[Senate Report 106-274]
[From the U.S. Government Publishing Office]
Calendar No. 517
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106th Congress Report
2d Session SENATE 106-274
_______________________________________________________________________
MANUFACTURED HOUSING
IMPROVEMENT ACT OF 2000
__________
R E P O R T
OF THE
COMMITTEE ON BANKING, HOUSING,
AND URBAN AFFAIRS
UNITED STATES SENATE
to accompany
S. 1452
together with
ADDITIONAL VIEWS
April 13, 2000.--Ordered to be printed
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U.S. GOVERNMENT PRINTING OFFICE
79-010 WASHINGTON : 2000
COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS
PHIL GRAMM, Texas, Chairman
RICHARD C. SHELBY, Alabama PAUL S. SARBANES, Maryland
CONNIE MACK, Florida CHRISTOPHER J. DODD, Connecticut
ROBERT F. BENNETT, Utah JOHN F. KERRY, Massachusetts
ROD GRAMS, Minnesota RICHARD H. BRYAN, Nevada
WAYNE ALLARD, Colorado TIM JOHNSON, South Dakota
MICHAEL B. ENZI, Wyoming JACK REED, Rhode Island
CHUCK HAGEL, Nebraska CHARLES E. SCHUMER, New York
RICK SANTORUM, Pennsylvania EVAN BAYH, Indiana
JIM BUNNING, Kentucky JOHN EDWARDS, North Carolina
MIKE CRAPO, Idaho
Wayne A. Abernathy, Staff Director
Steven B. Harris, Democratic Staff Director and Chief Counsel
Lendell Porterfield, Financial Economist
Melody H. Fennel, Professional Staff Member
Martin J. Gruenberg, Democratic Senior Counsel
Jonathan Miller, Democratic Professional Staff
George E. Whittle, Editor
(ii)
C O N T E N T S
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Page
Introduction..................................................... 1
Purpose and Summary of Need for Legislation...................... 2
History of the Legislation....................................... 2
Purpose and Scope of the Legislation............................. 3
Section-by-Section Analysis of S. 1452: ``Manufactured Housing
Improvement Act of 2000''...................................... 6
Section 1. Short Title and References........................ 6
Section 2. Findings and Purpose.............................. 6
Section 3. Definitions....................................... 6
Section 4. Federal Manufactured Home Construction and Safety
Standards.................................................. 6
Section 5. Abolishment of National Manufactured Home Advisory
Council; Manufactured Home Installation.................... 7
Section 6. Public Information................................ 7
Section 7. Research, Testing, Development, and Training...... 7
Section 8. Fees.............................................. 7
Section 9. Dispute Resolution................................ 8
Section 10. Elimination of Annual Report Requirement......... 8
Section 11. Effective Date................................... 8
Section 12. Savings Provision................................ 8
Changes in Existing Law (Cordon Rule)............................ 8
Regulatory Impact Statement...................................... 8
Cost of Legislation.............................................. 8
Additional Views of:
Senators Sarbanes, Dodd, Kerry, Bryan, Johnson, Schumer, Bayh
and Edwards................................................ 13
Calendar No. 517
106th Congress Report
SENATE
2d Session 106-274
=======================================================================
MANUFACTURED HOUSING IMPROVEMENT ACT OF 2000
April 13, 2000.--Ordered to be printed
_______
Mr. Gramm, from the Committee on Banking, Housing, and Urban Affairs,
submitted the following
R E P O R T
together with
ADDITIONAL VIEWS
[To accompany S. 1452]
The Committee on Banking, Housing, and Urban Affairs (the
``Banking Committee''), to which was referred the bill (S.
1452) to modernize the requirements under the National
Manufactured Housing Construction and Safety Standards Act of
1974 and to establish a balanced consensus committee process
for the development, revision, and interpretation of Federal
construction and safety standards for manufactured homes,
having considered the same, reports favorably thereon with an
amendment and recommends that the bill (as amended) do pass.
