Protection/Pricing & OneUpmanship Ridivivus….

COBA7® via community-investor.com Blog # 299 @ 5/25/2014 Copyright 2014

Perspective. ‘Land-lease-lifestyle communities, a.k.a. manufactured home communities and ‘mobile home parks’, comprise the real estate component of manufactured housing.’

This blog posting ‘is a national advocacy voice, ombudsman press*, statistical research reporter, & online communications resource for all LLLCommunities in North America!’

To input this blog &/or affiliate with Community Owners (7 Part) Business Alliance®, a.k.a. COBA7®, use the Official MHIndustry HOTLINE: (877)MFD-HSNG or 633-4764

* Ombudsman press. ‘Manufactured housing’s ronin; fielding inquiries, complaints, etc.

Introduction to this weeks’ COBA7® blog posting at community-investor.com

Didn’t have to scratch hard to expose a few of manufactured housing’s perennial issues:

• Alleged HUD-forced, but unverified, product changes & housing price increases!

• Protect HUD-Code housing market share or fill more LLLCommunity rental sites

• Continuing battle for turf, influence, & power inside Washington, DC beltway

• National advocacy for & by LLLCommunity owners OR executive cronies?

Our industry’s frequent contretemps read more like housing soap than business model! Go ahead, look it up: Contretemps is right word choice to describe our industry’s plight.

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I.
It’s Called ‘Protection/Pricing’

II.
You Favor More RVs On-Site in Communities
OR
Protect Manufactured Housing’s Market Share?

III.
One Upmanship Redivivus* or Finis*?

*(‘living again, revived’ or ‘the end’)

IV.
YOUR OPPORTUNITY
To Input the National Communities Council Agenda

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I.

It’s Called ‘Protection/Pricing’

Here last week we changed a rhetorical question into this statement: ‘How HUD-Code home manufacturers deal with a new type MHRetailer!’ Meaning, of course, how HUD-Code home manufacturers are navigating uncertain waters, marketing new homes into land-lease-lifestyle communities, where they are sold and often self-financed to prospective homebuyers/site lessees – by this ‘new breed of MHRetailer’.

To that end, another interesting question surfaced, and was also featured in last week’s blog posting at this website:

When HUD-Code home manufacturers unilaterally issue allegedly HUD-Code forced Product Change Information, and resulting Price Increase Warnings, who verifies the veracity of said modifications and necessity of said price increase(s)?

Well, that pithy two part question sat online for a week; and to date, there’s been no credible or helpful, response from either manufactured housing national advocacy body!

But we did receive this insightful message from a retired HUD-Code housing manufacturing executive:

“The ‘protection/pricing’ issue is historical and remains relevant. (When) adequate foreknowledge was available, and we could pre-buy (inventory) to protect our backlog of pending orders, we did so. Often, however, there was no (advance) notice period of (any) consequence, particularly on commodity items, so we would increase (prices) without notice. Once I even took an increase on our backlog of orders. ‘Stuff happens’ ya know?

Were you, as a MHRetailer, willing to contract for (multiple home) purchases, and the manufacturer likewise, things could be different. But when I proposed (this) to our dealers, what do you think they said about committing to a certain number of homes by contract and delivery times? – You are right.

Hence the title of Part I of this week’s blog posting: ‘It’s called ‘protection/pricing’; and the Lesson Learned? ‘Live With It!’ You have no paladin after the fact, only before…

There’s an apt corollary here. Imagine yourself a small HUD-Code home manufacturer, and a HUD-forced Product Change comes your way, increasing the cost of your housing product by $100.00 per unit. You’re producing 500 floors per year; that’s a $50,000 increase in product cost, for this single change, during 12 months – the wholesale price of at least one, if not two homes. For the firm producing 2,000 units per year, that’s a $200,000 increase, maybe. The difference? Buying Power, on the part of the larger firm, will likely enable it to mitigate the severity of the cost increase associated with the HUD-Code forced Product Change, perhaps even passing on less a Price Increase to the firm’s ‘company stores’, affiliated independent (street) MHRetailers, and new breed of MHRetailer – the LLLCommunity owner/operator selling new homes on-site. Bottom line? Continued vigilance needed in regards to ongoing regulatory reform!

