On this episode of The Mobile Home Park Lawyer Podcast, Ferd discusses why grandfathered rights might be superior to legal conforming zoning. Ferd shares some personal examples of when being grandfathered in can be better than legal conforming zoning. Ferd talks about how cities can rezone your property and explains why they would want to do that.

HIGHLIGHTS:

0:00 – Intro
0:48 – Ferd states that grandfathered rights are when your zoning is legal non-conforming
1:57 – Ferd talks about how the government have ‘police power’ which allows for them to regulate the public health, safety, welfare and morals of the community
3:27 – Ferd mentions how legal conforming zoning can sometimes be worse grandfathered rights
3:55 – Ferd speaks about how typically MHP zoning comes with a set of design guidelines or restrictions
5:39 – Ferd uses his office and his desk and the office next to his and their desk as an analogy of how it is more ideal to be allowed to replace or re-fill old homes for larger ones instead of the right to operate forever
7:51 – Ferd shares a story of his experience with zoning and grandfathering
9:24 – Ferd speaks about how the city can rezone your property
11:27 – Ferd mentions how you have the right to notice and if you’re the property owner you have the right to appeal and sue, however you don’t win very often
12:01 – Ferd explains why cities would want to rezone
14:56 – Ferd states that it is a case by case basis but sometimes you would rather be grandfathered than not

TRANSCRIPTION:

This is the mobile home park lawyer podcast with Ferd Niemann. If you’re looking to generate wealth and passive income in the lucrative world of mobile home parks, you’re in the right place. You’ll discover solutions to the common, legal, and operational pitfalls and how to optimize parks to maximize income.

Your host is in the trenches. He’s a real estate attorney, financial analyst and mobile home park investor, and operator. Now let’s turn it over to Ferd Niemann.

Welcome back the mobile home park nation Ferd Niemann here again today with another episode of the mobile home park lawyer podcast. Today, I want to just kind of follow up on a prior topic about zoning and grandfathered rights. Got a whole episode on this. So I’ll be brief on the intro. Grandfather rights are basically when your zoning is legal nonconforming, meaning it does not conform to the current code standards that could be as it pertains to use or something like size or setbacks often in our business.

So non-conforming to the current code, but legal in the sense that at some point, you know, either when it was built or it was built before the code, it was permissible or allowable. So it’s not illegal. Legal nonconforming, i.e.. Grandfathered means you can typically continue to operate the way you are. Sometimes they’ll put a sunset provision on there for over a stopping point, but in mobile home park business, typically you can continue to operate the park, you know, forever, as long as you don’t change it, redevelop it, develop it. Some cities will try to restrict whether you can bring homes in or not. Some of them will want you to upgrade certain things like the width of the roads, sidewalks, storm water detention, gutter, sewers, you know, new spacing, maybe even new infrastructure. On a case-by-case basis that may or may not be a reasonable restriction imposed by the government.

The government has what’s called the police power. And this doesn’t mean the police department In this instance. It means basically the right to regulate the quote, public health, safety, welfare, and morals of the community. And this is a reasonable right or power of the government. Typically cities and counties and towns and villages, They’re called creatures of the state. Meaning the state was generally, Each state has a constitution of which the original people and citizenry of the states gave the state certain powers, leaving the rest to the people.

One of those state powers they typically gave with the police power and the police power can be given out at the state discretion to creatures of the state. I live in Kansas city For example, it was a charter form of government. And based on that, the state has given Kansas city more powers than say Parkville, which is near my office. Not too far away. Parkville is a smaller city. It doesn’t have the same stroke that Kansas city does.

But the reason I bring this up, recently, I’ve gone through, I don’t know, 10 different cities zoning code, looking at trying to get zoning letters for clients and different than legal non-conforming is legal conforming or more perhaps just legal meaning the property is zoned mobile home park. So at first blush, the client’s like, great. I’m legit. I can do whatever I want.  But in some instances, this is actually worse than grandfather rights. And it doesn’t make sense at first blush, but if it’s zoned mobile home park, you’re allowed to operate. And if all your trailers blow away, you can, in theory, you could still operate. If really you can stop right forever. They can’t change it. You’re already zoned. You’re literally legit, you are legal conforming as it pertains to use. Here’s the problem.