INTRODUCTION
On March 8, 2000, the Senate Committee on Banking, Housing
and Urban Affairs met in legislative session and marked up and
ordered to be reported S. 1452, the Manufactured Housing
Improvement Act of 2000, a bill to modernize the requirements
under the National Manufactured Housing Construction and Safety
Standards Act of 1974 ('74 Act) and to establish a balanced
consensus committee process for the development, revision, and
interpretation of Federal construction and safety standards for
manufactured homes, with a recommendation that the bill do
pass, with an amendment. The Banking Committee adopted a
Managers' Amendment, offered by Senators Shelby, Kerry, Allard,
Edwards, Bayh and Bryan, making certain substantive and
technical amendments. The Committee reported the bill favorably
by voice vote.
PURPOSE AND SUMMARY OF NEED FOR LEGISLATION
The purpose of this legislation is to set up a process to
update manufactured housing safety and construction standards
on a timely basis. The '74 Act created the Federal manufactured
housing program under the authority of the Department of
Housing and Urban Development (HUD). Currently, the program is
a division of the Office of Consumer and Regulatory Affairs and
has no full-time director. The program's staff has been reduced
from 35 full-time employees in 1984 to eight professional
employees today. Meanwhile, manufactured housing has become one
of the fastest growing segments of the housing industry,
growing by 100 percent over the last decade and now accounting
for one in every four new single-family home starts.
Presently, over 19 million Americans live in approximately
9 million manufactured homes. According to the Department of
Commerce, the average cost of a new manufactured home in 1998
was $43,800 (excluding land) compared with $136,425 (excluding
land) for a new site-built home, thus extending home ownership
to Americans who may otherwise be unable to purchase their own
home. The median income for a manufactured home owner was
$24,500 in 1996 and according to Mr. Rutherford Brice, who
testified on behalf of the American Association of Retired
Persons (AARP), ``44 percent of the manufactured home owners
are aged 50 and above.'' \1\
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\1\ Testimony of Rutherford Brice, Member of the Board of
Directors, AARP, S. 1452 Hearing in the Subcommittee on Housing and
Transportation, October 5, 1999, p. 2.
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What started as a ``travel trailer'' and gained popularity
for recreational outdoor activities in the 1940's and 50's, has
become a very reasonable, affordable option for permanent
housing. Indeed, once shipped and anchored (most commonly to a
concrete foundation), these homes are rarely, if ever, moved.
Thus, manufactured housing has become a private-sector solution
to affordable housing. For this reason, the Banking Committee
believes Congress should update the laws to reflect the
technological developments and increased reliance on this
sector of the housing industry, which contributes more than $33
billion annually to our domestic economy.
HISTORY OF THE LEGISLATION
The Manufactured Housing Improvement Act of 2000, S. 1452,
was introduced on July 28, 1999 by Senators Shelby, Bayh,
Bryan, Rockefeller and Bingaman. Senators Craig, Hutchinson,
Inhofe, Burns, Lott, Snowe, Santorum, Mack, Smith (OR),
Cochran, Helms, Bunning, Lugar, Collins, Crapo, Roberts,
Sessions, Johnson, Cleland, Hagel, Hollings, Abraham, Bennett,
Coverdell, Daschle, Lincoln, Edwards and Allard were all added
as additional cosponsors.
The Subcommittee on Housing and Transportation conducted a
legislative hearing to consider S. 1452 on October 5, 1999. The
Subcommittee received testimony from: Senator Evan Bayh (D-IN);
the Honorable William Apgar, Assistant Secretary for Housing &
Federal Housing Commissioner, Department of Housing and Urban
Development; Mr. William Lear, Vice President & General
Counsel, Fleetwood Enterprises, Inc., who testified on behalf
of the Coalition to Improve the Manufactured Housing Act (the
``Coalition''); \2\ and Mr. Rutherford Brice, a member of the
Board of Directors, American Association of Retired Persons.
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\2\ The ``Coalition'' is comprised of the manufactured housing
industry's two national trade associations--the Manufactured Housing
Institute and the Manufactured Housing Association for Regulatory
Reform.
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On March 8, 2000, the Banking Committee met in Executive
Session to consider S. 1452. The Committee considered and
adopted, without objection, a bipartisan Managers' Amendment
offered by Senators Shelby, Kerry, Allard, Edwards, Bayh and
Bryan. This amendment changed the composition of the consensus
committee and included three additional provisions regarding:
technical support for the consensus committee; installation
programs; and dispute resolution programs for the timely
resolution of disputes regarding the responsibility for the
correction or repair of defects.
