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                                UNITED STATES
                     SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, DC  20549



                                  FORM 8-K

                               CURRENT REPORT


                     Pursuant to Section 13 or 15(d) of
                     the Securities Exchange Act of 1934



                              JANUARY 22, 1999
                              (Date of Report)



                     MANUFACTURED HOME COMMUNITIES, INC.
           (Exact name of registrant as specified in its Charter)



                                   1-11718
                            (Commission File No.)

                                      
           MARYLAND                                       36-3857664
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
incorporation or organization)  

TWO NORTH RIVERSIDE PLAZA, CHICAGO, ILLINOIS                       60606
(Address of principal executive offices)                         (Zip Code)



                               (312) 474-1122
            (Registrant's telephone number, including area code)

                                      
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ITEM 5. OTHER MATTERS

The trial of the ongoing utility charge dispute with the residents of DeAnza
Santa Cruz as discussed in Manufactured Home Community, Inc.'s ("MHC") Form
10-Q, Footnote 8 - "Commitments and Contingencies", for the quarter ended
September 30, 1998 concluded on January 22, 1999.  This summary provides the
history and reasoning underlying MHC's defense of the residents' claims and
explains MHC's decision to continue to defend its position which MHC believes
is fair and accurate.

DeAnza Santa Cruz Mobile Estates is a 198 site community located in Santa Cruz,
California overlooking the Pacific Ocean.  It is subject to the City of Santa
Cruz' rent control ordinance which limits annual rent increases to 75% of CPI.
MHC purchased the property in August 1994 from certain unaffiliated DeAnza
entities ("DeAnza").  Prior to MHC's purchase in 1994, DeAnza made the decision
to submeter the property for both water and sewer in 1993 in the face of the
City's rapidly rising utility costs.

Under California Civil Code 798.41, DeAnza was required to reduce rent by an
amount equal to the average cost of usage over the preceding 12 months.  This
was done.  With respect to water, not looking to submit to jurisdiction of the
Public Utility Commission, DeAnza relied on Public Utilities Code Section
2705.5  to determine what rates would be charged for water on an ongoing basis
without becoming a public utility.  This statute provides that in a submetered
mobilehome park, the property owner is not subject to regulation and control of
the PUC so long as the users are charged what they would be charged by the
utility company if users received their water directly from the utility
company.  In Santa Cruz, customers receiving their water directly from the
city's water utility were charged a certain lifeline rate for the first 400
ccfs of water and a greater rate for usage over 400 ccfs of water, a readiness
to serve charge of $7.80 per month and tax on the total.  In reliance on
Section 2705.5, DeAnza implemented its billings on this schedule
notwithstanding that it did not receive the discount for the first 400 ccfs of
water because it was a commercial and not a residential customer.

A dispute with the residents ensued over the readiness to serve charge and tax
thereon.   The residents argued that California Civil Code Section 798.41
required that the park owner could only pass through its actual costs of water
(and that the excess charges over the amount of the rent rollback were an
improper rent increase) and that PUC Section 2705.5 was not applicable.  DeAnza
unbundled the utility charges from rent consistent with California Civil Code
798.41 and it has generally been undisputed that the rent rollback was
accurately calculated.

In August 1994 when MHC acquired the property, MHC reviewed the respective
legal positions of the HOA and DeAnza and concurred with DeAnza.  Their
reliance on PUC Section 2705.5 made both legal and practical sense in that
residents paid only what they would pay if they lived in a residential
neighborhood within the city of Santa Cruz and permitted DeAnza to recoup part
of the expenses of operating a submetered system through the readiness to serve
charge.

Over a period of 18 months from 1993 into May of 1995, a series of complaints
were filed by the HOA and Herbert Rossman, a resident, against DeAnza, and
later, MHC.  DeAnza and MHC demurred to each of these complaints on the grounds
that the PUC had exclusive jurisdiction over the setting of water rates and
that residents under rent control had to first exhaust their administrative
remedies before proceeding in a civil action.  At one point, the case was
dismissed (with leave to amend) on the basis that jurisdiction was with the PUC
and, at another point, Mr. Rossman was dismissed from the case because he had
not exhausted his administrative remedies.

