1. MHARR FILES COMMENTS ON HUD LABEL FEE INCREASE RULEMAKING

MHARR has filed written comments (attached) in a pending HUD rulemaking to increase the manufactured housing certification label fee for the first time since 2002. Under the HUD proposed rule, the Department would increase the label fee from the current level of $39.00 per transportable section to an amount between $95.00 and $105.00 per section, as determined by HUD in a final rule on this matter. In support of the fee modification proposal, HUD maintains: (1) that the fee has not been adjusted for an extended period; and (2) that program expenses have increased over that period. The fee increase also coincides with Congress’ termination of the taxpayer-funded direct appropriations that the manufactured housing program has been receiving since 2009, and is designed to restore the program to self-funding status. Those taxpayer-funded direct appropriations were initially approved by both MHARR and MHI to allow HUD to implement the two new programs mandated by the 2000 law – i.e., installation standards and enforcement and dispute resolution – MHARR, however, withdrew its support when those funds were subsequently diverted to an unauthorized expansion of in-plant regulation.

In its comments, filed on May 22, 2014, MHARR emphasizes that while it does not oppose this particular fee modification per se, that position is contingent on full HUD compliance with all relevant requirements of the Manufactured Housing Improvement Act of 2000, as well as the utilization of any such funds for functions that are authorized by that law, and a proper allocation of those funds to decrease contractor functions and correspondingly increase funding for State Administrative Agencies (SAAs).

In particular, MHARR’s comments call on HUD to reduce “monitoring” contract expenditures that have continued to grow – especially in recent years – despite reduced industry production levels. Citing those production levels and the complete absence of any beneficial impacts for homeowners, MHARR’s comments call for the repeal of HUD’s costly 2009-2010 de facto expansion of in plant regulation. That expansion, implemented unilaterally by HUD outside of the mandatory consensus process, incorporates a multitude of make-work tasks for the contractor that correlate with growing contract expenditures since 2011 and major budgeted contractor spending increases in 2013, 2014 and 2015.

With the savings achieved by limiting contractor functions to those that comply with the 2000 law and tailoring those functions to meet current and anticipated production levels, MHARR’s comments urge HUD to increase funding for the SAAs that serve as the first line of consumer protection for an ever-growing number of new and existing manufactured homes. Unlike the program contractor, which, since 1998, has been monitoring fewer factories and fewer homes, workloads for SAAs continue to expand as new homes join those already sited. Combined with increasing pressure on state budgets, these key partners in the federal manufactured housing program need and deserve increased funding from HUD.

MHARR has filed its comments on this matter well prior to the comment deadline (June 2, 2014), so that they can be available to industry members that may wish to submit their own comments – and MHARR encourages interested industry members to do so.

On a closely-related matter, although not part of the label fee rulemaking, per se, MHARR’s comments also address a request by HUD, in its Fiscal Year 2015 budget submission, for permission from Congress to implement future label fee increases (that have been approved by Congress in an annual appropriations act) via “notice” rather than the notice and comment rulemaking required by the 2000 law. MHARR has already advised congressional appropriators that it strongly opposes any such change, and its written comments document and explain its objections.

Quite simply, the 2000 law requires HUD to pass two hurdles in order to raise its label fee – (1) approval by Congress in an annual appropriations act; and (2) implementation via full notice and comment rulemaking under the Administrative Procedure Act (APA). The HUD proposal would significantly diminish these protections – that the industry fought very hard to secure – by eliminating rulemaking and, with it, the guaranteed right of regulated parties (i.e., the HUD Code manufacturers who pay the label fee) and other stakeholders to comment on any such change and have their comments considered by HUD as a matter of law. Under a mere “notice” regime, HUD could rapidly implement label fee increases with absolutely no input from regulated parties or anyone else.

In support of this change, HUD claims that it needs flexibility to respond to changing needs and conditions but, as MHARR notes, the history of the program and prior label fee changes show that this rationale is baseless. Indeed, the very fact that HUD has waited 12 years since the last label fee change to now seek an increase, shows that there is no need for expedited procedures that would undermine the rights of regulated parties.

MHARR has shared its comments with Congress and will continue to keep you updated on these matters as new developments unfold.

2. HUD EXTENDS DATE FOR SOUTHERN YELLOW PINE (SYP) STANDARDS

MHARR has previously reported on a HUD delay in the implementation of new reference standards for Southern Yellow Pine (SYP) lumber. Implementation of those rules was previously delayed by HUD, following requests by MHARR and MHI, until January 1, 2014 to allow the Manufactured Housing Consensus Committee (MHCC) an opportunity to consider new information concerning the bases for the changes to the underlying reference criteria.

With no MHCC meetings, however, for nearly two years, HUD has now further extended the enforcement date for these standards to January 1, 2015, again, pending complete review by the MHCC.

While HUD is right to delay the implementation of these criteria pending MHCC consensus consideration, as required by the 2000 law, HUD needs to take action immediately to restore the full functionality of the MHCC with a new Administering Organization that meets the specific statutory criteria of the 2000 law (i.e., a “recognized, voluntary, private sector, consensus standards body with specific experience in developing model residential building codes and standards involving all disciplines regarding construction and safety”). MHARR stressed the need for the full restoration of MHCC activities in its January 27, 2014 communication to Assistant Secretary Galante and again at its April 10, 2014 meeting with Secretary Galante and other senior HUD officials, including the new manufactured housing program administrator.