I could believe that a lot of community owners are unaware of the subsidized housing threat. Unless you live in a city large enough to be targeted by developers and unless you are living in a state with a very active Finance Authority, you may not see what is coming down the pike.
However, if Des Moines Iowa is any example, "affordable/subsidized" housing, is coming on "Big Time" and killing both HUD manufactured housing sales and rentals.
It is likely that this will expand out into the smaller and smaller communities over time. Most "affordable/subsidized housing" is new, upscale, geothermal, and well below market. If it is not new, they are able to get millions in government grants to renovate—I don't believe community owners have access to federal or state "renovation grants.”
I can hardly turn on the TV without a least a weekly pronouncement by some politician or city councilman that, "We need more affordable housing!" Of course, what they are really saying is, "We need more subsidized housing.”
But as might be surmised, if they told the truth, the reception of that statement would be very different.
"Affordable/subsidized" housing is NOT affordable to the majority, who pay for it. In part, I fault MHI for some of our impending "affordable/subsidized" housing problems. Why, without so much as a whimper have they allowed subsidized housing to steal our "affordable housing" label? To call subsidized housing "affordable" is perverse and Orwellian, yet MHI says NOTHING. ##
(Editor's Note: This column was submitted in response to the following Masthead blog post,Your Thoughts on “I Am Affordable Housing.” We welcome other perspectives on this topic or others of industry interest. Editorially speaking, we are unable to accurately comment at this time on what efforts MHI or the NCC may have in motion on this subject.)
The “No BS about Resident Owned Communities” article that appears on this site brings to mind President George W. Bush’s comment while visiting Canada in 2004:
“I would like to thank all you Canadians for your warm welcome at the airport. Especially those of you who waved (pause) with all five fingers.”
I get it. We have a successful business model that is reshaping resident ownership and that invites reactions from competitors.
I stand by our record of performance to prove we have a lot of five-finger waves and cheers in the marketplace for ROC USA® as we’ve closed:
13 resident-owned community (ROC) purchases in 2013;
12 in 2012; and,
11 in 2011.
In fact, we have closed a ROC transaction every 37 days on average since we launched in 2008.
We got there by being 100-percent focused on making resident ownership effective and efficient and successful. The marketplace is the true judge.
One of the keys to our success is that we don’t have to chase capital to finance resident purchases. We have already raised all the financing the resident corporation needs — including funds for deposits and due diligence — in a U.S. Department of Treasury-certified Community Development Financial Institution.
We have current liquidity to finance $40 million of resident purchases today. No one else in resident ownership services has raised capital in advance the way we have. We did it so we could create a different transaction experience for buyers and sellers.
We’re not simply brokers who get paid at closing and walk away — we equip homeowners with the tools and training they need to successfully manage their communities. The fact is that we care about each community’s long-term performance and we know every democratic association needs leadership development and cost-effective shared services to be competitive. ROC USA has a national leadership institute for ROC leaders, a national marketing program for ROCs, and an online and in-person training system to help ROCs and ROC leaders succeed.
At ROC USA, we use the limited equity co-op for simple reasons: It is the most effective and efficient, the fairest and the most affordable model for homeowners. We stand by our work of the last 30 years with more than 140 ROCs that we took from tenants to owners.
Not one of those communities has failed.
That 30-year track record demonstrates the competency and capacity of ROC members and leaders with whom we work.
Every one of these ROCs is real ownership where each homeowner can purchase one low-cost membership interest in the corporation that owns and controls the MHC. There are no outside parties with an ownership interest in the co-op or the MHC, only the homeowners can be member owners.
ROC USA is a nonprofit and thus must serve low- and moderate-income communities, but that doesn’t limit us to small communities. Our largest completed transaction was a two-MHC portfolio transaction worth $23 million for nearly 500 home-sites in 2012. Further, and not surprisingly, every MHC we’ve worked in has sufficient numbers of low- and moderate-income — that’s not an issue.
We don’t apologize for being well-funded or widely publicized. Getting things done attracts interest and attention. Every closed transaction gets a press release and we send postcards to announce purchases. Often we’ll quote the community owner or the broker. Here are two recent ones:
“The business model that ROC USA has developed is superb. It was a different transaction in that you usually have to jump through a litany of different hoops in regard to banks and bank regulations. But that simply wasn’t the case here. I would certainly do it again, and I will.”
Joel Erlitz, Broker,
First Commercial Property Corp.
“It’s no different than a sale to any third-party.”
Seller in Minnesota
ROC USA does not practice public policy. In fact, we eliminated the part-time policy position at ROC USA in 201l.
We’re out earning our way in the marketplace — just like you.
Other perspectives on this topic or any that impact manufactured housing are welcome. Please put OpEd, Letter to the Editor or Industry Voices in your subject line and send proposed article to – firstname.lastname@example.org and/or iReportMHNewsTips@MHMSM.com – thank you.
As an additional reminder, we welcome tips on topics and local/regional/national/international news that impacts factory built housing. Readers like you can be and are a part of the story here! )
The phone rang one morning and a young man returned my call to him, we'd been playing phone tag. I had left a message with his wife in Oregon earlier, and he was calling about two Vermont MH communities I have listed for sale. From the voice of each, I guessed they were both far younger than I.
