The Manufactured Housing Institute (MHI) appreciates that the Biden administration has created a White House Task Force on Manufactured Housing. We also commend the administration for the White House initiative announced a week ago Monday to “Ease the Burden of Housing Costs,” which a Housing Wire article noted is designed to reduce regulatory hurdles.
So, it is disappointing that the final rule for manufactured housing energy standards that the Department of Energy (DOE) released just two days later does precisely the opposite. It would actually increase the burden of housing costs. The final DOE rule even acknowledged that it would raise new manufactured home prices.
Manufactured housing is by far the most affordable homeownership option in America. The industry is building quality affordable homes that are already energy efficient and resilient. However, by any objective analysis based on the real-world impact on actual homebuyers, the annual cost burden from those price increases will exceed the speculative energy savings that DOE hopes will take place.
Both the standards and the underlying methodology used to develop them are fundamentally flawed. EISA, the underlying statute behind the standards, was clear. The standards were required to take into consideration current manufactured housing construction methods and transportation requirements for homes built in a factory and transported to the site. At best, this was merely given lip service.
EISA was also clear that the IECC, the site-built building code, could only be used if proposed energy standards were “cost effective,” and further that DOE was required to consider iterative proposals to find the standard that is most cost effective. But this too did not happen.
Instead, the DOE standards relied on speculative home price appreciation assumptions a decade later — while ignoring that in the real world, increased annual mortgage costs to actual homebuyers as a result of the higher prices would exceed projected energy savings. It ignored that in the real world many potential homebuyers would no longer qualify for a mortgage to buy a home because of the higher prices.
Arguably, these flaws stemmed from DOE’s failure to follow the EISA statutory requirement to consult in a meaningful way with HUD — the federal agency with housing expertise — in developing the standards.
Fortunately, there is still time to sort these issues out. The DOE rule established a one-year implementation period. More importantly, HUD — the very agency DOE should have relied on for affordability expertise — should have the final say before the standards can become effective.
Under the 2000 Manufactured Housing Act, all manufactured housing construction and safety standards (including energy requirements) are governed by the HUD Code. And, HUD, acting on recommendations by its Manufactured Housing Consensus Committee, has exclusive authority under the HUD Code.
So, under the 2000 Act, the DOE standards should not become effective until HUD adopts them as part of the HUD Code, potentially with revisions. Moreover, they shouldn’t take effect until the DOE standards and the HUD Code are reconciled, since manufacturers should not have to sort through two standards.
There is even a bill in Congress – H.R.7651, the “Manufactured Housing Affordability and Energy Efficiency Act of 2022” – that clarifies all these points. Adoption of this bill would further ensure that these new manufactured housing energy standards do not come at the expense of manufactured housing homeownership affordability.
MHI supports energy-efficient manufactured homes. In MHI’s comment letter, we did not just criticize the DOE draft rule, we offered a cost-effective alternative proposal that balances homeownership affordability and energy efficiency. As HUD considers energy efficiency standards generated by DOE, we strongly urge adoption of a more balanced proposal along the lines MHI put forth in our comment letter.
As this process goes forward, MHI would also like to see other loose ends tied up. A recent court case, Louisiana vs. Biden, raises serious questions as to the legal validity of the DOE standards, since they seem to be based on the same methodology that the judge in that case ruled were invalid.
The DOE standards also failed to address a fundamental flaw in the underlying EISA statute, which is that the enforcement mechanism authorizes penalties that are based on the term “retail list price.” No such metric or term exists in manufactured housing, and the final rule did not address this flaw. Confusion among manufactured home manufacturers and retailers about issues like this would impede the use of manufactured homes as our nation’s most affordable homeownership option.
Another question: is DOE going to be responsible for determining whether the standards are being complied with, even though HUD has responsibility for manufactured housing and construction safety standard compliance under the HUD code? Or is HUD responsible for determining compliance for DOE standards?
This are just a few examples of the folly of making critically important housing affordability decisions without a direct, active role for HUD, the federal agency which has housing expertise and housing affordability as its mission.
MHI looks forward to working with HUD and other parties to get this important standard right as we face the twin challenges of housing affordability and energy efficiency.
Lesli Gooch is the Chief Executive Officer of the Manufactured Housing Institute (MHI), the only national trade group that represents all sectors of the manufactured housing industry.
This column does not necessarily reflect the opinion of HousingWire’s editorial department and its owners.
To contact the author of this story:
Lesli Gooch at [email protected]
To contact the editor responsible for this story:
Sarah Wheeler at [email protected]