On June 29, 1995, a hearing was held before a Santa Cruz rent control officer
on the submetering of both water and sewer.  MHC and DeAnza  prevailed on all
issues related to sewer and the rent rollback related to water, but the hearing
officer determined that MHC could only pass through its actual cost of the
water, i.e. a prorated readiness to serve charge and tax thereon.  The hearing
officer did not deal with the subsidy being given to residents through the
quantity charge and ordered a rebate in a fixed amount per resident.  MHC and
DeAnza requested reconsideration on this issue, among others, which
reconsideration was denied by the hearing officer.



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MHC then took a writ of mandate (an appeal from an administrative order) to the
Superior Court and pending this appeal, the residents, MHC and the City agreed
to stay the effect of the hearing officer's decision until the Court rendered
judgment.

In July 1996, the Superior Court affirmed the hearing officer's decision
without addressing concerns about the failure to take the subsidy on the
quantity charge into account.

MHC requested that the City and the HOA agree to a further stay pending appeal
to the court of appeals, but they refused and the appeals court denied MHC's
request for a stay in late November, 1996.  Therefore, on January 1, 1997, MHC
reduced its water charges at this property to reflect a pass-through of only
the readiness to serve charge and tax at the master meter (approximately $ .73)
and to eliminate the subsidy on the water charges.  On March 1, 1997 rent
billings, residents were credited for amounts previously "overcharged" for
readiness to serve charge and tax.  The amount of the rebate given by MHC was
$36,400.  In calculating the rebate, MHC and DeAnza took into account the
previous subsidy on water usage although this issue had not yet been decided by
the court of appeal.  MHC and DeAnza felt legally safe in so doing based on
language in the hearing officer's decision that actual costs could be passed
through.

On March 12, 1997, MHC also filed an application with the PUC to dedicate the
water system at this property to public use and have the PUC set cost based
rates for water usage.  MHC believed it was obligated to take this action
because of its consistent reliance on PUC Section 2705.5 as a safe harbor from
PUC jurisdiction.  That is, when MHC could no longer charge for water as the
local serving utility would charge, it was no longer exempt from the PUC's
jurisdiction and control under PUC Section 2705.5.

On March 20, 1997, the court of appeals issued the writ of mandate requested by
MHC on the grounds that the hearing officer had improperly calculated the
amount of the rebate (meaning MHC had correctly calculated the rent credits),
but also ruling that the hearing officer was correct when he found that the
readiness to serve charge and tax thereon as charged by DeAnza and MHC were an
inappropriate rent increase.  The court of appeals further agreed with MHC that
the city's hearing officer did not have the authority under 798.41 to establish
rates that could be charged in the future.

Following this decision, the PUC granted MHC its certificate of convenience and
necessity on December 17, 1998 and approved cost based rates and charges for
water that exceed what residents were paying under MHC's reliance on PUC
Section 2705.5.  Concurrently, the PUC also issued an Order Instituting
Investigation ("OII") confirming its exclusive jurisdiction over the issue of
water rates in a submetered system and commencing an investigation into the
confusion and turmoil over billings in submetered properties.  Specifically,
the OII states:  "The Commission has exclusive and primary jurisdiction over
the establishment of rates for water and sewer services provided by private
entities."

Specifically the PUC ruling regarding MHC's application stated:  "The ultimate
question of what fees and charges may or may not be assessed, beyond external
supplier pass-through charges, for in-park facilities when a mobile home park
does not adhere to the provisions of PUC Section 2705.5, must be decided by the
Commission."

After the court of appeals decision, the HOA brought all of its members back
into the underlying civil action for the purpose of determining damages,
including punitive damages, against MHC.  The trial was continued from July
1998 to January 1999 to give the PUC time to act on MHC's application.
Notwithstanding the action taken by the PUC in issuing the OII in December
1998, the trial court denied MHC's motion to dismiss on jurisdictional grounds
and trial commenced before a jury on January 11, 1999.



