LOCAL NEWS |
By Julie Reynolds
In Mercer County, West Virginia, Valeria Steele is proud of her home in Elk View Estates, a mobile home community she says used to be “such a nice place to live.” But since new owners took control nearly two years ago, “they’ve ruined it. There are trailers with broken windows, uncut grass. We never had that. We’ve had a sewer leak for months, and it’s leaking into a natural water source.”
Who, exactly, took over? After extensive online research, Steele and others figured out it was the founders of Alden Global Capital and its affiliated businesses.
Alden, as Voices readers may recall, owns — and is methodically extracting resources from — The Monterey Herald, The Santa Cruz Sentinel, The Mercury News, The Orange County Register and a great many other daily newspapers in California. In fact, 24 percent of Alden’s news properties are in the Golden State. Most recently, Alden bought the San Diego Union-Tribune.
Alden’s strategy is typical for investment firms that specialize in devouring struggling businesses. They buy newspapers on the cheap, quickly sell off assets like real estate, close offices (in Alden’s case, often defaulting on the rent) and extract as much cash and profit as possible by getting rid of as many employees as possible. The result is fewer reporters and fewer pages in your local paper. That’s why they’re known as “vulture funds,” a term coined not by snarky journalists, but by Wall Street itself.
But back to West Virginia and Valeria Steele.
Steele knows what it’s like to fall under the domain of Alden’s empire. Her mobile home park, like several hundred more across the nation, was quietly purchased in late 2021 by an Alden affiliate, Homes of America, or HOA.
What happened next was no secret: In Steele’s park — as in other HOA parks — rents abruptly shot up by as much as 60%. Steele’s rent jumped from $550 to $850 overnight. Her park and others nearby quickly fell into disrepair — sewer leakages, collapsing floors and other hazards became common. Tenants complained the new managers tried to evict them for owing back rent they’d paid in full. For many of the park’s residents already struggling with limited income or disabilities, the sudden rent hikes were an insurmountable burden.
Similar scenarios have played out in HOA parks across the south and midwest.
The efforts in West Virginia could provide inspiration to those in Northern California who worry about the fate of local news under private investment firms like Alden.
But a few of the West Virginia tenants — Steele among them — began investigating their secretive new owners. When they discovered the Alden connection, many were stunned, daunted by Alden cofounder Randall Smith’s seemingly unstoppable record of extracting cash from the businesses he buys — particularly local newspaper chains — while saddling them with debt, laying off wide swaths of the workforce and in some cases, shutting companies down.
All while buying more than 16 mansions in Florida and the Hamptons.
With their own, more modest homes at stake, the Elk View Estates tenants chose to fight back.
They’re suing Alden cofounder Randal Smith’s company, Smith Management, over HOA’s alleged mismanagement of six West Virginia mobile home parks.
“At the time we filed these lawsuits, the tenants didn’t even know where or to whom their rent money was going,” said plaintiffs’ attorney Adam Wolfe, whose firm, Mountain State Justice, offered to help the tenants pro bono. “We stepped in to help our friends and neighbors who were being subjected to unhealthy and unsafe living conditions while facing predatory rent hikes.”
The West Virginia nonprofit firm, Wolfe added, “has a storied history of taking on bad actors like Homes of America.”
The path from local news chains to mobile home parks
In responses to reporters and court inquiries, Homes of America officials have tried to distance themselves from Alden. But the ties are clear and abundant, according to public records. Although the parks’ deeds are held by a labyrinth of Delaware-based LLCs, nearly all legal documents related to HOA parks list Smith Management’s New Jersey address. In early communications with tenants, some HOA staff used Smith Management email addresses.
The names of Alden cofounder Heath Freeman and numerous Alden officials appear on many of the company’s legal filings. Steele even has a copy of a rent check that shows it was deposited into the account of an Alden subsidiary.
But the most troubling links tying the mobile home park venture to Alden invoke the name of Tribune Publishing, the newspaper chain that Alden took over in 2021 for a debt-laden price of $633 million.
A corporation called Tribune Holdco LLC was created when Alden bought Tribune Publishing to facilitate the purchase.
But Tribune Holdco was later used to buy a mobile home park in West Virginia for HOA, called Gardner Estates. The purchase document was signed by Alden’s chief financial officer. And Homes of America, public records show, is itself financed through an entity called “TRIBUNE II MHP FINANCE ONE LLC.” (MHP typically refers to mobile home park.)
It’s still not clear whether Alden used Tribune money to buy its parks, but the connections to these Tribune-named LLCs is disturbing: after all, Alden has done similar things in the past.
It has admitted it extracted hundreds of millions of dollars from Media NewsGroup, the newspaper chain that includes The Sentinel, The Herald and The Mercury News, to invest in unrelated business ventures. It improperly invested news workers’ pensions into two of its own investment funds, including one in the Cayman Islands.
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To date, Alden’s Homes of America has spent more than $260 million buying mobile home parks, according to a preliminary search of public records. The actual total is likely far greater.