The Banking Committee ordered S. 1452 reported, as amended,
to the Senate by voice vote.
PURPOSE AND SCOPE OF LEGISLATION
The bill, as ordered reported by the Banking Committee,
contains provisions that will improve and modernize the
National Manufactured Housing Construction and Safety Standards
Act of 1974 (P.L. 93-383) by: (i) setting up a balanced
consensus committee to recommend construction and safety
standards and codes; (ii) ensuring a timely update of those
standards and codes; (iii) strengthening installation standards
and dispute resolution mechanisms; and (iv) increasing funding
for the Federal program through industry label fees.
Balanced consensus committee
First and foremost, S. 1452 sets up a consensus committee
appointed by an administering organization and subject to the
approval of the Secretary of HUD (Secretary) to develop, review
and recommend manufactured housing construction and safety
standards and procedural and enforcement regulations on a
timely basis. The consensus committee will be comprised of
three groups with seven members in each group: (i) producers;
(ii) users; and (iii) general interest and public officials. In
addition to public officials, group (iii) may include
architects, engineers, homebuilders, academicians, developers
and others. HUD will also be allowed one non-voting member of
the consensus committee so as to communicate the views and
concerns of the Secretary of HUD. Consistent with American
National Standards Institute (ANSI) guidelines, the consensus
committee is represented by balanced interests and ``all
affected interests have the opportunity for fair and equitable
participation without dominance by any single interest.'' The
Banking Committee has taken the extra measure of defining
``dominance'' to ensure representation on the consensus
committee will be balanced.
In testimony offered by William Lear on behalf of the
Coalition, Mr. Lear testified to the inability of HUD to update
the code in a timely manner:
HUD has failed over the years in its most important
obligation--to update the standards on a timely basis.
Even reference standards developed by outside
organizations have taken years to adopt after their
implementation by other segments of the housing
industry. The cumulative impact of this neglect is a
code that has not kept pace with technological
innovation within the industry.\3\
\3\ Testimony of William Lear, Vice President and General Counsel,
Fleetwood Enterprises, Inc., on behalf of the Coalition to Improve the
Manufactured Housing Act, S. 1452 Hearing in the Subcommittee on
Housing and Transportation, October 5, 1999, p. 8.
Thus, one of the keys to streamlining the process of updating
the standards lies in the schedule for review specifically
outlined in the legislation. The Banking Committee believes the
need to provide such a mechanism for the timely development of
standards is of paramount importance to both consumers and
industry.
The bill provides that the consensus committee will meet at
least once every two years to consider revisions to the Federal
manufactured home construction and safety standards and
regulations, procedural and enforcement regulations, and to
submit proposed revisions. Revisions require a two-thirds
majority vote of the consensus committee. Once adopted, the
consensus committee will provide a proposed revised standard or
regulation to the Secretary who shall have one year--and
complete authority--to adopt, modify or reject the
recommendation. If the Secretary chooses to reject the
recommendation, the Secretary must publish the reasons for the
rejection in the Federal Register. If the Secretary fails to
act, the construction and safety standards recommendations
shall be considered to have been adopted by the Secretary and
automatically take effect 180 days after the conclusion of the
twelve-month review.
As reported, the legislation provides that the consensus
committee recommendations on both the construction and safety
standards and procedural enforcement regulations will have the
effect of law if the Secretary fails to act. The Banking
Committee considered the implications of including the ability
of the consensus committee to recommend both the safety
standards and enforcement regulations. The Banking Committee
recognized the significance of allowing the consideration of
standards and the enforcement of those standards to be
undertaken jointly so as to provide a seamless continuity
between the two. However, at no time did the Banking Committee
consider an enforcement action of a State Administrative Agency
against a manufacturer to be subject to the approval of the
consensus committee. Indeed, that is not contemplated by this
legislation.
Lastly, the consensus committee language includes a
provision requiring the administering organization to provide
technical support for any of the interest categories
represented so long as the support is ``necessary to ensure the
informed participation of the consensus committee members'' and
``the costs of providing the support are reasonable.'' Mr.
