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Posts Tagged ‘debate’

Affordable Housing and the Two Sides of Rent Control, in Two Videos – Pros and Cons

May 30th, 2019 Comments off

 

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Still from the second video, posted further below.

As a disclosure, MHProNews has argued for years that however good it sounds, rent-control doesn’t work in practice. That noted, as the affordable housing debate is only growing, and some are pushing rent control as a ‘solution,’ this morning the Daily Business News on MHProNews hereby presents two videos on opposite sides of the rent control debate.  We’ll close with a link to one of our own reports on the topic.

 

The first video spotlights in a somewhat lighthearted way the growing affordable housing crisis, and goes through some notable facts, mixed with debatably opinions, and which ends with the presenter’s argument for rent control.  In fairness, the stats near the start of her video are largely useful.

 

 

The next is a shorter video that explains why rent control does not work in practice.

 

 

The National Association of Realtors Chief Economist Lawrence Yun, Ph.D, made the point that only more housing supply can successfully address the problem of rising housing cost in a free market fashion.

HUD Secretary Ben Carson made a similar argument, and specifically proposed manufactured homes as part of his prescription for a better America.

If you are a manager or owner of a company, it is prudent to have your staff understand issues like rent control.  The more people you have working in your company, the more likely you will have some that think rent control is a good idea. Facts and reason can help those who believe that rent control is a solution, when history has repeatedly shown that it is not.

Affordable housing is likely to shape up as a 2020 issue. Expect rent control arguments to be part of that slippery ‘debate.’ See related reports, further below.

That’s this morning’s pre-dawn episode of “News through the lens of manufactured homes, and factory-built housing” © where “We Provide, You Decide.” © ## (News, analysis, and commentary.)

 

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Rent Control & MH – Politicians “Are Carpet-Bombing Our State With Regulations That Will Deliberately Destabilize The Housing Market And Leave It Obliterated”

 

Shocking, True State of the Manufactured Housing Industry, plus Solutions for Profitable, Sustainable Growth – May 2019

“Game On” – “Fighting Discriminatory Zoning” “Moral Obligation” Fix “Worsening Nightmare” – State Associations Entering Spotlight

 

Warren Buffett, Charlie Munger Video Interview at Berkshire Hathaway Annual Meeting on GSEs Lending for Affordable Manufactured Housing and Clayton Homes

Prosperity Now, Nonprofits Sustain John Oliver’s “Mobile Homes” Video in Their Reports

“Lead, Follow … Or Get Out of The Way”

“The Illusion of Motion Versus Real-World Challenges”

HUD Code Manufactured Home Production Decline Continues, May Updates

 

 

 

 

 

 

 

 

“Tug of War” – Manufactured Home Community Legislation – “Vicious Cycle Goes On,” Impacting Industry, Home Owners, and Potential Buyers

March 13th, 2019 Comments off

 TugofWarManufacturedHomeCommunityLegislationViciousCycleGoesOnImpactingIndustryHomeOwnersPotentialBuyersDailyBusinessNewsMHProNews

How does the manufactured housing industry, it’s current and potential home owners achieve mutual victories? That ought to be a key issue for professionals, investors, indeed all in the mix.

 

Here’s how a multi-year manufactured home industry leader put it.

ChristStinebertPhotoFormerMHIPresidentCurrentAmericanFinacialServicesAssociationPresidentAFSA-DailyBusinessNewsMHProNewsThe entire industry must focus on one goal – increasing the value proposition to the homeowner. If we cannot offer our homeowners realistic value for their housing dollar, how do we expect to compete in the marketplace. This means giving the customer true value with their purchase, then keeping them happy after the sale. This means insuring the homeowner builds equity and wealth in their home. And finally, this means providing for stable, viable resale market for when it is time to sell the home. Once the industry delivers this value, the rest will fall into place naturally.”

 

That point was made by former Manufactured Housing Institute (MHI) President Chris Stinebert. See his full commentary, linked here.

 

That goal of Stinebert’s ought to be at the heart of what all sides consider in a looming state legislative slug fest. The Daily Business News on MHProNews will explore the issue in depth, below. Why?  Because this pending bill is a symptom of a broader problem, that based on years of trend-lines and left unaddressed will leave manufactured housing stuck in low gear.

That would harm the interests of most businesses, home owners, housing seekers, investors and others in the mix.

Here’s the genesis of how this issue was brought to MHProNews’ attention.

