Washington, D.C., March 9, 2016 – The Department of Housing and Urban Development’s (HUD) manufactured housing program is again seeking higher levels of spending authority in its Fiscal Year (FY) 2017 budget request to Congress. In addition, as it has in other recent appropriations requests, HUD is pursuing congressional approval to implement future label fee increases by “notice with comment” (in reality, notice only) rather than full rulemaking as currently required by law. The Manufactured Housing Association for Regulatory Reform (MHARR), representing the industry’s smaller businesses, strongly objects to both aspects of this request, and has already taken action to apprise Congress of the program’s appalling misuse and abuse of prior funding and label fee increases.
Under the HUD spending plan, payments to the program “monitoring” contractor would grow – if approved by Congress — to a record $5.2 million in FY 2017 (nearly half of the total program budget request), even though industry production continues to hover near historic lows as it recovers at a modest pace since reaching its post-regulation production minimum in 2009.
Quite simply, after engineering a record-setting 156% increase in the certification label fee paid by HUD Code manufacturers (and, ultimately, hard-pressed consumers) in 2014, the current management of the HUD program – as it has continually over the past two years – is seeking to use those increased revenues to expand a needless, needlessly costly, excessive and ever-expanding web of unnecessary HUD regulation, paper-work, record-keeping and red tape. This chaotic regulatory obstacle course functions as de facto corporate welfare for revenue-driven program contractors, while obstructing true industry growth and saddling consumers with unnecessarily higher prices.
Thus, despite a 52% decline in annual industry production between 2005 and 2015 (from 146,881 homes to 70,544 homes), annualized HUD payments to the monitoring contractor under the proposed FY 2017 budget would increase by nearly 66%, while per capita HUD payments to that contractor would increase by an astounding 245%. All this comes moreover, at a time when the industry is producing its best, highest quality homes, as established by the de minimus number of referrals to the HUD manufactured home Dispute Resolution system, which between 2008 and 2014 registered just 24 referrals out of total placements of 123,174 manufactured homes in federally-administered states (or a referral rate of just .019%).
Despite these absolutely minimal levels of dispute resolution referrals, under the HUD program’s FY 2017 budget, funding for the program’s federal dispute resolution contractor – consistent with HUD’s increased funding for the program “monitoring” contractor — would surge by 200% over its level in FY 2015, while funding for the program’s “default state” installation contractor (serving 13 mostly low-shipment states that accounted for just 4.7% of all HUD Code manufactured homes sited in 2015), would grow by more than 62% over FY 2015.
In each such instance, HUD continues to over-fund program contractors – paving the way for needless, make-work activity that substantially and unnecessarily increases regulatory compliance costs for manufacturers and consumers — while at the same time, it shortchanges State Administrative Agencies (SAA) which serve as the first line of consumer protection for an ever-growing number of new and existing/occupied homes, and are being pressed by HUD to perform an array of significant new functions.
Furthermore, given the HUD program’s historically dubious and non-transparent contracting practices and its abuse of the 2014 label fee hike to support and promote – under its selected career Administrator – the penetration of the “monitoring” contractor into nearly every phase of the production process, there can be no doubt that HUD, if granted de facto “notice-only” fee authority by Congress, would be back in short order seeking even higher label fee payments to fund more (and more intrusive) make-work activity for its contractors. MHARR, therefore, has – and will continue to – oppose this effort to bypass (once again) the clear requirements of applicable law.
