The Texas Playbook

by D. J. Pendleton, J.D.

I had met Tony several times previously at various national events. However, it wasn’t until Tony was kind enough to attend the Texas Manufactured Housing Association's (TMHA’s) recent annual convention in September when I got a chance to talk substantively with him.

Actually, I believe Tony’s take-away from his Texas experience had little to do with me and more by what he observed of TMHA members.

At the end of our convention he asked if I would consider writing up an article discussing TMHA - our “Texas playbook” on how the association currently operates in the Lone Star State.

Poor Tony obviously hadn’t had enough time to properly vet me prior to making such a request. If he had he would have learned I have, a time or two, been accused of being long-winded, wordy, likes to hear himself talk, confused into thinking he gets paid by the word, or (a personal favorite regarding emails) having to label emails in the subject line whether they are “Blackberry approved” or not (over a certain length fail the approval test). And those are some of the nicer comments.

Regardless, of his unknowing and now to a reading audience I fear has already started to dwindle rapidly, I’m going to try to outline in a bit more detail a response to not only Tony’s request but the answer to a question I get, and I know many others in similar positions get all the time, “What is it that TMHA does?”

I will admit I’m still a bit skeptical as I write this it will garner any interest. Certainly doesn’t seem like I’m going to espouse some novelty in ideas or concepts. To a large extent I fully expect people reading to get about a third of the way through and think, “yeah, that’s how we do it too; nothing interesting here,” and stop reading. So for those that might care for the first-third (meaning you haven’t stop already) and the even rarer people who might find some interest in the remaining two-thirds, here we go.

The Playing Field

Before I can go into any Texas philosophy, don’t worry I won’t start quoting Plato or Aristotle, I first have to discuss the environment. The unique environment one must operate in dictates the strategy to effectuate any goals or philosophy.

In Texas our legislature meets every odd numbered years for 140 days. This compressed time line is both a blessing and a curse. I feel it is mostly a blessing. The legislative window is small and begins closing as soon as a session starts. However, this compressed time provides a level of intensity other states that met every year, and especially nationally which is seemingly never-ending, probably do not experience. Politicians have to run on their achievements and in order to get results they only have 140 days to pass bills on which they will campaign for reelection.

In Texas we have 150 House members and 31 Senators. So the scope of changing hearts and minds totals to 181 souls.

As far as the Texas regulatory environment, the diversity of our industry mandates involvement in a wide array of regulatory environments. While the list in Texas is numerous, at a core our industry is mainly touched by six regulatory agencies. This is the basic “lay of the land” in Texas.

Legislation First

At our core is the philosophy - legislation first. I might even go so far as to say we are legislation first, second and third, then regulation fourth. We also maintain our constants of member services, which are our communication, legal, education and networking efforts. However, without success it is difficult to attract new members or retain the ones we have. As proud as I am of the products and opportunities we provide our members, I know the absence of our core will create the absence of a membership.

Our primary purpose is to effectuate legislative changes to protect and promote our industry. Granted in recent times it seems we are doing more protecting. However, some could argue the line between protecting and promoting in this current climate can easily blur together.

With this focus on “legislation first” so goes the allocation of our resources. TMHA’s staff, like all the other associations, is lean and highly capable. We require motivated people who must wear many hats in dealing with large and varying areas of responsibilities. Our small staff allows us to focus many of our resources on achieving our various legislative strategies.

Swing Hard, You Might Hit It

The obvious question becomes, “How do you effectuate legislative changes?” Successful legislative change is similar to success in business. Success is a byproduct of a myriad of factors, a few of which are preparation, determination, out working the opposition and some dumb luck.

I also think it helps to start off by dreaming big. Reality and compromise will ultimately rein in the final product, but I’m a big believer in never negotiating against one’s self. My mindset is “swing hard, you might hit it” (for those who might have read other articles I have written, you know my use of baseball references is a common occurrence).

I’ll give you two examples of this strategy from our most recent 2011 legislative session. First, was dealing with passing a de minimus Texas exception to the SAFE Act for personal property owner financing. I didn’t make it to Vegas last year (I was in the middle of session), but I had several members who did attend. One member in particular reported back he had mentioned in an industry discussion the idea of a de minimus exception and others in attendance responded with a scoff of disbelief and condescending laughter of presumed impossibility.

And then we did it.

I know some reading this might have been those naysayers. I know others are thinking, “yea, well HUD in their final rules and CFPB will take that away from you.” And following the June release of final rules on SAFE from HUD, they might be right. But my response is one I think many other states share who have similarly gone on to pass de minimus exceptions, which is I acknowledge the reprieve is temporary. However, I’ll take temporary relief as will so many of my members who appreciate the current law on the books. I’ll also add the effort of trying pushes the discussion of bigger ideas further along. The more states that pass de minimus exceptions the further the national discussion is advanced that such provisions should be allowed.