Apgar recommended a technical assistance provision so that the
consensus committee could enjoy the ``maximum participation of
all the groups represented.'' \4\
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\4\ Testimony of William Apgar, Assistant Secretary for Housing &
Federal Housing Commissioner, Department of Housing and Urban
Development, S. 1452 Hearing in the Subcommittee on Housing and
Transportation, October 5, 1999, p. 2.
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Installation programs and dispute resolution
As reported, S. 1452 gives the States five years to adopt
an installation program ``established by State law'' that
includes: (i) installation standards; (ii) the training and
licensing of installers; and (iii) the inspection of the
installation of manufactured homes. During this five-year
period, the Secretary of the Department of Housing and Urban
Development and the consensus committee are charged with
constructing a ``model'' manufactured housing installation
program. In States not having or not choosing to adopt an
installation program, HUD may contract with an appropriate
agent in those States to implement the ``model'' installation
program.
In order to address problems that may arise with
manufactured homes, S. 1452 also gives the States five years to
adopt a dispute resolution program for the timely resolution of
disputes between manufacturers, retailers, and installers
regarding the responsibility for the correction or repair of
defects in manufactured homes that are reported during the one-
year period beginning on the date of installation. In States
not having or not choosing to adopt their own dispute
resolution program, HUD may contract with an appropriate agent
in those States to implement a dispute resolution program.
The Banking Committee considered extending the duration of
the dispute resolution provision from one year to the life of
the warranty. However, current warranties vary from one to five
years from State to State and manufacturer to manufacturer. The
Banking Committee decided that such a provision could provide
an incentive for the industry to shorten the effective warranty
period. Nevertheless, the dispute resolution provision does not
affect voluntary manufacturers' warranties or State mandated
warranties in any shape, form or fashion.
Fees
This bill amends Section 620 of P.L. 93-383, allowing the
Secretary to use industry label fees for carrying out the
responsibilities under this Act, including: conducting
inspections and monitoring; funding for States; increased
personnel at HUD for the manufactured housing program; and
administering the consensus committee. As amended, Section 620
would prohibit the use of label fees to fund any activity not
expressly authorized by this Act unless such activity was
already engaged in by the Secretary prior to the date of
enactment. Furthermore, any fee, or change in expenditure would
be subject to the annual Congressional appropriations process.
It is the intent of the Banking Committee that all fees
collected pursuant to Section 620 be used in support of the
manufactured housing program.
section-by-section analysis
Section 1. Short title and references
This Act is cited as the ``Manufactured Housing Improvement
Act of 2000.''
Section 2. Findings and purpose
This provision will add a more positive, detailed statement
to the purpose of the '74 Act. This section will add a
``balanced, consensus standards development process'' and also
express the continuing need for consumer protection while
emphasizing the need for affordability, performance based
standards, and for fair and reasonable enforcement regulations.
Section 3. Definitions
The bill would add several definitions to Section 603 of
P.L. 93-383 concerning the consensus committee and the
consensus standards development process. It also adds a
definition for the monitoring function and related definitions
for Production Inspection Primary Inspection Agency and Design
Approval Primary Inspection Agency duties, which have not been
previously defined. To update the '74 Act, the outdated term
``dealer'' has been replaced throughout with the term
``retailer.''
Section 4. Federal manufactured home construction and safety standards
Section 604 of P.L. 93-383 would be revised to establish a
consensus committee to submit recommendations to the Secretary
of HUD for developing, amending and revising both the Federal
Manufactured Home Construction and Safety Standards and the
procedural and enforcement regulations. These recommendations
would be published in the Federal Register for notice and
comment prior to final adoption by the Secretary. The Secretary
of HUD will maintain final authority in his ability to accept,
reject or modify consensus committee recommendations, within
twelve months of receipt.
The administering committee would function in accordance
with the ANSI procedures for the development and coordination
of American national standards. The consensus committee would
consist of 21 voting members and one non-voting member who
would represent the Secretary. The following three interest
categories would be equally represented: producers, which
include producers and retailers of manufactured housing; users,
which include consumer organizations, recognized consumer
leaders, and owners who are residents of manufactured homes;
and general interest and public officials.
