In 2010, when Colleen Preston was 67, she and her mother moved from their 4,000-square-foot, five-bedroom Federal colonial mansion built in 1792 into a 950-square-foot two-bedroom manufactured home in the same town, Carver, Massachusetts. Although it had a yard and garden, Preston’s new home was a contemporary version of a trailer, but less mobile. And at the time, it sat on rented land.
“I wanted to pay cash for my house because I was retiring and I wanted to keep my expenses under control,” she says. The former bookstore owner and journalist bought the house outright for $56,000. The rent for the land, which was the same for almost all the tenants in the community, increased 4 percent annually the first two years. That was a problem for Preston and her neighbors, many of whom were in their 50s and older and living on fixed incomes.
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Then they heard that the owner was going to sell the land of their community, Cranberry Village, and that the potential corporate buyer had a reputation for raising rent and reducing amenities in similar communities.
“We were universally scared,” Colleen says. “We were afraid of rents going through the roof and not being able to sell our houses because the rent was too high.”
Fortunately, Massachusetts has an “opportunity to purchase” law that gives manufactured home residents the right to match offers if the owner intends to sell. With the assistance of ROC USA, an organization that helps homeowners in manufactured housing communities buy the land as cooperatives, the owners of the 278 homes in Cranberry Village were able to purchase their land and the community structures for $13 million on June 22, 2012. Preston felt “a huge sense of personal relief.”
One of the key factors that made the purchase possible was a long-term, below-market loan of $500,000 to ROC USA by AARP Foundation, one of whose priorities is affordable, adequate housing for the low-income, vulnerable 50+ population. Nationwide, approximately 19 million adults 50+ live in unaffordable or unsafe housing.
AARP Foundation has been using an innovative form of financing to fund some of its programs to help struggling older adults. Called a program-related investment, it differs from a traditional grant in that the money is lent out at a low interest rate and returned to the Foundation, which can then lend the money out again.
AARP Foundation made three program-related investments in the Housing Impact area, all to be repaid over 10 years. The loan to ROC USA helped leverage other funding from banks and insurance companies normally too cautious to lend to the low-income community.