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Not only did the trial court not consider MHC's motion to dismiss, the trial
court refused to allow evidence of the OII or MHC's PUC approval to go before
the jury.  Notwithstanding MHC's strenuous objections, the judge also allowed
evidence of MHC's and DeAnza's litigation tactics to be used as evidence of bad
faith and oppressive actions (including evidence of the application to the PUC
requesting a $22.00 readiness to serve charge).  MHC's motion for a mistrial
based upon these evidentiary rulings was denied.  On January 22, 1999, the jury
returned a verdict awarding $6.0 Million Dollars of punitive damages against
MHC and DeAnza.  MHC has previously agreed to indemnify DeAnza on the matter.

MHC is preparing to bond the judgment pending appeal in accordance with
California procedural rules which require a bond equal to 150% of the amount of
the judgment.  Post-judgment interest will accrue at the statutory rate
(10.0%).

MHC will participate in post trial motions including a case management
conference in the next thirty (30) days.  The post trial motions will include a
motion for judgment notwithstanding the verdict, new trial and remittitur (a
procedure whereby the trial judge could unilaterally reduce the punitive
damages award).  To the extent MHC is unable to obtain relief in the form of
reversal or reduction of the award in the trial court pursuant to post trial
motions, relief from the verdict, if any, will have to come on appeal.

Generally, MHC's appeal will focus on two areas:  1) lack of jurisdiction in
the trial court; and 2) trial error.   Given that the PUC has issued an OII
confirming its exclusive jurisdiction over the issue of water rates in a
submetered system, that there was generally no dispute with respect to the rent
roll back to achieve relief from rent control, the magnitude of the verdict in
light of reasonable reliance on the PUC's statutory authority, use of
prejudicial evidence against MHC and denial of MHC's rights to present the PUC
decision and related evidence, MHC believes the Court of Appeals will reverse
or substantially reduce the punitive damage award.  However, there can be no
assurances that this will occur.

MHC's view is that the range of possible loss on this matter at this time based
on the opposing legal theories is from 0 (zero) (without considering MHC's
litigation expense which is not expected to be material) to 6 Million Dollars
(plus costs which we expect plaintiffs' counsel to claim, MHC's litigation
expense, cost of bond and post-judgment interest).

Under MHC's theory of the case, once appropriate unbundling of the utility
service from rent has occurred, only the PUC has exclusive jurisdiction
regarding rates that may be charged for utility services on a prospective
basis.  The actions by the PUC in reiterating its exclusive jurisdiction,
agreeing with MHC's interpretation of PUC Section 2705.5, and in certificating
MHC's utility company through the establishment of cost based rates for the
property MHC believes validate its previous reliance on PUC Section 2705.5 as a
means of recovering a portion of the cost of providing water at the property.
Based on the PUC's rulings, while legal expense will be incurred in further
defense, it follows that residents did not incur any actual damages (in the
form of "overcharges") and may be liable to return amounts previously repaid by
MHC and DeAnza.

Obviously, plaintiff's theory as described herein has resulted not only in a
refund to residents of amounts "overcharged", but also in the punitive damage
award.  To avoid trying this case on the merits, plaintiffs introduced
substantial evidence of legal strategy and objected strenuously (and
successfully) to introduction of evidence supporting MHC on the merits.

Currently, there is little or no settlement potential unless the trial court
indicates to plaintiffs at a scheduled case management conference (February 24,
1999) that it is seriously considering granting a new trial or other relief to
MHC based on post trial motions.  Estimated legal expense, if not resolved
prior to appeal, during the next 15 months could reach between $300,000 and
$500,000.



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                                   SIGNATURE


Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized.








                                      MANUFACTURED HOME COMMUNITIES, INC.





                                      BY:  /s/ Thomas P. Heneghan
                                         ------------------------
                                         Thomas P. Heneghan
                                         Executive Vice President, Treasurer
                                         and Chief Financial Officer

                                      BY:  /s/ Judy A. Pultorak
                                         ----------------------
                                         Judy A. Pultorak
                                         Principal Accounting Officer





DATE: February 2, 1999