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Secretary Carson Letter Lights Fuse for Explosive Change, Obliquely Addresses Manufactured Housing Action Concerns

April 29th, 2019 Comments off

 

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Last year at the Paris Hotel in Las Vegas, Manufactured Housing Action (MHAction) in conjunction with other left-leaning groups, protested Housing and Urban Development (HUD) Secretary Ben Carson’s address to the Manufactured Housing Institute (MHI) at their annual “Congress and Expo” fundraising and networking event.

 

At that time, MHAction issued a press release, photos, and video footage of their efforts to disrupt the talk by Secretary Carson.  The picture above is one of those items, and it’s use or quoting MHAction herein are not to be construed as an endorsement of their views or tactics.

Ben Carson insulted and dismissed us while telling the corporate investors in attendance that they should keep profiting off the housing crisis. Ben Carson’s job is to help solve the housing crisis for people, not profiteers. We came to Las Vegas today to remind Secretary Carson to do his job,” said Patricia Norberg, a manufactured homeowner from Delaware and a grassroots leader with MHAction. “Corporate and private equity investors associated with MHI say ‘jump’ and Carson says ‘how high?’ We’ve had enough.”

MHAction said that low-income senior Jeliner Jordan asked Carson, “If you increase rents and cut the HUD budget, where will I live?” Carson responded by saying “This is a perfect example of what happens when the swamp gets ahold of people.”

 

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What perhaps was missing from a clear understanding of the above drama was the fact brought forth by twin reports on Manufactured Home Living News, the first of which documented that MHAction has had dark money funding from Warren Buffett through the NoVo Foundation and the Tides nonprofit.

 

 

The second and more recent report then applied that insight learned to the MHAction supported and inspired video by Last Week Tonight with John Oliver errantly dubbed “Mobile Homes.”   In an apparent head-fake to many resident groups and industry professionals alike, MHAction – in concert with others – published a white paper that was cited by Oliver in his report.

 

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You build a case, by laying out the evidence, one fact at a time. To see the John Oliver errantly named “Mobile Homes” video and related fact-check, click here.

 

That MHAction co-branded white paper in turn was publicized by the Washington Post, others in media, and finally Oliver’s video.   But when one grasps how dark money operates in such matters, and steps back to look with that in mind, it is Buffett money that arguably helped fund an attack on a number of significant MHI members, including his own Clayton Homes and related lenders.

The rationale for Buffett doing so, in brief, is that like taxes or regulations, bigger companies can handle negative media better than smaller firms can.  Negative news for he and his allies is less harmful than it is for independents.  That in turn allows larger firms to gobble up smaller ones at reduced prices.  Here’s how retailer Alan Amy summed it up.

 

 

A View from NMHOA… 

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Separate the “wheat and chaff,” with all people, organizations, and ideas. One must separate the useful from what is not.

As a letter from the prior National Manufactured Home Owners Association (NMHOA) president Tim Sheahan quoted below in part reflects, when manufactured home communities were being developed, site fess or ‘lot rents’ were being held in check. Here is how he put it while he was still president of NMHOA, in his comments letter to the Federal Housing Finance Agency (FHFA) last year.

In 1970, my city of San Marcos had a population of less than 4,000 and was part of the dramatic manufactured housing community development boom of the 1970s, adding over 3,000 pads among 18 manufactured home communities, which led to more than a doubling of the population by the mid 1970s.” wrote Sheahan.

Like many areas of CA, manufactured home purchasers in San Marcos were lured away from metropolitan areas by the promise of a quiet semi-rural retirement lifestyle with low lot rents and nice amenities, which often included clubhouses/community centers, swimming pools and spas, saunas, shuffleboard courts, pool tables and card rooms, community kitchens; and, in some cases, tennis courts, golf courses and fishing ponds. Downsizing to a MH also enabled them to enhance their financial nest eggs for the retirement years. Initially, stiff competition among various developers during the only time a true “free market” situation existed in these communities commonly led to very reasonable starting rents,” stated Sheahan.  That last sentence is a telling and arguably correct point with the law of supply and demand in mind.