The next day I got an email message saying he and his partner/wife had decided not to invest in any locale where rent control is in force. OK, I get it, but that removes quite a swath of locales, many which are hot purchase markets. This philosophy allows investment in say Mississippi or Alabama, but negates purchases in Florida or much of California. Oh…
After that, my mind wondered over my experiences of the dangers of rent control and lack of it. Yes, I said the danger of the lack of it. I actually was pretty young once, had hundreds of apartments and almost 2000 MH/RV sites. With the exception of a Florida LLC, I was in no jurisdiction where rent control was in effect. And when rent control was threatened in a jurisdiction, I was the first to the battlements opposing its imposition. I was and am a capitalist, and rent control seemed an anathema to my beliefs. I'm not alone, right?
But time went by, slowly the days passed, and some of my beliefs at 40 years of age made transition to a more measured understanding as I aged and acquired experience I previously lacked. Let me be frank, I was an accomplished and notorious rent increaser, which in my twilight years brings me no acclaim by others, and more importantly, myself.
What I found was that in apartments, and we're not speaking of New York City here, the market rents in an area kinda act as rent control. You find yourself as the top dog in rent rate for your 1000 sq. ft three bedroom apartment in your area. What you are very likely to find, as I did, your apartment rents last and less, staying empty longer than it should. Recovering the lost time and money brings you back to Earth and unless your calqy is busted, your late debt payments slap Hai Karate hard. I found apartments very self correcting as to rents.
Now, on to LLCs. We all know the reasons we invest in communities; they own the dwelling unit, they can't move the house, etc. All good stuff, of course. So as I bought LLCs from original owner/developers, I found that as longtime owners they had allowed their rents to slip behind the market, keeping their management easy, with many long term residents.
Of course, the purchase price always reflected the oft unspoken premium of raising rents to market. "Hell, they can pay a lot more than that!" So I paid more than cash flow to get the community, not real unusual, right? Then the rent increases started. Often stiff and early increases happened shortly after closing.
The first few increases were swallowed, albeit with plenty of bitching by residents. We raised rents as much in two-three years as the former owner did in 10 years. Note that in some instances the increased rent still didn't pay for the capitalized investment costs. I knew that, they only knew and cared their rent had doubled in short order. No esoteric explanations of cap rates and other MH investor jargon seemed particularly persuasive to the LLC residents.
Who was it, Newton, who theorized every action has an equal and opposite reaction? I raised rents, they moved out. And I acquired a reputation in that community as a rapacious rent increaser. And these reputations are hard to escape. I wouldn't really care that much except the reputation had a very bad impact on homesite rentals. That, I did care about.
At first I did the calculation I see many others doing. Yah, I had 100 homes at $100 per month, and even though I'm quickly down to 90 homes at $111 per month, hey, I'm getting the same money with less work and expenses. And it keeps going this way as rents increase, residents fleeing like a torrent, out the MH Paradise Estates gates, which has turned into Hell Bent Acres. And as vacancies mount, you lose control of the community, no longer able to count on the desire to live in your LLC to keep people in line. And that desire includes pricing.
Were I the only one to have followed the raise-rents protocols, then only I would have suffered the residue, but of course, such was not the case. The MH industry's then flawed model, subsidized for years by flawed lenders, finally collapsed, dropping from 373,000 shipments in 1998, then tantalizing us into believing the hurricane-inspired 135,000 shipments of the mid 2000s was the stopping point, to the grim reality of 50,000 homes in the 2010s. Yah, I hear 60,000 homes could happen any day now.
I sat in on some very contentious MHI committees in the late 2000s era trying to formulate a chattel long term lease the GSEs could swallow. In concert with this I reviewed many LLC profiles showing monthly rent and occupancy. It probably won't surprise you that the vacancy was truly scary, yet rents occurred steeply and frequently. I had already tried that, and even with the generous retail financing by GreenTree, CIT, The Associates, Security Pacific, Chase and their ilk, it didn't work. Now we were dealing with the GSEs, who I did not find stupid, and we were trying to equate rents in LLCs to the capitalized valuation of single family conventional real estate lots. Any thought of sharply limiting rent increases to gain long term and low rate financing being the trade-off, got serious push back. Such was not to be and by then as the effort lost all bouyancy, the GSEs woke up to far bigger challenges.
As a post script I am the very first to admit that some major figures in that committee have since come far closer to the rent restraints advocated in the long term lease effort as their stated belief for industry resuscitation. Will that be enough? I greatly doubt it, but I sure think it is an indisputable industry wide measure in the road back to something other than Warren Buffett's table scraps.
So to my young friend in Oregon, rent control, other then confiscatory NYC apartments or some California cities in MH, can be a useful LLC owner restraint, quieting some of the early animal spirits we can all exhibit before experience shackles us. Did I like going to the rent hearings in my community in Florida and taking phallus down the throat to the gag control center? Oh, I loved it.
Still, Florida LLCs are and have long been highly prized acquisitions, not greatly injured by the relatively manageable process for raising rents. With the relatively benign rent control such as in Florida and Vermont, you and the industry are actually protected from many of the practices employed in the industry, leading to so much push back against us.
Before you believe I'm asking you to petition your jurisdiction for rent control, let me disabuse of that notion. Nothing could be further from the truth. I rail against governmental intrusion in to my affairs daily. Everyday the beast grows larger, only a financial collapse likely to abort its growth. The only point I am making is that one must practice rental increase restraint on your own. Sometimes laws can help a process.
