Energy Code Trends and Manufactured Housing Industry Impact

by Shawn P. Mullins

Energy conservation is a political hot button at present and, if recent history is any predictor, it will continue to play a vital role in our economy and the building industry in general for the foreseeable future. Before too long, the future will be the present and what was once voluntary, will become mandatory. Perhaps a short overview of current energy code applications will help put this into perspective.

Listed below are the various MHI segments and the energy-efficiency approach used:

HUD/Manufactured Housing

Regulated by the Manufactured Home Construction and Safety Standards as taken from 24 CFR Part 3280 (the code of federal regulations). This code provides for minimum levels of energy efficiency and, in its current form, has only very basic geographic thermal zones and insulation requirements. However, the US Department of Energy (DOE) is currently working on new energy-efficiency standards for manufactured housing as required by the Energy Independence and Security Act of 2007. The goal is to bring standards in line with the most current edition of the International Energy Conservation Code (IECC), but with an acknowledgement of the need to keep homes affordable for consumers. These standards are mandated to be completed by the end of 2011.

Modular/IRC Product

Codes vary by state, but are typically some variation of the IECC. Several states have unique addendums and additional requirements to increase a home's overall energy efficiency.

CA Modular/IRC/CBC

California has specific building and energy codes that are adopted from the IECC. However, CA is also recognized as having one of the more stringent energy codes, often referred to as "Title 24," because of the state legislation from which it was adopted. In addition to the baseline code, there are currently incentives available only to projects that achieve compliance by at least 15% or more, and even larger incentives if compliance is reached by 30% or more. In addition, CA is beginning to recommend and require higher levels of certifications for those on the design side of the process as well as those who do the physical tests and verifications during and after the home is built. California seems to pride itself on being energy-efficiency leaders, prompted both by actual need and public perception.

Listed here are the voluntary program titles with their respective descriptions:

Energy Star for New Homes

Since this program has been around for awhile, most of us are probably aware of it, at least in theory. Basically, Energy Star aims for a home to be at least 15% more energy efficient than a 2004 International Residential Code home. It does this via both prescriptive- and performance-based approaches. Prescriptive is a system wherein a home must be built in a specific manner based on where it is located. Under a performance approach, a home's energy efficiency is modeled with computer software that takes into account its location and building features in order to trade excess credits in one category for negatives in another. So long as the end result adds up, the home is considered to be in compliance. Performance modeling is a much more detailed, yet flexible, approach and allows for a greater amount of customization. Standards are increasing for the 2011 version of Energy Star in light of the fact that the 2009 IECC is largely adopting current Energy Star requirements into the baseline code. Hence, Energy Star certified homes will need to raise the bar considerably higher to warrant the "blue label."

HERS

HERS stands for Home Energy Ratings System and is used to score a home's energy efficiency on a numerical scale. The rating involves a physical evaluation of the home (or is based on plans), some overall air and duct leakage testing, and inputting technical data into proprietary software. The result, among other data, is the HERS Index Rating. A base 2006 IECC home is the benchmark at a score of 100. Anything above that is worse and anything below that is better. Hence, in the case of HERS, you want a lower score, not a higher one.

While HERS is commonly used for new home construction, it can also be used for existing homes in order to evaluate the effectiveness of proposed energy-efficiency improvements, and is required for an energy-efficient mortgage. Upon completion of rating a home, the HERS rater issues a certificate that identifies the score of the home and the relevant energy features. It should also be noted that the software utilized for HERS provides a literal plethora of concurrent reports, energy code compliance comparisons, energy usage and actual energy cost data. An example of the HERS Index is shown below.

Homestar

Although not yet passed, Homestar is an energy-efficiency bill currently working its way through Congress. It has multiple tiers of compliance and associated rebates for improving an existing home's energy performance. Recently added to the legislation was an option for additional tax credits and rebates for homes reaching particular HERS Index scores based on the age of the home. The combined tax credit and rebates for the HERS Index is currently being reported at $11,000! I mention this program only because if we want to sell new homes, then shouldn't they at least be as energy efficient as an existing retrofitted home could be?

Attached to this bill is an amendment aimed at manufactured housing specifically. The amendment calls for $7,500 rebates on new manufactured housing purchases to replace old, less energy-efficient manufactured homes. Hey, there's one opportunity to increase new home sales vs. retrofits!

The trend here seems to be clear in that building energy codes, government mandates and fiscal policies will continue to focus on energy efficiency improvements. Codes WILL get tougher and call for higher levels of insulation, better overall construction in terms of the thermal envelope (the energy shell of a building) and more requirements for independent verification that a home meets the required energy-efficiency standard. Keep in mind that some states have already adopted a HERS Index rating as a requirement for all home sale transactions, both new and existing. There is a belief that if consumers are educated as to the energy efficiency of a home, they will then move on their own towards homes of greater energy efficiency. Consumer education is a large part of current and upcoming energy-efficiency spending programs.

While the impact to our industry will certainly involve some higher costs for better materials, more testing and greater levels of documentation, there are some positives to this as well. Our homes are typically more efficient than site-built homes simply because of our production-line assembly process. Now we will be better able to document this fact. There will also be increased opportunities for the third-party agencies in our industry. These guys are few in number, and more business for them will hopefully mean more choices for manufacturers and retailers.

Because consumers will be more informed, this presents a great opportunity for us to capture their interest and show them exactly how we can produce a more energy-efficient home, and at a lower cost as compared to a site-built home. If you are a retailer and aren't sure exactly which points to focus on during a factory tour, be sure to ask your manufacturer for help on this subject. It doesn't have to get too technical, but a few key points should be brought to a potential buyer's attention.

If you are a retailer and not already using energy-efficient mortgages, then you should seriously consider them. They allow for greater levels of financing with no additional down payment from the borrower. A HERS Index rating (and therefore an audit) is required for these mortgages, but well worth the approx. $400 cost. This cost, by the way, can be paid by the borrower, retailer, lender, or a combination of all three. Therefore, it should not be viewed as a barrier of any significance.

Finally, with all the various energy-efficiency and green building certifications currently in existence, we now have a great opportunity to increase our collective knowledge base. If business is slow for you, like it currently is for most of us, why not spend a nominal amount of money and time to gain an extra certification/designation or two? The marketing advantages of these designations will pay off many times over as our business climate improves. Also keep in mind that just about any certification will come with some marketing material support to help you make the most of your new professional designation.

I've provided some links below to a few sites that you will hopefully find relevant and informative on this topic:
resnet.us/home-energy-ratings
efficiencyfirst.org/home-star/
resnet.us/homestar
esnet.us/mortgages
energystar.gov/index.cfm?c=new_homes.hm_index

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Shawn P. Mullins has worked in the manufactured buildings industry for over 22 years. Over the course of his career, he has held various leadership posts including: Engineering support and management, Estimating Management, and Operational support positions. His product experience covers a wide spectrum including: HUD, IRC, international and man camps, ANSI, light commercial, etc. Mr. Mullins currently holds a BSBA/Operations Management degree and is currently pursuing a MBA with a focus in Project Management. Industry-held positions include Board of Directors and Government Relations & Zoning Committee membership for the Arizona Housing Association. Other industry-related pursuits include Owner & Principal Managing Member of Earthwise Engineering LLC, an energy-efficient design, consulting, and HERS-rating company. Mr. Mullins welcomes comments, feedback to his articles and industry connections via This e-mail address is being protected from spambots. You need JavaScript enabled to view it .