Industry Decline Worsens – Disinformation Persists

Washington, D.C., June 10, 2011 – The Manufactured Housing Association for Regulatory Reform (MHARR) reports that according to official statistics complied on behalf of the U.S. Department of Housing and Urban Development (HUD), manufactured housing production continues to decline significantly in 2011. In April 2011, 3,944 HUD Code homes were produced, down from 4,793 homes produced in April 2010, representing a corresponding-month decline of 17.7%. Cumulative production during 2011, to the end of April, stands at 13,667 homes, a decline of 14.5% from the cumulative production of 15,979 homes during the same period last year.

As 2011 has progressed, the decline in overall industry production has become more pronounced. And as this decline continues, with no end in sight, the industry is facing an array of enormous challenges, most particularly the post-production segment of the industry (i.e., retailers? communities, finance companies, insurers and other service entities), which faces a veritable tsunami of damaging new regulations. This, together with the ongoing imposition on manufacturers of unnecessary and costly expansions of regulation, added to the continuing scarcity of both public and private consumer financing has left the industry and the lower and moderate-income consumers who rely on its products in dire straits. Thus, over the past decade, manufactured housing production has declined by more than 86% (from 373,143 units in 1998 to 50,046 in 2010), while nearly 75% of manufactured housing production facilities (from 430 to fewer than 110) and 7,500 retail centers have closed over the same period, resulting in the loss of more than 200,000 manufactured housing industry jobs throughout the United States.

And while the use of affordable manufactured housing in today’s difficult economic climate should actually be growing, the industry shows no signs of an imminent rebound. As a comprehensively federally-regulated industry, all segments of the manufactured housing industry have been negatively impacted by the decisions and actions of regulators in Washington, D.C. Those harmful decisions, moreover, have emboldened industry detractors, nemeses and competitors to pile-on the industry – pursuing policies and actions that could cause even greater harm for consumer financing as well as an unnecessary and costly expansions of production regulation. As a result, the industry’s problems continue to multiply and expand as assorted special interests have worked to manipulate the system – particularly the Manufactured Housing Consensus Committee (MHCC) – which has been undermined and weakened by HUD regulators.

Even worse, the industry itself helped to empower these detractors and helped HUD regulators stack the MHCC against the industry, when one of its national collective organizations unilaterally withdrew from voting MHCC membership. This provided HUD regulators with a pretext for totally excluding the industry’s collective national representation from voting membership on the MHCC, while simultaneously filling the MHCC with special interest advocates.

As a result, the industry has now been targeted within the MHCC with expensive and unnecessary proposed standards for matters such as fire sprinklers and compliance with “accessibility” standards in all manufactured homes, when such features are needed by only a fraction of the private market and are readily available as options. At the same time, there is also a renewed effort to alter and water-down the statutory definition of a “manufactured home” that would introduce “trailer” elements and “trailer” comparisons that the industry fought to end with the 2000 law. And all of these, have been packaged, portrayed and “spun” to the industry grassroots as positives.

MHARR, in its continuing effort to dispel such misinformation, has begun to publish a series of plain language, straightforward fact sheets regarding these key issues. Copies of three of these fact sheets, relating to HUD efforts to undermine the MHCC – a primary reform of the 2000 law – are attached (Ed: see below), MHARR previously published two other fact sheets, in May 2011, regarding the history of the manufactured housing program and the requirement for an appointed non-career program administrator under the 2000 law.

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.


FULL AND PROPER IMPLEMENTATION OF THE MANUFACTURED HOUSING IMPROVEMENT ACT OF 2000 – FACT SHEET # 1

HUD HAS NOT APPOINTED A NON-CAREER PROGRAM ADMINISTRATOR  

One of the key reforms of the 2000 law directed HUD to appoint a non-career administrator for the federal manufactured housing program.

The HUD program, however, has not had an appointed non-career administrator since 2004. HUD claims that it has no obligation to appoint such a non-career program administrator because the word “may” appears in section 620(a) of the 2000 law, which precedes section 620(a)(1)(C) regarding a non-career administrator. Based on this, HUD maintains that the 2000 law “contains no express or implied requirement for the Secretary to appoint a non-career Administrator.” This is a serious misreading of the law.

The law states in section 620(a) that the Secretary of HUD may “establish and collect” a reasonable fee to offset the expenses the Secretary incurs in carrying out his “responsibilities” under the law. Those responsibilities are then listed in the law – in section 620(a)(1)(A)-(G) and includes, among other things, the responsibility to provide “the funding for a non-career administrator” for the manufactured housing program. Under the plain wording of the law, the word “may” applies to the establishment of the fee. Once that fee is established, however – as it has been – it is to be used to offset the Secretary’s statutory “responsibilities.”