The Secretary may disapprove for any reason, in writing,
the appointment of an individual to the consensus committee,
and members of the committee shall be reimbursed for their
actual expenses for attendance at the meetings. The revisions
to Section 604 would also clarify the scope of Federal
preemption to ensure that disparate State or local requirements
do not affect the uniformity and comprehensive nature of the
Federal standards. Language also reserves to the States the
right to establish standards for the stabilizing and support
systems or for the foundations on which manufactured homes
sited are installed and the right to enforce compliance with
such standards, subject to Section 605.
Section 5. Abolishment of national manufactured home advisory council;
manufactured home installation
Section 605 of P.L. 93-383 is rescinded, abolishing the
National Manufactured Home Advisory Council. The establishment
of a consensus committee would make the council redundant and,
therefore, unnecessary.
In addition, this Section provides that States have five
years to adopt an installation program ``established by State
law'' that includes: (i) installation standards; (ii) the
training and licensing of installers; and (iii) the inspection
of the installation of manufactured homes. During this five-
year period, the Secretary and the consensus committee are
charged with constructing a ``model'' manufactured housing
installation program. In States not choosing to adopt an
installation program, HUD may contract with an appropriate
agent in those states to implement the ``model'' installation
program.
Section 6. Public information
Section 607 of P.L. 93-383 is amended by clarifying that
manufacturers must submit to the Secretary their opposition to
any of the Secretary's actions in order for the Secretary to
evaluate the manufacturers' statement. Also the Secretary must
submit such cost and other information to the consensus
committee for evaluation.
Section 7. Research, testing, development, and training
Section 608 of P.L. 93-383 is amended by adding two
activities which the Secretary of HUD may conduct to carry out
the purposes of the Act: encouraging the government sponsored
housing entities to develop and implement secondary market
securitization programs for Federal Housing Administration
(FHA) manufactured home loans and other loan programs; and
reviewing the programs for FHA manufactured home loans and
development of such changes to promote the affordability of
manufactured homes, including changes in loan terms,
amortization periods, regulations and procedures.
Section 8. Fees
The legislation amends Section 620 of P.L. 93-383 by
allowing the Secretary to use industry label fees for carrying
out the responsibilities under the Act, and for the
administration of the consensus committee. Additionally, fees
may be used for the hiring of additional HUD program staff,
along with additional funding for their travel; the funding of
a non-career administrator position to oversee the Federal
program; and HUD's facilitation of the acceptance of the
quality, durability, safety, and affordability of manufactured
housing within the Department.
The amended provision would prohibit the use of label fees
to fund any activity not expressly authorized by the Act unless
such activity was already engaged in by the Secretary prior to
the date of enactment; and it would make the expenditure of
label fees subject to annual Congressional appropriations
review. The provision would specifically require that any fee,
or any change in the expenditure of such fee, shall only be
modified as specifically authorized in an annual appropriations
act.
Section 9. Dispute resolution
This Section provides that States have five years to adopt
a dispute resolution program for the timely resolution of
disputes between manufacturers, retailers, and installers
regarding the responsibility for the correction or repair of
defects in manufactured homes that are reported during the one-
year period beginning on the date of installation. In States
choosing not to adopt their own dispute resolution program, HUD
may contract with an appropriate agent in those States to
implement a dispute resolution program.
Section 10. Elimination of annual report requirement
This section strikes Section 626 of P.L. 93-383,
eliminating HUD's annual report to Congress regarding the
manufactured housing program. This should no longer be required
because under Section 8 of this Act, program expenditures would
be subject to annual Congressional appropriations.
Section 11. Effective date
The amendments made by this Act shall take effect on the
date of enactment of this Act.
Section 12. Savings provision
Standards and regulations in effect prior to enactment of
this Act will remain in effect until modified or superseded.
changes in existing law (cordon rule)
In the opinion of the Banking Committee, it is necessary to
dispense with the requirements of paragraph 12 of the Rule XXVI
of the Standing Rules of the Senate in order to expedite the
business of the Senate.
regulatory impact statement
In compliance with paragraph 11(b) of the Rule XXVI of the
Standing Rules of the Senate, the Banking Committee makes the
following statement regarding the regulatory impact of the
bill.
