Wednesday, October 28, 2015

MHBA Fighting for Modular Housing on Many Fronts

How often have you stood on the sidewalk watching a parade in your hometown and never give a thought to all the effort it takes to organize and make sure the parade comes off as planned. No, most people think the hardest part is finding a place to put their folding chair to get a good view.

The hundreds and even thousands of people in the parade and the organizers that worked behind the scenes for months never get to see the parade. Their hard work doesn't allow them the benefit of enjoying the fruits of their labor.

That is what is happening right now with the Modular Home Builders Association, the MHBA. People working behind the scenes improving modular housing while others sit on their folding chairs and benefit from their efforts. If you are one of the modular factories or modular home builders that thinks you would like to take a more active part in helping fight for modular housing, take a minute and read what the MHBA under Tom Hardiman is doing for your benefit and then go their website, pay your dues and join with others fighting for the betterment of modular housing through the best association we have ever had. 


Overview – If you make a living in the modular home industry, you have issues with over-regulation. It may be difficult to assess the impact these regulations are having on your bottom line, but they are real and they are significant. The current efforts of MHBA listed below are targeting some of these excessive and anti-industry regulations to improve your business. If you are facing issues in other states, please email

Connecticut DOT - MHBA has retained the firm of Preti Strategies to work with the Department of Transportation and the State Troopers Office to improve driver safety and lessen these costs and requirements. MHBA is seeking relief in the following areas: 1) Drop requirement for state trooper escort altogether saving the industry about $1,200 per shipment. 2) If unsuccessful, seek to reduce the number of troopers needed from two to one, saving $600 per shipment. 3) Require trooper(s) escort only through construction zone instead of the full route through the state, coupled with an agreement from the state police to reduce the minimum number of billable hours from four to a lesser amount, saving the industry about $100 per hour per trooper. 4) Seek to get loads of 14 feet or less transported during the day. 5) Seek to add Thursday night transports in the pilot program, adding five more slots to the week. 6) Seek to allow shipments to enter Connecticut without police escort and utilize the scale house in Danbury (1.5 miles over line) as a staging area, vs. parking on the side of the road in New York at the border. MHBA lobbyist, Kris Erickson, has held calls with transport companies and manufacturers to get “buy in” on this strategy. With the retirement of a long term public employee responsible for issuing the permits, the industry is working to build new relationships with both the DOT and State Police.

North East Transportation Standardization – The Connecticut DOT issue has elevated the conversations about reviving efforts to standardize the transportation requirements in the Northeast. MHBA will take the lead in working with the state manufactured housing associations, the Building Systems Council and the Modular Building Institute to garner support for this effort. A preliminary conference call will be set to discuss this strategy.

Maryland - On 9/29/15, three industry members and the MHBA Director met with the Codes Administration staff of DHCD to express concerns about new procedures and forms. The meeting lasted over three hours with both sides sharing greater information about their concerns, challenges and limitations. Both the industry and the agency left with a better understanding of each other’s positions and agreed to continue meeting on a quarterly basis to continue the conversations. The meeting did generate the following results: 1) The agency agreed to a moratorium on “effective immediately” notices, preferring instead to communicate with the industry when certain requirements are not being met. 2) The industry agreed to communicate with its members the importance of submitting all required documents, as the failure to do so will result in even more requirements. Specifically, when a builder obtains the final letter signed by the sprinkler installer and the energy rater, the builder should forward that letter directly to the agency in addition to sending it back to the manufacturer. Additionally, the form MUST have the correct and full address. 3) The agency agreed to modify its process for documentation of the sprinkler system designs and install, allowing plans to be approved prior to final sprinkler designs. The agency head is drafting specific language to formalize this change. Looking ahead: The agency has agreed to a meeting later this year with the industry, the State Fire Marshal, and two sprinkler contractors to discuss the hardships created by this mandate.