Typically mobile home park zoning comes with a set of design guidelines or restrictions. For example, you must have a 25 foot set back in the front, the rear and both sides from each home relative to the street or the adjacent property line. And some cities have even taken the position that the internal privately owned streets count, where typically that would not be the case. And then the norm would be, I looked at a park yesterday in Georgia. There was a long narrow entry road, like a driveway from the west, from a main street. So the front street would normally be the west. The rear would be the opposite the east, and then the north and south of the sides. This city takes position. Well, that’s true. But also, this west east street runs through the property and bifurcates the park into basically two 20 unit parks. And it’s considered one 40 unit park, but it’s two different parks.

The city takes the position that the street that runs through the middle of the inter street is the street for purposes of measuring setbacks. Which means every single one of those houses is fronting on a single wide, the 16 foot side and the front of it must be 25 feet from that road. Well, it wasn’t designed for that, right? So those homes are two feet off the street cause an interior private street. So if this was legal nonconforming, we could more easily argue, woah, woah, you can’t impose this new setback. I have grandfather rights and you’re imposing on them. And that’s a taking and taking without compensation is unconstitutional. So I needed to be paid or you need to let me continue to use my current setbacks. And the problem with these when properties are rezoned, I was giving an example yesterday to a client, my office I’ve got a moderate amount of size office, but I’ve got a huge executive desk, but it works. My office is big enough that it fits my desk. Next door to me is my acquisitions guy. He has a smaller office. My desk is bigger than his and better than his, but my desk in his office would be worse because his office was not designed for as big a desk. He would have to climb over the front of it every time to get to his chair every day. So it actually works for him to have a smaller desk. Well, mobile home parks in 1950, 60, 70, when they were designed, were designed kind of like his office, not mine and mobile homes today are larger kind of like my desk. So what the city is trying to do is say, oh, you’re legal. You’re rezoned mobile home park. You can continue to operate. It’s like, yeah, but if I have vacant lots or if homes going into infill, I can’t fit a modern desk. Or in this case, a modern mobile home in that space or in that little office. So as a result, it doesn’t really help me. I’d rather have not the right to operate forever, but argue for, and try to negotiate with the city through the zoning letter, the rights to replace or refill the old mobile home for like one that’s slightly larger, one that’s larger.

And that’s sometimes going to happen on legal nonconforming, but on parks that are already zoned mobile home park, It’s hard to say you’re infringing on my grandfather rights because you don’t have grandfather rights per se, because you’re not grandfather [07:18 inaudible] legal conforming. And what has happened in some of these places is the city has rezoned the property at some point in time to be mobile home park. So it’s hard to say I deserve my old rights, even though I abandoned them when I converted. Cause really grandfather rights are trumped by the police power. They are Trump by nuisance and their Trump by abandonment and abandoned often comes up in this space where if you move them along the way and you don’t replace it for say 12 months, you have essentially abandoned the rights to refill that lot.

What happens is, and on this property yesterday, there were three parks in the same town and one of them was owned mobile home park. And because it was not all three of them, I assume not knowing the exact history of each parcel. I assume that the one was voluntarily rezoned to mobile home park.  If it was government posed, then a private on all three. So if our predecessor and ownership interest voluntarily chose to be a normal mom part, perhaps because he thought he or she thought it was going to be why, cool I’ll have this right forever. They’ve strengthened their rights as it pertains to use, but they’ve now voluntarily agreed to be held to the new twenty-five foot setback requirements, which if the park was a hundred percent full, maybe not that big a deal I’m absent in an emergency or something of this world where you lose lots of occupancy. But if it’s full, an infill is not that big of an issue. But in the subject property I looked at yesterday for a client, it was like 40% full.  So part of the business plan is infilling lots. Well we’re voluntarily mobile home park zoning. So we voluntarily agreed to these setbacks. It’s really hard now to say, you can’t impose these setbacks on me. It’s like the city’s like we didn’t, you did, or really your predecessor interested in your rights, whether they’re good or bad quote, run with the land. So you inherited her guys’ rights or in this case, you guys bad decision.

Which brings up the next piece of this. Can the city rezone your property? And the answer is yes, they can’t just rezone my one trailer park because they don’t like it. Cause that could be considered spot zoning or they’re picking on me. Cities are supposed to allow for lots of uses in their town. Well this normally comes up as an adult businesses like dirty bookstore or you know, strip club or something where lots of cities, you know, justifiably don’t want these in their town. Don’t want these in every location in their town. But these people, let’s say you want to open that one of those, you know, quasi noxious businesses, do you have a right to put it in town? Well, probably not everywhere, but what if the city of Kansas says no strip clubs. And then the next town over says no strip clubs and then Raytown and then Blue Springs and pretty soon the whole county, then the whole state, then the whole Midwest. Well now the person that wants to operate the business has practically nowhere to go. So what cities often do is they will put these sort of noxious uses like an asphalt plant and such on the outskirts of town. And that way they can say, oh look, we’re not against it. It’s on the outskirts, but it’s not on main street.