This legislation will not create a regulatory burden on
producers or users of manufactured housing. Any direct economic
impact is considered to be minimal, while it is believed that a
secondary impact of greater commerce will result. This
legislation does not impact the personal privacy of affected
individuals. Lastly, there will be no additional paperwork on
the manufactured housing industry as it relates to the passage
of this bill.
cost of the legislation
Senate Rule XXVI, section 11(b) of the Standing Rules of
the Senate, and Section 403 of the Congressional Budget
Impoundment and Control Act, require that each committee report
on a bill containing a statement estimating the cost of the
proposed legislation, which has been prepared by the
Congressional Budget Office. The estimate is as follows:
U.S. Congress,
Congressional Budget Office,
Washington, DC, April 6, 2000.
Hon. Phil Gramm,
Chairman, Committee on Banking, Housing, and Urban Affairs,
U.S. Senate, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for S. 1452, the
Manufactured Housing Improvement Act.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contacts are Mark Hadley
(for federal costs), Susan Sieg Tompkins (for the state and
local impact), and Bruce Vavrichek (for the private-sector
impact).
Sincerely,
Barry B. Anderson
(For Dan L. Crippen, Director).
Enclosure.
S. 1452.--Manufactured Housing Improvement Act
Summary: CBO estimates that S. 1452 would reduce revenues
(government receipts) by $90 million and reduce direct spending
by $82 million over the 2001-2005 period. Because S. 1452 would
affect direct spending and receipts, pay-as-you-go procedures
would apply.
S. 1452 would make changes to the joint federal and state
program for ensuring the safety and soundness of manufactured
housing. The bill would require the Department of Housing and
Urban Development (HUD) to develop a program for monitoring the
installation of manufactured homes and resolving disputes. The
bill also would create a consensus committee to make
recommendations to HUD on regulations concerning manufactured
homes. S. 1452 would expand current research and information
gathering activities performed by HUD and would eliminate
certain reports HUD prepares for Congress. Finally, the bill
would make spending for this work subject to appropriation and
expand HUD's authority to charge fees to recover all associated
costs. When this program is fully implemented, after 2005, the
bill would have no net effect on discretionary spending because
additional fees would completely offset additional
discretionary spending.
S. 1452 contains several intergovernmental mandates as
defined in the Unfunded Mandates Reform Act (UMRA), but CBO
estimates that the costs of complying with these mandates would
not exceed the threshold established under that act ($55
million in 2000, adjusted annually for inflation).
The bill also contains private-sector mandates as defined
in UMRA. Because those new requirements would depend on
specific standards that would be established by the Secretary
of Housing and Urban Development, CBO cannot determine whether
their direct cost to the private sector would exceed the
threshold in UMRA ($109 million in 2000, adjusted annually for
inflation).
Estimated Cost to the Federal Government: The estimated
impact of S. 1452 is shown in the following table. The cost of
this legislation falls within budget function 370 (commerce and
housing credit).
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By fiscal year, in millions of dollars
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2000 2001 2002 2003 2004 2005
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CHANGES IN DIRECT SPENDING
Estimated Budget Authority...................................... 0 -17 -17 -18 -19 -19
Estimated Outlays............................................... 0 -9 -17 -18 -19 -19
CHANGES IN REVENUES
Estimated Revenue Loss.......................................... 0 -17 -17 -18 -19 -19
CHANGES IN SPENDING SUBJECT TO APPROPRIATION
Changes in Offsetting Collections:
Estimated Authorization Level............................... 0 -26 -32 -39 -46 -55
Estimated Outlays........................................... 0 -26 -32 -39 -46 -55
Changes in Spending of Collections:
Estimated Authorization Level............................... 0 26 32 39 46 55
Estimated Outlays........................................... 0 18 30 37 44 52
Net Changes in Discretionary Spending:
Estimated Authorization Level............................... 0 0 0 0 0 0
Estimated Outlays........................................... 0 -8 -2 -2 -2 -3
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Basis of Estimate: Under current law, HUD charges
manufacturers fees for the cost of inspecting manufactured
homes. The budget records the receipt of these fees as
revenues, and they are spent by HUD without further
appropriation action. CBO estimates that under current law such
spending and revenue will be about $18 million a year over the
2001-2005 period. S. 1452 would make federal spending and the
collection of fees associated with manufactured housing subject
to appropriation action, and would direct that fees collected
to cover these costs be credited as offsetting collections to
this new appropriation account. Because the fees would shift to
the discretionary side of the budget, revenues would decline by
about $90 million over the five-year period. The spending for
these activities would also become discretionary, so that
direct spending would also decline--by about $82 million.
