Month: December 2023

RVer dilemma: death by fire or cold

The site of a fatal RV fire in Windsor, Maine, in early November. Note the multiple extension cords criss-crossing the area, indicative of the jury-rigged nature of this encampment.

Now that we’re well into meteorological winter, one sure-fire prediction is that we’re going to see a rising crescendo of reported RV fires. A Google search for “RV fires,” for example, turned up the following news reports over just the past 24 hours:

  • “Putnam County Fire Rescue responded to a 30-foot RV fire off Mackey Avenue,” but were unable to save two family dogs.
  • “Firefighters are investigating what caused an RV to go up in flames in northwest Fresno.”
  • “An investigation is underway after a RV fire briefly threatened a home in Sparks Tuesday night. “

Expand the time frame and you’ll encounter some truly chilling headlines, such as the following from a week ago: “Mom listens to baby scream in burning RV until he falls silent, Arkansas cops say.”

It’s hard to ascertain, in the first three examples, how many of the immolated RVs were being used as full-time housing, but it’s a pretty good guess that such was the case in the older story. Such incidents have become commonplace, and will become more so as time goes by: more than 650,000 people nationwide are sleeping outside or in shelters, according to the latest snapshot census (another will be conducted next month), thanks in no small part to a critical shortage of affordable housing. The real estate group Redfin reported last week that just 15.5% of homes for sale are affordable for the typical U.S. household, the lowest share in at least a decade.

For those unable to afford a home, the opportunity to live in an RV must seem immeasurably better than joining the army of pavement dwellers. A roof and four walls, a door that can be locked, possibly functioning electrical outlets—even the shabbiest travel trailer can be a refuge against rain, prying eyes and human predators. Indeed, if first occupied during summer months, such an RV can seem like a godsend, allowing fantasies of outdoor vacationing and only temporary inconvenience, a pitstop on the road back to “normal.” And then harsh winter intrudes.

Last month the Waldoboro, Maine, Select Board heard about people living in RVs without appropriate hookups. Sewage was being dumped on the ground. In at least one instance, an RV dweller had cut a hole through the roof for a chimney pipe so he could heat the interior with a wood stove. Referring to an RV fire in nearby Windsor the previous week, in which a 25-year-old man had been killed, Waldoboro’s code enforcement officer, Mark Stults, observed that existing ordinances were insufficient to deal with such conditions. “I would rather be the bad guy in town, forcing people to find safe places to reside,” he said, urging adoption of more stringent regulations.

A month later he got his wish, as the Select Board proposed an ordinance that for the first time will set “limitations on the use of RVs and other non-permanent structures for permanent habitation,” including a maximum stay of 120 days and required installation of smoke detectors and fire extinguishers. More action is expected. Yet even as the Waldoboro town fathers attempt to limit the deaths and health hazards resulting from full-time RV residency, they remain flummoxed by the economic factors that contribute to the problem.

As recently as last August, for example, the Waldoboro Economic Development Committee conceded that the town had been “remarkably bad at having affordable housing for people to work and live here.” The area’s affordability index had gone from 75% to 51% in just two years—considerably better than the 15% national figure cited by Redfin, but still leaving half of the area’s workers with less than the $48 hourly wage they would need to afford a home. All of which makes Mark Stults’s preferred option of “forcing people to find safe places to reside” a non-starter.

Or as Waldoboro Select Board Member Bob Butler said, “there’s a lot of homeless people now. What are we going to do with them? They could die from the cold or they could die from the fire, but they’re still dead.”

Waldoboro is just a microcosm of a far larger problem that will become an ever more in-your-face national crisis, but give it credit for at least wrestling with the issues. Not so elsewhere, where it’s less common to connect the dots between low pay, astronomical rents, an inadequate housing stock and an explosion of beat-up, rattletrap RVs parked virtually anywhere. There are lots of reasons for that willful blindness, in a world that can seem irredeemably broken, from a feeling of being overwhelmed to the silent hope that someone else will fix things to a reflexive turning inward. Most can be addressed, by people of good will.

But the most difficult reaction to overcome, alas, is a hardening of the heart that objectifies and dehumanizes the unfortunate. Consider, for example, the reaction of an “I’ve got mine” RVtravel subscriber who, on reading its account of the proposed Waldoboro ordinance—an account that not once described those who were living in the town’s RVs—wrote: “I’m all for the regulations. It’s lazy, filthy people like this that screw it up for hard working RV’rs.”

