MHARR has received numerous inquiries regarding the Association’s position on a “materials cost” survey being circulated to HUD Code manufacturers by the Manufactured Housing Institute (MHI) and Emanuel Levy of the Systems Building Research Alliance (SBRA), in connection with the ongoing U.S. Department of Energy (DOE) “negotiated rulemaking” concerning manufactured housing energy conservation standards. While MHARR cannot and would not tell individual manufacturers whether or how to respond to this survey or otherwise use or disclose their proprietary business information, it will provide its collective view of this matter within the context of the ongoing negotiated rulemaking process.
MHARR is extremely concerned that this “survey” and its results could be misused within the negotiated rulemaking process to effectively shift the burden to manufacturers (and consumers) to prove a negative – i.e., that retail purchase price increases driven by new energy standards would not significantly harm the affordability of manufactured housing and/or reduce the numbers of lower and moderate-income families that would be able to qualify for financing to purchase a new manufactured home.
This concern stems from a proposed “strawman” analytical framework presented to the DOE Manufactured Housing Working Group at its August 21-22, 2014 meeting by SBRA and Mr. Levy as SBRA’s Executive Director and a DOE working group member. (It should be noted that both SBRA and Mr. Levy have a long track record as proponents of enhanced energy criteria and most recently have partnered with the DOE “Building America Program” in a 15-month test, “partly underwritten by the Tennessee Valley Authority” to “identify ways in which consumers can make their homes more energy efficient,” according to a July 28, 2014 News Release issued by Clayton Homes, Inc.)
The original strawman language, as reported by MHARR in its August 25, 2014 memorandum, “Second DOE Manufactured Housing ‘Negotiated Rulemaking’ Committee Meeting — Report and Analysis,” would only have allowed for “adjustments” to costly new energy mandates “if and when it is demonstrated that such standards will significantly reduce the roles (sic) of loan qualifying households.”
As MHARR stressed in its report, it objected to this “specific language” at the second DOE Working Group meeting “on the ground that, among other things, it would effectively shift the burden to consumers (and those representing consumers) to essentially prove a negative, i.e., that the purchase price impact of energy conservation measures would not ‘significantly’ reduce the number of households able to qualify for a manufactured home purchase loan.” While this language of the SBRA/Levy “strawman” was withdrawn based on MHARR’s objections, there is no rule or procedure in the negotiated rulemaking process that would prevent it from being revived, on the basis of – or in conjunction with — the results of such a “manufacturer cost survey.”
MHARR’s position on this matter is straightforward. Federal law recognizes and protects the status of manufactured homes as “affordable housing.” And, in fact, HUD research confirms that HUD Code manufactured housing is the nation’s most affordable housing resource, with a mean monthly housing cost that is substantially less than the cost of renting a home. Furthermore, the industry already offers a complete array of energy packages to homebuyers on an optional basis as a matter of consumer choice. Consequently – and given the fact that the manufactured housing market, as shown by the latest research, is extremely sensitive to purchase price increases –any regulatory change, by any government agency, under any law, that increases the cost of manufactured housing to the consumer in anyamount, must be justified by that agency as to both necessity and cost efficiency.
Put differently, it is not – and should not — be the burden of the industry or consumers to prove that a given standard or government measure, whether it be energy standards or anything else, does not undermine the affordability of manufactured housing or the ability of manufactured homebuyers to qualify for loans (or put together needed down payments). Rather, it is – and must be – the burden of regulators to show that a given proposed standard or other measure either: (1) would not increase the purchase price of the home; or (2) is both necessary and cost-justified based on their own research and analysis.
Consequently, if DOE seeks to impose new energy standards on manufactured housing, it has the resources and means available to it to conduct the necessary research, either directly or through its own contractors, based on existing manufactured home models. That research could then be analyzed, vetted and critiqued by the industry and consumers. By contrast, the SBRA/Levy “manufacturer cost survey,” turns this process on its head and needlessly places the industry, manufacturers and consumers on the defensive in ways that could prove extremely costly in the negotiated rulemaking process.
Given the fact that it has already taken DOE over seven years just to get to the beginning of a negotiated rulemaking – following a failed conventional rulemaking process that culminated in the “improper disclosure” of a proposed draft rule – a full, thorough and complete purchase- price cost impact analysis should be conducted by DOE and/or its contractors, subject to review by the industry and consumers, as well as HUD and the Manufactured Housing Consensus Committee (as provided by law), rather than a rushed “survey” by part of the industry that could become a fig-leaf for extremely costly and burdensome energy mandates.
