One Part Jargon, Three Parts Footnotes

My first comment about Esther Sullivan’s monograph Manufactured Insecurity (University of California Press, 2018) was that there is nothing wrong with it.  There’s nothing right with it, either.  In fact, there is pretty much nothing with it at all.  But that was before I got past the fourth chapter.  The edition that I bought is 221 pages including the methodological appendix but not including endnotes.[1]  Pages 1-125 are a lugubrious proof of the hypothesis that water is wet.  That is the “not-much-here,-guys” part.  Pages 126 to 158 contain some interesting observations regarding hitherto unavailable data.  The rest of the book gives voice to conclusions that I believe are not supported by the facts.  Strong policy prejudices underlie much of the book’s argument.  Reasonable people can agree or disagree with these prejudices, but the discussion would be stronger if these assumptions were examined rather than implied.

In researching the book, Sullivan lived in a couple of parks in Florida and Texas for the better part of two years and attended Frank and Dave’s Mobile Home Park Investors Bootcamp course. The narrative cuts, whiplash-like, between personal anecdotes from Sullivan’s field work and academo-babble-ridden prose.  The personal anecdotes are compelling, but the theoretical discussion is, well, dreck.  Here are some examples:

“’Emplacing’ place – borrowing phenomenological understandings of place from the fields of philosophy and human geography – helps us understand places as sources of identity (Relph, 1976), as sources of security (Tuan 1977), and as sources of roots (Heidegger 1958)”.[2]

“[T]he problem of manufactured insecurity is a double-sided dilemma.”[3]

“In the reviled trailer park, territorial stigmatization and the moralization of place are flip sides of the same coin.”[4]

“Much has been said about the social and semiotic processes that produce urban marginalization and its spatial expression, territorial stigmatization (Wacquant 2009; Slater forthcoming).”[5]

That’s from two facing pages in the introduction.  It gets worse:

“The development of parks on these marginal lands reproduces the socio-spatial stigmatization of park residents.  It also produces housing in security”.[6] 

“The nascent sociological study of eviction has demonstrated that it is a relational process between landlords, residents, and the legal frameworks that structure their interactions.”[7]

“This marginalizes individuals (or homes) seen as having weak ties to place and contributes to a ‘moral geography of mobility’ where impermanence is seen as ‘the assumed threat to the rooted, moral, authentic existence of place’ (Cresswell 2001:14).”[8]

“Socio-Spatial Stigma and Trailer Trash”[9]

“[E]mplacing place”[10]

I understand that Sullivan got her PhD at UT Austin, and that the book grew out of her dissertation.  A Google search showed that she got her undergrad degree at the University of Chicago.  I found both facts deeply troubling.  I went to college at U. of C.  I also went to grad school at UT, although I dropped out far short of the doctorate.  As a double xue zhang, I am aghast.  The barbarians aren’t at the gates any more.  They have stormed the capital building, have put their feet on the desks and are running sociology departments.  They publish books in their degenerate dialect.  We try to appease them by standing outside the gates laden with trinkets meant to impress, but the bastards don’t even show up. The years of work and brain-damage that went into the book are surely not the highest and best use of societal resources.  Alaric and his droogs could not have done worse.

Wait – Water is What?

Through Chapter Four, the book discusses the trauma suffered by mobile home park tenants who are displaced when the park in which they live is torn down.  This happens when the park owner sells to a developer who wants to put the land to a different use (high-rise condos, big-box stores, e.g.), or when the town re-zones the land to get rid of what the city fathers think is an eyesore.  Here are Sullivan’s observations:

• The deracination caused by mass eviction due to changes in land use is traumatic for mobile home park tenants;

• The hybrid nature of mobile home parks, within which tenants own their homes but lease the land, creates transaction costs that exacerbate this trauma; and

• Mobile home park tenants are stigmatized.

This is the water-is-wet part.  Of course evictions are traumatic.  Mass evictions are more traumatic than one-off evictions because they are bigger and because they destroy communities.  The hybrid nature of mobile home ownership makes it prohibitively expensive for tenants to move their homes.  Owner-tenants have their life savings wrapped up in their homes.  That means they get hosed when they have to move.  That is dog-bites-man material, enough to fill out a dependent clause if you really milk it; certainly not sufficient for a book.