The flip side is that lack of restraint causes lack of residents at a time LLC vacancy nationwide forebodes another step down in industry size. In places like Vermont and Florida and others, rent control, which one should practice on their own, is instilled by statute. Perhaps not the best solution, but the record says the world did not end there.
Yes, we tell a great story which seemingly has legs of truth about our affordable housing heritage. But for whatever reason, even though its great dog food, the dogs won't eat it. Perhaps a legacy of rapacious rent increases, closing parks, high default rates and high home value depreciation could be a good place to start the industry resurgence. We build great homes, but my friends, that, by itself is not enough. ##
(Editor's note: The hot link was added by us, not Marty, nor was the link requested in any way by Marty. We think it is good for others to realize that while Marty is 'retired,' he is still involved in this industry and clearly cares about manufactured housing deeply. That is why he sounds off on issues, because he cares enough to raise them for discussion, thought and action.
As always, letters and articles by you or your colleagues that may agree or take other perspectives are encouraged. Send them to email@example.com with Industry Voices Guest Column in the subject line. )
With the political changes in Sacramento, the tenant advocates are pressing their agenda with new vigor in 2013. Once again, they are pushing to amend the subdivision conversion statute (Government Code § 66427.5). They are advocating for changes which would allow local governments to deny conversions not supported by a majority of residents and which would give such governments authority to implement their own “conversion” regulations. There are even rumblings for statewide rent control for mobilehome parks.
Conversions under Section 66427.5 have been a favored exit strategy for park owners, resulting in related litigation all over the state. Recent decisions applying Section 66427.5 have been a "mixed bag." The decision in Sequoia Park Associates in 2009 was the “high water mark” for limiting the interference of local governments in conversions since the Ordinance was amended in 2002 to add the requirement that tenants be surveyed regarding their support. Based on that decision, many local governments and lower courts have approved conversions despite resident opposition. Subsequent reported decisions by different appellate courts have chipped away at and offered different interpretations of Section 66427.5. The 2010 decision in Colony Cove v. Carson held that local governments could "consider" the resident survey results, but the Court did not provide any guidance as to how local governments could consider or use the surveys. The Court did acknowledge, however, the lack of resident support in and of itself could not block a conversion.
The worst decision for park owners, Goldstone v. County of Santa Cruz, was decided in early 2012. Goldstone held local governments could deny subdivisions if the subdivision was not supported by a majority of residents. Although not explicit, the Court seemed to adopt the view that a "bona fide" or “non-sham” conversion is, by definition, one supported by a majority or at least a large percentage of tenants. Chino MHC v. City Of Chino, decided in late October 2012, took a decidedly more pro-park owner view, concluding that a local government was required to approve a subdivision unless there was overwhelming opposition by the tenants. The Court also made clear its view that a bona fide conversion was one in which the park owner truly intended to convert it to tenant ownership. Unfortunately, the Chino decision still encourages tenants to attempt to block subdivisions or extort favorable terms in exchange for support for the conversion.
Late last year, the California Supreme Court issued a decision directly relevant to conversions in coastal zones, Pacific Palisades Bowl v. Los Angeles. The Court in that case held that local governments did have some authority to review conversions for compliance with the Coastal Act requirements (and other state laws). The ultimate impact of this holding is not entirely clear, but it makes clear that local governments can impose conditions relating to the replacement of affordable housing in a coastal zone.
Under the existing statute which has been relatively favorable to park owners, there still has been substantial resistance to subdivisions in many local communities, in some cases, even where no rent control exists. The processing of a subdivision for Pacific Mobile Home Park in Huntington Beach is a good example.
Pacific initiated a subdivision in 2010 with the support of a majority of the residents in the Park. The City fought Pacific’s subdivision Application. Pacific had to file a lawsuit after the City denied the Application. The City not only aggressively defended the lawsuit, but attempted to extort a favorable result by filing a cross-complaint seeking immediate physical removal of homes owned by park tenants who the City claimed were “trespassing” on an unused City right of way for decades.
The City’s denial of the subdivision Application was reversed in July 2012, which resulted in the City approving the subdivision in November, 2012. However, on December 3, 2012, the newly elected City Council voted to rescind the approval. Pacific then obtained a court order invalidating the vote and barring reconsideration of the subdivision Application by the City. That court order still did not stop the City two weeks later from voting to confirm their illegal December 3 vote. This did not sit well with the Judge who issued the order. The Court granted Pacific’s Application to set a trial for Contempt of Court for 6 of the 7 Council Members and the City Attorney. Finally, with the threat of a criminal trial hanging over their head, the City Council abandoned its challenge of the subdivision.
If Section 66427.5 is amended, which seems likely given the current political environment, then park owners can count on more local opposition to subdivision. The sad reality is that while local politicians often talk about how important affordable housing is to them, they often really do not want to see mobilehome park uses become permanent, particularly in coastal or other “upscale” locations.
If the door to subdivisions is closed, the final path of escape for park owners trapped in confiscatory rent control is closure. The U.S. Supreme Court has made clear that governments cannot stop closures in Yee v. Escondido. Yee recognizes that the right to go out of business is one of the crucial “sticks” in the “bundle of property rights.” Of course, the crucial issues become the cost of closure and the viability of alternative uses. Government Code 65863.7 limits payments to tenants to the “reasonable cost of relocation.” The common sense interpretation of “reasonable cost of relocation” limitation means the cost of physically moving a mobilehome and the tenant’s belongings. Certain local governments have adopted requirements that exceed this limitation, but we do not have any appellate decisions directly addressing the question. If conversions are made more difficult, it is likely we will get binding authority, hopefully confirming a “common sense” interpretation of Section 65863.7. We can count on the courts for common sense, right?
