MHI Responds to August 21, 2000

HUD Letter Regarding Completion of Manufactured Homes On-Site

MHI answers approximately 50 questions on completion of homes on-site.

MHI Transmittal Letter
MHI Response
HUD Letter (Attachment A)
Proposed Revision to 24 CFR 3282 (Attachment B)

MHI Transmittal Letter

October 13, 2000

Ms. Elizabeth A. Cocke, Director
Manufactured Housing and Standards Division
U.S. Department of Housing and Urban Development
451 Seventh Street, SW, Room 9152
Washington, DC 20410-8000

RE: On-Site Construction of Manufactured Homes

Dear Ms. Cocke:

We are pleased to submit responses to the set of questions listed
in your August 21, 2000 letter to all interested parties, regarding
completion of manufactured homes on site. MHI members strongly
support the Secretary’s initiative to continue to permit work on
site without the Department’s approval when the completed home
is in compliance with the Standards (24 CFR 3280).

Three categories of construction work at the home site are
identified:

1.Work finalized as an extension of the factory assembly
process and siting process (the last paragraph on page 2 of
your letter lists typical constructions). The completed home
would comply with the Standards and not be subject to IPIA
monitoring.
2.Work finalized at the home site that includes safety-related
constructions (such as a vent stack through a hinged roof).
The completed home would comply with the Standards,
would be monitored by the IPIA approved on-site inspection
agency and would not be subject to approval by the
Department. The monitoring agency shall not have any
financial ties to the retailer, installer or other on-site
construction company, but could be a qualified employee of
the manufacturer.
3.Work finalized at the home site, that possibly includes
innovation and/or the use of new technology, where the
completed home is not in compliance with the Standards. In
this category of homes the manufacturer would seek the
Department’s approval under the alternative construction
procedures of Section 3282.14.

We recognize that the most significant question that the
manufacturer must answer is to separate home-site construction
work in category 1. (extension of the assembly and siting
process), from on-site construction in category 2. We stipulate
that the "litmus test" should be that safety-related constructions
would fall in category 2.

The enclosed response contains MHI’s comments in support of a
Departmental policy crafted for the above described category 2
on-site work. Attachment B to the enclosed comments is language
for a proposed new section of the Enforcement Regulations (24
CFR 3282).

A fourth category of work at the home site includes constructions
under the cognizance of the authority having jurisdiction. This
includes both installation/foundation requirements and other
constructions that are not covered by the federal Standards.
Neither of the types of constructions in this fourth category
should result in monitoring under the federal MHCSS program,
because they are not governed by Title VI. Industry fully intends
to continue to comply with applicable State and/or local building
codes.

MHI Response

to the HUD August 21, 2000 Letter
on Completion of Manufactured Homes On-Site

Introduction:

On August 19, 2000 the HUD staff released, by e-mail, a 6-page
letter (attachment A) to all interested parties, seeking feedback
on 14 numbered paragraphs containing about 40 questions, plus 8
other paragraphs of comments that compel additional feedback.

MHI’s following comments are cross-referenced to the lettered
and numbered paragraphs at attachment A.

MHI Responses to HUD Comments and Questions:

A. HUD Comments - possibly extend the manufacturer’s quality
control system to on-site work.

MHI response - We support the Department’s approach,
announced in the October 29, 1997 Semiannual Regulatory
Agenda, to "propose a new process, under which manufacturers
and State and private inspection agencies [PIAs] could agree to
permit limited site work under certain conditions, to complete
production of manufactured homes, without prior approval by the
Secretary.

At this time, MHI submits proposed special procedures for
incorporation into the Manufactured Home Procedural and
Enforcement Regulations - see attachment B.

In summary:

DAPIA reviews and approves the design package for the
home to demonstrate that the completed manufactured
home on site complies with the federal Standards (MHCSS).
DAPIA reviews and approves the on-site inspection
procedures submitted by the manufacturer, for those
positions of construction that are to be completed on site in
accordance with the Standards.
IPIA-approved on-site inspection agency shall monitor at
least 10 percent of homes; for each individual home to be
monitored, at least 25 percent of the on-site construction
shall be inspected, including all safety-related
constructions.

B. HUD Comments - IPIA or IPIA-approved on-site independent
inspection agencies perform oversight inspections. Manufacturers
tracks each sited home, keeps records, and reports summary of
work to HUD or its agent.

MHI response - We support this concept. An "independent
inspection agency" shall be defined as an IPIA or IPIA-approved
on-site inspection agency that has no financial interests in the
retailer/installer sale of the home.

C. HUD Comments - the Department’s procedure would not
extend to constructions not covered by the federal Standards.

MHI Response - We agree. The manufacturer may have to
contact the local authority having jurisdiction, as necessary, to
determine what local codes may apply to portions of the home not
covered by the federal Standards. Where a local authority desires
to review designs and/or inspect constructions, it may do so.
However, throughout the nation, many local authorities do not
wish to be involved with design review or inspection of
manufactured homes that have constructions that meet the local
building code.