Rather than allowing new ones, what they would also do is if there’s already a noxious use, a strip club in this example, in business at 10th and Adam street, they may say, you know, it’s already there that one’s grandfathered and we can’t get rid of it. Let’s rezone that one. And we can probably convince the owner that it’s a good idea because then he or she can continue to operate forever. Let’s rezone that adult use. And then when the next guy, when John Smith comes in and says, I want to put an adult use property here, they can say, no, no, no adult use only in that zoning district, only in those locations. And then look, we’re not discriminating against your use. In fact, it already exists in five locations, including 10th and Adams. By the city’s zoning that sometimes with the property owners permission, sometimes doing it with the city’s police power, they’ve basically identified tracks of land and locations where this is an appropriate use. And by the way they do this, there’s typically a hearing and you have the right, just like any rezoning of any of your neighbor’s property. You have a right to notice and you have a right to be heard at the public hearing. And if you’re the property owner you typically have, depending on the city and state, we typically have a right of appeal and there’s an administrative review and process for that. Maybe not, that may not often be that effective, but I’ve seen it work most time it doesn’t work. The city’s already made up their mind. They’re going to [11:50 inaudible].

You might’ve right to Sue, especially if they don’t pay you or if they’re discriminatory of spot zoning. But back to my point on these strip clubs, why does they do this? They allow for it in certain locations, they reduce and regulate where it can go in future locations. And as a result, they’re giving that person legal, conforming rights because they already were going to have grandfather rights. I’ve seen cities do this and counties. And they’re actually like third-party planning firms that have, I’ve seen [12:21 inaudible] cities. So my theory is they go around to towns since it happened a lot in Indiana, some reason they’ll go around to towns and say, Hey, you guys don’t want more trailer parks, right? Okay, Here’s what we’re going to do. We’re going to prove that we’re not anti-trailer park. So all of the existing trailer parks that are allowed to remain, we’re going to rezone them. We are going to contact the owners and convince them that it’s good for them because they’ll be legal conforming, albeit only as it pertains to use. So then they will voluntarily rezone or we’ll just do like an overlay. We’ll choose all the existing mobile home parks and we’ll zone the mobile home park or manufactured housing. And we will impose all these new owners restrictions, which means if infill is necessary, either because of the destruction of homes and the need for replacement or the infill of vacant lots that will make the park sustainable and valuable for an ongoing basis and will incentivize people like me to invest additional capital into it.

In order to limit the longevity of these parks, let’s make them legal and then impose all these owner setbacks and other restrictions on them, thereby shortening the practical useful life of them. And what you’ve got here as a result is they will be able to say, look, we’re not anti-mobile home park. Look, we’ve got a specific zoning classification and we have 11 parks in this town that are already zoned that, but you know, 11 is quite a few, so we don’t need any more. And in fact, the location you want to redevelop, develop, well, it just isn’t really in the right zoning classification and we’re not going to rezone more. Well we would, but you got to follow all these new guidelines, which by the way, are cost prohibitive or like my desk is too big for the office next door to me. Well, the restrictions are only going to allow small desks and those would mean 36 foot homes. I mean, I’ve got a park I’m looking at now, if I could fit 76 foot homes in there, I’d do it. But if I’ve got in this case, it’s 20 foot setbacks on each side, it’s a 36 foot home. I mean, I can’t even [14:21 inaudible] to double wides and [14:22 inaudible]. So could I fight the city? Could I Sue the city? Maybe. If I was legal nonconforming, I could look at the date and time and age of those enacting ordinances and depending case by case basis, I can win that. But if my predecessor voluntarily chose to be legal, conforming, and rezoned, I’ve got a real tough argument to say, no, no, the government, the police powers being unjust. They’re unreasonably imposing restrictions on my grandfather rights. I’m kind of neutered.

So it’s a case by case basis. We look at these all the time and it’s hard to explain to clients. So that’s what I’m trying to articulate this here, kind of quasi off the cuff, but it’s fresh in my mind from yesterday that sometimes you’d rather be grandfathered than not.

Until next time stay smart, have fun. God bless.

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