3 million loan and prolonging its ownership of the park 10 years, until 2040.

“A refinance of the park made sense because it would mean that none of the residents in the park would face special assessments or dramatically increased rent to pay for the project,” Priest told New Times in a phone interview. “It would be paid from the equity that had developed in the property and from a refinance.”

SOMPRA’s lawsuit alleges that the move to refinance violated the terms of the 2005 agreement and residents’ individual leases. “ROP shall not sell, transfer, assign, or further encumber its interest in the park to any other investor entity,” the contract reads.

“[Priest] breached that agreement by entering into this new financing without our permission,” Fricks said. “He essentially extended the time period which all these elderly people were going to have to pay this overly high rent.”

Sunny Oaks residents say that little to no consultation took place with SOMPRA prior to ROP’s refinancing decision and that ROP was not responsive to questions from residents throughout the process.

Priest contends that ROP gave SOMPRA ample opportunity for input in the decision-making process.

“They have had plenty of time to consider [the project] and provide their feedback,” Priest said. “As the owner of the park, ROP is responsible for making sure that the state-mandated project goes forward. With the deadline looming, we had to make sure we had sufficient financing for it.”

Priest also vouched for adding the new water system, which he said will be more cost effective if done at the same time as the sewer hookup. He said he provided residents with a photo of a corroding water pipe from the park’s water system to demonstrate the need for new pipes.

SOMPRA President and Sunny Oaks resident Charlotte Dietzel argued that park residents shouldn’t have to shoulder the bill for a new water system.

“We don’t think it should be an out-of-pocket water system,” Dietzel said. “That’s not on our back, that’s on [ROP]’s back.”

In general, Dietzel bemoaned ROP for failing to adequately take care of the park and its common facilities. She said that the refinance was just the last straw for tenants who are fed up with being “taken advantage of.”

“We’ve banded together and decided that we’re not going to let this guy walk all over us anymore,” Dietzel said.

On top of alleging the breach of agreements, the lawsuit also accuses ROP of financial elder abuse, unlawfully converting the park’s equity, and negligence, and demands that ROP release detailed accounting statements of the nonprofit’s activities.

“[Priest] has never provided us with cash flow documents or statements, which are critical here because were paying a bunch of debt,” Fricks said.

SOMPRA has also filed a complaint with California Attorney General Kamala Harris. Thirty-four tenants of Sunny Oaks penned letters to Attorney General Harris expressing their concerns with ROP, the condition of the park, and the refinancing. 

Staff Writer Peter Johnson can be reached at pjohnson@newtimesslo.com or on Twitter at @pljohnson9.

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