That’s the Christmas spirit, Bub.

Overpriced parks drag everyone down

It comes as bittersweet relief to learn, every now and then, that my generally skeptical view of the RV park and campground industry is shared by others, and that this dyspeptic outlook is based on a shared understanding of just how readily greed can overcome common sense.

One such affirmation came last week in the form of an email from a broker who’s been in the business for several decades, but who in recent years has seen a piling on of would-be competitors who know nothing about campgrounds, and who wouldn’t even have touched one just three or four years ago. Too cheap. Too déclassé. But now, lured by the promise of quick riches to be made in a hot new real estate market, these opportunists corner the market on new listings by “telling owners their park is worth twice what it really is,” according to my correspondent.

An over-priced campground will “just lay there, never sell and then it gets a stigma, there must be something wrong with it,” the broker wrote. “Plus other owners get the idea their park must be worth a 3-cap,” spreading the contagion of pie-in-the-sky expectations. The end result? Honest brokers get pushed aside, while unrealistically priced campgrounds languish in the listings for years—or worse, those campgrounds find starry-eyed, innumerate buyers who now must figure out how to make a financial go of it, with a ripple effect that drags down private and public campgrounds alike.

To understand why that is, let’s start with a little math. A “3-cap,” for those who don’t know, is shorthand for a capitalization rate of 3%, which is a lousy rate of return for the buyer but a windfall for the lucky seller. It’s also wildly unrealistic for any commercial real estate, where normal cap rates fall into a range of 5-12, but especially so for campgrounds and RV parks, which inherently are more risky than, say, motels or apartment buildings. 

Cap rates are calculated by dividing a property’s net operating income (NOI) by its current market value, or sales price. So if a campground has a net operating income (what’s left over after all operating expenses) of $100,000 and is listed for sale for $1 million, the cap rate is 10, meaning a buyer’s expected rate of return on that $1 million investment will be 10% a year. Buy that same property for $2 million, and the cap rate drops to 5. To achieve a cap rate of 3, the sales price will have to exceed $3 million—in other words, the seller expects someone to tie up $3 million in an investment that returns less than a CD.

Sound wacky? Indeed, yet there are numerous brokers out there doing exactly what my correspondent found so objectionable, peddling RV parks at eye-watering prices that will find a buyer only if that buyer is independently wealthy and looking for a vanity project. Consider, for example, a recently emailed broadside from Campground Marketplace, headlined “Opportunity Awaits,” in which one of the top two advertised “opportunities” is a 20-acre riverside campground in Arkansas with seven cabins. The property’s gross sales in 2022 were reported to be $130,769; the property itself is listed at $2.8 million.

Assuming a very generous NOI of 60% of gross, or $78,461, that works out to a 2.8% return on capitalization. You’d get a better return on passbook savings, if such a thing is even available these days. So why would anyone shell out millions for this property? And why would the current owner have any expectation that someone would pay so much for something with such low returns?

One possible answer, as suggested above, is that the seller hopes to attract a deep-pocketed buyer looking for a vanity project. Riverside property is a draw, and there are those seven cabins, which presumably represent sunk costs that the owner would like to recoup. With 20 acres there’s room for expansion, so there’s potential for top-line growth. But unless that mythical buyer has nearly $3 million in hand he’s going to need a loan just to get in the door, never mind building additional cabins or adding RV sites, and no reputable lender will touch this deal.

Or look at it this way. A married couple want their own business and this looks like a dream come true. They scrape together 25% of the purchase price, or $700,000, and through a stroke of good fortune find someone—maybe a rich uncle?— willing to lend them $2.1 million to clinch the purchase. Better yet, their lender will give them a 30-year loan at 6%, which really pushes this example into the realm of fantasy but serves to make a point: even with that impossibly generous deal, the Arkansas property would have a monthly mortgage of $12,590. Which means, in turn, that the nightly rates on those seven cabins will need an immediate 15% increase just to cover the rent, and let’s hope that occupancy rates don’t drop as a result of the price hike.

Operating expenses? Fuhgeddaboudit!

True, this 2.8 cap listing is an extreme example—but it’s real, and it’s not unique. Meanwhile, less extreme examples of campgrounds for sale at 4, 5 and 6 caps are abundant, and all pose the same basic financial quandary: they don’t generate enough cash to cover a buyer’s nut, never mind what it costs to run a business. Yet RV parks and campgrounds are selling like hot-cakes, despite these insane valuations, because everyone’s convinced that this is the new hot thing in real estate: supposedly recession-proof, with demand outstripping supply and apparently no upper limit on what the customer will pay.

