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Will Costs Rise $6,000 per Home? DOE Energy Rule on Manufactured Housing Revived, MHARR Rattles Legal Saber

June 12th, 2018 Comments off

WillCostsRise$6000PerHomeDamagingDOEEnergyRuleRevivedMHARRrattlesLegalSaberManufacturedHomeIndustryMHProNews

The revival of a previously “inactive” energy rule for manufactured homes by the U.S. Department of Energy (DOE) may trigger legal action by MHARR on behalf of smaller HUD Code industry businesses,” said MHARR in a release do the Daily Business News.

 

As MHARR reported on December 18, 2017, the baseless, contrived and excessively-costly DOE-proposed manufactured housing “energy” rule, developed as part of an illegitimate, so-called “negotiated rulemaking” process — urged by the Manufactured Housing Institute (MHI) and “energy” special interests, as shown by documents released by DOE to MHARR under the Freedom of Information Act — was designated an “inactive” rule by DOE in the Fall 2017 Federal Semi-Annual Regulatory Agenda (SRA),” the Washington, D.C. based association’s statement said to the industry’s trade publication of record, MHProNews.

That proposed rule, however, possibly in response to pending litigation filed by the Sierra Club in December 2017 to force DOE to adopt a final manufactured housing rule, has now re-appeared in the Spring 2018 SRA, with a notation indicating that a “supplemental” Notice of Proposed Rulemaking (NPRM) is being targeted for publication by DOE by August 2018. (See copy attached),” MHARR said.

The reason the rule is important is because some analysis of the arguably flawed proposal reveal that a multi-sectional could spike $6,000 each.  As long-time Daily Business News readers recall, the National Association for Home Builders has calculated that for every $1,000 in price increase, some 200,000 potential buyers will be “priced out” of the market for that higher-priced home.  Rephrased, some 1.2 million customers using the NAHB “priced out” model would be knocked out, and some advantage over conventional housing could be lost in the process.

Here’s how MHARR put it. 

While there is no information available at present as to what the “supplemental” NPRM will propose — or may change from the initial NPRM published by the Obama Administration in June 2016 — MHARR (unlike MHI, which voted in favor of the proposed rule as part of the illegitimate “negotiated” rulemaking process) has consistently and strongly opposed this proposed rule, which would needlessly explode the purchase price of manufactured housing (by $6,000.00, or more, for a double-section home) and effectively force hundreds-of-thousands of potential lower and moderate-income HUD Code purchasers out of the manufactured housing market, based on research conducted by the National Association of Home Builders (NAHB).” 

Moreover, even for consumers who are able to remain in the HUD Code market, the contrived DOE “cost-benefit” assessment for the 2016 proposed rule, purportedly showing “benefits” for such remaining consumers, has been completely decimated by subsequent actions of the Trump Administration, which: (1) disavowed and repealed the Obama Administration’s invalid “Social Cost of Carbon” (SCC) construct, which was used by DOE to inflate the alleged benefits of the 2016 proposed rule; and (2) withdrew the United States from the “Paris Climate Accord,” which formed part of the policy basis for the DOE proposed rule,” reasoned MHARR.

As MHProNews has previously reported, MHI pushed for this rule, and only later reversed course, under pressure from reports by MHARR, the SBA, George Washington University, and this publication.  The linked article below can be read for additional context and details.

Manufactured Housing Institute (MHI) Shifts on DOE Regulatory Rule, Report, Analysis

 

What’s Next from MHARR?

Here’s an extended quote from the balance of the MHARR release, which will be follow by our 3 point summary/analysis.

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Consequently, unless the forthcoming “supplemental” NPRM substantially modifies and/or withdraws objectionable, unnecessary, and unnecessarily-costly elements of the initial DOE proposed rule, MHARR may have no alternative but to consider legal action to enjoin the enforcement of any resulting “final” rule. Prior to any such court action, however, MHARR (and the industry) will have a further opportunity to comment and take other administrative action, as warranted, with respect to the “supplemental” energy NPRM. 

MHARR, accordingly, will continue to monitor this matter very closely and will take further and additional steps as it deems appropriate.

In other matters reflected in the Spring 2018 SRA, HUD announced three regulatory actions affecting manufactured housing. 

First, HUD has withdrawn – effective April 4, 2018 – a pending “Third Set” of amended HUD Code standards, including recommended standards concerning “carbon monoxide detection, stairways, fire safety considerations for attached garages and duplexes.”  Presumably, this action was undertaken pursuant to HUD’s current “top-to-bottom” review of all existing and pending standards, and will be subject to further consideration and action as determined by that review. 

Meanwhile, HUD has reactivated – on a long-term basis — two other manufactured housing rulemaking proceedings that had previously been suspended under the Trump Administration’s January 2017 regulatory freeze order. These are: (1) an “interim final rule” to amend HUD’s formaldehyde emissions standards based on the new formaldehyde standards adopted by the U.S. Environmental Protection Agency (EPA); and (2) a final rule on amendments to the HUD Code’s regulatory exemption for recreational vehicles.

Both of these actions are slated for action by April 2019 and will be addressed further by MHARR on an administrative basis as warranted.   

MHARR will continue to keep you updated on all of these matters as further developments unfold,” said their release.