 

 

Mainstream Media Outreach for Background on Pending Legislation

An email came in 3.12.2019 from a reporter to MHProNews’ publisher yesterday morning. As is often the case, the journalist had a deadline – in his case – for that same day. It was a request for ‘on the record’ comment about a bill pending at the state level that would impact community owners, management companies, and mobile or manufactured home residents.

By late afternoon, that reporter’s article was already written and published.

On Google’s news function, it was the top article last night under both “manufactured home” news searches and “mobile home” news searches. That’s important, as will be revealed later.

 

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The screen captures above and below document that point.

 

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To a reporter doing his research and making his inquiry, it might have seemed like a black and white issue.

But in fact, the tension between community owners and those residents involved is arguably an artificially created problem. It is avoidable, but only if the various parties begin to understand what caused these symptoms that lead to the legislative proposals and resulting tensions in the first place. That will be covered further below.

This is therefore a useful example of lessons learned in dealing with media, public officials, or other researchers who want the truth, instead of some pre-packaged agenda driven response.

The print journalist should be commended for getting a range of perspectives, and then trying to accurately reflect them in his report. Note that headlines are often the work of an editor, not the journalist.

Here was the segue that led to the reporter’s question to MHProNews’ publisher. As is our custom here on the Daily Business News on MHProNews, direct quotes are in brown and bold text. The first and last paragraph are from the reporter, the big middle paragraph is from a third party, and it is what the reporter wanted reaction to for his report.

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The first and third paragraphs at the right are Mark Young’s statement or questions, while the large paragraph in the middle was the statement he was receiving comments and reaction to from industry expert, L. A. ‘Tony’ Kovach,

On a different matter, I’d like your official input on another story. I received the following email today:

 

“Are you aware there are bills before the Florida Legislature that will have a tremendous impact on the lives on those that live in land leased mobile home parks.  723.035 will amend the law to include the responsibility for mowing, trimming trees, power washing, and painting their home, just to name a few.  If, after notice from the park owner, if the violations are not corrected within the stated time, the park owner may enter the lot, perform the work and charge enough to “ensure compliance in the future”.  Though we do see the need for some method of keeping up appearances of the community, it is that “ ensuring compliance “ that we object to.  And can you envision the elderly trimming our live oaks and palm trees.  Can you imagine being away on vacation and not receiving the notice that your home needs painting, only to return and find that it has been painted and you are receiving the bill for it.  The other large issue in the bills, is mandatory binding arbitration for minor violations of Homeowners Associations. There are many land leased mobile home parks in the Manatee Sarasota area, I thought this may be of interest to them.  Thank you for your time.”

 

Are you up to speed on this? Thoughts? Good idea, bad idea? I’m hoping to have a story on this today. I just got in so still have to research it.”

 

Note that the journalist didn’t reveal who spoke those words?  That’s fine, but the writer did provide a direct quote, to which publisher L.A. ‘Tony’ Kovach responded as follows momentarily.  The final news product had the video below, which of course was not made available to Tony until after the print journalist’s report was finished. The video was credited to another person other than the article’s reporter.

 

 

 

 

As a housekeeping note for professional reader clarity, the other items being discussed between the mainstream journalist and Tony Kovach are edited out as not germane to the issue the print reporter was focused upon for an article about pending legislation. Kovach began addressing the reporter on his requested topic as follows.

 

Now, to your question. It’s not as simple as you might think.

As to the pending legislation, I’m not familiar with the specifics of the bill.  The Florida Manufactured Housing Association (FMHA) could give you their feedback.  That said, I am broadly familiar with the issues being mentioned, and will give you insights few if any will care to share.

At present, there is a tug of war that takes place all too often between home owner groups and some manufactured home community owners and most industry trade groups.  While the issues can be significant to the residents and community owners alike, the source of tension are frankly symptoms of broader issues. 

Here’s why. 

More manufactured home communities are closing than are being opened.  That fact has several impacts on the business marketplace, manufactured home owners, and potential customers.  Using the issues you asked about as an example, here’s how that plays out in the real world. 

First, it is in everyone’s interests to keep a community neat and clean. Mowing grass, trimming trees, etc. are both safety and appearance issues that protect the value of the home owners and community alike. 

The question is, how is a valid goal best accomplished?  Let’s look at a hypothetical case, and you’ll see why this simple question can be problematic in practice.

John and Mary Smith are getting fined for unmowed grass by an overly aggressive community owner.