Discretionary spending would be affected both by changing
the current program from mandatory to discretionary, and also
by an expansion of federal activities related to manufactured
homes. The bill would require HUD to establish a committee to
advise it on regulations, a program to resolve disputes, and a
program to monitor the installation of manufactured housing.
The bill also would require HUD to increase its use of private
contractors for administering the program. Based on information
from HUD, CBO estimates that the bill would increase the cost
of this program by $12 million a year when the legislation is
fully implemented in 2005, assuming appropriation of the
necessary funds.
S. 1452 would authorize the federal government to pay
states for their costs associated with inspections of the
installation manufactured homes. Based on information from HUD
and the states, CBO assumes the installation program would
require on-site inspections for about 25 percent of the 400,000
homes installed annually. Based on information about similar
programs in various states, CBO estimates that the cost per
visit will be about $250. Thus, CBO estimates that the
installation program will cost about $25 million a year when
fully implemented in 2005.
HUD's new responsibilities would gradually increase federal
spending in this area to more than $50 million a year, but such
costs would be offset by higher fees paid by the manufactured
home industry. Because we expect such fees to be collected more
quickly than they would be spent, CBO estimates that net
discretionary outlays would decline by $17 million over the
2001-2005 period.
Pay-as-You-Go Considerations: The Balanced Budget and
Emergency Deficit Control Act sets up pay-as-you-go procedures
for legislation affecting direct spending or receipts. The net
changes in outlays and governmental receipts that are subject
to pay-as-you-go procedures are shown in the following table.
For the purposes of enforcing pay-as-you-go procedures, only
the effects in the current year, the budget year, and the
succeeding four years are counted.
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By fiscal year, in millions of dollars
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2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
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Changes in outlays............................................... 0 -9 -17 -18 -19 -19 -20 -21 -22 -23 -24
Changes in receipts.............................................. 0 -17 -17 -18 -19 -19 -20 -21 -22 -23 -24
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Estimated Impact on State, Local, and Tribal Governments:
S. 1452 contains several preemptions of state authority:
From the date of enactment of the bill until the date
that HUD finalizes its standard governing the
installation manufactured housing, states would be
prohibited from lowering their standards from those
that are already in place;
Once the federal installation standard is finalized,
if they choose to create their own installation
standard and program, states would be required to set
standards that are no less rigorous than the federal
program. State installation programs that do not meet
the federal minimum would be superseded by the HUD
standards; and
Similarly, states that choose to create a dispute
resolution program would be required to set standards
that are at least as stringent as the federal program;
otherwise HUD would administer the program in the
state.
CBO treats such preemptions of state law as mandates under
UMRA. The mandates would impose no costs on state, local, or
tribal governments, however, because the affected entities
would not be required to take any action. States that chose not
to establish their own standards would be regulated and
monitored by HUD.
Other provisions of the bill would broaden the activities
HUD is authorized to include in its calculation of inspection
fees for manufactured housing, and expand its authority to
collect those fees in states where such collections are
prohibited under current law. Though these provisions would
change the method by which inspection fees are calculated and
levied on builders of manufactured housing, CBO estimates that
states would continue to receive at least the same amount of
funding under this program as they collect under current law.
Estimated Impact on the Private Sector: S. 1452 also
contains private-sector mandates as defined in UMRA. Currently,
builders of manufactured housing must pay a fee to cover the
cost of construction and safety inspections and other
administrative activities. The bill would increase the cost of
that mandate by expanding the activities paid by the fee to
include items such as the on-site inspection of newly installed
homes and the operation of a dispute resolution program. CBO
estimates that those changes would increase private-sector
costs by $9 million in 2001 and by a total of $108 million over
the 2001-2005 period, assuming that 25 percent of new-home
installations would be inspected. (The added cost could be
higher or lower depending on the requirements specified by the
Secretary of HUD.)