Mark Alpert is a partner with Orange County law firm, Hart, King & Coldren. He focuses much of his practice on manufactured housing issues, and has a particular expertise in rent control, subdivision conversions and park closures. Mark can be reached at (714) 432-8700 or at firstname.lastname@example.org.
Research can be valuable and informative if it approaches its subject in a non-biased, factual manner. Your recent definition of "manufactured home" however immediately casts your research intentions into serious doubt with such prejudicial, outdated, and uninformed terminology.
Official, legal, definitions are available on many state and national government websites and will provide you a more balanced and timely reflection of the state of manufactured homes in 2013. I request that you update your own definition using one of these, without the insertion of your flawed and outdated misunderstanding of today's manufactured homes.
Should you need any additional assistance in defining manufactured homes, please contact me and I will be happy to provide you with correct information.
President and CEO
Manufactured Housing Institute
(Editor's Note: Dick Jennison's cogent response is published with permission, and is in response to this 'definition' published online by Princeton's WordNet as shown below:
Until Princeton's Wordnet Team has made a proper update, please take a moment and add your voice to these and other respected industry professionals who have emailed email@example.com them to correct their flawed online definition. You could use one of the examples given by others linked above, or write your own, but please do write them.
Our original column that launched this topic on MHProNews is linked here and a different version meant for the public is found here on MHLivingNews) ##
Please take a few moments and send them a message of your own, or use a variation on the one MH Retailer Jody Anderson sent, or like the fine one above from MHC manager James Cook, both of which we deem better than the one Tony Kovach sent, linked again here.)
Other messages besides these have been sent to WordNet, but we need more from You and Your MH Circle until Princeton U 'gets the message' and changes their terribly erroneous, so-called definition of a manufactured home. So take a moment now and please send a message to firstname.lastname@example.org. CC email@example.com your message to Wordnet, Thank you! )
The Manufactured Housing Consensus Committee (MHCC) held its first and only meeting of 2012 on October 22nd – 25th to consider a number of recommendations for changes to the Manufactured Housing Construction and Safety Standards Program. HUD intended to have two meetings in 2012 but problems with the approval of a new contract for the Administering Organization, the National Fire Protection Association, resulted in a hastily arranged fall meeting in Arlington, VA. All but three of the 21 members were in attendance. Representatives from HUD included the Deputy Administrator of the HUD Manufactured Housing Program, the HUD engineering staff, and a representative from HUD’s office of General Council.
MHI was surprised and disappointed that higher ranking officials who oversee the program from the Department’s Office of Regulatory Affairs were not in attendance at any time during the meeting.
The Committee worked over two days to conclude work on all outstanding items before the Committee and to consider several new issues. This is despite the frustration voiced by MHCC members and MHI over HUD’s failure to implement dozens of recommendations of the MHCC over the last four years or more.
Highlights of the Committee Recommendations
Southern Yellow Pine Design Standards – By a 15-2 vote, the MHCC recommended that HUD delay implementation of the National Design Specification (NDS) for Wood for 2×2 and 2×4 southern pine lumber, effective January 1, 2013, until such time that it presents the MHCC with a proposal for changes to the existing standards as required by law, or until such time that HUD issues an emergency rule under Section 604(b)(5) of the Manufactured Housing Improvements Act of 2000. This is consistent with MHI’s petition to HUD earlier this year, and with MHI’s testimony before the committee.
Hinged Roof Assemblies – The MHCC voted 15-2 to recommend that HUD withdraw requirements for Alternative Construction Letters for certain types of hinged roofs designed for Wind Zone I until HUD clarifies current regulations regarding the on-site installation of hinged roof assemblies known as “double hinged” and “ridge box or peak cap” assemblies. The industry argued that such hinged roof assemblies do not need AC letters because they are constructed in the factory and are part of the “close–up” requirements under the installation standards, 3285,801(f). Members argued that methods for completing the installation of such homes are much less complicated than many multi-section home “close-ups.” These types of assemblies are common practice in the industry, and installers are trained and certified to complete these types of installations.
Wind Design Standards – The MHCC voted 17-0 to recommend that the reference standards of the American Society of Engineers (ASCE 7) wind design standards be updated to the 2005 version from the 1995 version, and the existing wind speed design requirements in the HUD Code be adjusted accordingly. However, the committee did not recommend any code changes regarding design requirements for wind pressure. It voted to maintain the current three wind zones as opposed to four. The new wind safety recommendations are the result of many hours of work by an industry led task force that included HUD and members of the ASCE-7 committee, who concluded that any new requirements beyond what the MHCC recommended would not be cost beneficial.
Indoor Air Quality – The MHCC concluded action on pending recommendations debated over the last four years, to improve ventilation and indoor quality in manufactured homes. In a unanimous vote, the MHCC recommended that the HUD Code provide for the voluntary use of ASHRAE 62.2, Ventilation and Acceptable Indoor Air Quality in Low-Rise Residential Buildings. In a change supported by MHI, the Committee voted to amend existing regulations to provide more flexibility in the types and size of ventilation systems that may be utilized to ensure adequate ventilation. (In a related issue, see information below on the GAO report).
