The “Age Wave” is upon us. It is estimated that every eight seconds another American turns 65. As is already clear to many, elder care is the crisis we have no plan for. Add housing to the mix of existing concerns about care, health and retirement security and you have a disaster looming—which is why it’s crazy to threaten the largest source of unsubsidized housing still affordable for the middle class—especially when those middle-class retirees are your clients.
At least that’s what a group of retirees had it in mind to tell billionaire property baron (and Romney supporter) Sam Zell when they flew into Chicago from around the country to attend the annual shareholder meeting of one of Zell’s companies, Equity Life Style Properties (ELS), last week.
“This was our one chance in the year to tell Zell and his board how the company’s policies are affecting real people,” said Ishbel Dickens of the Manufactured Home Owners Association of America (MHOAA), who helped organize the residents’ action May 8. But she and most of the residents were excluded from the meeting, and Sam Zell himself stayed away.
“I bought a share so I could tell Sam Zell that that we need to have a conversation regarding the company’s treatment of its own clients,” Pam Bournival of Florida told the press afterwards. “I came all the way from Sarasota Florida, to attend and have a voice…. but I’ll be back next year.”
ELS owns hundreds of manufactured home communities that cater to senior citizens. The seniors who live in ELS communities have bought their homes, but they rent the plot on which their houses stand. Since Zell started buying up manufactured home communities, he has made millions by cutting services and raising rent. For retirees like Bournival, or Helen Honeycutt, who came to Chicago from an ELS community in Los Osos, California, acquisition by Zell has turned what she thought was a well-planned retirement in a rent-controlled community into an insecure experience that threatens her nest-egg home.
“When we paid $85,000 for a manufactured home fourteen years ago, we were looking to have no mortgage, low overhead and a lifestyle we could afford,” Honeycutt told me in Chicago. When ELS bought the property ten years ago, they started hiking rents and pressuring the county to eliminate rent control.
“Now I live in constant fear that the county will give up the fight against Sam Zell’s deep-pocket lawsuits and we’ll be priced out,” explains Honeycutt. ELS says their tenants can move if they don’t like it. “But my home is a 1,900-square-foot triple-wide. It’s old. I can’t move it two feet.”
Honeycutt has good cause to be concerned. In Santa Cruz, ELS sued so many times to rescind the prevailing rent control ordinance that the city finally gave way even after prevailing in court, reportedly to avoid further litigation costs. Now, “fair market rents” established by ELS for the local DeAnza Home Park are up from $400–$600 to $1,700, even $5,000 per month for ocean-front properties. Bob Lamonica, a DeAnza resident, can’t move his $300,000 home and he fears he’d never be able to sell it. “Potential buyers won’t buy when they realize they will have to pay $60,000 a year rent on top of the house itself,” Lamonica explained.
According to the Center for Community Change (CCC), one of the groups that brought the retirees to Chicago, “In the past eight years more than 25 families have lost all their equity.… A few have sold for $25,000. Others, after not being able to sell, have had to walk away from their home after signing over their home to ELS for $1.00.”
It’s bad news for the family, for the local community and for the country as a whole. According to MHOAA, about 2.9 million households own their own home and rent land in 56,000 manufactured-home communities. For seniors, the properties are particularly attractive and the communities are typically close-knit and caring; some even have healthcare assistants living on site. Replacing year-round middle-class tenants with affluent vacation homeowners breaks up the communities, changes their atmosphere and throws more seniors into crisis, onto their families or even onto the state.
“The managing arm of ELS evicts; the sales arm sells at a profit. Profiting is one thing. Racketeering is another,” said LaMonica. “Sam Zell should be beyond this.”
Sam Zell’s not famous for his moral compass. To the contrary, he’s most well known for his involvement in bankrupting the Tribune Media Company and sacrificing the pensions of Tribune workers along the way. He’s a master at the big-dollar deal that doesn’t involve too much of his own cash. According to Forbes magazine, Zell is also the sixty-eighth wealthiest man in America, worth $4.9 billion. ELS made over $300 million profit last year.
In addition to suing cities over rent-control measures in California and other states, he has funded a statewide ballot to end rent control entirely. He has backed Eric Cantor, contributed $70,000 to the Restore Our Future Super PAC, which is supporting Mitt Romney, and he has given $100,000 to Karl Rove’s American Crossroads Super PAC.
“He’s spending money on right-wing candidates who think Social Security should not exist in America. How is that good for your customer base?” said Kevin Borden of CCC.
That’s another thing the retirees wanted to ask Sam Zell. But perhaps even for the man who’s called himself “Grave Dancer,” “Granny-Gouger” was one moniker too many.
“He can run, but he can’t hide,” said Bill Dempsy, of the United Food and Commercial Workers Union. The UFCW members’ pension fund has hundreds of shares in ELS. “We have a simple message for the Zells of the world who are used to doing whatever they want behind close doors. Zell was hiding today from his shareholders, but he can’t hide anymore.”
Last week’s action in Chicago was part of the same “99 Power” campaign of shareholder actions that brought thousands of protestors to the Charlotte, North Carolina, meeting of Bank of America on May 10.
“The idea is, these boards are up in their towers looking at ledgers, not realizing there are names attached,” said Lamonica. “Coming here today is to remind them, that there are human beings involved.”
ELS corporate relations officer Martina Lenders didn’t respond to a reporter’s request for a comment from ELS or Sam Zell.