And next week, in this blog posting at community-investor.com, DUELING CURVES author, and retired manufactured housing factory executive Bob Vahsholtz, will share his ‘take’ on this ‘protection/pricing’ matter. Here’s a taste: “George, I’d not want to be a manufacturer today….Regulation is out of control.” And more….

II.

You Favor More RVs On-site in Communities
OR
Protect Manufactured Housing’s Market Share?

This was the question posed in last week’s BEBA (Blast Email Blog Alert) covering email message accompanying blog posting # 298 at community-investor.com

Here’s what I’ve learned since that posting a week ago. Upon querying MHI, I was sent a copy of its’ board meeting minutes from 4 October 2011 – that’s 2 ½ years ago. Then, the manufactured housing division sought and received this Resolution from the board: “Therefore be it resolved, MHI opposes changing current size restrictions for RVs & Park Trailers.” In effect, opposing a ‘change (that) would encourage permanent living in recreational vehicles.’

2 ½ years later, MHARR views the same matter in similar fashion, i.e. “…an intricate and highly complex issue that will have significant substantive impacts and repercussions on multiple constituencies, including consumers, state and local regulatory authorities, and both the manufactured housing and RV industries.” From MHARR correspondence dated 16 May 2014.

More to the point however, is this prediction by MHARR: a “…likely proliferation of the use of larger RV products as unregulated de facto residences….” (and without saying so) increasingly parked on some-to-many of the estimated 250,000 vacant, frequently ‘functionally obsolete’ (i.e. too small for today’s behemoth HUD-Code manufactured homes; you know, the ‘big box = big bucks’ or Developer Series Models of the late 1990s) rental home sites in land-lease-lifestyle communities coast to coast.

A congressional hearing, on this matter, has been requested, so “…all affected stakeholders can be heard, and address the intricacies of this matters, as well as its’ likely and potential unintended consequences.” (The latter maybe being, fewer smaller new manufactured homes shipped and sited on erstwhile vacant rental homesites in LLLCommunities – now occupied by a variety of recreational vehicle types).

As they say, ‘Stay tuned’, and this web site blog will keep you informed regarding this heady matter, as the legislative drama unfolds. And it’ll be interesting to see if this matter appears on the agenda of the National Communities Council (‘NCC’) division of the Manufactured Housing Institute, the morning of 9 June 2014.

A related sidebar. This conflict of interests is nothing new for the manufactured housing industry. The classic contrast of views, in years past, played out with HUD-Code home manufacturers favoring open zoning – in effect, allowing manufactured housing to be sited just about anywhere in a local housing market. At the same time, land-lease-lifestyle community owners/operators quietly preferred said homes to generally be restricted to that unique, income-producing property type and scattered building sites outside cities and towns.

III.

One Upmanship Redivivus* or Finis*?

* (‘living again, revived’ or ‘the end’)

In March 2014, this blog headlined ‘MH Politics as Usual in DC’, describing the unfolding melodrama that led to Pam Danner being named HUD administrator, all the while another was widely viewed as frontrunner. What was not publicized, at the time, was an attempt by one national advocacy body to usurp credit for insertion of ‘manufactured housing-friendly language’, specifically proposed earlier by yet another national advocacy body, into GSE reform legislation.

Well, the latter contretemps resurfaced a week or so ago in a Press Release from one national advocacy body, and a HOUSING ALERT from the other….

“…the inclusion of MHARR’s consumer financing amendments in bi-partisan GSE reform legislation – first in the original March 16, 2014 Johnson-Crapo bill, and now in the final committee-approved bill – breaks the ice and sets a political benchmark for future GSE reform efforts to fully include, recognize and protect all types of manufactured housing….”. This from MHARR’s Press Release dated 16 May 2014.

& this

“Included in the Johnson-Crapo bill are provisions explicitly requested by MHI that would allow manufactured home loans, including those secured by personal property, full access to the newly envisioned secondary market system.” This from MHI’s HOUSING ALERT dated 15 May 2014

In a memorandum sent to both lobbying bodies, this simple question was asked: ‘Are we talking about the same provisions here, in the Johnson-Crapo bill, or not?”

Reply(ies) to date?

