Let’s Make History Together!

A DRAFT manuscript, titled ‘The Near Perfect Storm Manifesto’ was recently distributed to 26 business stakeholder leaders active in the manufactured housing industry & landlease (nee manufactured home) community real estate asset class. Written responses have been numerous and 100% supportive of the document’s thesis:

‘Imagine No New HUD Code Homes Manufactured in Year 2020!’

Accordingly, a new chapter, and likely one of several when all is said and done, is being added – via this week’s Blog – to the original DRAFT manuscript. And if responses and ideas to this week’s Blog continue to arrive, as they have to date, it’ll be appropriate to envision early 2010 as the timeframe during which some – or many, come together to
lay the foundation for a rejuvenated HUD Code manufactured housing industry,
maybe in a manner untried to date. But this is not going to even begin to occur, without your input and commitment to materially participate in the very salvation and rebirth of our unique factory – built housing business model! Are you ready? Then let’s read and reflect upon the content of chapters one and two together, then….

Chapter # 1.

The Near Perfect Storm Manifesto

‘Imagine No New HUD Code Homes Manufactured in Year 2020!’

or

The Not So Secret Scheme to Regulate and Politic HUD Code Manufactured Housing Out of Business by the Year 2020…

*

At a recent meeting of a de facto Think Tank* pondering the past, present and future of landlease (nee manufactured home) communities, 40 conferees identified more than 20 business indicators and significant trends affecting that realty segment of the industry, during years 1999 through 2009, out to 2019 and beyond.* What wasn’t discussed however, are the dark clouds of an impending near perfect storm, threatening the continuing existence of the home manufacturing segment of the industry, a blow characterized by onerous regulatory manifestations, bureaucratic inefficaciousness, and political legerdemain. These, and other conditions, appear poised to wash away what’s left of this nation’s sole homegrown type and source of affordable factory – built housing!

To understand and appreciate how this latest near perfect storm has advanced on the HUD Code manufactured housing industry, one must look back to 1972 when factory – built housing enjoyed the sunniest of times, shipping 575,940 new mobile homes throughout the United States in one year!. And 26 years later, 1998 was almost as sunny again, with 372,843 new manufactured homes shipped! But between those apex and renascence years, the industry endured its’ first major (regulatory) storm, only to now appear to be on the cusp of being wiped – out by yet another! Precursor to the first storm, was passage of the HUD Code (i.e. Federal preemptive building code for factory – built housing) in 1974, implemented in 1976. Result? A halving of new manufactured home shipments, down to an average of 249,000 homes per year during 15 years, until 1991, when we hit our first nadir of 179,713 – before rebounding to 372,843 new manufactured homes during 1998! Precursors to the second, now near perfect storm? Selfish missteps within the industry, involving massive misuse of chattel (personal property) housing finance; and, the hollow promise of positive regulatory reform (i.e. Finally evolving manufactured housing from the ‘trailer business’ to becoming a bona fide housing supplier!) couched in passage of the Manufactured Housing Improvement Act of 2000.*

What’s happened between year 2000, when the MHIA of 2000 was passed, and now? Statistically, it looks like this:

2000 = 250,550 new HUD Code manufactured homes shipped; then in…
2001 = 194,229
2002 = 168,491
2003 = 130,937
2004 = 130,802
2007 = 95,769
2008 = 81,889
2009 = (50,000+/-)
2010 = ________?
&
2020 = 250,000 as in year 2000; or 50,000+/- as in year 2009 & 10; or 0+ ?

Yes, manufactured housing’s near perfect storm is indeed imminent! What are just some of the prevalent and potentially harmful weather conditions?

• A cold front at HUD, characterized by perennial bureaucratic wrangling with the politically gerrymandered Manufactured Housing Consensus Committee (‘MHCC’), operating in a 100% regulatory environment! Ask yourself: ‘When was the last time I heard and or read of HUD overtly promoting HUD Code manufactured housing in any fashion?’ Not! Last I heard, umpires like baseball, referees like football. Why can’t HUD career employees and political appointees like our unique form of affordable, quality, energy efficient, transportable, non – subsidized, factory – built housing enough to promote it, instead of stifling its’ affordability by regularly increasing its’ cost to the American homebuyer?

• Continuing lack of the much – needed, non – career administrator to function as HUD and industry’s weatherman, warning all parties of imminent stormy weather, suggesting how we might survive, and dare I mention, thrive together in service to our nation as ready suppliers of truly affordable, attractive housing!