Other MHCC Actions
In other actions, the Committee added new testing and certification requirements for certain types of vinyl siding; provided a new reference standard for Medium Density Fiberboard (MDF); updated and clarified language regarding construction methods; tabled a proposal regarding alternative foundation designs; rejected a site drainage proposal; rejected updated testing and certification requirements for windows and sliding doors; and referred new issues to MHCC subcommittees regarding water heaters.
Highlights of HUD (Designated Federal Officer) Report and Comments to MHCC
Status of MHCC recommendations pending at HUD
• Final Rules for the proposed 2nd set of updates to the standards, changes to roof truss testing, and changes to 3282, Subpart I, are in Departmental Clearance.
• A final rule for On-Site Completion of Construction is still being developed by HUD staff.
• HUD is still working to develop a proposed rule on a proposal developed by MHI regarding ground anchor testing. HUD is also working on changes to the regulations regarding Primary Inspection Agencies.
MHCC recommendations need a cost benefit analysis
HUD's Designated Federal Officer (DFO), Henry Czauski, reported that the MHCC/DFO must present to the committee its recommendations with an economic cost/benefit analysis. The recommendations must be in a format consistent with the Administrative Procedures Act (APA) regarding proposed rules and should include a preamble.
Manufacturers need to adhere to regulations regarding Alternative Construction
During discussion of hinged roof designs and Alternative Construction (AC) letters Mr. Czauski noted that there have been numerous instances where manufacturers are not following the regulations under 3282.14 regarding Alternative Construction. If the industry members demand a timely response it is imperative that complete information is provided and regulations regarding inspections, labeling and reporting be followed.
DOE has not communicated on energy efficiency proposals
In response to a question by a committee member, HUD reported that it has had no recent conversations with the Department of Energy regarding energy efficiency standards, although the law requires it, and a recent Congressional directive, sought by MHI, directs DOE to also consult with the MHCC.
Highlights of MHI’s Public Remarks to MHCC
MHI staff provided the following public testimony during each of the three public comment periods:
• Recommended that the MHCC consider HUD’s inappropriate action regarding enforcement of the new design standards for southern pine lumber.
• Urged the committee to review and comment, if necessary, on the recent and pending changes to the NDS standard for southern pine lumber.
• Recommended that the MHCC review HUD’s guidelines for quality assurance under the procedural and enforcement regulations and codify the guidelines.
• Expressed concern about lack of transparency and timely action by HUD and the MHCC on MHCC recommendations.
• Thanked HUD for recent actions regarding preemption and the City of Richland, Mississippi.
• Announced that MHI is working on an industry-based energy efficiency standard and hopes to bring it before the MHCC early in 2013.
GAO Report Published on Indoor Air Quality to Coincide with MHCC Meeting
Coincidently, related to MHCC’s recommendation on indoor air quality, the Government Accountability Office (GAO) issued a report entitled “Manufactured Housing Standards – Testing and Performance Evaluation Could Better Ensure Safe Indoor Air Quality” (available at www.gao.gov/products/GAO-13-52.) The report was requested by several members of Congress last year to examine indoor air quality standards for manufactured housing.
The report's key findings conclude that some provisions of the HUD Code provide a lower margin of safety against a carbon monoxide exposure incident than those for site-built homes. The report concluded that the primary reason for the differences in ventilation standards for manufactured homes and site-built homes is that the HUD Code has not been updated and has not kept pace with standards tied to ventilation and air quality for site-built homes. This is despite recommendations by the MHCC in 2009 and 2010 to update various ventilation standards and carbon monoxide requirements. The GAO report is consistent with MHI’s position that the HUD Code, to remain viable, must be updated.
Lois Starkey, Vice President, Regulatory Affairs, Manufactured Housing Institute (MHI)
You don't have to be Jewish to feel deep concern about what took place at the Democratic National Convention (DNC). Responding to political pressure to put the word "God" back in their platform as well as to once again name Jerusalem as Israel's national capital, DNC delegates where asked to pass the motion by a 2/3 vote. The video I've asked to be posted below tells the tale. For those who question the commitment by Democrats to fair elections, please watch this CSPAN video and share it with others.
Once you've watched this objectively, everything else is spin and commentary.
Among the emails that come into me are from a White House 'group.' Some months back, there was an outreach by that White House group to the business community. The president, it was said, wants to help ease burdensome regulations, to make it easier on small businesses.
How can we take such an election year outreach to small businesses seriously, by those who executed Dodd-Frank and ObamaCare?
Talk to an independent manufactured home builder. Ask them, with consumer complaints at new lows, why is HUD pushing more and more 'voluntary' – and other – regulations? Why don't we have the Duty to Serve implemented by the GSEs/FHFA?
The energy sector creates demand for factory-built housing, in places such as North Dakota, Texas, West Virginia, Ohio, Pennsylvania and other states. The current administration's policies, up until election year, were favoring gas prices of $8 to $9 a gallon for gas, as this video clip of testimony by Energy Secretary Steven Chu demonstrates.
While this next video clip has been pieced together, it reflects in President Obama and Vice President Joe Biden's own words, a path designed to foil coal fired energy production in the United States.
Without belaboring the point, some believe that anti-domestic energy policies such as these were a path to promote green energy by making conventional domestic energy sources harder to come by. Such policies directly harm domestic energy firms. But they indirectly harm our industry, which often provides housing for those workers, especially when they are in areas with high demand for housing.
We scarcely hear about enhanced pre-emption for HUD Code Homes these days. Why not? Wasn't it part of the Manufactured Housing Improvement Act of 2000?