The interesting part of the story is why this trauma takes place, whether it is justified, and whether there is a way that we can attenuate it.  To do that, you have to examine your policy assumptions, give voice to all constituents and propose solutions.  A narrow focus and a sleight-of-hand that shifts of attention away from the author’s prejudices distorts things.

None of this makes sense in the abstract.  Let’s say I sell one of my parks to a guy who wants to tear it up and build a Home Depot on the site.  Who benefits, who loses?

• The tenants suffer, at least in the short term.  A powerful actor takes their home from them.  This is both traumatic and humiliating.  They are ripped from their community and have to bear a heavy economic burden.  This can be alleviated by notice and compensation laws, but it can never be made painless or frictionless.

• With some luck, I get a big payday.  My kids go to private college (to study hard science or music theory – anything but sociology, I hope);

• My buyer makes money;

• The local community gets the convenience and economic boost of a Home Depot.  Jobs are created and ancillary businesses get a bump;

• Home Depot Shareholders – most of whom are middle class people who hold HD shares in their IRAs, 401(k) plans and Keoghs – benefit;

• The local government and the taxpayers of the town get revenue from the Home Depot.  This boost in revenue may also be paired with a decrease in public spending.  The local school district can now afford, say, another remedial math or special ed teacher.

My point is not to say that some of these parties deserve to win and others deserve to lose.  It is to clarify that there are many constituents here and that there are winners and losers in any transaction.  That doesn’t mean that we stop transacting.  It means we should try to minimize injustice by broadening the scope of inquiry and using the law to spread the cost in a way that prevents transactions from being a zero-sum game.

Land use changes are often justified by an appeal to the “highest and best use” for the applicable parcel.  The book hints, but never makes explicit, that this standard begs the question.  Highest and best for whom?  For me?  For the developer?  For the teachers and firemen who hold HD shares in their pension plans?  For the children in the local school district?  For the neighbors who think the park is an eyesore?  For the people who make the rules?  For the residents, the park holds their bottom asset, the asset with the highest marginal utility.  If you add up the utility gained and lost by all constituents, the transaction may create a net gain to society as a whole; however, the trauma to any given park resident will always be greater than the benefit to any other individual actor.  From what I can tell, Sullivan thinks that we should treat the highest and best use of an asset as that which causes the smallest amount of harm or the greatest amount of good to one or more disenfranchised individuals.  That is a laudable position – but if you want to defend it, you should enunciate it.

Here are some alternatives to that position.  Reasonable people can disagree about these issues – but, again, to do justice to the issue, they should be discussed:

• A pure utilitarian approach.  Aggregate total losses and gains of utility created by the transaction, taking into account the decreasing marginal utility of wealth.  If closing the park will create a net increase in social utility, close the park.  If it will create a net decrease, don’t close it;

• Let me sell the park because it’s my property and I should be allowed to do what I want with my asset.  Anything else would be a slippery slope.  Mess with my property rights and you mess with everyone’s property rights – including those of the residents who own their homes; or,

• Treat the park closure as a type of “creative destruction” that will cause the beneficial development of the land.  Sit back, watch the destruction, and let the market do its magic.

Speaking for myself, I think that the best solution is utilitarianism with a human face.  Close the park if the change in land use will create a net benefit to society – but require me to give the residents adequate notice of the change, and have the state compensate the residents for the cost of the move.  This allows for optimal development of the property but it also lessens the hit to individuals made vulnerable by the land-lease model of ownership.

The Interesting Part

Here’s the part of the book where the author looked at data and drew conclusions.  In doing her fieldwork, Sullivan lived in two parks that were being shut down, one in Texas and one in Florida.  Laws regarding park closures in the two states differ.  In Texas, park owners are required to give thirty days’ notice of a park closure and residents are not entitled to any compensation for moving costs.  In Florida, park owners are required to give six months’ notice, and residents are entitled to compensation.  Sullivan found that, while evicted tenants in both states suffered trauma, Texas residents suffered less.  That’s right – tenants in the state with fewer tenant protection laws fared better.

What the fuck?

Two things seem to have caused this.  First, the trauma suffered by the Texas residents was short and sharp.  They only had thirty days to hear the news, contact a mover and move.  By the time they had reached the second stage in the Kubler-Ross process, they were already living elsewhere.  By contrast, the process in Florida was long and drawn-out.  First there were rumors of the proposed change.  Then, there were public hearings at which the change in use was debated.  Then the six-month clock started.  Homes were moved out over the course of the six months.  Residents who remained until the last day ended up living in a Mad Max patchwork of empty lots, gleaners, scraps of skirting and fiberglass steps leading to nowhere.  The anticipation of the trauma was more traumatic than the trauma itself.

