The Arlington, VA based Manufactured Housing Institute (MHI) has for the past few years been touting their new class of manufactured homes recently named as “CrossMODTM homes.”
When the plan was announced with some fanfare at their Congress and Expo, numbers of MHI members literally walked out of the presentation, per sources at the event.
MHI-only member producers ripped the plan as undermining the bulk of HUD Code manufactured homes.
As a senior executive told MHProNews, there was already lending that had parity with site built housing for modular homes. Why create a home with similar features to a modular home and still call it a manufactured home?
Put differently, the plan made no sense, based upon MHI’s own stated mission and goals.
What did this plan cost MHI?
For the year 2017, we now know. It wasn’t $25,000 or $50,000. It blew past $75,000. Per their own IRS Form 990, obtained by MHProNews, it was $167,962. How much additional has been spent beyond that sum which was paid directly to Ducker Worldwide?
MHProNews has previously reported that seasoned state association executives said off the record that they didn’t need market research. The industry’s members already knew what was necessary.
One MHI affiliated executive said that such research routinely provides what the party that requests it asks for – they find ways to confirm what the requesting party wants to hear. MHI got what they wanted, per that industry veteran source.
But if they got what they wanted, then why has manufactured home shipments declined?
If MHI got what they wanted, then why has this plan that was so trumpeted so obviously failed in the marketplace?
Why has MHI’s new CEO, Lesli Gooch, pushed in her comments letter to FHFA for more support under the Duty to Serve (DTS) for this ‘new class’ of homes rather than promote a robust call for all HUD Code manufactured homes?
While some might argue that it is no surprise that comments from the Manufactured Housing Association for Regulatory Reform (MHARR) or this publication criticized MHI’s approach on this matter, David Dworkin for the National Housing Council arguably did a better job in a paragraph to promote the robust need for DTS on manufactured homes than Gooch did in pages of her comments.
In testimony to Congress, Skyline-Champion president Mark Yost pushed this new class of homes project.
Indeed, each of the ‘big three’ producers of Clayton Homes, Skyline Champion and Cavco Industries is formally behind the plan, even if voices inside those organizations are casting doubts over its logic and value. How do they explain the failure of this scheme to perform as advertised by Ducker and MHI to their stockholders?
“One need but look at the pattern at MHI in recent years to realize the following. Big claims are often made that arguably have little or no practical value as measured by new HUD Code manufactured home shipments,” said publisher and industry consultant L. A. ‘Tony’ Kovach.
Tony Kovach pointed to MHI’s claim of “momentum,” even as the industry was going into its year over year downturn. All of this has occurred in the wake of the ‘new class of homes’ or “CrossModTM homes” project that is failing in every possible measure.
“We warned industry readers and investors almost 2 years ago that this project had the look of a Trojan Horse,” Kovach said, adding “Hasn’t that demonstrably proven to be true?”
As industry leaders know, this new class of homes is directly tied to the Ducker Worldwide research. How good could that research be if the market failure is so obvious?
But there is more to this IRS 990.
MHI paid Patricia Boerger, then their media relations and communications professional, over $200,000 in salary and bonuses. Combined with other costs, the totals for ‘marketing and promotion’ could easily top $500,000.
That figure doesn’t include event costs, which are far higher. Two event totals are known.
- CAESARS PALACE LAS VEGAS – $198,644.
- THE WESTIN MICHIGAN AVENUE – $132,143.
That’s $330,787 for those 2 event venues alone. The MHI IRS Form 990 reveals that in 2017, “Conferences, conventions, and meetings” totaled “$681,404.”
But sources say that’s not travel or other expenses associated with those events, which takes those figures higher still.
All told, MHI paid out $4,915,513 in 2017. Much of that was for salaries and bonuses. How much of that was used to promote the full implementation of the enhanced preemption provision of the Manufactured Housing Improvement Act (MHIA) of 2000? Or how much was spent in pushing for the proper implementation of all forms of federal lending already enacted, which include DTS, FHA Title I, FHA Title II, USDA (Rural Housing), VA and more?
President and CEO Richard ‘Dick’ Jennison, who has been often praised by MHI’s leadership and is no doubt going to get a nice send off message as he retires, was paid some $307,739 in salary and bonuses for 2017 alone.
- Could you find someone to sell out the interests of manufactured housing independents and consumers for Jennison’s $307,739 pay, plus retirement and other benefits?
- Would the millions spent on pay along with travel to nice hotels in getaway locations with no expectation of measurable performance keep other key MHI staffers from blowing the whistle on corruption that is undermining the industry from within?
Here is a collage of some key data, per their 2017 IRS 990 filing.
Jennison, Boerger, Jenny Hodges, Ann Parman and Rick Robinson are among those who are now gone from MHI during that reporting year. Parman and Jennison are among those who praised our publication and specific items, even as we began to increasingly question some of the decision making and performance. But as those questions from MHProNews to MHI continued, MHI opted to remove us from membership in 2017 on the pretense that they had no category of membership for “news.” That ignores the fact that they have others in trade media, who like MHProNews, has affiliated marketing, consulting and other business interests.