Community operators created some 10 billion worth of paper to finance manufactured homes in their land lease locations. This was a free enterprise solution designed to fill the gaps created when lenders who vaporized – such as Conseco – went good-bye. But SAFE, Dodd-Frank and a plethora of other laws and regulations have so squeezed this 'captive finance' free enterprise solution in MHCs, that now community owner/operators are turning to rental homes in their properties instead.
Rentals in once all owner occupied communities?! The entire business model of community operators is being changed by the Regulators and their political allies who passed and fund those regulations. Shame on us if we let the party of Regulation be rewarded.
I'm appalled that some still want to believe in "hope and change," when we are heading "forward" towards a new fiscal cliff and a new recession in 2013. Some commentators already believe we are already back in recession.
How could we move "forward" by following the advice of those who gladly took Fannie and Freddie's PAC money? Politicians such as Congressman Barney Frank and then Senator Barack Obama? ACORN, community organizer Barack Obama and the Clinton Administration worked together to force lenders to issue loans to those who were not credit qualified. No doubt there were Republicans who colluded. Shame on all involved.
But it is gutless by Republicans to let the Democrats dish it out and not respond to such fables, blaming Bush II for the mortgage/housing meltdown when Democrats had a firm hand in the cookie jar that caused that whole fiasco.
They should call it the mortgage/financial services industry's version of Russian roulette.
When government interferes so massively in the free market, of course there will be unintended consequences.
But to falsely blame supply side economics for the mortgage/housing collapse is a creative lie or brutal ignorance. Neither the option of lie or ignorance are worthy of credence or support.
We don't hear much in Manufactured housing circles about how the run-up to the mortgage meltdown harmed our Industry. But it did! Easy qualifying, liar loans and the like created a false opportunity for hundreds of thousands of conventional housing buyers. A percentage of those buyers were or normally would have been manufactured home owners. As some manufactured home lenders about those owners who walked away from their HUD Code homes to get conventional houses during the run up to the mortgage/housing bust.
That put pressure on MH lenders and the MH market in general. As MHs where being left behind, of course values dropped, just as they have more recently in conventional housing neighborhoods plagued by foreclosures.
So federal policy harmed our industry in the early 00s, as thousands of our home owners left what become over-leveraged HUDs for what turned out to be over-leveraged conventional houses.
You can thank those politicians who made that happen to us then and more recently.
But let's not thank them by rewarding them with our support or our votes. That is like rewarding the thief by putting him in charge of law enforcement.
When politicians plunder the public treasury to fund with borrowed and tax payer money programs contrary to the Constitution and the public interest, it is time to end such madness.
Research I've seen indicates that some 44-47% of voters will vote for President Obama no matter what he says or does. That means the rest of us who are capable of a critical analysis and independent thought better show up at the polls and cast ballots wisely.
While applauding columns like the one on Voter Fraud, I was frankly disappointed when MHProNews published an interview with Congressman Joe Donnelly. Donnelly may be a co-sponsor of HR 3849, but he also voted for HERA 2008, which gave us the SAFE Act. Donnelly voted for Dodd-Frank. So while I understand the desire for 'balance,' I question the timing or "political correctness" of publishing the Donnelly interview during campaign season.
What we need when the industry is already in the lifeboats and are looking at possible new waves looming on the horizon is enhanced clarity, not confusion.
When even Time Magazine, Newsweek and the New York Times Magazine are publishing stories and OpEds that call into question or openly attack the Obama Presidency, MH trade publications need to be coming out loud, clear and strongly in favor of less government, lower taxes/regulations, a sane pro-domestic energy program and more free enterprise leadership.
The first pair of drafts of this article I was asked to edit and tone down. So this is the toned down version. I was also told that the editor would add a disclaimer and an invitation for responses. So be it.
Back to the top. Sham votes matter. They speak volumes.
Election year political posturing, via asking independent business owners and executives how to reduce the burdens or regulations matters too. It is the age old trick of seduction at work. We are being divided and conquered.
We are watching borrowed money and our tax dollars being turned against us to destroy the greatest economic system and the most free society in world history.
9/11 and U.S. Embassies ablaze reminds us why Jerusalem and God matters to America, and why that Democratic sham of a platform vote matters.
Manufactured housing matters too. President Obama stood in Elkhart, IN – an area where so many manufactured housing plants and suppliers are – talking jobs. Are there connections between all that is being covered in this column? Yes. They are just different corners of the same bolt of American political cloth.
If we sweep the current left wing crop of Democrats and RINO Republicans aside in favor of more free market oriented leaders, manufactured housing can blossom and grow again. All we need is a level playing field.
Some speculate that Ben Bernanke may have decided on QE3 – de facto printing money – to boost stock prices short term to help Team Obama win re-election. Whatever his motivation, the credit down grade cited below reminds us that the Bernanke/FED/QE3 policy is misguided. It will harm the middle class and seniors. Economic history reminds us that you earn, not print, your way to success.
“Ratings firm Egan-Jones cut its credit rating on the U.S. government to "AA-"
from "AA," citing its opinion that quantitative easing from the
Federal Reserve would hurt the
U.S. economy and the country's credit quality.” – CNBC
If we have supply-side Republicans in charge of the House and Senate, but fail to sweep out Architect Obama – the leader of our changed and hopeless society – we have not done enough.