My other example was when we found ourselves in what I called “ultimate defense.” An outside effort was launched that would have dismantled the regulatory agency currently dedicated to the manufactured housing industry in Texas. The repercussions would have been disastrous to the industry. The ensuing reaction was the delicate political dance, which changed the entire direction of the discussion. Ultimately, everyone was sent back to neutral corners to live another day, but the lesson learned was once again to dream big. We worked tirelessly for weeks trying to find another landing spot within existing agencies, but when all efforts failed we boldly set out for pure independence and very nearly achieved it.

It’s Not Power, it’s Trust

For all the political junkies out there, such as me, so much is made in the political world of “power.” Who has it, who doesn’t, who should it be taken from, who would benefit the most, who is abusing it, who can exert retribution on one’s foes with it. It seems all political discussions revolve around power. Political power obviously does exist, but when thinking of long-term successful legislative advocacy, I’d argue the goal is not to be the most powerful, but to be the most trusted.

Power shifts, changes, switches sides, materializes and evaporates. Trust, once achieved, is more valuable than power because it will survive. Trust is more valuable because it is rare.

Condemnation of political advocacy is everywhere - news media, pundits, pollsters, late-night talk shows. It is demonized as an evil endeavor. Personally, I choose to think of it much differently (then again I’m a lawyer-lobbyists so full disclosure on where the readers might think my moral compass points).

I choose to put myself in the position of not only an elected official, but their staff. Imagine with me your job is to try and make everyone happy. Every day you come to work with this goal. And everyday your phone rings and you talk to people all day long. Now these people who call range from the furthest outreaches of political affiliations of the far right to the way left. There are the pure crazies, the lonely who just want to talk to another human being and the severely misinformed. Typically your dealings are with the loudest of the “squeaky wheels” representing only a tiny fraction of a constituency, but the majority of your daily interaction. What are you supposed to do? Who do you listen to? What information do you filter out and what do you take in? How do you base decisions and form policy?

What you do is what all of us would do in that situation; you turn to those you trust for help, advice and guidance. You also treat those you don’t know or don’t trust with healthy skepticism.

We foster trust by focusing on the three basics of: campaign support, membership and constituent intersection and access. Phrased another way – a strong PAC (Political Action Committee), grassroots, and hired-gun lobbyists.

All three are critical for successfully establishing trust. Deficiency on one or more of the three requires compensation in the other categories. Ideally, strength in all three provides the platform to deliver not only the industry message, but a trusted relied upon message used by legislators.

Operating in an ideal world is easy. It also happens to not exist. Reality demands a balancing and re-balancing of all three elements.

Investing in PAC

We stress our Association PAC constantly. Much of our efforts are educating our members on the importance of the TMHA PAC. Long ago I learned money into a PAC is an investment. I have heard others compare it to insurance. Someone wouldn’t think of leaving all their business assets uninsured and exposed to a potential devastating disaster. The same effect of a disaster can occur from bad legislation being passed. This is accurate, but a PAC is more than defense.

PAC is an investment. Helping those seeking office in their moment of need and advancing their political goals establishes a trusting relationship. Introductions are made, relationship fosters, friendships created all through the interaction of political campaign support.

We currently have nearly $100,000 in our TMHA PAC. Not an impressive amount in the world of politics, but it is a start. Our goal is to continue educating our members on the importance of their PAC investment, continue to show them returns from their investment and grow our PAC to over $250,000 for the biennium cycle.

Effective Grassroots When You Don’t Have Much Grass

Leveraging every TMHA member who is a direct voting constituent of their legislators is critical. When it comes to politics the majority is the “apathetic majority.” This is similar to membership within an association where there are leaders and active participates, but the majority of the membership is relatively passive. The challenge is to energize the passive into active and cultivate the active into trusted voices their legislators turn to.

Powerful grassroots is attributed to massive numbers. However, our industry’s challenge in this regard is a lack of mass. Unfortunately, our industry numbers are relatively small when dealing in the large world of politics. We don’t have the membership size advantages of the Realtors or AARP. Even with the most optimistic rounding-up estimates the lack of massive numbers creates a unique challenge for us in manufactured housing advocacy.

TMHA is always striving to grow our membership and with it our political grassroots base. But we can’t wait around in the hopes one day we will have 90,000 members, like the Realtors. We work with the assets we have. And we focus on trust, not power. Establishing a close and informed network of select members who have direct relationships with their legislators is a resource we constantly use and strive to cultivate.

Evil Lobbyists?

The third element is the dreaded and evil use of lobbyists. Obviously, we don’t see it this way, but the portrayal of lobbyists is that of the lowest scourges of the earth. Even below lawyers; now that’s saying something.

By no means am I going to make a defensive argument of all lobbyists; however, lobbyists serve a role of access and associated trust. When faced with a situation where access is needed to articulate the industry position on an issue the appropriately hired lobbyist to help with not only access but providing an environment where open, honest and trusted dialogue can be achieved is invaluable.

So many times our role is merely educational on an issue. No legislator or regulator is an expert on all issues and all industries. The good ones at least know what our industry is painfully aware of, which is unintended consequences can be devastating. Having the ability and opportunity to educate policy makers on the unintended consequences before they draft and vote on legislation can mean the difference between a thriving industry and a dead one.