The bill would also impose new federal standards on the
installation of manufactured homes, including requiring
installation inspections and mandating that all installers be
trained and licensed. The cost of those new requirements to the
private sector would also depend on the specific standards
established by the Secretary of HUD.
Overall, because the requirements imposed by the bill would
depend in large part on future actions of the Secretary of HUD,
CBO cannot determine whether their direct cost to private-
sector entities would exceed the threshold specified in UMRA
($109 million in 2000, adjusted annually for inflation).
Previous CBO Estimate: S. 1452 is similar to Title XI of
H.R. 1776, which was reported by the House Committee on Banking
and Financial Services on March 29, 2000. CBO's estimate of the
budgetary impact of Title XI of H.R. 1776, prepared on April 4,
2000, is identical to the estimated impact of S. 1452.
Estimate Prepared by: Federal Costs: Mark Hadley. Impact on
State, Local, and Tribal Governments: Susan Sieg Tompkins.
Impact on the Private Sector: Bruce Vavrichek.
Estimate Approved by: Robert A. Sunshine, Assistant
Director for Budget Analysis.
ADDITIONAL VIEWS
We would like to join Senator Shelby and the other sponsors
of S. 1452, The Manufactured Housing Improvement Act of 2000,
in recommending this bill for passage. As the report makes
clear, the laws governing the manufactured housing industry
have been overlooked for far too long. This oversight not only
adversely affects the producers of manufactured housing, but
also consumers who purchase and live in these homes. S. 1452
directly addresses the lack of progress in updating both
statutes and regulations, which we believe, will be of
significant benefit to all parties influenced by this section
of the housing industry.
This bill establishes a national model for installation of
manufactured homes, which includes inspection, and a dispute
resolution program. During our hearings on this bill we
discovered that consumers are frequently passed back and forth
between retailers, manufacturers and installers when they have
a problem with their home, making it difficult to get the
problem resolved. This requirement will enable consumers who
live in states that do not have laws that govern manufactured
housing to establish who is responsible for the defect, and
have it repaired.
However, there are a few deficiencies in S. 1452 which must
be addressed before the full Senate passes this legislation.
The bill establishes a consensus committee to review
manufactured housing standards and regulations. Exemptions have
been made to three ethics statutes for consensus committee
members. While this was done to facilitate the ability to
attract industry representatives--necessary participants in the
consensus committee--we are concerned that the manner in which
it has been done is too broad and far reaching. Before the bill
passes the floor, we would like to see the ethics exemptions
tailored. Specifically, we must ensure that there is a
mechanism in place to ensure financial disclosure of the
consensus committee members and an appropriate gift ban.
There is also concern with the process established by the
legislation to develop enforcement regulations. While we agree
that HUD should and must move efficiently, the method passed by
the committee which allows both regulations and standards to go
into effect in the absence of Secretarial action, would result
in an inappropriate delegation of enforcement authority to a
non-governmental entity. Enforcement of the law is an
inherently governmental function. It is a potential conflict
for a non-government entity such as the consensus committee to
draft both the standards and the regulations to enforce those
standards. This latter role should be reserved exclusively for
HUD. We suggest that the provision be revised to reflect this
important principle.
Lastly, we support changing the bill language to give the
Secretary of HUD the authority to appoint the members of the
consensus committee from among recommendations made by the
administering organization, rather than to approve selections
made by that organization. According to the Administration, the
latter approach raises Constitutional concerns.
Both industry and consumer groups have expressed their
desire to cooperate on these matters and we feel that these
remaining issues can be rectified without jeopardizing the
passage of the bill. Again, it is our intention that this bill
move forward expeditiously. It is a good bill for both
consumers and industry.
Senator Paul Sarbanes.
Senator John Edwards.
Senator Richard Bryan.
Senator Evan Bayh.
Senator John F. Kerry.
Senator Chris Dodd.
Senator Tim Johnson.
Senator Charles Schumer.