MHARR has learned from multiple sources that the HUD manufactured housing program is considering increasing per unit payments to State Administrative Agencies (SAAs) from current levels – i.e., $2.50 per floor for each unit sited in the recipient state and $9.00 per floor for each unit manufactured in the recipient state – to $10.00 per floor and $20.00 per floor respectively, or to $30.00 per floor, total, for units manufactured and then located within the same state.
Increased funding for SAAs – and corresponding reductions in funding levels for revenue driven program contractors — has been a consistent priority for MHARR since the enactment of the Manufactured Housing Improvement Act of 2000. Unlike private contractors, which HUD has allowed to drastically expanded their role, functions and influence within the program, effectively now setting program policy and needlessly increasing regulatory compliance costs with little or no benefit to consumers — and little or no accountability or oversight by the HUD program — SAAs, as state entities, are broadly accountable to their respective governments, and ultimately to the voters and public in each such state. Yet, HUD funding for program contractors increased by nearly 30% between 2005 and 2014, while budgeted HUD payments to SAAs fell by 50% over the same period.
Thus, when HUD, in May 2014, proposed a 156% hike in the label fee paid by HUD Code manufacturers, MHARR, in its May 22, 2014 written comments (provided to and addressed with congressional appropriators) specifically called on HUD to use additional program revenues to increase funding for all state SAAs. MHARR stated:
“Unlike the program monitoring contractor which monitors only a significantly-reduced number of new homes … SAAs constitute the first line of protection for a growing number of both new and existing manufactured homes. *** With a substantial number of states facing critical difficulties providing funding for SAA operations, it is essential that additional HUD funding be provided and provided soon. Consequently … any additional program revenues should be utilized to increase payments to the SAAs and thereby preserve the federal-state partnership that is the bedrock of the program.”
And, in fact, in its final rule adopting the label fee increase, HUD stated that it would “consider” changes to SAA funding levels.
While HUD’s impending action to amend the current SAA funding formula by increasing per floor payment levels thus responds to and is consistent with MHARR’s efforts – both administratively and in Congress – there is significant concern that HUD (and its entrenched contractors), as usual, could ultimately pull defeat from the jaws of victory for the states, consumers and the industry.
Specifically, numerous concerns have been expressed that HUD, while increasing per floor payment levels, could actually end-up reducing aggregate payments to many SAAs through yet another misreading of the Manufactured Housing Improvement Act of 2000.
At present, SAAs are paid based on the much higher industry production levels that existed at the time of implementation of the 2000 reform law. It appears, though, that HUD under its present approach, could increase per floor payments while paying less in the aggregate by using current, substantially-lower industry production levels as the payment “baseline” and eliminating “supplemental payments” to the SAAs that have been used until now to make-up the difference between the 2000-2001 production “baseline” and current production.
In the event that HUD attempts to proceed in this manner, any such proposal will be immediately challenged by MHARR. First, the fact that current production levels are lower than 2000-2001 does not change the fact that SAAs continue to be responsible for a growing number of new and used homes that far exceeds any single-year production baseline. Further, the relevant provision of the 2000 reform law, section 620(e)(3), “Payments to the States,” is designed to prevent payment reductions to the states by providing that “the Secretary shall continue to fund the States … in … amounts which are not less than the allocated amounts based on the fee distribution system in effect on the day before the effective date” of the 2000 reform law. Thus, rather than a license to decrease total SAA payments, this provision is worded to make aggregate payment levels — at the time of the implementation of the 2000 law — the minimum amount paid to the states.
Insofar as any decrease in SAA funding would seriously discourage state participation in the HUD program, further undermining the federal-state partnership envisioned by Congress and further empowering revenue-driven contractors to the detriment of all other program stakeholders, MHARR will vigorously oppose any proposal that fails to enhance SAA funding.
Lastly, HUD has indicated that it will bring any such SAA funding proposal to the MHCC — as it should and must under the 2000 reform law. Accordingly MHARR will address any potential issues affecting the HUD proposal in that forum as well.
