Issue link: https://read.dmtmag.com/i/441836
JANUARY 2015 10 THE JOURNAL Energy Regulation Winners and Losers MHARR VIEWPOINT BY MARK WEISS As most industry members are aware, with the well-earned retirement of my friend and mentor Danny Ghorbani at the end of 2014, I was hon- ored to be named by the MHARR Board of Di- rectors as only the second President and Chief Executive Officer of the Association in its 30- year history. One of the great privileges that goes with being President of MHARR (with the gra- cious consent of Jim Visser, Publisher of The Jour- nal) is the opportunity to author these MHARR Viewpoint columns each month. As Danny noted in his farewell article this past December, these columns have been running now for over 22 years. Over that time, they have served a cru- cial purpose, by allowing MHARR, as the in- dustry's leading regulatory authority and "watchdog" in Washington, D.C., to reach a broad audience of industry members with analy- sis, insight and factual, accurate information on matters and decisions in the nation's capital that directly affect them and millions of American consumers. Carrying on this tradition and the standard of excellence that Danny established and maintained for over two decades is a serious responsibility – one that I will do my best to up- hold every month, with each new column. That said, as 2015 begins, the manufactured housing industry and American consumers of af- fordable housing face the bleak prospect of new federal energy standards that will significantly in- crease the purchase price of manufactured hous- ing, exclude large numbers of Americans from the manufactured housing market, and shrink, even further, the pool of potential manufactured home purchasers -- all at a time when industry production levels, while growing, remain far below historic norms. While support for such an eventuality by energy interests and environmen- tal groups may be understandable, it remains a mystery why part of the manufactured housing industry itself would welcome such an outcome. Yet, industry supporters of these standards, which could be published as a proposed rule by the U.S. Department of Energy (DOE) as early as the end of January 2015, say that they repre- sent a "big win for consumers and the environ- ment" or a "win-win for our homebuyers and the environment." That positive "spin," however, ignores some inconvenient truths about the proposed standards and the negative impacts they will have on consumers and a price-sensitive manufactured housing market. For a supposed "win-win," the DOE energy standards, if adopted, will result in an awful lot of "losers" due to their extremely high cost. And let's be clear, these are not life-safety standards like many of those under the HUD Code that are designed, by law, to protect man- ufactured housing residents against "any unrea- sonable risk of injury or death." In the case of certain life-safety requirements, some level of additional cost could be justifiable in order to safeguard against injury or death, based on the balancing test ingrained in federal manufactured housing law. The wind resistance standards adopted by HUD in the mid-1990s in the wake of Hurricane Andrew are a good example of such a measure. But in 2015, manufactured homes – as demonstrated by virtually every metric available (such as the National Fire Protection Associa- tion's updated 2013 report on manufactured home fires) – are already safe and well-con- structed. Instead, the impending DOE energy standards are an outgrowth of the Energy Inde- pendence and Security Act of 2007 (EISA) – a "green energy" statute. And while a "greener" future might be cheery to contemplate, it should not be built on the backs of hard-working lower and moderate-income Americans who would thereby be priced out of the market for the only form of home ownership they can currently af- ford. So, putting aside, for now, the unmitigated debacle that has been the DOE rulemaking process since 2007 – as explained and analyzed in the November 2014 MHARR Viewpoint – let's look at the price numbers, and their likely im- pact. According to purchase price information developed by the DOE manufactured housing Working Group, the consumer acquisition cost for a new single-section manu- factured home constructed in accordance with the pending standards – based largely on the requirements of the 2015 International Energy Conservation Code (IECC), as mandated by EISA – would in- crease by a projected average of approximately $2,300.00. The consumer cost of a double-sec- tion home would increase by a projected average of approximately $3,200.00. If those numbers were final and completely ac- curate, according to the only market-price sen- sitivity data presented to the DOE Working Group, they would have a huge impact on the manufactured housing market and American families already facing unprecedented difficulty in accessing consumer financing to purchase a man- ufactured home. According to a 2014 study by the National Association of Home Builders (NAHB), presented to the Working Group at its initial meeting, a $1,000.00 increase in the pur- chase price of a new manufactured home excludes 347,901 households from the market for a sin- gle-section home, while the same $1,000.00 in- crease excludes 315,385 households from the market for a double-section home. Extrapolat- ing this data to the price increases projected by the Working Group shows that the pending DOE standards would exclude more than 1.1 million households from the single-section manufactured housing market and just over 1 million house- holds from the double/multi-section market – extremely large numbers considering that the en- tire industry, for several years, has been gener-