Hidden in Plain Sight: Some Next Steps

Guest  post by Brian Dabson

The scale and complexity of the issues surrounding North Carolina’s manufactured homes stock was the subject of a previous blog post, Hidden in Plain Sight.  Over 1.3 million people in the state live in 480,000 manufactured homes, making them a vital part of the affordable housing stock especially in rural counties. However, challenges associated with high utility bills, vulnerability to flooding and high winds, and deteriorating condition of older homes suggest an urgent need for action. That said, responsibility and capacity for action is spread across multiple agencies and individuals with little incentive for any concerted or coordinated effort.

The School of Government interviewed 40 stakeholders with connections with manufactured home building, installation, maintenance, financing, regulation, removal, resident representation, and housing policy. It was apparent that bringing these stakeholders together might be a productive way forward. So, in April 2018, the School convened a workshop which attracted 32 participants from 25 organizations—ranging from the North Carolina Manufactured & Modular Homebuilders Association to the North Carolina Justice Center, from the Roanoke Electric Cooperative to Habitat for Humanity NC, and from the NC Department of Insurance to the Choanoke Area Development Association—to consider possible strategies and action steps to meet the mobile homes challenge.

Stakeholders’ Workshop, April 28, 2018

The Stakeholders’ Workshop was held at the North Carolina Rural Center and was led and facilitated by experts from the School of Government. Working in small groups, the participants focused on six areas in which action might be taken. The following are some of the main conclusions.

• Re-Shaping the Market. Many of the challenges associated with manufactured homes may be tackled through market shaping actions. Such actions may include manufacturing and design standards, Energy Star compliance, installation and siting standards including flood vulnerability, loan products and practices, and relocations. Pilot projects, learning networks, and advocacy can all help influence policy and funding. Secondary market institutions—Freddie Mac and Fannie Mae; federal agencies, primarily the US Department of Housing and Urban Development (HUD), the Federal Emergency Management Agency (FEMA), and the USDA Office of Rural Development; state agencies such as NC Housing Finance Agency, Departments of Environmental Quality, Public Safety, and Insurance; banks and insurance companies; utility companies and cooperatives; and local governments—can impact all aspects of the manufactured home sector through their policies and practices .

• Regulation, Enforcement, and Certification. There is value in reviewing the regulations and rules that govern the manufacture, sales, installation, relocation, and maintenance of manufactured homes to ensure that there is a proper balance between affordability and safety. This will involve lengthy engagement with federal, state, and local governments. Four priority areas for action might be:
  1. The introduction of statewide minimum housing standards for all existing homes (including manufactured homes);
  2. The introduction of flood zone standards that require manufactured homes to be elevated to increase freeboard height above flood level, and for better and fairer zoning away from flood-prone and other hazardous areas;
  3. The regulation of resales (including online) of manufactured homes; and
  4. Mandatory installer training, licensing, and bonding, with independent installation inspections.

• Energy Efficiency and Safety. There is no shortage of ideas for improving the energy efficiency and safety of new and existing manufactured homes—and there is good evidence to show the substantial utility costs savings from appropriate efficiency measures. The challenge is that there are insufficient public funds available to meet the demand. There is also the reality that spending on energy efficiency may be wasted if there are structural or other problems with the homes, or if they are sited in areas vulnerable to floods and high winds. The Community Rating System used by the National Flood Insurance Program could be a useful incentive for local government action on flood mitigation measures, coupled with incentives for whole communities to be EnergyStar certified. Changing behaviors of owners and tenants may bring substantial benefits using smart technologies to monitor and adjust electricity usage and pre-paid programs and regular maintenance.

• Comprehensive Improvements to Manufactured Home Parks. The ownership of manufactured home parks and communities are of three types: the investor-owned parks or real estate investment trusts (REITs), large local investor or family parks, and smaller ‘mom and pop’ operations. Among the 2,600 parks in the state, ‘mom and pop’ operations predominate, which tend to be cash flow businesses with little margin for investments in infrastructure and home upgrades. The sale and disposal of parks places homeowners and tenants at risk. Across the country, initiatives such as transferring park ownership to resident owner cooperatives, nonprofit agencies, and land trusts are underway, and there is some evidence to show that these increase community stability and investment. Tax incentives to encourage donations of parks, flexible use of federal funds (HUD, FEMA), greater cooperation between utilities, local governments, and state agencies, and re-dedication of state community development block grant (CDBG) funds to housing may all be helpful.

• Home Occupant Counseling and Education. Counseling and education for potential and existing owners and tenants will give them better protection from financial exploitation and help them to be better stewards of their homes. This will include information and understanding of the implications of ownership and tenancy in terms of financing, responsibilities, energy efficiency, and essential maintenance. The production of an owners’/tenants’ home maintenance manual could be an effective tool similar to those provided to new Habitat for Habitat homeowners.

• Decommissioning of Abandoned Homes. The estimated 100,000 abandoned homes in North Carolina, with a further 200,000 homes that are in such poor condition that they need to be replaced, represents a formidable challenge with financial, operational, public health, and environmental implications. There is already legislation and funding in place (HB 1134: 2008) through which up to $1 million annually is available for this purpose through 2023. Establishing how this fund has been used and identifying obstacles to its implementation are important next steps, as is identifying opportunities for standardizing rules, fees, and enforcement across the state.

The School of Government is considering how this effort might be taken forward with a focus on local governments with the support of some or all of the organizations represented at the Stakeholders’ Workshop. Please contact Brian Dabson at dabson@sog.unc.edu  if you have suggestions.

Brian Dabson is a Research Fellow at the School of Government, where he focuses on community and economic development, community and regional resilience, and entrepreneurship.