Unlike an individually owned land-lease community, where the community owner may interact with their residents daily, the corporate giants are answering to investors.  Those giants can ‘get away with’ steep fines or other practices in part because the resident have few if any other options. 

The resident can’t move their manufactured home with ease.  Manufactured homes can be moved, but it requires specialized equipment and experienced professionals to move them, that’s thousands of dollars.  It’s part of the reason why once they are properly installed, manufactured homes are better thought of as immobile homes rather than ‘mobile,’ it’s costly to move.

But that cost to move would be less relevant if there were plenty of competitors in a given market that were opening up new land-lease communities.  30 or 40 years ago, these sorts of tension issues between management and residents just didn’t occur as they do now.  Why?  Because new communities were being built. If some resident didn’t like management company X, and that resident was in fact being mistreated by the management at X, new community owner Y may pay to have that customer’s home moved to Y’s new community. 

Rephrased, normal supply and demand decades ago created options for everyone in the mix. That in turn kept all parties at a more level playing field.  Management treated residents fairly, because they didn’t want to see their home moved. Makes sense?

Which bring us to a broader issue. How is possible that during an affordable housing crisis, there are so few manufactured home communities being built or expanded?  Factually, manufactured homes are the most proven kind of affordable housing, period. The graphic below summarizes key data points, from 2018. The problems that were associated with the construction, safety, and energy standards of older mobile homes were largely resolved after the federal HUD Code for manufactured housing went into effect on June 15, 1976.  Put differently, the issues over quality or durability of construction were resolved almost 43 years ago.  Yet the stigma remains.  Why?

Those federal standards for manufactured homes ought to be preemptive, especially since the passage of the Manufactured Housing Improvement Act of 2000 (MHIA), which established “enhanced preemption.”

But for a variety of reasons, some major industry trade groups won’t routinely publicly defend and promote that preemption.  An arguable case in point is the Manufactured Housing Institute (MHI). State associations often follow MHI’s lead.

Here’s how that plays out with John and Mary.  Let’s say that there were too few manufactured home communities being built, as is now the case. The Smith’s could, in theory, move to a privately owned site that they buy.  Enhanced preemption makes that possible.  By the way, the fear that NIMBY forces have of a manufactured home installed next door has been debunked by HUD research and others.

 

 

But for whatever reason, many – but not all – trade groups may posture support for enhanced preemption, but they do little in practice to support it. Some manufactured home community association leaders won’t even mention it. 

By de facto failing to encourage a robust array of options for current and future community residents to turn to, the existing manufactured home communities become in some ways ‘more valuable’ real estate.

What ends up happening as a result are scenarios like this bill you are asking about.  Resident groups want to nix it, because they don’t want (understandably so) a community owner to excessively fine them. Communities want the ability to do so, for both just – and potentially unjust – reasons.

The ‘solution’ that more radical resident groups like MHAction promote is that communities should all be resident owned communities (ROCs).  But that brings us back to Millie Francis. She lives in a resident owned community.  She is supposed to have certain safeguards. In fact, Millie told me she was fined for unmowed grass, and otherwise harassed prior to her Our Lady of Guadalupe artwork incident. Where was her protection as a shareholder in her community?

The solution to this patchwork of overlapping problems is to stop the artificial manipulation of the market.  By action or inaction, big corporate interests and their trade groups can increasingly gain control over more once independently owned communities. With little effective competition, the residents become trapped.  But the answer isn’t ROCs, as Millie’s case proved they can be just as overreaching as an aggressive large community owner might be.

Finally, I’m not saying that every big community is bad, nor that every small community owner is good.  [So] the dynamics above may or may not fit specific cases.

To answer your final question, it isn’t a good or a bad idea. It’s entirely misplaced.  They are looking at symptoms, not the cause.

The underlying causes for the tension will likely remain unaddressed by any such bill.  Until market forces are allowed back in, giving home owners choices, and giving manufactured home communities a natural check on overreaching, there are going to be no quick or easy solutions. Education has to be part of that mix, because lack of understanding causes fear, frustration and can lead to bad legislation. 

A case in point is rent control in the state of Delaware, where resident groups wanted that measure passed to prevent abuses by big operators.  The resident groups in fact got a bill passed.  Those same resident groups, now years later, are still unhappy.  The law doesn’t work as they thought it would. Meanwhile, those complex laws only push more small operators out of the business, and thus encouraged more big companies to buy out smaller ones.  No new communities are being built. And the vicious cycle goes on.