“Patriotism means to stand by the country. It does not mean to stand by the president or any other public official, save exactly to the degree in which he himself stands by the country. It is patriotic to support him insofar as he efficiently serves the country. It is unpatriotic not to oppose him to the exact extent that by inefficiency or otherwise he fails in his duty to stand by the country. In either event, it is unpatriotic not to tell the truth, whether about the president or anyone else.”
― Theodore Roosevelt
26th President of the United States
For anyone who votes to re-elect the man who wants to move us 'forward' off the looming fiscal cliff, such a person could qualify as unpatriotic by Roosevelt's definition.
Don't let that happen. Half measures won't be enough. ##
(Editor's Note: All Industry Voices and other opinion columns, including the Masthead blog, et al, represent the views of those who write them. They do not necessarily represent the views of MHProNews.com or our sponsors. It has been our long standing policy to invite guest columns from people with opposing perspectives. You can send your own letter to the editor or OpEd column on a subject connected to factory built housing to the email address linked here, with Industry Voices in the subject line. Thank you.)
A question brought up by an individual at a real estate investment group meeting in Tacoma, WA did not get answered at that time so thought I would attempt to put my perspective on it and then get feedback as to other people’s opinion.
The question: Where do you think the MHP industry (a.k.a. Manufactured Home Park, Manufactured Home Community, Land Lease Community) is headed?
To start, I will explain some of the chatter on the internet on this subject.
Many are under the impression that within 5-7 years the MHPs will fade into history. Manufacturers are not listening to MHP Owners and are not building the types of manufactured homes needed to fill the lots available in the older MHPs.
The MH Retailers have such a high markup from the factory price that the end users cannot afford their homes.
Banks & Mortgage Companies are not interested in financing a “mobile home” that is not attached to land.
So MHP Owners have had to step in and do the financing for the individuals looking to buy. Politicians are trying to over-regulate the industry by passing new laws dealing with financing, rent control, maintenance issues. Their interference with the free market is killing the industry overall.
On paper in WA (lip service?) some politicians have made efforts to extended benefits to help Owners maintain and develop MHPs as the last form of affordable housing. Yet they did not provide funding to support their magnanimous ruling on paper.
On top of all this the taxes keep going up – calculated as a commercial operation according to the Pierce County Assessor’s Office instead of as multifamily residential. That is where it stands. In order to bring some relief to the overall picture all parties need to get together and work out a solution.
There are numerous summits and all of the above are represented, except there are no representatives from Mobile Home Park Owners that count. The ones who have 500 -1000 units are there, but they do not represent the ‘mom and pop’ MHP Owners as a whole. Community Owners need to get their input into these meetings in some way.
Another problem that will arise is that many Owners are from out of state and depend on a mismanagement company to run their operations. They do not have an office on site – their office is 5-10 miles down the road or more. These MHPs fall into a state of disrepair and then the city officials step in and close them down.
The tax base from the personal property taxes are not very much. By closing the MHPs down, then they can build a new car dealership or motel that brings in more taxes for the city. Watch over the next 3-7 years to see how many MHPs are closed by city officials and not a developer Buyer.
As for the smaller operations – business will continue as usual. A home is abandoned – take it over, rehab it or have a Lonnie Dealer do it for you with you providing concessions for them. Sell the homes and finance it with a note. Same with those that are selling their homes: Buy it at a discount, rehab it, sell it on a note – never RENT a MH. If repo homes come available in another MHP – the Owner of that MHP should jump on the opportunity of keeping the home in their MHP. If they do not and it is available, you need to buy it, relocate it to your MHP and get it occupied.
Several of the trainers for the Washington State Mobile Home Community Owners Association have provided classes explaining to all in attendance that for each home that comes into your MHP you increase the overall value of your MHP.
For example if lot rent is $400/month and you bring in a home to fill a vacancy. The rent for one year is increased by $4800 (12 X $400). Dividing this by 0.10 (10 CAP) the value of your MHP just increased by $48,000.00. As long as you have the frame in your MHP, the mobile home can be rebuilt and your income stream will continue to flow in.
One MHP can be considered a pretty decent retirement plan. Most people who get involved in the industry are not satisfied with just one and may have more. Just be careful not to get overextended. Why? The scuttlebutt on the internet is that the commercial loans will have the same problems as the residential loans. One cause is that loans are not being made. The financial institutions are saving their funds for when interest rates climb to 11-12%. (A rumor was started that this was supposed to happen in November 2009). The main cause will be that the banks and mortgage companies will be sticking their noses up in the air and looking down on financing or refinancing of MHPs. Many MHP Owners have 3-5-7 or 10 year balloons that will be coming due soon.
Last year at the convention I brought this up and one of the instructors stated that one of his clients was in this type of predicament. One solution is for the use of Private Money to bail out fellow MHP Owners. The elimination of the banks and mortgage companies would be a great relief to many. Yet, who has deep enough pockets to take them out of the picture?
Email me your thoughts as to where you see the MHP industry going in the future. The above is my own personal observation of where things are going. # #
Unlike the manufactured housing industry in the United States, the market for manufactured homes in Canada remains rather prosperous by comparison. A Canadian Manufactured Housing Institute (CMHI) report for the 3rd quarter of 2010 shows some 3,608 factory-built single-family homes were started in the third quarter, representing a 17 percent improvement over the same period in 2009; and that factory-built units have started to improve as a share of total single- family housing starts. In raw numbers, that may not immediately impress, but consider the population variation. The population of Canada is approximately 33,700,000, compared to some 307,000,000 in the U.S.