FULL AND PROPER IMPLEMENTATION OF THE MANUFACTURED HOUSING IMPROVEMENT ACT OF 2000 –  FACT SHEET # 3

HUD HAS UNDERMINED THE ROLE AND AUTHORITY OF THE MHCC

Because the Manufactured Housing Consensus Committee (MHCC) is not a routine federal advisory committee but, instead, has specific authority under the 2000 law, HUD has attempted to severely limit its role through baseless, highly restrictive interpretations of the law. Specifically, HUD has refused to trigger section 604(b) of the 2000 law, which requires proposed regulations and regulatory interpretations to be brought to the MHCC. Further, HUD issued an “interpretive rule” on February 5, 2010, without opportunity for public comment, which strips the MHCC of nearly all its authority under section 604(b)(6) of the 2000 law to review and comment on a wide range of HUD actions that do not fall under the formal definition of a “rule.” These positions, however, are plainly inconsistent with the 2000 law.

HUD claims that “as a private advisory body not composed of federal employees, the MHCC does not have HUD’s responsibilities for public safety and consumer protection. The Department must, therefore, remain free of the MHCC process to make program decisions that would not be considered rules under the Administrative Procedure Act.” While HUD is correct that the MHCC does not have HUD’s statutory “responsibilities,” this issue was addressed fully during the legislative process and is precisely why the MHCC issues recommendations that do not gain the force of law unless they are approved by the Secretary and subject to rulemaking.

Since the power of the MHCC is limited to recommendations only, the law is very broad in identifying the types of HUD actions that must be brought to the MHCC. In addition to standards, enforcement regulations and interpretations of both, as addressed in sections 604(a) and 604(b), the “catchall” section of the Act, 604(b)(6), was designed to ensure that virtually all regulatory actions of the Department, whether characterized by HUD as a “rule” or not, to establish or change existing standards, regulations and inspection, monitoring and enforcement policies or practices, would be subject to review, consideration and comment by the MHCC. This section, which deems any such action “void” without MHCC review, was included in the law as a remedy for past abuses where major changes to enforcement procedures and the construction of the standards were implemented without rulemaking or other safeguards.

The law, therefore, addresses HUD’s point by limiting the power of the MHCC to recommendations, not by severely limiting the actions subject to MHCC review as HUD claims. To construe section 604(b)(6) to apply only to formal “rules” makes no sense, because rules are subject to rulemaking and public comment anyway. Instead, section 604(b)(6) is designed to provide an opportunity for MHCC consensus comment and recommendations on a wide range of program actions that would not otherwise be subject to public review or comment. HUD, therefore, has misconstrued the 2000 law.


FULL AND PROPER IMPLEMENTATION OF THE MANUFACTURED HOUSING IMPROVEMENT ACT OF 2000 – FACT SHEET # 4

HUD HAS UNDERMINED THE INDEPENDENCE OF THE MHCC

The Manufactured Housing Consensus Committee (MHCC) was established by Congress in the 2000 law as a replacement for the National Manufactured Housing Advisory Council (Advisory Council). Congress abolished the toothless Advisory Council because it was limited to standards only and was easily and consistently bypassed by HUD, which was not required to consider its recommendations. The MHCC, by contrast, was designed by Congress to have presumptive authority to review and comment on all HUD proposals and actions affecting the federal standards and enforcement regulations, and their interpretation. The 2000 law thus establishes specific statutory mandates as to what types of matters must be brought to the MHCC (i.e., standards, regulations, interpretations and changes to enforcement related practices and policies) and when those matters must be brought to the MHCC (i.e., in advance, or be deemed “void” under section 604(b)(6)). It also establishes specific substantive (i.e., section 604(e)) and procedural requirements (i.e., sections 604(a) and (b)) for MHCC consideration of those matters, as well as actions the Secretary must take (i.e., sections 604(a)(5) and 604(b)(3)-(4)).

HUD, however, claims that the MHCC is merely a routine federal advisory committee and has relied upon the Federal Advisory Committees Act (FACA) in an effort to transform the MHCC into a meaningless rubber stamp, akin to the defunct Advisory Council. It has thus acted to: (1) control the issues considered by the MHCC; (2) drastically limit public notice of – and participation in – MHCC meetings; (3) hand-select the MHCC chairman and subcommittee chairmen; (4) hand-select appointments to subcommittees; and (5) control the assignment of proposals to particular subcommittees. Nothing in FACA, however, supports these positions. Indeed, FACA states that it applies: “except to the extent that any Act of Congress establishing any such advisory committee specifically provides otherwise.” Thus, the specific MHCC authority and procedures established by Congress would supersede FACA in any event.

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