Make sense, sir? 

All the Best,

 

LATonyKovachMHLivingnewsMHProNewsPHotoTony

 

L. A. ‘Tony’ Kovach
www.MHLivingNews.com|www.MHProNews.com| Office 863-213-4090 |

 

The article the reporter published is linked below.

 

 

 

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Thousands won’t go beyond the headline. It is one more black eye for the industry, and hurts the appeal and value of communities, retailers, and home owners among others. Before industry considers such a bill, they should realize that such headlines are likely to occur. The image above is a collage from the sources as noted.  The story is linked below.
https://www.bradenton.com/news/local/article227400579.html

 

Why it Matters? What Does This Reveal? 

First, there are voices in media across the left-right divide that want to frame stories to fit an agenda. Per third party surveys – many but not all in media tent to tilt left or Democratic, so that narrative is going to be more common. That said, there are a range of media today that likewise find audiences that cross that left-right divide. Some in media – perhaps cognizant of the charges in the last few years of ‘Fake News’ – want to get the facts correctly and accurately.  The point is that a journalist merits some benefit of the doubt, unless or until they reveal themselves as a mere hack for a particular perspective.

But all of those points mean that precise phrasing is important. This report in the Bradenton newspaper  – a McClatchy owned media outlet – is a case in point.

Every reporter feels compelled to cull out as much as possible to get to the heart of the matter. Good writers want to reflect the tension in a controversy that reflects ‘both sides.’

MHProNews readers can see for themselves that every quote used by the reporter was accurate. Keep in mind as you read the article linked below that the same process of culling out some details from each source the Bradenton Herald’s writer sought for comments is likely at play.  No one gets every word quoted, unless the quote is a sound bite only.

Superficiality-is-the-curse-of-the-modernWorldMatthewKellyQuoteFancyInspirationBlogMHProNews720

Warren Buffett didn’t say it, but another successful business guru did. Want to understand something enough to benefit from it? There is no substitute to investing the time needed. Buffett says he reads 5 to 6 hours a day. Wow…but look were that got him.

 

 

Back to Stinebert, MHARR – and The Third Way for Manufactured Housing?

At present, the arguable manipulation of the marketplace by forces within and outside of manufactured housing is leading the industry and its customers into what amounts to an oppositional or confrontational posture.  It is win-lose, and each side wants what it wants.

But the various parties may or may not always realize that they are dealing with symptoms rather than the core issue that Tony Kovach addressed in his commentary, quoted at length above.

That core issue is summed up in making the value proposition good for the consumer, and it is achieved by applying what the Manufactured Housing Association for Regulatory Reform (MHARR) has argued in favor of for many years.  Namely, robust enforcement of enhanced preemption and a level playing field in financing. Only that combination, says MHARR, will yield robust rising production.  It is achieved by ending the “Illusion of Motion” vs. seeking actual measurable results.

It is that third way – getting to the heart of the matter instead of dealing with symptoms – that manufactured housing professionals and resident leaders ought to ponder and pursue.  Because the lack of options for the resident-homeowner is indeed a factor that yields the “tug of war” dynamic.

In no particular order of importance:

 

  • Manufactured home communities, residents, and possible buyers are all being impacted by this confrontational dynamic. This kind of tug-of-war or ‘win-lose’ vantagepoint doesn’t tend to exist to this same degree in other American industries between businesses and their customers.  The natural order of free enterprise ought to yield more alignment than the currently manipulated marketplace all-too-often produces.  More typically, a business provides a desired service, and the customer is willing to pay, thus both routinely end up happy, because that is what keeps a business, in business. That’s healthy, while the current state of affairs is arguably harmful to each segment’s longer term interests.
  • Short-term thinking and behavior may appear to benefit the businesses briefly and the same may seem to be true for the mobile or manufactured home owners. But in fact, both sides end up with mid-to-longer term issues that will at some point artificially harm the interests of each. The current low level of new home sales is in part due to a steady stream of mainstream news reports that often appear problematic to the home seeking public. A possible home buyer won’t slug through this kind of nuanced analysis, but professionals or leaders keen on sustainability and win-win growth may.
  • There are no short-cuts. The multifamily housing world is growing, and that growth isn’t seen as problematic for existing apartment owners. So why is it stunted growth in manufactured home community development viewed as healthy or desirable by some in the manufactured home world? The current state-of-affairs mitigates against smaller firms in favor of larger ones.  But even bigger firms know the obvious parallel between manufactured home communities and multifamily housing. So why don’t leaders of larger operations see the longer term harm this current dynamic will eventually impose upon investors and resident-owners alike?  The status quo – viewed objectively – has a future Cavco Industries type threat looming over it, perhaps one that is even bigger.  Or, if a strongly leftist government takes root in Washington, D.C., or at a state house, then the interest of community owners could well be harmed sufficiently. It is avoidable now, so long as long-term win-win mindsets are at work.
  • Therefore, it is arguably in the long-term interests of most involved in such struggles to restore the marketplace to a more normal state affairs. That’s very much in keeping with what MHARR’s advocacy would yield. Enforce existing laws, and the market will be resorted to more normal, and eventually, robust health.