Second, there was the administration of the compensation scheme.  Under Florida law, a resident of a park whose use will change is entitled to $3,000 to move a singlewide, $6,000 to move a doublewide, or $1,500 in an “abandonment fee” if they own a home that can not be moved because it is structurally unsound.  These payments come out of a fund administered by the state into which park owners and residents pay a small fee each month.  The $1,500 abandonment fee is paid in cash; moving fees are paid in vouchers, which the residents give to mobile home movers.  The problem is – $3,000 is not enough to tear down, move, block, level, tie down, hook up, skirt and build steps for a singlewide.  The true cost is closer to $5,000.  Residents who could pay the differential gave their vouchers and the extra $2,000 or so to a mover of their choice and moved their homes into a park of their choice, but most residents could not afford this option.  So a few large park owners stepped into the breach and paid the excess cost of moving these residents’ homes into their parks.

The foregoing should have been a win-win situation for the new park owners and the residents.  The park owners were more than happy to pay a few thousand dollars per pad to fill twenty-odd lots, and the residents got to move their homes for free.[11]  There were, however, glitches.  One was that the partnership between the state and the big parks limited tenants’ moving choices.  Not all of the big parks were where the residents wanted to live, and some had higher lot rents than competing parks.  Another was that the mass move created a bottleneck for installations and the issuance of certificates of occupancy, which delayed the moving date for some residents significantly.

I suspect a small government-type would look at these data and say that the solution is to eliminate tenant protections.  Sweep ‘em out and leave ‘em to the tender mercies of the free market, like they do in Texas!  Sullivan faults the ad-hoc partnership that grew up between the state of Florida and private actors such as movers and large parks.  I think the problem could be solved by increasing the value of the vouchers.  I do not think that the problem is public-private partnerships per se, but Sullivan’s observations are quite interesting, and her willingness to put her prejudices aside when she looks at these facts is admirable.

Follow the Money

The final chapter of the book is where Sullivan attends the Frank and Dave course and discusses chattel lending.  This is where I was reminded of the Mencken quote that puritanism is the haunting fear that someone, somewhere, may be happy.

I won’t discuss chattel lenders.  I have done so here, and I generally agree that mobile home park tenants should be able to borrow money on terms comparable to those available to residents of stick-built homes.  If you want to learn about manufactured housing CMBS, you can read about them here, or hang out at one of the places where I used to work.  There is nothing inherently naughty about selling debt backed by loans on manufactured homes.  There is also nothing inherently good about it.  It is morally neutral.  It creates interesting intellectual puzzles and conundra for quants and tax lawyers. On the one hand, it sucks up large amounts of society’s resources, but on the other it frees up capital that can be used to house more park tenants.  My problem is with Sullivan’s treatment of park owners.  She does not like the fact that owning parks is a money-making pursuit.  She thinks that it is mere passive rent-seeking rather than an active business.  She confuses the concept of running a rent-based business with the concept of “rent-seeking” economic behavior.  She does not think that parks should be owned by private parties.  She thinks that I, and people like me, suck.

Let’s unpack that.

First – the economics term “rent seeking”, as I understand it, means earning income through the shrewd deployment of wealth without adding value (full disclosure – I could be mistaken here.  Economic theory is not my specialty.  Readers are encouraged to correct me if I mis-speak.).  A bunch of economists, dont Thomas Picketty, have taken the position that the signal problem of modern society is the increasing importance of rent seeking activities to the economy.  This is not unlike what other commentators have called the “financialization” of our economy – during the fifties, we made tangible things like cars, air conditioners and missile systems.  Now, our best and brightest young minds produce Excel models and finely-tranched CMBS and RMBS.  