Once more at the heart of this issue is that consumers, per some analysis,

  • won’t be able to recoup their investment during the normal 7 year time frame that a home buyer lives in a home they purchase.
  • Also, manufactured housing professionals will see thousands of potential home buyers not be able to qualify, about 1.2 million, per the NAHB priced out model.
  • SBA, and George Washington University both agreed with MHARR’s analysis, while MHI pushed this rule for some time, prior to relenting.
  • What the Trump Administration will ultimately do will be worth watching, as some believe that this may be tied to a lawsuit from an environmental group.

The Arlington, VA based MHI position on this development will be interesting to watch, given their prior flip-flops.  “We Provide, You Decide.” © That’s MH “Industry News, Tips and Views Pros Can Use.”  © ## (News, analysis, commentary.)

(Third party images, content are provided under fair use guidelines.)

Related Reports:

NAHB Report – High Cost of Regulations Impact Housing – and Manufactured Housing

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NAHB Report – High Cost of Regulations Impact Housing – and Manufactured Housing

August 29th, 2016 Comments off
NAHBHousingEconomicsLogos-creditNAHB-postedDailyBusinessNews-textby-MHProNews

Image credits, NAHB and HousingEconomics logo are the property of the NAHB, used here under fair use guidelines; text graphics added by MHProNews.

A recent study by the National Association of Home Builders (NAHB) indicates that an average of some 24.3 percent of the price of a new house can have that cost traced back to regulatory impact.  The NAHB study reflects costs of regulations from all levels of government: local, state and federal.

14.6 percent of the final price of a house is caused by regulations imposed during development of a home’s lot. 9.7 percent is caused by costs incurred by the builder beyond the costs involved in the lot.

RegulationsCostShareHomePrice-creditNHAB-postedDailyBusinessNews-ManufacturedHousingIndustry=MHProNews-com-

Source, NAHB study, linked as download, below.

When these facts are considered against the backdrop of a previous NAHB study MHProNews has referenced – their “Priced-Out” report, which shows how many tens of thousands of buyers are knocked out of qualifying per $1000 in price increase – the impact on potentially millions of home buyers becomes more clear.

AvgCostofRegulatinsInHomePrice-2011v2016creditNHAB-postedDailyBusinessNews-ManufacturedHousingIndustry=MHProNews-com-

Source, NAHB study, linked as download, below.

As MHProNews has observed in previous reports, a similar principle would hold true for factory-home builders.

While manufactured housing as an industry lacks some of the detailed studies and reports that other, larger industries have, the charts below from the National Association of Manufacturers (NAM) provides useful insights for HUD Code manufactured and modular home builders.

regulatory-compliance-costs-for-manufacturers-source-national-assoc-manufacturers-posted-masthead-mhpronews0-com-_001-575x298

Source, NAM.

As has been previously noted on the Masthead, housing has historically been a driver of economic activity and post-recession recoveries.

The relatively tame recovery since 2009 – and the harm done most notably to people with lower or middle class incomes, black or Hispanic ethnic groups and others – makes this information timely and important considerations in the upcoming 2016 election.  In following the lead from the Bush-Obama years, the Clinton campaign generally favors more regulations, while the Trump campaign has pledged to cut burdensome regulations to spur economic activity and job growth.  Trump’s video address to home builders is linked here.

regulatory-costs-by-business-size-manufactrurers-association-posted-mhpronews--575x335

Source, NAM.

The download of the entire NAHB report cited above, is linked here.

The download of the NAHB Priced-Out report, is linked here.

It should be noted that zoning – one of the forms of regulation NAHB is referencing – has also been cited as contributing to the affordable housing crisis.  Recent examples of that directly impacting manufactured housing are linked as follows in Lowell, MA and Georgetown, SC.

EdShaferGovtAffairsDirectorManufacturedHousingInstituteSouthCarolinaMHISCProgessiveTownsUrbanInfillManufacturedHomes-postedIndustryVoices-MHProNews

Quote from an extended statement to MHProNews on zoing related efforts by Ed Shafer, click image above to read more.

Ed Schafer, of the South Carolina Manufactured Housing Institute, in commenting on the Georgetown zoning case linked above, said: “…the South Carolina association’s focus is to move beyond killing bad zoning proposals and working to reopen areas that have been closed to manufactured homes for many years.”

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Residential style Sunshine Homes single sectional, with finished drywall and 8′ sidewalls, energy star package.  Photo credits still from Inside MH video and ManufacturedHomes.com

In some areas it’s been easy,” explained Shafer. “Progressive planning officials in several towns have been very interested in using manufactured homes for “urban” infill.”

ClaytonFusionNewDurhamEstates-WestvilleIN-

Clayton Fusion model, New Durham Estates, Westville, IN.

Shefer went on to state, “Here’s a case where the people of Georgetown actually petitioned to allow manufactured homes.  Sometimes citizens have a better understanding of the role manufactured homes can play in meeting local needs for work-force housing than many officials.” Schafer’s entire statement, is linked here. ##

(Image credits are as shown above.)

(Editor’s Note: Matthew Silver is taking some much needed and well-earned time off, and L. A. “Tony” Kovach will be helping fill the Daily Business News role in the interim).

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L. A. ‘Tony’ Kovach is the publisher of MHProNews.com and MHLivingNews.com.

Article submitted by L. A. “Tony” Kovach, to the Daily Business News for MHProNews.