 

That would in turn yield what MHI’s former president Christ Stinebert called for, as previously quoted.

 

ChrisStinebertFormerPresidentManufacturedHousingInstituteAFSAceoMHIndustryMustFocusGoalIncreasingValuePropositionHomeOwnerMHProNewsQuotePhoto

 

Tony Kovach took the time to lay out and link up facts that allowed for a more nuanced final news product.  That should be a key part of what growth-minded associations, and businesses of all sizes seek.

The status quo is fraught with landlines. It creates winners-and-losers. That’s arguably not the norm in most industries. For longer term sustainability that leads to mutual victories, the status quo must be changed.

If current industry trade groups won’t adapt and to the best elements of the principles that MHARR and MHI’s former CEO made in his quote above, then new structures in the post-production realm must be established. Otherwise, the trend lines of more community closures than openings will yield only more woes.  It remains to be seen what the new National Association for Manufactured Housing Community Owners (NAMHCO) will do about such vexing controversies.

 

 

The Last Blockbuster?

The last Blockbuster store on planet earth was recently in the news. Not so many years ago, Blockbuster was a giant, but it failed to adapt. That’s a timely warning to the manufactured housing industry. The low new home shipment levels is another warning.  The time to act is ASAP, as soon as possible, preferably now.

Positive changes that yield mutual victories must be part of the mix. On that point quote above, Stinebert was arguably correct.

Which begs the question, why did it have to be Stinebert’s parting message? Was the growing influence of Omaha-Knoxville over Arlington based MHI already playing out?  See the related reports below for more insights on that question. “We Provide, You Decide” ©  ## (News, analysis, commentary.)

 

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SoheylaKovachDailyBusinessNewsMHProNewsMHLivingNewsSubmitted by Soheyla Kovach to the Daily Business News for MHProNews.com. Soheyla is a managing member of LifeStyle Factory Homes, LLC, the parent company to MHProNews, and MHLivingNews.com.

 

 

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Going to Pot – Marijuana, Illegal Drugs Controversies, and Manufactured Housing

June 23rd, 2018 Comments off
GoingToPotMarijunaIllegalDrugsManufacturedHousingDailyBusinessNewsMHProNews550x315

Graphic design by MHProNews.

There are no known industry specific statistics, but it is safe to say that thousands of manufactured housing (MH) communities have dealt in some form of fashion with the problem of illegal drugs. The same is true with MH factories or other workplaces. Employers tell MHProNews anecdotally that a significant percentage of people who apply for work have a problem with drugs, alcohol or other forms of substance abuse.

 

A growing number of Americans are employed. One manufacturer told MHProNews that they would like to open another production center in Florida. It is a well capitalized company.

What has been their hold up? In a phrase, the competition for an able workforce.

 

Controversial – Drugs, Society and Employment

States have increasingly been debating the issue of legalizing “pot” or marijuana. It is on the surface a vexing issue.

States are routinely hungry for new tax sources, and marijuana fit the bill for voters in Colorado, which legalized the sale of pot in 2012.

SenatorCoryBookerDNJ-TwitterManufacturedHousingIndustryDailyBusinessNEwsMHProNews

U.S. Senator Cory Booker, (D-NJ).

The Denver Post said that in 2017, there was $1.5 billion dollars in sales, and “Colorado collected upward of $247 million in taxes and fees revenue from marijuana sales.”

What are the downsides?

In a USA Today op-ed, Jeff Hunt said, “Marijuana devastated Colorado, don’t legalize it nationally.”

Hunt pointed to federal legislation promoted by Senator Cory Booker (D-NJ), which would legalize marijuana nationally.

Hunt said, “Our country is facing a drug epidemic. Legalizing recreational marijuana will do nothing that Senator Booker expects. We heard many of these same promises in 2012 when Colorado legalized recreational marijuana.”