I won’t take a position on Picketty’s book here.  I’d have to read it first, and I suspect I’d agree with a lot of it.  My beef is with associating our business with rent-seeking.  Owning a mobile home park is an active trade or business.  It is not coupon-clipping.  Unless you are a limited partner, park ownership is not mailbox money.  I do not work as hard now as I did when I punched the clock, but I work.  I visit the parks once a month, and I speak, text or email with the managers every day.  I try to ensure that my customers have a clean, safe and affordable place to live by enforcing rules that allow residents to enjoy their property without intrusion.  When the roads get paved, I need to make sure the work gets done right.  When a home is installed, I need to make sure the mover doesn’t drive over a septic field.  When the septic tanks overflow, I need to make sure they get pumped.  I get calls at nights and weekends.  I take risks.  If I don’t do my job, a large chunk of my life savings evaporates.  I enjoy what I do, and I can control my time – but much as I would like to sit back fat, dumb and happy and collect rents, I do not do so because I cannot do so.

Second – in the mobile home park space, capital is a service.  My customers need housing.  They want to own their homes but they cannot afford to buy land of their own.  I provide them the service of giving them a place to put their manufactured homes.  Some plan to stay on rented land forever, and some move up and out.  I am compensated for providing the service of giving them a place to put their home same as the septic pumper and the dry cleaner are compensated for providing their services.  I happen to have saved that capital by working for decades at not-always-pleasant jobs, but it would be the same if I were a REIT or a PE fund.  My customers need a service.  I provide it.  In exchange, I am paid a fee.  If that is rent-seeking behavior, then bring on the rent-seeking behavior! It houses people.

Finally – although this is not stated explicitly, Sullivan appears to hint in the final pages of the book that mobile home parks should not be owned by private parties.  I am not sure why she thinks this, but it appears that she thinks that there is something naughty about making money. She appears to think that parks should be owned by the tenants, or by the state.  I think that parks should be owned by whoever runs them in a way that most benefits all relevant participants.  That might be the tenants; it might be the government, and it might be private investors.  There are well-run privately-owned parks, and there are terribly-run privately-owned parks.  Cooperatively-owned parks constitute a smaller data set, but some are run well, and some are run badly. I do not know of any publicly-owned parks.  When considering how these properties should be owned, the welfare of the residents is the most important issue to consider.  The fact that some private park owner, somewhere, is happy with his or her business should not enter into the calculation.

The Good Part

Sullivan’s fieldwork revealed one very important fact.  She spent her time living with and observing people who lived in parks that were slated for closure.  One of these parks was sold to a developer who planned to convert it to stick-built rental housing, and another was shut down by the city.  She follows people who live in these two parks as they go through the process of losing their homes.  All of these people, without exception, say that they liked living in the park before they were rausted.  That’s why the loss of their homes was traumatic – because their eviction caused them to lose something of value.  The parks were affordable.  They were convenient.  They provided a sense of community and a way for multi-branch families to live together.  The people took pride in their homes.  They were able to have gardens, porches and back-yards.  The structure that they inhabited was more comfortable than an apartment.  The people wanted to stay where they were.  That doesn’t tell me that something is wrong with the current mobile home park business model; it tells me that something is right with it.  From what I can tell, the book is intended to be an indictment of the manufactured housing business – but the data that it presents support the opposite conclusion.

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[1] The sheet of paper that makes up pages 215 and 216 in the copy I bought was cropped about a fifth of the way from the top of the page, thereby eliding the page numbers, the heading, and the first three or four lines of text, but that is neither here nor there.  I will not ask Amazon for a refund for the information contained in those six hundred-odd key strokes.

[2] Esther Sullivan, Manufactured Insecurity – Mobile Home Parks and Americans’ Tenuous Right to Place, University of California Press, 2018, 24.

[3] Id, 25.  Query whether there could be a single, or triple, – sided dilemma.

[4] Id, 25.

[5] Id, 25

[6] Id, 58 (emphasis in the original).

[7] Id, 59.  Query whether the eviction process could be anything else.  There is an evictor, an evictee, and a set of rules for the legal process.  The evictor and the evictee have a relationship with each other before, during and, sometimes, after move-out date.

[8] Id, 101.

[9] Id, 53-74

[10] Id, 101.  See, also supra, at Note 2.  Emphasis in original.

[11] In financial terms, a mobile home lot is a growing perpetuity.  The present value of a growing perpetuity is C/(r-g), where C is annual cash flow on Day 1, r is the applicable cap rate, and g is the rate at which lot rent will increase each year.  For example, if net lot rent is $325 a month, cap rates are 9% and you plan on 3% annual lot rent increases, a lot is worth $65,000 (=($325*12)/(.09-.03)).  That is well worth the up to $10,000 in extra costs that the park owners paid movers and other service providers to fill these empty lots.  Multiply by twenty, and that’s real money.