Cheshire Rent Control Board Questions Mobile Home Park's Numbers
CHESHIRE, Mass. — Town officials and Pine Valley Park residents sharply questioned expenses listed by Morgan Management as part of its documentation to justify increasing rents.
Morgan is seeking to hike lot rents from $256 a month to $401, a more than 50 percent increase, at the Wells Road mobile home park in part to cover costs for an estimated $200,000 paving project.
The Board of Selectmen, sitting as the Mobile Home Rent Control Board, requested Morgan's representatives return to a continuation of the public hearing on March 23 with more details on expenses including salary, paving, health insurance and utilities.
Attorney Joseph Kelleher, of Kraus & Hummel LLP, representing Morgan Management, said there was a threefold reason for the increase request: it had been four years since an increase, there are planned capital improvements at the 96-lot park and it will nullify a Housing Court case on a prior rent hike.
"We've been through this a couple times with this board, we'd like tonight just to get a lay of the board," he said, adding that he would bring someone who could directly address the board's financial questions at the continued hearing.
Tenants and interested parties filled the Senior Center where the hearing was held. A number began interrupting some of the explanations Kelleher gave until the board asked them to be quiet.
"They may not like our answers but we'll be respectful of them if they're respectful for us," Kelleher said.
Chairwoman Carol Francesconi said she would need some convincing that the mobile home park management company could only get a prime rate of 9.5 percent for loans.
"What planet you came up with that prime rate, I don't know," she said, since the current rates are 3.5 percent.
Kelleher said it was very difficult for companies such as Morgan to get a low prime rate from a bank because of "high risk" nature of mobile home parks.
"You simply can't get a bank to give you a rate of 3.5," he said.
The board, working off the figures provided in Morgan's Jan. 11 application, also questioned a nearly doubling of electrical costs from 2012 to 2015 at a time when prices have dropped, and the significant increase in payroll from $17,378 to $56,000.
Park Manager Robert Kirchner said he oversees other properties and a full-time person was brought on to deal with Pine Valley. Francesconi said tenants were not convinced that a full-time maintainance person was at the park.
Board member Robert Ciskowski questioned a major component of the hike, the proposed reconstruction and paving of two roads in the park. Morgan Management had provided two estimates but they were almost $50,000 apart, he said, asking for a more concrete number than an average of the two figures.
Several tenants at the crowded hearing also questioned whether the estimates including fixing their driveways, which had been ripped up for the installation of the new septic. They complained of mud, damage to their cars and popped tires.
Kelleher said he was unsure but would have someone able to answer that question at the next meeting.
Francesconi said there should also be someone to answer why the park was estimating a five-year lifespan on the two roads.
"You're spending thousands and you expect it to last five?" she said. "Most streets we do last seven to 10 years and we have a lot more use than the trailer park has."
Of particular concern was a nearly doubling of legal and professional costs since 2012, up from $49,000 to $104,000. The board questioned if the tenants were being charged for legal costs incurred by a class action suit against Morgan Management over septic issues.
Kelleher agreed that that would be inappropriate and Ciskowski asked for a breakdown in legal fees for the next meeting.
Attorneys Aaron Dulles and Hugh Heisler of Heisler, Feldman & McCormick, PC, who are representing tenants in the lawsuit, questioned the same issues as the board.
State statute prevents park owners from charging tenants for bringing septic systems up to code, said Dulles, and that it included returning roads dug up for installation to their original condition.
"The cost of restoring the road should be part of the costs that are prohibited," he said.
Morgan Management has submitted operating expenses of $262,771.37; a rate of return based on assessed value of $1,661,000 at 9 percent as $149,490, for a subtotal of $412,261.37. Divided by 12 months and again by 95 (occupied) units, the rent comes to $361.63.
It calculates capital costs at $210,585 (using a five-year useful life for road paving and carrying costs of 7 percent) to $39.53 a month per unit over five years. Together, the monthy rent comes to $401.16.
Kelleher said he would contact the administrative assistant with the documentation the board requested, including salaries, monthly electrical bills and the itemization of legal fees.
Dulles said an attempt had been made to negotiate a settlement with Morgan Management that was rejected. The two parties will be before a judge on March 23 to try for a judicial mediation; if that fails, he anticpates filing for summary judgement.
The board will reconvene on Wednesday, March 23, at 7 p.m. at the Senior Center.
Tags: mobile home park, morgan management, rent control,