D. HUD Comments - constructions to be included in the new
procedures would only include integral parts of the home.

MHI response - We agree that the constructions should be
limited to the constructions covered by the federal Standards.

E. HUD Comments - covered on-site construction could include:

partially completed structural assemblies
interior finish work on marriage lines and related items
homeowner-provided building components, such as
appliances
homes over a basement

MHI response- The most significant and difficult question which
has been presented is to what should be included by the proposed
on-site construction rules and what should be continued or
included in the installation and setup manual. Many of the
examples provided by HUD have historically been included in
installation manuals and have been routinely inspected during
setup by local or state agencies. The industry has long been on
record as encouraging and promoting state setup legislation and
regulation. Inspections which can be well defined by
manufacturers’ installation instructions should continue to be
inspected during normal setup. The manufacturer and the DAPIAs,
with guidance and oversight by HUD, should make the decision as
to when the construction is of significant complexity or of safety
concern to trigger the "on-site" independent inspection
requirements.

F. HUD Comments - the Department lists types of work to be
finalized at the home site, that the Department would continue to
allow under the current program, as an "extension of the siting
process," without alternative construction letters or the "on-site
completion process."

MHI response - We strongly agree.

G. HUD Comments - the Department lists types of constructions
that it might not qualify under the "on-site completion" process:

construction of roof, wall or floor assemblies, including
installation of thermal insulation on site
complete or substantial assembly of systems (e.g. plumbing,
heating, electrical)

MHI Comments - We strongly disagree. The intent of the
"on-site completion" process should remain as envisioned by the
Department in its October 29, 1997 announcement. That is, the
process will cover manufactured homes that, when completed on
site do meet the federal Standards (MHCSS) and therefore avoid
the "alternative construction" process under 3282.14.

H. HUD Comments - there is a need to define "on-site."

MHI response - MHI proposes that "on-site construction" should
mean those constructions at the home site, that meet the federal
Standards (MHCSS), but are impractical to complete in the
manufacturing plant, and are more complex than the currently
approved list of work as an "extension of the siting process,"
outlined in paragraph F., attachment A.

(1) HUD Questions - (a) Define the limits of "on-site
construction"; (b) should the definition of "manufactured home" be
improved; and, (c) how to handle multi-story construction?

MHI response - (a) The limits of the future "on-site
construction" rule are outlined in MHI’s response to paragraph H.,
above; (b) The definition of "manufactured home" found in the
federal MHCSS Act should not be changed at this time; (c)
Multi-story construction shall be covered under item (a) above.

(2) HUD Questions - (a) Where is the line between the current
"extension of the siting process" and future "on-site completion"
rules; (b) Should the "siting process" be as described in paragraph
F, appendix A; (c) What about hinged roofs; (d) What about other
site construction required by transportation height restrictions;
(e) define the limits; and, (f) how shall HUD monitor constructions
on site?

MHI response - (a) The line should be where safety would be
jeopardized by an improper on-site construction. We note that the
Department draws this line now by requiring an AC Letter for
safety-related on-site construction. [MHI believes that this
procedure is a "stretch" of the provisions of 3282.14, which scope
is to require the Secretary’s approval of constructions that do not
meet the federal Standards when completed.]; (b) The
currently-allowed "extension of the siting process" should continue
to be allowed, with the line drawn as described in (a) above; (c)
The same answer as in (b) above; that is, if the hinged roof
involves a safety construction, such as installation of a vent
stack, then it should be included in the "on-site construction"
regulation; (d) Yes, unless a safety construction is involved; (e)
Define the safety-related construction (e.g., vent stack
installation on site); (f) Yes, the Department can monitor the
"on-site constructions" as described in paragraph B., attachment
A, using the manufacturers’ reporting system.

(3) HUD Questions - (a) How should the Department monitor;
(b) What is best control method to ensure compliance; (c) How
many inspections; (d) Who shall inspect; (e) What is the value of
qualified independent inspectors; (f) Are independent inspectors
needed for all work; (g) Can manufacturers inspect and IPIAs spot
check?

MHI response - (a) The Department should monitor the on-site
work done in accordance with the Standards, as described in
paragraph B, attachment A. (i.e. manufacturer maintains on-site
construction records and reports to HUD); (b) IPIA or
IPIA-approved on-site inspection agency inspects constructions
at about the same rate as the IPIA does in the factory; that is,
about 10% of construction [3282.362(c), where each home is
inspected in at least one stage of production] inspection reports
are submitted to the manufacturer and also retained in the IPIAs
files; (c) Randomly, inspect 10% of homes in a subdivision of
construction; and, for each individual home that is monitored,
inspect at least 25% of the on-site construction, including all
safety-related work, such as vent stacks through hinged roofs; if
any construction is found to be unacceptable, inspect 100% of
the remainder of the individual home; (d) Permit IPIAs to choose
any qualified, independent inspector; (e) Avoids a conflict of
financial interests. (f) Same as (c) above; (g) Manufacturers do
inspect their own work, in accordance with 3280.11(c) -
certification label that home has been inspected. And, the IPIA
inspects in accordance with 3282.362(c), as noted in paragraphs
(b), (c), and (d) above.