He then said, “As the communities filled with “im-mobile” homes, free market forces such as competition were lost and lot rents for captive homeowners skyrocketed in many areas of California.” That point is largely correct, but it fails to note that it was the lack of new community development that de facto eliminated the option for someone to leave a community where they felt like they were being mistreated in favor of a newer one.”

 

Real World Lessons Learned

LATonyKovachMHanufacturedHomeLivingNewsManufacturedHousingProNewsConsultantIndustryExpertIn the Oklahoma City and Houston, Texas metro areas, I personally witnessed periods in manufactured housing history where land-lease community owners that were developing new sites, offered to move residents from other area communities in to their property at the property owners’ cost,” said publisher and industry consultant L. A. ‘Tony’ Kovach.

Rephrased, as long as there are reasonable alternatives to residents, then the temptation to ‘jack up’ site fees of ‘trapped’ residents is significantly reduced or even eliminated.

Imagine if apartment complexes were no longer being built in the U.S. What would happen? In a free market, as population grows and demand rises, rents would too.  The steady construction of new apartment buildings helps keep existing apartment owners from going too high on rental rates,” explained Kovach.

So, NMHOA’s Tim Sheahan isn’t wrong about the early history, but the solution now isn’t rent control, which Paul Bradley of ROC USA has himself said isn’t an answer,” Kovach said. “Rather, a longer-term solution is to provide more options for community residents, so that the temptation to do what certain MHI member companies have been accused of in recent years is eliminated.”

 

With that Backdrop, The Fuse for Meaningful Solutions is Lit with New Letter

At their annual meeting at the 2019 Tunica Manufactured Housing Show, members of the Manufactured Housing Association for Regulatory Reform (MHARR) voted to undertake a new initiative to address zoning and placement issues that in their view is not being successfully addressed by the MHI. That perspective is held by others in MHVille too, including a number of MHI members.  At the recent Bryan, TX effective ‘ban’ voted by their city council of even new manufactured housing in various cases, MHI – per MHI members in attendance – did not even send a staffer to protest the ban.

Although MHARR is an independent production association, which compared to MHI claims to be both a producers and post-production association, they’ve taken another step into post-production territory, with their recent vote.

As careful and regular MHProNews readers know, MHARR recently asked HUD to initiate a study of the problems related to placement and zoning issues, tied into the legal concept of enhanced preemption.

In a light-the-fuse letter obtained by MHProNews to HUD Secretary Ben Carson, the next step in that process is being taken.

MarkWeissJDPresidentCEOManufacturedHousingAssocRegulatoryReformDailyBusinessNewsMHProNewsMHARR’s President and CEO, Mark Weiss said to Secretary Carson and several key Washington, D.C. figures as follows, under the subject: Discriminatory and Exclusionary Zoning of HUD-Regulated Manufactured Homes.

One of the principal challenges faced by the manufactured housing industry and particularly its smaller businesses in providing inherently affordable, non-subsidized housing and homeownership for lower and moderate-income Americans, is the discriminatory exclusion of HUD Code manufactured housing from large areas of the United States under the guise of local zoning regulation.”

Such exclusionary and, in fact, discriminatory zoning mandates, affect not only single-home manufactured housing placements, but also the development and/or expansion of manufactured housing communities which provide much-needed land-lease (i.e., rental) space for manufactured homes.”

Weiss’ letter than reminds Secretary Carson that he himself made a similar point last year.

In a 2018 speech to the Policy Advisory Board of the Harvard University Joint Center for Housing Studies, you specifically identified and recognized the harmful impact of exclusionary zoning on the availability of affordable housing and homeownership for all Americans, stating that HUD would act “to identify and incentivize the tearing-down of local regulations that serve as impediments to the developing [of] affordable housing stock. Out-of-date building codes, time consuming approval processes, restrictive or exclusionary zoning ordinances, unnecessary fees or taxes, and excessive land development standards can all contribute to higher housing costs and production delays.” (Emphasis added).”