In the years since, Colorado has seen an increase in marijuana related traffic deaths, poison control calls, and emergency room visits. The marijuana black market has increased in Colorado, not decreased. And, numerous Colorado marijuana regulators have been indicted for corruption,” said Hunt.

JeffHuntColoradoChristianUniversityPhotoPictureImageManufacturedHousingIndustryDailyBusinessNewsMHProNews

Jeff Hunt, Vice President of Public Policy at Colorado Christian University,

In fiscal year 2016, marijuana tax revenue resulted in $156,701,018. The total tax revenue for Colorado was $13,327,123,798, making marijuana only 1.18% of the state’s total tax revenue,” wrote Hunt. “The cost of marijuana legalization in public awareness campaigns, law enforcement, healthcare treatment, addiction recovery, and preventative work is an unknown cost to date.”

Senator Booker stated his reasons for legalizing marijuana is to reduce “marijuana arrests happening so much in our country, targeting certain communities – poor communities, minority communities.” It’s a noble cause to seek to reduce incarceration rates among these communities but legalizing marijuana has had the opposite effect,” said Hunt.

According to the Colorado Department of Public Safety, arrests in Colorado of black and Latino youth for marijuana possession have increased 58% and 29% respectively after legalization,” Hunt said, adding “This means that Black and Latino youth are being arrested more for marijuana possession after it became legal.”

 

Race and Drugs

Furthermore,” said Hunt “a vast majority of Colorado’s marijuana businesses are concentrated in neighborhoods of color. Leaders from these communities, many of whom initially voted to legalize recreational marijuana, often speak out about the negative impacts of these businesses.”

The true impact of marijuana on our communities is just starting to be learned,” Hunt, who is Vice President of Public Policy at Colorado Christian University, wrote.

Given Hunt’s vantage point as an educator, it is interesting to note the his following factoids.

Senator Booker released his bill a few days after the Washington Post reported on a study by the Review of Economic Studies, said Hunt.

That report found “college students with access to recreational cannabis on average earn worse grades and fail classes at a higher rate.” Getting off marijuana especially helped lower performing students who were at risk of dropping out. Since legalizing marijuana, Colorado’s youth marijuana use rate is the highest in the nation, 74% higher than the national average, according to the Rocky Mountain High Intensity Drug Trafficking Area Report. This is having terribly negative effects on the education of our youth.”

To say that Hunt is against legalization for fact-based reasons is clear.

But what is absent from Hunt’s thoughtful column is the history of prohibition and alcohol in the U.S.

The U.S. tried and failed to make alcohol illegal. It resulted in black markets, gangs, and criminalized behaviors that have been legal in some parts of the world for centuries. The war on alcohol failed as badly as the war on drugs has.

Perhaps what is necessary is to strike some middle ground?

President Trump recently pardoned a non-violent drug offender. Per Vox, “Kim Kardashian West did it: President Donald Trump has commuted the life sentence of Alice Johnson, the 63-year-old great grandmother in prison for drug trafficking, whose cause Kardashian lobbied for in the Oval Office.

KimKardasianWestPresidentDonaldJTrumpOfficailPhotoManufacturedHousingIndustryDailyBusinessNewsMHProNews

Official photo.

At the end of the day, there is a need to get to the heart of what drives people to use – or abuse – substances in the first place. With millions incarcerated over the years for drug related crimes, that has a high cost to society.  But as Hunt points out the legalization hasn’t changed all of that either.

Getting to the root issues of what causes people to turn to a controlled substance must be part of the solution. Much of what has been done so far clearly has not worked.

UnemploymentRateBLSJune2018ManufacturedHousingIndustryDailyBusinessNewsMHProNews600x

There are 6.7 million job openings and just 6.4 million available workers to fill them,” said CNBC on June 5, 2018.

The labor force participation rate is still low, as the chart reflects.

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It is still early in the Trump Administration, and the labor force participation rate has been improving. Still, as the data reflects, it is at historic lows. Part of the problem? According to experts, substance abuse.

The Trump Administration policies have been pro-growth for business. Incomes are starting to rise. Claims for unemployment and so-called “entitlement” programs are starting to fall.

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Employment is surging, and so too is the demand for skilled workers. Efforts to train former inmates, and other vocational training are parts of the policy discussions, which impact manufactured housing and all other industries too.