(4) HUD Questions - (a) How to separate federal from local
standards; (b) Should manufacturers do this; (c) Should
manufacturers so advise the homebuyer?

MHI response - (a), (b), and (c) - In today’s free market, many
manufacturers attempt to determine what applicable state and/or
local requirements may apply to manufactured home systems or
components. This aspect of the on-site completion should be left
to the individual manufacturers.

(5) HUD Questions - (a) Should there be a deadline for
completing on-site construction; (b) Should there be consumer
protections; (c) How can HUD expedite on-site construction; (d)
Should HUD develop regulatory protections for the manufacturer if
there are delays beyond manufacturer or retailer’s controls?

MHI response - (a), (b), and (c) - We urge the Department not
to make changes in the consumer protection regulations of the
federal Manufactured Home Procedural and Enforcement
Regulations (MHPER) specifically for on-site construction. The
MHPER contains adequate protections for the manufacturer,
retailer and the consumer. States have numerous consumer
protection laws as well; (d) Let the free market work in
combination with existing federal, state and local regulations.

(6) HUD Questions - (a) Regarding corrections of "failures to
conform" with the federal Standards or local codes, what should
HUD do; (b) Should responsibilities be clarified; (c) How; (d)
Should on-site inspection procedures also apply to repairs of any
"failures to conform?

MHI response - (a) the federal Regulations (MHPER) adequately
cover manufacturers’ responsibilities to investigate any possible
"failures to conform" or imminent safety hazards. Likewise, state
regulations cover consumer protections. (b) HUD should explain
how the MHPER protects the homebuyer; (c) HUD should make
information known as part of the on-site completion rule preamble.
(d) Yes, the MHPER applies.

(7) HUD Question - If a home does not pass inspection, should
HUD consider requiring repair or removal?

MHI response - The MHPER applies and there is no reason for
the Department to supplement the regulations. The IPIA always
has the right to "red tag" or "pull the labels," subsequent to a
failed on-site inspection by the IPIA-approved on-site inspection
agency.

(8) HUD Questions - (a) Is a two-stage labeling system needed
and workable; (b) Could the IPIA "red tag" the home in the factory
and remove it when site-work is satisfactorily completed; (c) If
(b), would additional protections be needed?

MHI response - (a) There is no need to initiate a new labeling
system; (b) The IPIA could "red tag the home," so long as there is
a time limitation on the red tag, that specifies that the tag is
automatically removed three days after the manufacturer reports
to the IPIA that the home is completed, unless the IPIA or
IPIA-approved on-site inspection agency determines that the
home has not passed a final inspection; (c) with the procedure
outlined in (b) above, additional protections would not be
necessary.

(9) HUD Questions - (a) How can HUD specify the selection of
the "date of manufacture"; (b) What date would manufacturers
use?

MHI response - (a) and (b) The "date of manufacture" should be
set the same as is currently done, with "A-C" letter homes; that
is, the "date of manufacture" is determined by the date the
certification label is applied, which is before the home leaves the
plant. No new regulations are needed.

(10) HUD Questions - (a) What monthly production reporting
procedure should be used; (b) Would individual reports be helpful?

MHI response - (a) and (b) A new monthly reporting form should
be created by the Department, as part of the manufacturer’s
on-site construction reporting procedure, described in paragraph
B, attachment A.

(11) HUD Questions - (a) Will any need for additional fee
assessments be governed by agreements among parties involved;
(b) How should such procedures be outlined by HUD; (c) Should
Out-of-state IPIA inspections be addressed?

MHI response - (a) Yes, the need for any additional fee
assessments needs to be governed by agreements among involved
parties; (b) HUD need not outline the process beyond what it has
already established under the MHPER; (c) Out-of-state
inspections can be handled by the IPIA-approved on-site
inspection agency.

(12) HUD Question - Should HUD consider a surcharge to the
$24.00 current monitoring inspection fee per transportable
section?

MHI response - No, any additional fee assessment needs to be
governed by agreements among involved parties.

(13) HUD Question - (a) Should the manufacturer’s IPIA agree
to let another IPIA perform on-site inspections; (b) Would this
conflict with any State inspection requirements?

MHI response - (a) and (b) The matter becomes a non-issue
with the proposal that an IPIA-approved on-site inspection
agency shall provide the service. That agency could be any IPIA,
on a list of qualified companies and organizations that the
manufacturers’ IPIAs would be expected to compile.

(14) HUD Questions - (a) How will exclusive IPIAs handle
out-of-state inspections; (b) What details are needed?

MHI response - (a) and (b) Exclusive IPIAs operating procedures
can be accommodated through their establishment of a list of
IPIA-approved on-site inspection agencies, as noted in (13)
above. The list shall include, as a minimum, all HUD-approved or
conditionally-approved IPIAs.

Attachment A
Attachment B