Issue link: https://read.dmtmag.com/i/391492
OCTOBER 2014 10 THE JOURNAL A Better Understanding of Regulatory Compliance Costs – And Their Impact MHARR VIEWPOINT BY DANNY GHORBANI Because the manufactured housing industry is comprehensively regulated by the federal gov- ernment, the activities of federal regulators – across the full spectrum of relevant agencies -- are a constant concern for MHARR as an in- dustry "watchdog" organization. This is why MHARR, for months now, has been sounding the alarm on an emerging new regulatory push. And while MHARR is preparing to resist these impending new mandates, there still appears to be a need for further information and education about the harmful impact of needlessly increased regulatory compliance costs on HUD Code manufacturers, the broader manufactured housing industry and consumers. As with any regulatory issue facing the in- dustry, such further "information and educa- tion" hinges on the Title VI federal manufactured housing law that codifies national policy with respect to manufactured housing. That law, as revised, reformed and updated in 2000, is very clear in mandating a balance be- tween the inherent (non-subsidized) afford- ability of manufactured housing and safety for residents -- in other words, equilibrium. This is consistent with – and, indeed, reflects -- MHARR's founding mission, some 30 years ago, to seek and advance such a balance. And, in fact, the evidence shows that in today's manufactured housing, that balance and equi- librium have been achieved. To best maintain and protect that balance and equilibrium, how- ever, requires: • Completion of the full and proper imple- mentation of all reform provisions of the Man- ufactured Housing Improvement Act of 2000; and • Avoiding new unnecessary – and unneces- sarily costly – regulation. First, the evidence. On affordability, HUD Code manufactured homes are unequalled. By any definition that matters, HUD Code manu- factured homes are the nation's most affordable single-family detached housing. On purchase price, today's new manufactured homes beat site-built homes hands- down, with a 2013 aver- age cost per square foot (determined by the U.S. Census Bureau) that is 53% lower than that of a new site-built home (ex- clusive of land). And what about those suppos- edly high "operating costs" cited endlessly by regulators, competitors and detractors? It turns out that the mean monthly "operating cost" of a HUD Code home, as determined by a 2004 HUD study, was consistently and significantly lower -- over the entire study period -- than the mean monthly operating cost of any other type of home, including rental units. On safety (and quality), the results are even more impressive. Today's manufactured homes are the best that the industry has ever pro- duced, and that reality is backed up by hard data. For example, the same 2004 HUD study shows broad homeowner satisfaction with HUD Code homes, noting: "Across all time periods, in terms of … neighborhood quality and struc- tural quality, owned manufactured housing is perceived to be (ranked) higher quality than rental units." Similarly, on fire safety, the lat- est data from the National Fire Protection As- sociation (NFPA) shows that HUD Code manufactured homes perform as well as – or better than – site built homes, and recent wind testing by the insurance industry shows that current properly installed HUD Code homes perform as well or better than site-built homes in high velocity winds. All of this is borne-out, moreover, by HUD Freedom of Information Act (FOIA) disclosures (and direct statements), in- dicating that referrals to the federal manufactured hous- ing dispute resolution system have been minimal. Further, the state of the art technology that HUD Code manufacturers strive to utilize, and the industry's unique retail distribution network allows producers to offer consumers a wealth of available options over and above the require- ments of the HUD Code, while leaving the ul- timate choice to them, based on their wishes and resources. For example, one consumer might decide to add an enhanced energy pack- age to a home being purchased, while another might choose an upgraded kitchen or bath. The end result, based on all the above, is that the twin goals of federal law with respect to manufactured housing – safety and a quality, affordable home -- have been reached. Thus, any further expansion of the current regulatory system is, by definition, "make-work" in na- ture, with costs that will necessarily exceed po- tential benefits for consumers, who are already assured the level of safety and quality expected by law. Moreover, any such regulatory expan- sion, in addition to being costly and unneces- sary, would also have a discriminatory impact on smaller manufacturers and industry busi-