Weiss followed that up by agreeing in this highly specific fashion, “…indeed, in the case of HUD-regulated manufactured housing, the law provides HUD with powerful tools and authority to override local zoning actions that discriminatorily exclude or severely limit the placement and utilization of HUD Code homes. Specifically, in the Manufactured Housing Improvement Act of 2000, Congress gave HUD the express authority to federally preempt state and local “requirements” of any kind that impair “federal superintendence of the manufactured housing industry” and the accomplishment of the Act’s congressionally-mandated federal purposes, including “facilitat[ing] the availability of affordable manufactured homes.” Indeed, in a November 13, 2003 letter to then-HUD Secretary Mel Martinez (copy attached), key congressional proponents of the 2000 reform law stated that enhancements to the scope of federal preemption set forth in that law “have given HUD the legal authority to preempt local requirements or restrictions which discriminate against the siting of manufactured homes (compared to other single family housing) simply because they are HUD-code homes.”

Rephrased, Weiss stressed the merits of using “Enhanced Preemption” – a point that MHARR, MHLivingNews, and MHProNews have stressed for years as an existing legal remedy to prompt local zoning “NIMBYites” to relent under federal supremacy.

While there are examples of HUD flexing its supremacy since the 2000 law, those cases are scant.  One such letter from HUD to a local jurisdiction is linked here.

Thus, Weiss pressed on by saying, “Despite this enhanced preemption authority, however, HUD has failed to take action to stop the baseless – and expanding – exclusion of safe, decent and affordable HUD-regulated manufactured homes from numerous jurisdictions around the United States.”

“…MHARR met with officials of HUD’s Office of Policy Development and Research (PD&R) on April 4, 2019 and requested that HUD, as a first step, utilize its resources to research, study and analyze such discriminatory and exclusionary zoning and its local and national impact(s) on the availability of affordable housing and homeownership in light of relevant national housing policies. Such research and analysis could then serve as a roadmap for further HUD action going forward.  Accordingly, we ask that you authorize and advance such a study within the Department,” wrote Weiss.

MHARR’s CEO added, “Quite simply, in order for manufactured housing to reach its full potential as an inherently affordable, non-subsidized housing resource for millions of lower and moderate-income Americans, it cannot, should not, and must not be unfairly and illegitimately excluded from significant areas of the country. In order to stop and reverse this phenomenon, leadership from HUD and by you, personally, as HUD Secretary, is essential and, indeed, indispensable.”

Among those cc’d were:

Hon. Mike Crapo
Hon. Maxine Waters
Hon. Mick Mulvaney

The letter and attachment are linked here.

As important as that letter is in tipping a domino toward more action, were the attachments.  One was a powerful letter dated in 2003, signed by Maxine Waters and others in Congress calling on HUD then to exercise their rights under “enhanced preemption” given to HUD by Congress under the Manufactured Housing Improvement Act of 2000 (MHIA).

That letter from congress is a legally significant document, because it reflected in that time-frame the legislative intent that Congress had.

All of this begs an important question.  Why hasn’t MHI done this years ago?

It is MHI that claims to represent “all segments of factory-built housing,” while MHARR has historically stated plainly that they represent the interests of independent producers of HUD Code manufactured homes.

While there are several ways that HUD can respond, there is now a formal series of steps being taken by MHARR to prompt action.  Given that the Trump Administration has said that they are in the “enforce the law” and “promise keeping” business, it will be interesting to see how Secretary Carson and senior HUD leadership responds to these efforts. To learn more, see the link below, “Lead, Follow, or Get out of the Way.”

 

A New Paradigm Ahead?

Consider the opening quotes from MHAction, NMHOA, and Secretary Carson at the top. Then ponder how independent producers of HUD Code manufactured homes, and residents of manufactured homes, could both begin pushing for implementation of existing federal law.  The common opponent, it would seem, are the big corporate interests that MHAction claims to rail against, but is in fact supported by.  But that point doesn’t seem to be a logical hinderance for the good that could flow to existing residents, independent businesses, new investors, and new housing seekers. MHARR’s effort is timely, and in hindsight, it can be seen as a significant one.

Time will tell, but the stage is being set.  The proverbial fuse has been lit…

That’s this morning’s edition 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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“Lead, Follow … Or Get Out of The Way”