Congress Should Hold HUD Accountable on Program Budget and Expenditures

MHARR logoWashington, D.C., February 23, 2011 — The February 2011 release of the Fiscal Year 2012 budget and appropriations request of the HUD manufactured housing program underscores the urgent need for intensive congressional scrutiny, examination and oversight of that runaway budget, as well as direct accountability by HUD regulators for the misdirection of funds previously appropriated, as already called for by the Manufactured Housing Association for Regulatory Reform (MHARR).

In a January 28, 2011 letter to Rep. Thomas Latham (R-IA), chairman of the House of Representatives’ Transportation, Housing and Urban Development and Related Agencies Subcommittee (see, downloadable PDF), MHARR called on the 112th Congress to seek “full accountability from HUD regarding its use of all appropriated funds” and to “carefully scrutinize any claimed need for further general revenue appropriations at a time of historically low [manufactured housing] industry production.” And, the Department’s just-released 2012 proposed budget, which requests $7 million in taxpayer funding as well as a more than 50% increase in the fee paid by manufacturers to fund the program (i.e., from $39.00 to $60.00 per home section), fully warrants such congressional action.

MHARR brought this issue to Congress, based upon HUD’s now five-year track record of misleading program funding requests that have ballooned the program budget and have led to multi-million dollar infusions of tax revenue that have been misdirected by the program.

Since 2007, despite a devastating decrease in industry production (now standing at 87%), the HUD manufactured housing program budget has more than doubled. Contrary to claims by HUD in budget requests dating to at least 2008, this dramatically increased funding has not been used to fully implement the federal installation and dispute resolution programs mandated by the Manufactured Housing Improvement Act of 2000 — a one-time cost for programs that were, by law, to have been in place by December 2005. Nor has it been used to properly fund program functions expressly mandated by Congress in the 2000 law. 

Instead, the increased funding approved by Congress each year has been misdirected by HUD regulators to impose a totally new structure of needless and needlessly costly de facto regulation on manufacturers and consumers, in contravention of relevant reform provisions of the 2000 law. This has provided HUD with a pretense for increasing program staff and payments to contractors — including its “monitoring” contractor of 34 years (now a de facto sole-source contract) — at a time when it otherwise would have been forced to reduce expenditures due to falling production. In addition, and despite a projected funding carry-over that — together with the $14 million total FY 2012 funding request — would provide the program with $20 million of expendable funds, HUD continues to refuse to use a small part of its funding to hire a non-career manufactured housing program administrator, as expressly provided by the 2000 Act.

To make matters worse, at the same time that HUD has been funding its make-work regulatory expansion, its proposed budgets have capped funding at unrealistically low levels for its state partners — State Administrative Agencies (SAAs) which serve as the first line of protection for consumers living in both new and existing manufactured homes. 

It is precisely because of the multi-year track record of budget and expenditure abuse by the HUD program, its ongoing and continuing misdirection of appropriated funds and its failure to use those funds to implement mandatory functions and reforms under the 2000 law, that led MHARR, even before the release of the 2012 budget, to inform Congress that “there is no legitimate basis” for such a large program budget and to call on the 112th Congress to seek full accountability from HUD officials for all aspects of the program budget and the program’s use of budgeted funds since the passage of the 2000 law. Such an accounting from HUD is long-overdue and badly needed, and should be a pre-condition to the appropriation of further funds for the program as part of the FY 2012 budget.

Moreover, the proper time to address program funding and expenditures is now, when Congress can examine and consider funding needs in relation to the specific functions authorized and mandated by section 620 of the 2000 law, in light of HUD’s past failure to comply with those provisions, and not later, during possible rulemaking on the proposed 50%+ increase in manufacturer label fees, as suggested by some in the industry.

Based on all these factors MHARR, over the past several months, has conducted a critical analysis of HUD program budgets and expenditures since 2007 and has prepared a document reflecting that analysis, as well as conclusions and suggested approaches and remedies, that will be submitted to Congress in connection with the appropriations process for FY 2012. 

The Manufactured Housing Association for Regulatory Reform is a Washington, D.C.-based national trade association representing the views and interests of producers of federally-regulated manufactured housing.

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