Issue link: https://read.dmtmag.com/i/469624
MARCH 2015 12 THE JOURNAL Ending A Baseless HUD Restriction on Manufactured Housing MHARR VIEWPOINT BY MARK WEISS Part of what makes the Manufactured Housing Improvement Act of 2000 such a landmark ac- complishment for the industry and American con- sumers of affordable housing, is its broad declaration of federal housing policies designed to promote the availability, utilization and techno- logical advancement of manufactured homes. This is a far cry from the original National Manufac- tured Housing Construction and Safety Standards Act of 1974 – adopted in a totally different era -- which had as its purpose, the reduction of "per- sonal injuries … deaths … insurance costs and property damage resulting from mobile home acci- dents" and "improv[ing] the quality and durabil- ity of mobile homes." Instead, the 2000 reform law (as pointedly reiterated by the Government Accountability Office in its July 2014 report on the federal program) directs HUD to "facilitate the availability of affordable manufactured homes," "increase homeownership for all Americans," and "encourage innovative and cost-effective con- struction techniques for manufactured homes." (Emphasis added). The reference to "all" Amer- icans is significant for the simple reason that this congressional mandate cannot be met – and the full potential of modern, high-quality manufac- tured housing cannot be realized -- if the design and use of HUD Code manufactured homes are needlessly restricted by baseless regulatory straight- jackets. One such straightjacket is the "one-family" re- striction set forth in the current HUD Code stan- dards. Although the federal law governing the HUD Code and the federal program says absolutely nothing about manufactured homes being limited to "one-family" use, or "one-family" design, or "one-family" anything, the HUD standards (24 C.F.R. 3280.2) define a "manufactured home" as a structure "designed to be used as a dwelling" and then define a "dwelling unit" as "one or more habitable rooms which are designed to be occupied by one-family …." (Emphasis added). Given this "one-family" limitation in the standards -- which based on the governing law should not even be there -- the HUD Procedural and Enforcement Regulations (24 C.F.R. 3282.8(l)) state the obvious by pointing out that "multi-family homes" i.e., "mobile homes designed and manufactured with more than one separate living area are not covered by the [HUD] standards and … regula- tions." (Emphasis added). Perhaps because of the lack of any statutory support for this "one-family" limitation in the standards, HUD, for some time, had shown lit- tle appetite for aggressively regulating the design and, effectively, the use of manufactured homes based on these provisions. Things changed, how- ever, on October 3, 2014, when the new HUD program Administrator (based on analyses by the program monitoring contractor, no doubt as part of its rapidly-expanding make-work activities and revenue-driven penetration into virtually all as- pects of the program) issued a memorandum threatening manufacturers with fines and civil penalties for selling any HUD-labeled home "for purposes other than single-family use." In part, the Administrator's memorandum stated: "[M]anufacturers may not design or build manufactured homes labeled pursuant to the National Manufactured Home Construction and Safety Standards [Act] for multi-fam- ily or other non-single-family residential use. [A]ny manufactured home built under the federal program and bearing a HUD Certification Label may not be sold for pur- poses other than Single Family Use. *** Moving forward, the Department will be re- ferring cases involving manufactured homes designed, built or sold for other than Single Family Use to its Office of General Counsel for further enforcement action." Given this threat of federal enforcement and its potentially serious impact on significant manufac- tured housing growth markets – contrary to the fundamental purposes and mandate of the 2000 reform law -- MHARR immediately analyzed this issue and presented its findings to the program Ad- ministrator in a November 12, 2014 communica- tion. In that communication, as reiterated by MHARR at a December 10, 2014 meeting with program officials, MHARR urged the Administra- tor to rescind the October 3, 2014 memorandum and its threat of enforcement action. MHARR emphasized in its written communi- cation and in person that insofar as the regulatory "one-family" restriction exceeds HUD's statutory authority, it is unenforceable. And, in fact, a well-publicized federal court decision involving another HUD regulation recently made it very clear – again -- that federal regulations may not exceed the scope of an agency's underlying grant of authority from Congress. Just as importantly, though, there is no basis in federal manufactured housing law -- or Obama Administration policy for that matter – for HUD to define what does or does not constitute "one family" or a "single family" for purposes of habita- tion in a manufactured home. Given – (1) evolving legal standards; (2) the different types of habitation and living arrangements being sanc- tioned by courts and legislatures; and (3) clear civil rights implications, HUD should not be in- volved in defining or deciding who or what con- stitutes a "family" or, by extension, "one-family," or a "single-family." Nor should manufacturers and/or retailers be forced into a situation where they could find themselves subject to discrimina- tion claims and potential liability for refusing to design, build, sell, or lease a HUD-labeled home based on the "family" status of the purchaser(s) or expected use of the home. Furthermore, when Congress established fed- eral authority over the safety and construction of manufactured homes its intent was to create a fed- eral-state partnership. A de facto federal use re- striction, as set forth in the Administrator's October 3, 2014 memorandum, could improperly replace state and local authority over the use of residential structures placed within their jurisdic- tions. Based on the amendments contained in the 2000 reform law, so long as a manufactured home is designed, constructed, delivered and installed in accordance with the HUD standards and regu- lations, and is not subsequently taken out of com- pliance, its end use by a purchaser is a matter for state and local officials, not HUD. Any such federal restric- tion on the sale of manufactured homes based on \ 15