The healthy market has attracted a number of U.S. companies to become certified to do business in Canada where communities are being updated and renovated. There are also important distinctions in the market that some credit with the success of the industry in our northern neighbor.
The third-quarter report also showed a surge in imports of manufactured buildings, and weak exports resulted in Canada registering a trade deficit of manufactured buildings, its first since the fourth quarter of 2008. The report indicates that although the U.S. still accounts for the majority of exports of manufactured buildings, demand should continue to waver as the housing market in the U.S. remains depressed.
Kathleen Maynard, Executive Director and CEO of the Canadian Manufactured Housing Institute, spoke with MHMSM.com about some of the differences between the market and regulatory environment in the U.S. and Canada.
A major difference, and one that has kept the market strong and attracted U.S. companies, is the fact that chattel loan financing is for the most part readily available in Canada.
Maynard explains the Canada Mortgage and Housing Corporation provides chattel loan insurance for manufactured homes when land is not involved.
“If you’re putting a home into a land-lease community without purchasing the land, then they provide the insurance to facilitate those sales,” Maynard says. “It’s required you need to get mortgage insurance with less than 25 percent down payment. CMHI provides that.”
A five percent down payment requirement is typical in Canada. The maximum amortization period on chattel loans is 25 years. Effective March 18, the maximum period is 30 years for other mortgage loans. Maynard says other features of the two types of loans are consistent. Default rates on chattel loans are not available.
Perhaps most notable is that Maynard says there is typically appreciation on homes purchased with chattel loans in Canada.
“There would be a comparison made of recent purchase prices of similar homes in the area, and factors such as improvements and retrofits made would be taken into account,” she says.
While manufactured homes in the United States are somewhat distinct from other forms of both factory-built and site-built housing because they follow federal manufacturing and safety standards, Maynard explains there is no equivalent to the HUD Code in Canada.
“There’s no across-the-board federal standard,” Maynard explains. “Anything produced in the factory has to meet the same requirements.” In some ways, she says, it may be easier to have factory-built housing installed in Canada. All factory-built housing must meet standards set by the Canadian Standards Association (CSA).
That’s not to say local building officials aren’t able to at times restrict the placement of manufactured housing. Local building officials do have the authority over technical requirements.
For example, Maynard says some local jurisdictions don’t approve homes built to something known as the Z240 standard, which she says is the closest thing Canada has to the HUD Code.
“If it’s just built to CSA Z240, they may not approve it,” she says, explaining that that standard has recently been updated to mirror the national building code, which is voluntarily adopted by Canada’s provinces.
Zoning issues can also prevent placement of manufactured homes in Canada, but that, she says, is largely due to issues surrounding terminology and outdated regulations. These issues are particularly acute in the province of Alberta.
This is not to suggest the grass is always greener across the northern border. The industry has had its ups and downs in recent years. Maynard says while 2008 was generally a very good year for the industry, 2009 was terrible, and while 2010 started off strong, there was a bit of a decrease in the second half.
“Most economists are projecting deceleration for 2011, but not a complete collapse or anything; just a downturn in keeping with demographic requirements,” Maynard says. “Prior to economic meltdown, we were producing at levels above what was projected by demographic requirements. Particular markets were very hot. What they’re saying now is a return to normal. 2009 was below normal. 2010 and 2011 are stabilizing.
Regionally, Maynard says Quebec and Ontario did better in 2010 than 2009 and activity in British Columbia is on the rise, but Alberta is “not as hot as it used to be.”
“There was a huge boom in Alberta and Saskatchewan in ’06, ’07 and ’08,” Maynard says. “It’s not as hot as it was, but still good there. No market is experiencing a huge boom.”
Maynard says “the landlease community option has been more attractive to first-time buyers looking for lower cost, or seniors who want to free-up equity and spend half the year in Florida. Typically the industry has looked to those consumer segments.”
While manufactured housing typically makes up ten percent of single-family housing starts in Canada, Maynard says, as for over-all starts, multi-family is accelerating faster than single-family.
“It could be due to housing costs, aging population, all sorts of things,” she says.
While the hottest industry topics in the United States seem to center around financing and regulation, the most talked about issues in Canada are an aging population and how that affects the number of sales and type of units and how design might be affected, a shortage of skilled labor and the use of social media.
“The shortage of labor is in a way a result of aging population,” Maynard says. “The average age of a brick layer is something like 68. There are a range of federal and provincial programs trying to deal with that.” For example, she says the ideas of additional apprenticeship certifications and allowing apprentices to move across provinces are being explored.
Maynard says the aging population is resulting in more multi-generational households, so demand for homes with two master suites, as an example, is on the rise.
The biggest difference, Maynard says, between the industries in Canada and the United States is the distinction made between manufactured and factory-built housing in the U.S. That distinction isn’t made in Canada and may be the reason why what is called manufactured housing doesn’t have much of a stigma across the northern border.
“There has been a lot of positive press (in Canada) with improvements in design and green technology and with manufactured housing being an environmental choice,” Maynard says. “There’s interest in the architect and design community. Developers and planners are seeing it as a good green choice.
“We talk more about factory-based construction,” she says. “That’s been a way to address the stigma. That was a concern for many years. There’s more of a recognition that with certification and quality control, waste-management and protection from the weather, the benefits are more recognized.”