Michigan Taxes – MHBA recently submitted comments on the draft Revenue Administrative Bulletin 2014-XX, entitled Use Tax Base of Tangible personal Property Affixed to Real Estate by a Manufacturer/Contractor or Other Contractor (the “Draft RAB”). The sales and use tax law in Michigan allows manufacturer/contractors to use a price base for calculating tax of either the direct and indirect production costs or the cost of material and labor. Typically, manufacturer/contractors who maintain an inventory for sale use the direct and indirect production costs, while those who do not, use materials cost of property and labor. The draft RAB is overly broad and effectively eliminates the ability of the manufacturer/contractor to use the cost of materials and labor as the use tax base of property affixed to real estate if any advertisement or graphic depiction of the potential finished product is made available. This means that the manufacturers will be force to calculate the direct AND indirect production costs when determining tax liability.

The state assumes that if you utilize a sale brochure for your floor plan models, you “maintain an inventory” of products available for sale and must calculate indirect production costs. Indirect cost include: indirect labor and production supervisory wages, including but not limited to: 1. basic wages; 2. overtime wages; 3. vacation and holiday pay; 4. sick leave pay; 5. shift differential; 6. fringe benefits; 7. payroll taxes; 8. payments to a supplemental unemployment benefit plan; 9. profit sharing, retirement and pension; 10. other payments incurred on behalf of employees whose labor is incident to and necessary for production or manufacturing operations or processes. Miscellaneous indirect costs such as: 1. indirect materials and supplies; 2. tools and equipment expensed and not capitalized; 3. costs of quality control and inspection; 4. depreciation and depletion incident to and necessary for production or manufacturing operations or processes (including buildings, machinery, and equipment); 5. other employee benefits (including workers compensation expenses); 6. costs attributable to strikes incident to production or manufacturing operations or processes; 7. rework labor incident to and necessary for production or manufacturing operations or processes; 8. scrap and spoilage incident to and necessary for production or manufacturing operations or processes; 9. administrative costs of production incident to and necessary for production or manufacturing operations or processes; 10. officers’ salaries incident to and necessary for production or manufacturing operations or processes; 11. insurance costs incident to and necessary for production or manufacturing operations or processes. Are you including these indirect costs in your tax calculations?

Pennsylvania – The PA Assembly recently introduced House Bill 1645 which, among many other items, “provides for definitions and for Uniform Construction Code Review and Advisory Council.”
MHBA’s chief concern is that the newly defined advisory council strips powers and duties away from the builder community in general and the modular home industry specifically. The modular home representative as well as the manufactured housing representative listed as members of the council are deleted under the proposed legislation. The council will now have one singular “residential contractor”, which MAY include a manufactured housing or modular home representative.

With all due respect to whoever is the residential representative, it is highly unlikely that one person can adequately express the concerns of the stick built community, manufactured housing, and modular home industries. This bill may not seem significant on its surface, but MHBA finds it very problematic. The sponsors of this bill are clearly signaling that the modular home industry is not important enough to merit our own voice on the council, despite over a dozen PA modular home manufacturers employing nearly 2,000 people! MHBA plans to reach out to the bill’s sponsors to ensure our seat remains intact and that our voice is heard on code adoption issues in the Keystone State.

Summary: MHBA may or may not be successful in all of these efforts, but we will be the advocate for the modular home industry nationwide and we will fight on behalf of your company.


Builder Bob said...

I agree. Too many factory people simply watch the parade and never step forward to help. Tom Hardiman and entire staff of the MHBA should be commended for their efforts.

Harris - Finish Werks said...

Agreed, Bob. I took some heat from reps at the factories I singled out for not showing up to any of the Builder Breakfasts, Boot Camp, or MHBA Conferences. To their credit, both are now paying members, but I had to move mountains to get them one of them to join.

Maybe my word choice of "insular" was not very nice. But what has "nice" gotten us? Oh crap - I'm starting to sound like Trump!

Seriously, if I'm out of line, hit me. But I don't have much patience when our budding "industry" is treading water at 1.5%, many are jumping in to help, and some are content to just sit on the sidelines.