Issue link: https://read.dmtmag.com/i/72467
MHARR VIEWPOINT An Unfair and Costly Double Standard onAlternate Construction BY DANNY GHORBANI As every regulated business can attest – and especially the smaller ones that according to a 2010 U.S. Small BusinessAdministration study disproportionately bear the economic brunt of government regulation even under the best of circumstances -- honest, fact-based consis- tency in regulation is not only desirable, but ab- solutely essential both for practical reasons and to maintain the bedrock principle of equality enshrined in the Constitution. Simply put, the government should not play favorites among people -- or businesses – that are similarly sit- uated. Quick-shift now to the federalmanufactured housing program. No one expects the HUD programto be perfect or anything close – three- plus decades of experience have shown other- wise. Nor is it likely -- absent a congressional shove, a major change in HUD priorities, or the appointment of a non-career program Ad- ministrator as required by law – that HUD reg- ulators will wake-up any time soon and realize that right under their collective noses is a solu- tion to the nation's growing need for affordable home ownership that will not push the govern- ment further down the road toward bankruptcy. But it is not unreasonable or unrealistic to ex- pect and demand that the industry's regulators act in an even-handed manner that complies with relevant law and avoids: (1) an uneven playing field for regulated parties, discriminat- ing against some while exposing them to severe disadvantages in a highly competitive market- place; or (2) imposing needless costs or other burdens on already hard-pressed consumers. Unfortunately, though, a significant exam- ple of just such a double standard, with severe implications for smaller industry businesses, is playing out within the HUD program right now concerningHUDAlternate Construction (AC) JULY 2012 10 THE JOURNAL approvals and specifically AC approvals related to certain roof ridge designs. The history on this issue goes back to Janu- ary 26, 2009, when a former (career) HUD program Administrator issued a ruling that ef- fectively pre-authorized AC approval for three specific roof ridge designs with no corre- sponding requirement for the on-site inspection of com- pleted homes by themanufac- turer's Production Inspection Primary Inspection Agency (IPIA). The relevant por- tion of the ruling emphasized that on-site roof ridge completion was consid- ered "construction" by HUD and not "installa- tion," and encouraged manufacturers to submit AC requests based on the pre-approved designs: "Attached is a[n] … AC approval letter that the Department issued for a hinged-roof today. The letter allows that if any of the three specifically-ap- proved roof ridge interconnection de- signs are used, then completed roof ridge construction does not require on site in- spection. ***While HUD continues to treat this completion of the roof ridge in- terconnections as construction, rather than installation, HUD recognizes that [such] standardized constructionmeth- ods … reduce [the] level of oversight necessary to ensure the integrity of the completed roof. HUD is prepared to consider AC requests incorporating one or more of these designs from the rest of the industry. Accordingly, primary in- spection agencies are hereby encouraged to share this AC approval letter with the individualmanufacturers that they over- see." (Emphasis added). In issuing this ruling, the Administrator ac- knowledged that "a task group of industry engi- neers" – representing the industry's largest corporate conglomerates -- had worked with HUD to develop the generic AC pre-approval for the three specified roof ridge designs. And, of course, consistent with the efforts of the program to diminish and limit the role of the Manufactured Housing Consensus Committee (MHCC), the ruling -- like so many other program decisions regarding inspections -- was never brought be- fore theMHCC for consensus review, approval and submittal to the Secretory. Now, fast forward to 2011 and 2012. After the largest conglomerates secured continuing AC approvals with no on-site inspection re- quirement as offered by the January 26, 2009 ruling, smallermanufacturers – takingHUD up on its open invitation and relying on that ruling – sought AC approvals based on the same roof ridge designs. After languishing at HUD, in at least one instance for more than a year, those requests – while ultimately granted – came with a major surprise, a mandatory on-site IPIA in- spection for all homes constructed in accor- dance with the approval. Effectively, then, the initial arbitrary HUD policy ruling has now been replaced by another arbitrary ruling that leaves in place the older inspection-lessAC ap- provals, while subjecting new approvals to an extremely costly 100 percent on-site inspection requirement. The policy shift thus creates a two-tiered inspection system which discrimi- nates between different manufacturers utilizing the same HUD-approved designs, subjecting