MHCC AO Suspends Services Due to Non-Payment by HUD

TO:         MHARR MANUFACTURERS
               MHARR TECHNICAL REVIEW GROUP (TRG)
               MHARR STATE AFFILIATES

FROM:    DANNY D. GHORBANI

RE:         MHCC AO SUSPENDS SERVICES DUE TO NON-PAYMENT BY
               HUD

The National Fire Protection Association (NFPA), the Administering Organization (AO) of the Manufactured Housing Consensus Committee (MHCC), in a May 14, 2012 memorandum to all MHCC members, announced that, effective immediately, it is suspending all MHCC AO support services (see, copy attached).

The NFPA announcement is based on HUD’s written refusal to pay NFPA over $37,000.00 for AO services dating back to February 2009, citing the alleged exhaustion of funds available under the current AO contract -- a claim disputed by NFPA, which maintains that nearly $140,000.00 in contract funding remains available. Although the last option period for the AO contract expired in January 2012, the contract, according to NFPA, is currently on an administrative extension through July 2012, pending the formal solicitation of a new agreement for AO services.

The NFPA suspension of all MHCC AO services resulted in the immediate cancellation of a scheduled May 22, 2012 conference call of the MHCC’s Wind Task Force and throws into question planning for an expected in-person meeting of the MHCC during June 2012 – a meeting that has already been delayed well past its usual March-April yearly timeframe.

More importantly, as with other recent events, this development raises fundamental questions regarding HUD’s management of the federal program, its funding, its focus, its direction and the proper allocation of program resources. Even worse, a failure to revive and properly fund the MHCC would effectively take the federal program back to the days of closed-door rulemaking, regulation via “interpretation,” and other abuses that Congress sought to end through the Manufactured Housing Improvement Act of 2000.

Thus, as MHARR has stressed in its continuing engagement with HUD and Congress (and soon through another new venue), the priorities and resulting expenditures of the federal program – in the wake of the 2000 law -- are seriously flawed and need to be corrected.

Over the past several years, even though the industry is producing its highest-quality homes ever (with proper installation under the 2000 law) and production-related consumer complaints have fallen to minimal levels, HUD has skirted the 2000 law in an effort to impose expanded in-plant regulation – make-work that has allowed the entrenched contractor to maintain its billing despite sharply reduced industry production. And, as MHARR has previously noted, HUD, in its 2013 budget and appropriations requests, is seeking an additional $1 million increase in the monitoring contract, out of a total proposed program budget of $8 million.

To say the least, it is disconcerting that at the same time HUD seeks to funnel more and more money into production monitoring – when every objective measure shows that no expansion of production regulation is warranted or justified – the Department is crippling the MHCC, the centerpiece reform of the 2000 law, by refusing to pay its one essential contractor (after having already degraded the role, independence and functionality of the Committee through other baseless restrictions and limitations).

Thus, as MHARR has been urging HUD and Congress, a fundamental shift in federal program priorities and spending is essential. Rather than subsidizing regulatory overkill through expanded in-plant regulation and a $1 million increase in funding for the monitoring contract, HUD should be using its funds to fully and properly implement the key reforms of the 2000 law, including the appointment of a non-career program administrator and the proper operation of the MHCC, as well as providing additional and badly-needed funding for State Administrative Agencies (SAAs), which constitute the first line of consumer protection for a growing number of new and existing homeowners.

MHARR took the first step in this direction in 2011, when Congress, for the first time since the inception of federal program, took a close look at program spending and demanded strict accountability for all appropriated funds. And now, with HUD’s 2013 program budget pending before Congress, MHARR is seeking expanded congressional scrutiny of the allocation of program funds in order to advance a properly-functioning federal-state partnership and full compliance with the 2000 law.

Simply put, the further degradation of the MHCC through HUD’s failure to fund its sole contractor is unacceptable. MHARR, therefore, has already begun investigating the relevant details of this payment dispute with the AO and will take further action as is appropriate.

MHARR will keep you apprised regarding this important matter as developments unfold.

cc: Other Interested HUD Code Manufacturers, Retailers and Communities

Manufactured Housing Association for Regulatory Reform
1331 Pennsylvania Ave N.W., Suite 508
Washington, D.C. 20004
Phone: 202/783-4087
Fax: 202/783-4075
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