During the recent 2011 Texas Legislative Session we had six “hired-guns.” We spent just under 50 percent of our total expenses solely on legislative efforts. This dedication of resources is expensive. However, with this price tag expectations are incredibly high and performance accountability is demanded. When results fall below high expectations, changes occur quickly.

Our legislative focused strategy has yielded success. For over the past decade TMHA has always had at least one “TMHA bill.” A bill originally drafted by the association on behalf of our industry to correct existing legislative problems or create new opportunities. Every session we have passed our TMHA bill. In fact, in 2011 our TMHA bill passed through the legislature more quickly than any other TMHA bill in the last 45 years.

Praise for Common Sense Regulators

When switching gears to the state regulatory environment the foundation of our continued legislative success generates respect towards our industry. This foundation allows us to interact amicably with regulators. We are able to start from a position of perceived equality.

TMHA’s regulatory philosophy is simple; we want to be treated fair. Bad actors should be removed from the industry by the regulators because they hurt the industry as a whole in tandem with the consumers they injure.

Regulation should be open, transparent, and fair.

Our best case scenarios are regulators who engage issues with common sense. Our strongest relationships are with regulators willing to exercise common sense solutions first and do not hide behind senseless bureaucratic dogma.

TMHA insists on regulatory accountability along with legislative accountability. The regulators we commonly interact with know or, in some cases soon learn, what it means for us to insist on regulatory accountability. There are times where the existing law, the regulators interpretation of existing law, or the regulations themselves tip the scales unfairly against our industry. We work the regulatory channels ardently and professionally, but sometimes those efforts fall short. The demand our members have is when this occurs we automatically add the adverse regulatory issue to our legislative priority list.

In fairness to regulators, whose job can be difficult and clear cut solutions rarely present themselves, their existence provides additional credibility and marketability of our industry. Regulators are also limited in the end to what is written in the law. Therefore, it is our job when we can’t convince the regulators, or the existing law is simply limited, to then convince the legislators in the next session.

Singing the Same Song

The demands of accountability do not rest solely with TMHA staff and our various professional contractors. The association members expect accountability and performance from their fellow members. Now to say we have full, active participation from TMHA members is an overstatement. However, we have many dedicated members who work tirelessly with TMHA and independently to communicate the role and importance of our industry.

Unity provides us strength. Unity provides us with a clear consistent message. This is critical. As my mother would say (disclosure: both of my parents are from a small west Texas town), “we have to all be singing from the same hymnal.”

The strength of our membership and our unity is the byproduct of confidence, proven success, and the ability to come together for the common good of the industry. Many TMHA members disagree at times with priorities and sometimes even strategies, but they know they can be part of the process to advocate their positions. At the end of the day when the internal dust settles, despite whatever disagreements might exist, we stand strongly together.

Our Lone Star State

Texans can sometimes be labeled as brash, aggressive, bluntly direct and demanding. In writing that sentence I can see some of my members reading it, crossing their arms and responding, “Yep.” I’d even render a guess some of these attributes are what Tony observed in September which precipitated his request and my writing this article.

We are also blessed. In particular, our industry in Texas is blessed. We have a large and growing population with pressing housing needs. The Texas economy has fared better than many states and unemployment is lower than most. We have a large rural population where our products uniquely address many of the largest hurdles of affordability and access. Let’s not also forget the impact of the oil and gas industry and the housing demands tied hand-in-hand with that industry’s growth.

On the manufactured housing side we benefit from a fair, common sense based regulatory environment that protects our consumers and simultaneously treats the industry with professional respect. Our unregulated community industry has flourished and continues to attract investment. On the modular side, well, I suppose if pressed I’d say there are some things that are a work in progress (everything isn’t a perfect rose...or glorious bluebonnets).

We are a proud industry. We are comprised of proud people producing and selling homes we are proud of, and should be. We embody the entrepreneurial spirit and are job creators.

The trouble we find ourselves in now feels permanent, but it isn’t. Whether it is my Texas upbringing or naïve blinders, I am still an optimist. In rough times it is easy to focus only on the low and downtrodden topics - the wishes, wants, being unfulfilled or the lack of instant gratification. Our industry will recover as our country as a whole recovers. It will take time, and I don’t think a silver bullet solution is going to instantly save us. However, with a consumer public becoming more aware of what constitutes affordable housing, with coming years of austerity and with people living within their means, the stage is set for a growing recovery for our industry.

We have challenges ahead of us. Our task is to create innovative solutions so we can continue to serve our customers. These solutions will range from leveraging technology to lower compliance costs, attracting investors, using our competitive advantages over competitors, ensuring laws and rules address our unique industry and eliminating the unintended consequences that threaten us. We will accomplish these goals and more. Why? For the simple reason that we must.

If there is one truth stretching beyond the borders of Texas and extending to our whole industry, it is the truth that our industry is made up of fighters. So long as we continue to fight for ourselves, we will never lose. # #

(Editor's Note: DJ is considered by many as one of the top state executive directors in the country. DJ was considered for the MHI President's post, but he declined to stay on in Texas in his current role.)