By Tracey Lien
Los Angeles Times
WWR Article Summary (tl;dr) The expansion of tech companies in Silicon Valley has significantly increased demand for real estate in the area. In turn, some long time residents are now facing skyrocketing rents, threats of displacement and evictions.
During the last week of March, Apple reached a record market value of $754 billion, Google tweaked a policy to protect its $22 billion-a-quarter advertising business and Yahoo inched toward closing a $4.83 billion sale. Meanwhile, Judy Pavlick drove around her Sunnyvale, Calif., mobile home park collecting plastic bottles and empty drink cans to save her future.
At a recycling rate of 5 to 10 cents a bottle, the 70-year-old’s attempt to raise $10,000 to campaign for a rent control measure seemed like a long shot. But living in the heart of Silicon Valley, where rents keep soaring, outside interests are encroaching and protections for renters are scant, what else was she going to do?
“People are looking for somebody to save them, and they’re not looking to themselves,” said Pavlick, a retiree who has lived in the Plaza del Rey mobile home park since 1989.
The mobile home park sits on more than 65 acres of some of California’s hottest real estate.
Its 800 tidy modular homes are less than 2 miles from the campuses of Apple, Google, Yahoo and LinkedIn. One of the world’s largest private equity firms, the Carlyle Group, bought the land two years ago for $151.1 million. And in its first year owning the park, it increased space rents (the amount that homeowners pay to lease land) by 7.5 percent, the largest in Plaza del Rey’s 47-year history.
Pavlick knows how this goes. She’s not going to wait to be priced out. She’s rallying her neighbors: Plastics. Cans. Put ’em out, now.
To live in the Bay Area is to face skyrocketing rents, threats of displacement and evictions. It’s to hear about techies moving in, to hear about even techies being priced out. It’s to watch glistening tech campuses go up as the gulf between those who make the tech and those who just happen to be here widens.
“When people think Silicon Valley, they think ‘pot of gold,'” said Dorothy Niblock, 90, a Plaza del Rey resident who lives alone in the two-bedroom mobile home she designed with her late husband 44 years ago. “That doesn’t really apply to us.”
Most of Sunnyvale’s dozen or so mobile home parks started as retirement communities, and nearly half remain that way. Plaza del Rey is now a family park, but its retirement roots linger: Seniors make up the bulk of its population.
Its monthly newsletter includes a calendar of activities such as Mahjong Tuesdays, Bridge Club Wednesdays and exercise groups four days a week. On Valentine’s Day, there was a spaghetti dinner in the main clubhouse. On St. Patrick’s Day, it was corned beef and cabbage. “Please bring your own plates and utensils,” the flier read. “We will be serving water, but feel free to BYOB!”
Many longtime residents have never thought of themselves as part of the Silicon Valley story. But sometimes, you don’t get to choose.
The most recent tech boom created staggering job growth in the region, with real estate brokers estimating that firms such as Google and Apple now occupy around nine times the amount of land they did in 2005. The expansion of companies such as Facebook, LinkedIn and Microsoft, along with the tens of thousands of employees they attract, has also significantly increased demand for real estate in the area.
One-bedroom homes in the Sunnyvale area have gone from a median selling price of $205,000 in 2012 to more than $445,000 in 2017. Apartments have over the last four years seen double-digit rent increases.
Teachers have been priced out of the school districts where they teach. Even lawyers have left the region in a huff. And as investors still keen to park their money in Silicon Valley look for ways to squeeze value out of what’s already there, no property is getting a free pass, not even mobile home parks.
On her first day driving around the park, Pavlick collected 10 bags of bottles and cans. Total Value: $40.
“Next Thursday, how about 20 donations?” she wrote to Plaza del Rey’s Nextdoor community forum.
It costs only $200 to file the initial paperwork to get a measure on the ballot in Sunnyvale. But getting a ballot measure passed is more expensive and difficult, said Juliet Brodie, an attorney who represented the Mountain View Tenants Coalition in its successful push for rent control last year.
Proponents have to publish a notice of intent in local newspapers, get the ballot measure written, gather signatures of at least 10 percent of the city’s eligible voters and win a majority of votes. Printing costs alone can push costs into the thousands of dollars.
“You can’t just take a notepad and get signatures,” Brodie said.
When Pavlick bought her home in 1989, she paid $65,000 plus $356 in monthly space rent, which also included water, garbage, sewage and cable. She was a business systems analyst, working for companies such as Memorex and Genentech. The park was close to her job, and its affordability meant that she could get a two-bedroom, allowing her to care for her late mother, who had Alzheimer’s disease.
The original owners kept Plaza del Rey in the family for more than four decades until granddaughter Shereen Caswell sold it to Carlyle in 2015 (Caswell could not be reached for comment).
Today, Pavlick pays $1,004 for space rent, the result of incremental rent increases over nearly 30 years. Residents now cover the cost of all utilities, in addition to personal property taxes and the cost of maintaining their homes, patios and yards.
On top of doubling the space rent increase in 2016 from previous years (residents have long paid increases of 3 percent to 4 percent a year, comparable to neighboring parks), Carlyle raised the space rents for new residents to $1,600, nearly 40 percent more than the park average.
Earlier this year the firm offered residents a five-year lease that would cap rent increases at 4 percent a year, but only if they also agreed to sign a contract that would give Carlyle the right to make the first bid if a homeowner decided to sell. Carlyle declined to comment on the rent increases or its plans for the park after the five-year period is up.
As of May, around 70 percent of residents have signed the lease. Those who have not signed might see rents increase to market value, Carlyle declined to define what this would be.
Mobile home owners face a “double whammy,” according to housing lawyers, because unlike traditional homeowners, they don’t own the land beneath their houses. That means they can’t expect a windfall when they sell. Newer, larger mobile homes can go for as much as $400,000, according to local Realtors, but older homes in the park can sell for as little as $120,000.
Recent space rent increases have hurt homeowners looking to sell because Realtors estimate that for every $100 increase in space rent, a home loses $10,000 in value.
And unlike renters, who can easily up and leave, mobile home owners are saddled with a house that is, despite the name, difficult to move. Some homes exceed 1,800 square feet, with multiple bedrooms and bathrooms. Many are brought into the park in pieces and built on site.
Taking apart and transporting a mobile home can cost tens of thousands of dollars. Putting one back together can cost even more. And once a home has been uprooted, homeowners have to find a new space for it.
“Just move, just move,” said Pavlick, mimicking those who believe that the solution to her problem is to leave. “Move where?”