• A turbulent upper atmosphere apparently not improved with the recent (2009) change in federal government administration. Will the sun shine through this near perfect storm before it’s too late? Let’s hope so….

• Continuing lack of sufficient chattel home financing with which to weather this near perfect storm. Just maybe part of the answer to this storm condition lies with cutting through red tape and barriers long germane to the FHA 207(m) Program.

• Continuing local (housing market) regulatory barriers (e.g. acronyms NIMBY, LULU & BANANA*) to all forms of affordable housing needed to shelter our nation’s citizenry, storm or no storm!

• Growing, continuing threat to affordability of HUD Code housing by dint of installation overkill, threat of water sprinklers as original equipment, ongoing transportation restrictions and much much more…

Bottom line? Unless our industry’s two trade bodies in Washington, DC., once and for all, simultaneously and united, adopt identical foci in behalf of every segment of the manufactured housing industry, there simply will not likely be an industry by the year 2020! Effect this will have on landlease communities (‘LLCommunities’)? With no new HUD Code housing, a continual need to rejuvenate existing housing stock, site RVs when and where allowed, utilize other forms of factory – built housing (e.g. modulars & ‘park model’ RVs cum homes), even build new homes on – site to complement existing HUD Code homes. No longer will the 50,000+/- LLCommunities enjoy ‘business as usual’!

What are some of the things MHARR & MHI* should be united in effecting ASAP?

• Press for full & immediate implementation of MHIA @ 2000; accept no excuses!

• Press for immediate appointment of non – career administrator to guide MHCC!

• Plan and soon effect a major national Image Improvement Campaign, on behalf of all brands of HUD Code manufactured housing, using appropriate media and online resources and opportunities. Invite the LLCommunities segment of the industry to help financially support this timely and much – needed effort!

So, in the meantime, what are manufactured housing industry purists, aficionados, even Luddites, to do? Maybe hunker down, as HUD Code home manufacturers have already, and hope for the best – which might eventually come as an up tick in the affordable housing need cycle. But know what? That’s not going to happen anytime soon, because hundreds of thousands of foreclosed site – built homes are on the market and must be ‘sold through’ before prospective homebuyers return to factory – built housing. Hunkering down is not the effective answer! Become an activist! How? Reread the previous paragraphs, then personally and corporately commit to address the following:

The biggest disconnect within the HUD Code manufactured housing industry
and its’ sister business model, LLCommunities, lies in the near complete lack
of understanding and appreciation of ‘the other (segment’s) business model’.

HUD Code home manufacturers, till recently (early 2009), gave short drift to
community folk; and in turn, LLCommunity owners/operators have too long taken manufacturers and distributors of HUD Code housing product for granted. NOW is almost too late to learn and appreciate ‘the other party’s role’ in and about our unique and related business models. Are you willing to try? If so, start now! The price for not doing so is too high for any one of us, alone, to bear; specifically:

No New HUD Code Homes Built in Year 2020
Postscript.

Early in this article, actually beginning with the title, mention was made of a
‘not too secret scheme to regulate and politic HUD Code housing out of business’.

That’s been touched upon, just not fully explored. Why? Think about it. To do so,
would be in part, to have to name names and identify competing trade entities in national homebuilding business environs; as well as to criticize divergent leadership styles, from those publicly ‘resisting perceived regulatory encroachment at all costs’, to what appears to occur behind closed doors: ‘consensus – building to the extreme’. Are you, are we, ready for that sort of expose and discussion? I suppose your answer to that question depends on whether one agrees with and believes the thesis you’ve just read, or simply don’t care to form an opinion upon which you might be called to act. Again remember, the possible consequence of your personal and corporate inaction might well be…

No New HUD Code Homes built in Year 2020!

*****

Endnotes.

1. Urban Land Institute’s (‘ULI’) Manufactured Housing Communities Council (‘MHCC’) meeting November 4, 2009, in San Francisco, CA.

2. Available for viewing at MHI’s National Communities Council website: mhcommunities.org & Communities Connection newsletter or phone (317) 346-7156 and request a copy be emailed to you ASAP.

3. MHIA of 2000 established the MHCC and was viewed as modernizing ‘mobile home’ manufacturing of the early 1970s, to contemporary housing standards for the new millennium.