Indeed, that removal from MHI membership followed specific questions about issues such as:
- MHI’s support for Pam Danner under the new Trump Administration.
- The new class of home project, now known as “CrossModTM”
- The steady pace of increasingly occupancy at land-lease communities, which could result in an anticipated ‘wall’ being hit for those HUD Code home producers selling manufactured homes to community operators.
- Why Duty to Serve (DTS) and enhanced preemption, among other existing laws, weren’t being robustly pushed by MHI.
- Why MHI wasn’t releasing their bylaws or minutes to key meetings?
- Options for promoting industry growth during an affordable housing crisis.
There was more, but those are enough to make several points.
Let’s stress that no other reason was given by the Arlington, VA based trade group for removing us via an unsigned letter with no name associated with it from MHI’s membership. There was no allegation by MHI that our parent company or team members violated any MHI rule or code of ethical conduct. Our publisher, L.A. ‘Tony’ Kovach, had been elected by his peers to serve on the Suppliers Division board of directors. Are we to believe that in some 7 years of our parent company’s membership, that MHI didn’t realize that we published news? How would that even be possible, given that MHI had paid MHProNews at times precisely to promote their events via our news resources? Their claim to rid themselves of our membership and presence were absurd on its face.
Based on the evidence, far more logical is this reasoning. After years of polite questions and suggestions, it was becoming ever more difficult for MHI’s staff or elected leaders to duck or give intelligent answers to questions that led to uncomfortable realities.
MHProNews has and will continue to advance the argument that MHI is working to subvert the industry, not to promote it. That subversion is done in a fashion that allows consolidation to take place, while it appears that they are doing the kinds of things that a normal trade organization would do.
But in making those efforts, what they routinely produce is the something other than the claimed goal or result. The CrossModTM homes project is but one example of that claim. Their advertorial and social media campaign has produced what in the way of measurable results? Likes mean little if sales go down. How can declining sales and acceptance in the marketplace be squared with the Ducker research or MHI’s claims?
That decline in acceptance is the clear data from third-party Zillow, whose independent research covers part of this same timeframe as this MHI 2017 IRS Form 990. Oops.
No one else in manufactured housing trade publishing has bothered or seriously tried to unmask years of such failures. Why? Is it because key MHI staff, MHInsider, George Allen – to name but a few – are directly connected with this slow-motion travesty?
It was only slowly, over time, after repeated comments from others within MHI that the truth that the trade group was either inept beyond belief or working to undermine the industry from within began to become clear. That undermining, by intention or design, fosters consolidation. It is routinely the big boys of the industry that dominate the MHI board. Are these coincidences?
For example. Why promote a new bill that could undermine the Manufactured Housing Improvement Act MHIA) of 2000, when MHI isn’t robustly pushing for a full implementation of a law they backed before Berkshire Hathaway bought Clayton Homes?
NAMHCO broke with MHI, precisely over MHI’s lack of performance.
MHI award-winner Marty Lavin told MHProNews on-the-record the following.
Those and more like it are damning statements from those who were engaged with the trade group for years.
As to MHI has often been accused of saying one thing and doing another, industry observer Lavin made this statement.
That recent comment amplified a prior one to MHProNews that encouraged industry professionals to see where the money trail leads.
Investigators – including reporters or law enforcement who are trying to solve a mystery – often use the ‘follow the money’ mantra. See what may motivate someone to do or not do whatever. This report sheds light on why staffers may stay mute, because they have a pretty decent gig which arguably has no practical demands other than posturing. But beyond that, current and past staffers have said that MHI mandates non-disclosure agreements (NDAs). So for about 2 years, those who depart are kept from speaking about what they know, or they may face litigation.
When tens of billions if not hundreds of billions of dollars are involved, why would someone be surprised if some are less than enthusiastic about blowing the whistle on a scheme that is historic in its impact?
The industry is steadily being monopolized or ‘consolidated.’ Manipulation of the industry’s access to credit is one aspect of that trend, as the above and below each reflect.
But equally important is the failure to promote the enforcement of good existing laws.
All of that matters with respect to the IRS 990. Richard Jennison for years signed statements under penalties of perjury.
After our prior reporting on previous 990s, it is interesting to note that MHI pivoted on their claim.
But that telling change doesn’t diminish the problems they face under those same penalties of perjury. For public officials, investors or others who pursue this report and analysis is this unmistakable point. By accident or design, the industry is consolidating. MHI claims to represent all segments of the industry, not just those that are doing the consolidating. Skyline Champion’s own investor relations package makes it clear that the industry is underperforming. What sort of wink and a nod is occurring and at what costs and harms?
That’s a wrap on this installment of manufactured housing “Industry News, Tips and Views Pros Can Use“ © where “We Provide, You Decide.” © (News, fact-checks, analysis, and commentary.) Notice: all third party images or content are provided under fair use guidelines for media.
Submitted by Soheyla Kovach for MHProNews.com.Soheyla is a co-founder and managing member of LifeStyle Factory Homes, LLC, the parent company to MHProNews, and MHLivingNews.com. Connect with us on LinkedIn here and here.
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