No wonder, then, that the first thing buyers of such over-priced properties do is double their rates—followed quickly by slashing staff and cutting back on maintenance and upkeep. Their competitors, aided by the rapid dissemination of computerized and networked reservation platforms that allow them to determine “market rates,” quickly follow suit. And now even the public sector is getting in on the act, justifying increases at state and national campgrounds by insisting they’re simply keeping up with their commercial counterparts.

The predictable outcome has been for camping to become notably more expensive over the past three or four years, even as many properties are looking seedier and more run-down. The bubble is being inflated by the get-rich-quick scheming of hustlers breaking into a business they wouldn’t have given a second look prior to the pandemic. And once the bubble bursts, as bubbles always do, those hustlers will be just as quick to move on to the Next Big Thing, leaving a mess behind. Ain’t unfettered capitalism grand?

ARVC rebrand sees its first defection

It’s been less than a year since I published three successive posts taking issue with the National Association of RV Parks and Campgrounds—or, more precisely, with its misleading name. As I pointed out last January, ARVC was neither “national” nor an “association,” nor should it lean into the idea that RV parks and campgrounds are part of a larger hospitality industry that includes hotels, motels, resorts, inns, ski lodges, marinas, glampgrounds, bed and breakfasts and so on.

Well, sonofagun if ARVC didn’t toss in the towel on two of the three points I’d raised, even as it went all in on the third. Last month ARVC “rebranded” itself—its choice of words, telling you right there how much of a market research-driven organization it has become—by dropping the ARVC name and calling itself the Outdoor Hospitality Industry. That’s right—this membership organization is now claiming the mantle of an entire industry. And, it should be noted, by doing so is even more explicitly distancing itself from its campground roots.

The repercussions are just beginning to be felt.

Three days ago, the board of directors of the Pennsylvania Campground Owners Association voted to drop its state membership in OHI, explaining that OHI’s “mission and vision” no longer align with the state organization’s. Indeed, the board noted, the association’s campground members had become increasingly less engaged with the national organization over the past several years, a trend indicative of OHI’s loss of grassroots appeal. Moreover, PCOA’s executive director told a Woodall’s Campground Magazine reporter, Pennsylvania members had grown increasingly concerned about OHI’s lack of communications and transparency about the significant changes it was implementing, including adoption of industry standards, bylaws changes and even the rebranding itself.

The Pennsylvania association was one of OHI’s largest state affiliates, claiming more than 200 campgrounds and RV parks. Its departure, however, moves it into the column occupied by California, Texas, Florida and New York, whose campground associations are the largest in the U.S. but all of which have either dropped or never had ARVC/OHI affiliation. And while individual campground owners can apply for OHI membership in states that don’t have associations, or whose associations don’t belong to OHI, the evidence out of Pennsylvania suggests OHI will retain a fraction of the state’s campgrounds that ARVC had claimed.

Nor is Pennsylvania unique. The board of directors of the Virginia Campground Association, for example, will hold its biannual meeting this Tuesday. Among the agenda items: “We would like to have a discussion to see if the VCA membership is happy with the direction OHI is moving. VCA will then take your responses to OHI to let them know how our membership feels about this change,” i.e. the rebranding. No telling where that conversation will end, of course, but that it’s even taking place should give OHI’s leadership pause: that’s the kind of discussion that should have occurred before a major institutional change, not after.

But as with ARVC’s big surprise reveal last year, when it blindsided a significant proportion of its membership with a set of proposed “campground standards,” the OHI rebrand is the product of back-room discussions driven by industry “leaders” who believe they’re dragging a backwoods industry into the modern age. Such top-down leadership, however, works only as long as the leaders have invested in their followers. Pennsylvania, and possibly other states in the months ahead, are saying that hasn’t happened, and as a result they’re done following.

It’s questionable whether OHI will get the message. Just how out of touch it has become can be seen in a seemingly placating response by Paul Bambei, its president and CEO, to the Woodall’s story about Pennsylvania’s secession. “Our members are our most valued asset,” he began, in an unconscious flipping of the script—for who is the “our” in that false assurance? Once upon a time it would have been the campground owners themselves, and their most valued asset—one can hope—would have been Paul Bambei and his staff. To turn that around and say the campground owners are an asset of an unspecified “us” reduces them to mere enablers for Bambei & Co.’s agenda, whatever that may be.