The vexing issue of drugs and substance abuse impacts manufactured housing industry businesses of all kinds. A happy medium must be found, because much of U.S. policy for over 50 years has proven ineffective, costly, and harmful to millions. “We Provide, You Decide.” © ## (News, analysis, and commentary.)

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Manufactured Home Community Best Practices Debate, Rentals vs. Sales and Accounting Methods

May 26th, 2017 Comments off
tristar-estates-bourbonnais-il-CreditMHC-MD-com, posted MHPorNews.com.

Arial photo credit, MHC-MD.com.

A recent post from Eric Enloe, Managing Director of JLL Valuation and Advisory Services has revved up debated topics in the industry – home rentals versus sales – as well as a look at various best practices regarding accounting and corporate structure methods.

Most participants in the manufactured housing industry know that the best way to add value over time to a land lease community is to drive maximum rental growth rates while holding expenses to a lower growth rate,” writes Enloe.

But, did you know you can often add value to a community without investing any time or capital?”

Enloe then provides three “tricks” to maximize community value, as viewed through what he calls the eyes of a lender:

  • Ensure that your leases allow for a pass-through of increases in real estate taxes and other government assessments.

Enloe writes that this lease clause will ensure that, as your property rises in value, a hypothetical increase in real estate taxes doesn’t impair the underwritten value of your property.

  • If you have community-owned homes, make sure you charge yourself the same rent as your third-party pad tenants.

If you charge yourself—or a related entity— below-market pad rent, you could be reducing the value of your property from a lender’s perspective because they are often limited to underwriting rents supported by the rent roll,” Enloe said.

Alternatively,” says Enloe “the lender is not likely to allow you to count community-owned pad rents in excess of unrelated third-party pad rents, but be sure not to short change your community by failing to ensure that community-owned pad sites depict rental rates at least in line with other tenants.”

  • If you have community-owned homes, some of your payroll, as well repairs and maintenance expenses, is likely associated with maintaining these homes rather than the actual land lease community.
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Credit: The Investor.

Enloe writes that, “if you can track these labor and materials expenses separately, or at least make a reasonable estimate of them at the end of each month, many lenders will allow you to deduct these expenses from your property’s operating expenses, thereby increasing the underwritten value of the community.”

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Eric Enloe. Credit: CRE.

He continues, “if the lenders can’t give you credit for your personal property (chattel), you shouldn’t be penalized by counting the expenses for maintaining such chattel as a community operating expense, reducing the underwritten value of your property.”

Following these three simple suggestions,” writes Enloe, “will maximize most lenders’ underwritten value of your community, ensuring the best possible financing terms for yourself or a potential buyer.”

 

Gathering Industry Feedback

As the manufactured housing industry’s trade publication of record, MHProNews asked for industry feedback from professionals in the community sector on Enloe’s article.

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Richard Nodel, owner, Nodel Parks, photo credit, LinkedIn.

I agree with all three points made. I think the most important one has to do with segregating all expense attributable to the home operation separate,” says Richard Nodel of Nodel Parks.

As we know lenders do not like to count the ‘home rental income.’ To help offset that, we need to clearly show all the expenses that could be cut if the rental homes were not there.  Again, nothing controversial there, just good common sense.“

I am in favor of more attention being paid to the ever-growing segment of our business, which is rental housing,” said Nodel.

Sun, ELS and UMH are among those community operators that turned to rentals as a faster way to fill vacant home site.

Bucking the Rental Trend with Home Sales

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Video still from Roberts Resorts are from an exclusive interview, A Cup of Coffee with Scott Roberts of Roberts Resorts, linked here.

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http://www.mhmarketingsalesmanagement.com/cup-of-coffee/a-cup-of-coffee-withscott-roberts

Scott Roberts of Roberts Resorts, is one community professional who is “bucking the trend” in the tide of rentals in communities.

Roberts says that his operation is focused on selling homes, rather than renting them.

Other industry professionals point out that renting homes routinely results in a drop in new manufactured home sales.

While some renters may, over time, decide to buy the home they lease/rent, the total conversions reported to MHProNews typically hover in the low single digit a year range when it comes to the percentage of buyers that become renters.

Other Views

I disagree with the first bullet – rising real estate taxes would be a reflection of rising site rents or occupancy – both of which should cover increases in RET. I assume owners are already charging what the market will bear for site rent,” said one industry professional, off the record.

Other comments included this from a Midwestern operator.