Only this from the Manufactured Housing Association for Regulatory Reform, or MHARR, in correspondence dated 16 May 2014:

“The MHARR News Release (dated 16 March 2014) shows in detail, with specific quotes, the MHARR-developed language, how (said) language (was) drafted and submitted to the Senate committee shortly after a September 26, 2013 meeting between MHARR and (the) Banking Committee staff, was (then) incorporated into the Johnson-Crapo bill, to include all types of manufactured housing loans (chattel, real estate and hybrid) within the definitions of ‘eligible single-family mortgage loan’ and ‘residential real estate loan’. There is no mistaking this, because the bill language includes a specific proviso drafted by MHARR, excluding manufactured housing loans from certain title insurance mandates found in another part of the bill.” And the memorandum continues…

To date, at the posting of this weekly blog on or about 25 May 2014, there has been no reply from the Manufactured Housing Institute, or MHI, regarding this contentious matter. But then, as is oft said, ‘No reply is a reply!’

Draw your own conclusion(s).

IV.

YOUR OPPORTUNITY

to Input the National Communities Council Agenda

MHI’s National Communities Council (‘NCC’) division will convene at 10:45AM, the morning of 8 June 2014, meeting until Noon; that’s 1 ¼ hours for a meeting that usually lasts 2 – 2 ½ hours. One wonders, ‘Why the reduced time frame?’ As one of the NCC’s 86 members (according to MHI’s website list), will you be present? If past performance is an indicator, the answer is ‘No’. But I will be, on your behalf!

On the average, only a dozen or so bona fide NCC members, including certified representatives from state MHAssociations, show up for these get togethers. The rest of the (usually) many individuals in the meeting room, is an eclectic mix of state MHAssociation execs, product and service suppliers, and folk with nowhere else to go.

On 13 May I contacted NCC staff via email, asking: “Are you planning to solicit NCC meeting agenda topics before said meeting…?” And I offered five agenda suggestions. Two days later, on the 15th, I received this terse reply: “Thank You for sharing your suggestions. An agenda will be distributed prior to the meeting.” My rejoinder, later the same day? “That’s OK. I see matters continue unchanged at the NCC. Tight control at the top, little communication with members, and no desire to solicit input from members that would make our occasional meetings worth attending. See you there.”

SO, with no assurance the five topics I recommended will be on the NCC meeting agenda – they certainly haven’t been in the past; I’ve decided to ‘take the matter public’, asking YOU what you’d like to see and hear brought up before the august officers of the NCC. To date, my list has grown to nine in number. Here’s the list to date:

• The ‘value proposition’ of NCC division’s $500.00/year membership fee. What specific products & services are direct, dues-paying MHI/NCC members presently receiving, in addition to lobbying efforts in our behalf?

• Revisit MHI’s October 4, 2012 board resolution opposing “,,,changing current size restrictions for RVs and Park Trailers”, in effect discouraging permanent living in RVs. Review said opposition in light of need to fill an estimated 250,000 vacant rental homesites in land-lease-lifestyle communities nationwide.

• Recommend change to MHI bylaws (NCC has none) to permit properly executed absentee ballot use during annual election of division officers.

• Discuss the ‘intimidation by litigation’ environment apparently spawned by Right of First Refusal clauses within or outside some LLLCommunity leases.

• Status of MHI web page re NCC content and newsletter?

• Why discontinuation of the MHI Membership Directory in 2014? Who effected its’ demise? Why not make print subscription copies available at profit for MHI?

• NCC is formally invited to participate in the first ever National Public Forum examining the ‘Future of manufactured housing as ‘housing’ vs. its’ trailer heritage’, & ‘Future of LLLCommunities as ‘lifestyle’ & ‘investment’.’

• NCC is formally invited to affiliate with the Community Owners (7 part) Business Alliance, or COBA7.

• Status of the Duke University (Dr. Charles Becker) research project?

I’ll report on how (or ‘if’) any of these important and timely matters are aired and acted upon during the NCC division meeting on 9 June 2014.

What would YOU like to see added to this list? Simply respond via email (gfa7156@aoo.com) or phone the Official MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764. Better yet, if an NCC member, send your suggestion(s) on corporate letterhead. That’ll carry, by far, the most weight. I’ll report your suggestions during the New Business portion of the meeting – IF the 1 ¼ hour NCC meeting ‘gets that far’; and, hopefully, the results thereof, in a future blog posting – or a newsletter feature article.

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