Attempts to reach Alden, Smith Management and HOA chief operating officer Bryon Fields Jr. for comment were unsuccessful. On Oct. 17, Fields answered my call but said it was not a good time to talk and to call back in the afternoon. My next call went to voicemail and cut off the message.
How tenants took on Goliath
In his book “Why David Sometimes Wins,” Harvard professor and longtime United Farm Workers organizer Marshall Ganz describes the “foundation” for winning seemingly impossible struggles: depth of commitment.
“David’s commitment to challenge Goliath did not depend on figuring out a good strategy,” Ganz writes. “On the contrary, good strategy grew out of his commitment to fight.”
In West Virginia, Steele and other mobile home park tenants have strategized under their own commitment, joining with their feisty group of rural lawyers to take on Goliath.
While it’s unknown if the HOA tenants will ultimately win their war, their determination has carried this group to some significant early victories.
The tenants recently succeeded in getting their rent hikes halted. In a related case, the Mercer County Court also ordered the parks to complete repairs so they comply with permitting requirements.
“They’ve done repairs only in response to court orders,” Wolfe noted.
Still, the efforts in West Virginia could provide inspiration to those in Northern California who worry about the fate of local news under private investment firms like Alden.
Despite living in a relatively remote region, the West Virginia tenants reached far beyond their own sphere. They read about journalists’ long struggle with Alden, and studied the firm’s history of shutting down retail chains like Payless ShoeSource and Fred’s pharmacies.
Steele learned about legislative efforts from people fighting HOA in states like Idaho, where lawmakers passed laws imposing increased fines in response to HOA’s lack of obtaining proper permits.
Armed with cell phone cameras, the West Virginia tenants and community organizers documented HOA parks’ maintenance issues and apparent code violations. They made copies of receipts, notices and documents showing that tenants had in many cases paid their rent in full, yet were still given “eviction” notices that were not formatted in compliance with the law.
Because of these homespun efforts, some evictions have been halted, and the Mercer County Court has ordered a stay on rent increases — at least until the parks come into compliance with permit requirements.
“You name it — these are the folks that are always getting squeezed.” Mountain State Justice attorney Colten Fleu
Stalling in court
This is not to say the fight has been won. Homes of America tenants still contend with attempted evictions, water issues — in one park, HOA neglected to pay the $15,000 water bill, causing a shutoff — and most notoriously, leaking sewage, one of the most common complaints in HOA parks.
In one example, Florida’s Department of Environmental Protection opened an investigation into an HOA park after a July 2022 inspection found the septic system’s discharge into drain fields was “very turbid and cloudy” and exceeded legal levels of solids and fecal coliform bacteria.
It took the park’s managers eight months to bring the system up to code.
Across the country, tenants in HOA parks have complained about similar health hazards, rent hikes and evictions. Some tenants, including in neighboring Virginia, have lost legal battles. Some in West Virginia are weary of an already lengthy court fight they’re not sure they’ll win.
Mountain State Justice lawyers are concerned about rising vacancy rates at HOA’s parks in West Virginia.
As in Alden’s formerly robust newsrooms, “a lot of people are getting out,” said Jackie Lane, a paralegal and black lung specialist at the firm who’s working on the firm’s two HOA lawsuits. “It made me think of a ghost town. It’s sad.”
Steele says the once-full Elk View Estates is about 50% vacant. At nearby Gardner Estates, she said, a friend had to tow her home out of the park. “Her doctor told her she had to move because of her asthma. You’ve got systemic issues like water and sewer and it affects everyone that lives there.
“That’s where I get angry.”
Now, in a potential class action case in which Steele is one of six named plaintiffs, Mountain State Justice attorneys are asking for an injunction to stop HOA from terminating leases as well as “operating manufactured home communities without permits.” Gardner Estates — the park purchased by Tribune Holdco — is named as a co-defendant.
Court records show HOA and Smith Management have for months failed to hand over court-ordered discovery materials and have missed scheduled depositions.
In response, Mountain State Justice has asked the court to enforce its own orders and issue sanctions against HOA and Smith Management for their “egregious failure” to follow court orders.
“These are people mostly on fixed incomes already being hit in the pocketbook with higher grocery prices, higher gas prices, you name it — these are the folks that are always getting squeezed,” said Colten Fleu, a senior attorney at Mountain State Justice who’s spent years working with tenants in manufactured housing communities.
“It is important to stand up with them and fight with them,” Fleu said. “It also matters to hold to account these large, faceless companies that are buying up these communities; to make them abide by the laws of this state, to make sure if they are going to get into the business of being a landlord, they know that real lives are being affected by their decisions.”
As defenders of local news know well, Alden doesn’t seem much concerned with its public image as a destroyer of democracy, or now, as a destroyer of the roofs over peoples’ heads.
Yet there’s an important lesson in the West Virginians’ fight: that tenacity and commitment — even against daunting odds — sometimes pays off.
In a recent surprise move, tenants report that Homes of America now appears ready to settle their case.
But even if their class-action suit does make it to its scheduled trial date in June, Valeria Steele is confident about the outcome.
“We will win that one.”
A version of this story also appeared in the Gateway Journalism Review.
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