If the owner is at that max, and the RET finally catches up, does it really make sense to go to residents and say, “I just increased your rent for 2018 by $15.  That was before I knew I’d pay an additional l $5 per pad for increased RET.  So I’m passing that on too? Isn’t the increase in RET reflective of the ongoing increase in site rent?”

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Brian Gallagher. Credit: LinkedIn.

Brian Gallagher, Chief Operating and Financial Officer Santefort Real Estate Group, LLC, shared his take regarding point number three in the Enloe article.

Rather than record all home and site expenses on the books of the entity which owns the community and is the borrower on the mortgage, and then ‘deduct’ home related expenses from site operations, it’s much better to establish a separate LLC to account for all home operations, separately from site operations,” Gallagher told MHProNews.

 

A Closing Disclosure

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On the consulting side of MHMarketingSalesManagement, there are companies our sister operations work successfully with that fall into each of these camps.

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MHProNews is not taking a public position on these questions.

Instead, as the industry’s trade publisher of record, we’re highlighting the evolving discussion and debate in the important manufactured home community sector on how these issues are viewed by professionals.  This fuels the useful discussion of what are the best practices for community owner/operators?

The Daily Business News will continue to track these and other industry debates and discussions. ##

(Image credits are as shown above, and when provided by third parties, are shared under fair use guidelines.)

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RC Williams, MHProNews.

Submitted by RC Williams to the Daily Business News for MHProNews.

 

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Mo Mitt

October 3rd, 2012 Comments off

round-won-credit-drudge-report-posted-manufactured-home-marketing-sales-management-mhpronews.com-daily-business-news-MHProNews reports that Mitt Romney grabbed momentum and took it to the incumbent president on a range of issues, including: Dodd-Frank, ObamaCare, Medicare, increasing domestic energy production, reforming taxes, education and of course creating jobs. Romney twice cited that the National Federation of Independent Businesses (NFIB) said that Obama’s policies would cost the country another 700,000 jobs. Romney stressed free market vs. big government solutions and repeatedly corrected the president on claims Obama made about his policies, saying the president was entitled to his own plane, house and opinions “but not to your own facts.”

In post debate commentary, ABC, CBS and NBC all essentially agreed that Romney was crisp and in command of facts, while Obama looked flat. The fact that Barack Obama was often hanging his head and grimacing seemed to capture the night, as the photo from Drudge reflects.

In samples of post debate media coverage, even very partisan MSNBC seemed frustrated with Obama’s performance. Real Clear Politics stated:

“Tonight wasn’t an MSNBC debate tonight, was it?” Chris Matthews said after the first Obama-Romney presidential debate concluded on Wednesday night.

“I don’t know what he was doing out there. He had his head down, he was enduring the debate rather than fighting it. Romney, on the other hand, came in with a campaign. He had a plan, he was going to dominate the time, he was going to be aggressive, he was going to push the moderator around, which he did effectively, he was going to relish the evening, enjoying it,” Matthews said.

The National Journal reported:

“Going forward with the status quo is not going to cut it for the American people who are struggling today,” Romney said, stealing the mantle of change Obama wore so well in 2008.

The former Massachusetts governor also reminded voters repeatedly that the president has not lived up to promises he made four years ago. After Obama vowed to reduce the deficit in a second term, Romney replied, “You’ve been president four years.”

“You said you’d cut the deficit in half. It’s now four years later. We still have trillion-dollar deficits,” he said. Time is up was the message for voters.

Privately, some Democratic strategists said the challenger got the best of the president. “We got our clock cleaned,” said a Democratic strategist who spoke on condition of anonymity out of fear of retribution. The strategist had reviewed results of polls and focus groups of the debate.

As MHProNews knows, while all of the issues discussed impact manufactured housing professionals and the industry’s customers, Dodd-Frank is certainly among the issues that impacts our industry the most. Romney has promised to repeal Dodd-Frank if elected. Gains in the Senate and holding the House by Republicans would make that promise possible.

One radio commentator pointed out in pre-debate coverage that of the over 40 promises that Romney made to voters in Massachusetts, he kept all of them. Governor Romney pledged to do what he did in Massachusetts, where he worked with both parties to get things done. During Romney’s term, the former Governor asserted that he worked successfully with a legislature that was 87% Democratic.

Governor Chris Christie predicted on Sunday that the narrative of the race would be different Thursday morning.   There was surprising consensus even among often partisan pundits that the debate’s Mo went with Mitt. ##

(Photo credit: Drudge)