4. NIMBY = ‘Not in my back yard!’; then there’s LULU = ‘Locally Unwanted Land Use!’; and finally, the ultimate local regulatory barrier to all forms of affordable housing clearly expressed by the acronym BANANA = ‘Build Absolutely Nothing Anywhere Near Anything!’ Have additions to this list?

5. Manufactured Housing Association for Regulatory Reform (‘MHARR’) & Manufactured Housing Institute (‘MHI’)

*********************************************************************

Chapter # 2

Near Perfect Storm Manifesto now Manufactured Housing’s Jeremiad? *

‘The Near Perfect Storm Manifesto’ was distributed, along with a cover letter, to 26 business stakeholder leaders active in the manufactured housing industry and landlease community (‘LLCommunity’) real estate asset class. Fully half these men and women, mostly corporate stakeholders, from California to New Jersey, responded to the manifesto with comments like these:

• “That is a great read, really sums up what’s happening and how important it is some kind of action be taken (soon).”

• “(Manifesto) analyzes industry’s predicament fairly well, but stops short and pulls punches when it should bust it wide open! Looks like (no one) is willing to tackle the major problems the industry is facing; meanwhile, things keep getting worse.”

• “I’ve read ‘The Near Perfect Storm Manifesto’. I share your concerns, predictions, and necessary steps that need to be taken, specifically 1) getting MHI & MHARR to agree on a consistent message to HUD; 2) press for appointment of a (non – career) administrator to guide the MHCC; 3) (ensure) full implementation of the MHIA of 2000; and, 4) (implement) an image campaign.
&.
“I do think there needs to be significant improvements and use of the MHCC –
and it starts with a unified industry.”
&
• “If MHARR & MHI can’t get together to get the job done, perhaps we need a new national trade advocacy body to effectively represent our business interests.”

• “It’s statistically accurate we’re headed straight for extinction…it could happen sooner – 2015! DRASTIC measures need to be taken IMMEDIATELY by national industry leaders, and at the local level, by all of us.”

• “Overzealous and self – promoting bureaucrats/politicians have destroyed many industries, therefore the MH guys should not feel singled out. Look at the cost of automobiles. India now as a car for $2,000 – but you’ll never see one in the U.S. Government regulation will prevent it.”

• “…you cannot beat HUD staff. If you could not win under the Bush Administration, you have no chance with Obama. They do not really want affordably constructed housing. They want to subsidize expensively constructed homes.”
Vs.
“The approach that HUD is the enemy does nothing to help the cause or change anything – all that attitude does is stand in the way of meaningful change. It’s a distraction.”

• “The death sentence might have been imposed on manufactured housing the day in 1973 the industry went to Congress and asked the politicians for regulation. Like death row inmates, it took 40 years for the execution. Government cannot help but add cost, and eventually those costs add up.”
Vs.
“We’ve got affordability of product down pat – financing drives this industry…”

• “the MHIndustry needs to either find a way to succeed with more expensive housing or have Congress repeal the HUD Code law and return regulation to the states.”

How many of these observations, opinions, and suggestions ‘strike a nerve’ with you? Did you notice, while a lot of business angst was expressed, there’s also disagreement on different issues among businessmen and women in the MHBusiness?

OK, so where do we go from here? That’s really up to you. If the preceding remarks have motivated you to become involved, in some fashion, and make your views known – and or willingness to participate, respond directly to this Blog or correspond via GFA c/o Box # 47024, Indianapolis, IN. 46247. The third chapter of this MHJeremiad will unfold during the next 30 days, and be featured in the January 2010 issue of a newly configured Allen Letter professional journal for the MHIndustry & LLCommunity asset class!

January’s Allen Letter is the sole source of this year’s 21St annual ALLEN REPORT (a.k.a. ‘Who’s Who Among LLCommunity Portfolio Owners/operators throughout North America!’); and, will contain special features describing the new Community Series HUD Code homes (Don Westphal), Small LLCommunity Owners Forum (Joanne Stevens, CCIM), and ‘Taking LLCommunity Statistics to the Next Level’ (Bruce Nell). Subscriber? If not, phone (317) 346-7156 and do so today!

But know what? There’s yet more to cover in this Chapter # 2 of our industry and asset class’ final – or first, chapter describing its’ demise or latest renascence – to last another 50 years! The previous quoted responses notwithstanding, there’re two points to be made before bringing this chapter to a close.