OHI, in other words, is a membership organization that has been captured by its professional staff. And Pennsylvanians, at least, have said what they think of that by voting with their feet.

When glamping isn’t bougie enough

Architect’s drawing of one of the rooms planned for a revamped Prospect Lake “landscape hotel,” which all appearances aside purports to be a “recreational vehicle.”

Flabby use of language dilutes meaning, leads to sloppy thinking and invariably results in undesirable consequences. Consider, for example, the way we say the chief executive of a large corporation “earned” X million dollars. Nobody “earns” a million dollars—never mind $10 million, or ten times that amount—when the median working wage is $56,473. A CEO may be paid that amount, may be rewarded that amount, but to describe this remuneration as “earned” is to rob the word of all relevance.

Something similar is happening in the world of campgrounds and RV parks, where a deliberately sloppy embrace of “camping” has robbed the word of most meaning. One consequence is that affluent people—or people with access to capital—are free to invade rural areas and reshape them to their own liking, despite local efforts to maintain the character of their communities through zoning restrictions, land use plans and other attempts to limit unchecked growth. That tramples both local sensibilities and any meaningful understanding of camping per se.

Exhibit A: Prospect Lake in Egremont, Massachusetts, where developer Ian Rasch has started transforming a tired old 125-site RV park and campground into an affluent playground projected to have 40 high-end cabins, a spa, yoga classes, catered events, private saunas and hot tubs, evening cocktails and an upscale retail outlet. If a similar venture designed by the same architectural firm, Piaule Catskills, is any guide, nightly rates will start at $499 plus taxes and resort fees. This isn’t, in other words, anything like your grandfather’s campground, and even the latest window-dressing name for this sort of luxe indulgence won’t suffice: rather than call his project a “glampground,” Rasch’s documentation refers to it as a “landscape hotel.”

Yet as extensively documented in a 9,000 word article by Bill Shein of the Berkshire Argus, the well-heeled developer seldom utters the words “landscape hotel” in public. When it comes to seeking community approval for his plans, Rasch is all “camp” this and “campground” that, as in, “The campground will continue to operate as a campground but with fewer sites and upgraded amenities.” Which is like saying that a Maserati MC20 is just like your family minivan, but with fewer seats and an upgraded engine and aerodynamics.

As clearly inappropriate as it is, however, the campground label is hugely useful for Rasch or other developers who want to get around zoning restrictions that allow traditional campgrounds but not more overtly commercial enterprises, as in an otherwise residential area. Such end-runs are especially critical for existing campgrounds that predate existing zoning regulations, and therefore operate under grandfathered conditions that vanish if the use changes—as is the case with Prospect Lake. As summarized by Egremont’s board of health director, “What they’re going to be, as opposed to what they were, is going to be so vastly different. I’m thinking this is going to turn into a lodging. . . . It could be a ‘campground,’ but it will be a campground in name only.”

The irony here is that the traditional campground industry has been a key player in creating that confusion—why I referred to this as “deliberately sloppy” semantics. If Rasch wanted to build 40 cabins on his property, there’d be room to argue that he needs the kinds of permits and inspections that any permanent structures require. But because he’s planning to bring in cabins mounted on wheeled chassis, which the RV industry has successfully lobbied to have categorized as park model “recreational vehicles,” the fiction that this is a transient, non-permanent arrangement can be perpetuated with a straight face.

I’ve written repeatedly about the problems associated with the park model scam (here, here and here, for example), but the absurdity of insisting the emperor is fully clothed was summarized most unmistakably by Cynthia Zbierski, president and CEO of the Massachusetts Association of Campground Owners. When Shein referred to park model RVs as being “permanently sited,” she quickly corrected him by observing, without a hint of sardonic self-awareness, “They’re not going to be permanent because they’re on wheels.” Shein, alas, failed to follow up by asking just how many of the scores of park model RVs throughout the state’s 75 or so campgrounds have ever been moved from their initial placements.

The upshot, thanks to such muddied semantics, is that Rasch can tell Egremont he’s just fixing up a dilapidated campground—even as he markets the same property as a “landscape hotel” to an upscale clientele that thinks a thousand bucks a person for a weekend stay “should cost way more.” He can get away with that misrepresentation because the campground industry has lost sight of its core business, turning a blind eye to its bougie competitors. And Massachusetts now has 125 fewer RV sites, even though there’s been no change in its overall campground census.