Dozens of Knollwood Village residents gathered on the second floor of the Far Western Tavern in Orcutt on the evening of Aug. 17 to hear The Towbes Group Chairman Michael Towbes address a sudden steep rise in their rent bills, some of which increased by thousands of dollars.
Knollwood Village is an age-restricted mobile home park in Santa Maria that has roughly 200 residents, many of whom are on fixed incomes but are facing rents that have jumped to as much as $3,300. The increase was triggered when the properties were reassessed at a higher value, which prompted an increase in property taxes. Per their rental contracts, the residents are responsible for that extra cost.
The reassessment took place when Towbes sold Knollwood Village LLP to Knollwood Village Inc. in 2011, in an attempt to convert the entire park into resident-owned condominiums. Towbes cited two reasons for making the change. One was his personal estate planning. At 82 years old, he won’t be chairing the company much longer, he said.
The second was to provide its residents the benefits of owning a home. Not everyone exercised the option to buy their home, but some did and that’s when the property tax increase came into play.
Whenever there is a change in ownership, according to Rick Holly with the county assessor’s office, there is a reappraisal of property value. State law provides an exemption from reappraisal—which hasn’t happened in years—if Towbes could’ve gotten at least 51 percent of the park’s residents to buy their lots before Aug. 31, 2014, but that didn’t happen and the entire park was reassessed.
Towbes became a multi-millionaire through growing his company after a housing boom in Santa Barbara County in the late 1950s. By 2016, his company had developed thousands of residential units across the county. He’s known for his success as well as his philanthropy.
Towbes said he received notification in February of the increased assessment but didn’t notify residents until July 26 in the form of a letter. He said he was waiting to make the announcement after receiving tax bills for the individual properties, which haven’t come yet.
Not every lot received the same assessment and many were assessed at less than market value. Some residents received bills of only several hundred dollars. Although many of the lots are very similar, Holly said the assessments are based on a variety of factors such as location within the park. It’s something Towbes said was out of his hands.
“I think there actually has been a benefit to those who are paying taxes because they are substantially less than they would be at full market value,” Towbes told the group of residents.
The reassessment doesn’t affect the residents who’ve purchased their lots. Only renters like Linda Agren are feeling the effects. She pays $1,300 for rent, insurance, and taxes—and that’s on top of her new tax bill. She’s lived in the park since 2003 and said she’ll have to move.
“I can’t do it,” she said. “I’m gone, I guess.”
Others wondered why Towbes simply couldn’t pay for the taxes himself. But Towbes said that he is.
The taxes—totaling $453,000—cover an assessment period of four years, from 2012 to 2016. The company would absorb half of the total assessed amount because many residents sold their units before the notification came back.
“We didn’t think it was fair to chase after the people who are no longer here and have no knowledge of this situation,” Towbes said.
To help with the taxes, Towbes offered to defer payments until June 30, 2017, without interest or give a five-year loan with simple interest, meaning that interest is not compounded.
“I don’t know too many park owners who’d be willing to do that,” Towbes said.
One resident, Phillip Hermosillo, has lived in the park since 2010. He claims Native American heritage and compares the whole deal to a betrayal.
“It’s like the old ways. The only time the white man wants you to sign a piece of paper is to steal from you,” Hermosillo said. “As far as this tax is concerned, I’m going to do my best to pay it off. But like everybody else, I’m on Social Security. I’m on a fixed income. You can’t be telling me that I have to pay $200 to $400 a month on top of the rent I’m paying. It ain’t going to happen.”
Staff Writer David Minsky can be reached at dminsky@santamariasun.com.
This article appears in Aug 25 – Sep 1, 2016.