First; ‘The National Manufactured Home Construction and Safety Standards Act’, as amended by ‘The Manufactured Housing Improvement Act of 2000’ (‘MHIA@2000’), contains two ‘findings’ by Congress: “Manufactured housing plays a vital role in meeting the housing needs of the Nation; and, manufactured homes provide a significant resource for affordable homeownership and rental housing accessible to all Americans.”* One sure would not know that at present, given the extremely poor state of economic affairs throughout the manufacturing and distribution segments of the HUD Code housing.

Second; Congress sets forth eight ‘purposes’ for this title, the MHIA@ 2000; of which I’ll quote three that relate to what’s been described in this DRAFT and Blog:

• “to facilitate the availability of affordable manufactured homes and to increase homeownership for all Americans;

• to establish a balanced consensus process for the development, revision and interpretation of Federal construction and safety standards for manufactured homes and related regulations for the enforcement of such standards.

• to ensure the public interest in, and need for, affordable manufactured housing is duly considered in all determinations relating to the Federal standards and their enforcement.”

The first of these purposes, in my opinion, relates to the total lack of promotional effort on the part of anyone at HUD, to ensure our nation’s home buying public is well aware, the only factory – built housing type in the U.S., built to a Federally pre – emptive building code, is the most affordable, transportable, non – subsidized, high quality, energy efficient, green housing available anywhere, anytime!

The second purpose relates to the Manufactured Housing Consensus Committee or MHCC. This body, in the eyes of many in the manufactured housing industry, has evolved into a political football – from the manner in which its’ members are selected by HUD, to perennial battles regarding how to develop, revise and interpret Federal construction and safety standards.

The third purpose relates to the dire and pressing need at HUD for “…a noncareer administrator within the Department to administer the manufactured housing program” – for which a funding mechanism is already in place; and not only that, “pay expenses (salary) referred to in that (a previous) paragraph which shall be exempt and separate from any limitations on the Department regarding full – time equivalent positions and travel.” Reads like a ‘ticket to ride’ to me! So, why won’t HUD execs appoint a noncareer administrator who’ll convey MHIndustry’s pressing concerns onto the Department’s policy level, rather than continuing to rely on a career employee to do so? They’re not saying, and I have a copy of the letter that makes that point very clear.

But all is not lost! There are indeed bright signs in and about the MHIndustry and LLCommunity asset class! In summary, here’re some of the emerging and existent new trends:

• In the face of little to no chattel (personal property) mortgage sources of funds, many LLCommunity owners, large and small, now actively market and sell new and resale homes on – site, often self – financing them in either a ‘captive finance’ fashion (i.e. where third party collects mortgage payments and services the loan) or a ‘buy here – pay here’ format, in which the property owner does so.

• Nearly three dozen Business Development Managers (‘BDM’), since early in 2009, have ably represented more than a dozen HUD Code home manufacturers, building their firm’s market share of new HUD Code homes sold into LLCommunities nationwide! For a free list of these BDMs, call (317) 346-7156.

• For the first time in years, MHRetailers are actively seeking out and buying small to mid – sized LLCommunities in relatively close proximity to their salescenters. Why? The land & home business has about dried – up for the time being, for obvious reasons, and MHRetailers are relearning the LLCommunity business they’ve ignored, for the most part, for the past decade.

• As more and more major HUD Code home manufacturers liquidate, new HUD Code home manufacturers are springing up around the country. One of the most notable recent startups is ADVENTURE HOMES in Garrett, Indiana. The firm ships into 14 states and boasts the most competitive pricing in the HUD Code market today, with 14X70 singlesection homes starting at $15,995 (net pricing) and multisection homes beginning at $19,995. Interested? Call (877) 510-1955 and talk to Greg Pinckney, account sales manager.

And yes, there’re even more timely and motivating examples, but we’ll leave them for Chapter # 3 or this manifesto cum jeremiad description of the MHIndustry in the January 2010 issue of the Allen Letter professional journal for businessmen and women! You don’t want to miss this budding opportunity to help reform and rejuvenate our industry for the 21st Century! Subscribe today.

*****
End Notes.

1. Jeremiad = lamentation, a complaint

2. Quoted from Unofficial Compilation Prepared by NCSBCS: Title VI as amended by the Manufactured Housing Improvement Act of 2000, page # 1.

3. Ibid, Authority to Collect Fee, page # 15.

George Allen, Realtor®, CPM®, MHM®
Consultant to the Factory – built Housing Industry &
The Landlease Community Real Estate Asset Class

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