Eliminating Barriers to the Use of HUD-Code …HUD-code home industry to produce inno-vative designs. While in the past, HUD-code homes have developed largely apart from the mainstream

Eliminating Barriers to the Use of HUD-Code Housing in Attached Construction


Prepared for:U.S. Department of Housing

and Urban DevelopmentOffice of Policy Development

and ResearchWashington, D.C.

New York State Energy Research and Development Authory

Albany, NY

Prepared by:Manufactured Housing

Research AllianceNew York, NY

September 2003


Acknowledgements

ii Eliminating Barriers to the Use of HUD-Code Housing in Attached Construction

The Manufactured Housing Research Alliance wishes to acknowledge the assistance, advice, and guidance ofa number of people without whose help this publication would not have been possible.

Steve Hullibarger, The Home Team, Project ChairEric Alexander, Manufactured Housing InstituteBill Bain, Mid-Peninsula Housing CoalitionDr. Elizabeth Cocke, U.S. Department of Housing and Urban DevelopmentEdward Bryant, Champion Enterprises, Inc.Michael D. Blanford, U.S. Department of Housing and Urban Development Robert M. Carver, New York State Energy Research and Development Authority Azure-Sky Dufaux, Oakland Community Housing, Inc.David Engel, U.S. Department of Housing and Urban DevelopmentDesiree Espinoza, Mid-Peninsula Housing CoalitionCharles Fanaro Jr., Hi-Tech HousingWilliam Freeborne, U.S. Department of Housing and Urban DevelopmentRobert Henry, Oakland Community Housing, Inc.Jack Ireton-Hewitt, Titan HomesDennis Jones, R-Anell Housing GroupRoberto Kritzer, Champion Enterprises, Inc.Thayer Long, Manufactured Housing InstituteJohn R. McKelvey, ArchitectJohn McLaren, ArchitectRick Mendlen, U.S. Department of Housing and Urban DevelopmentMark Nunn, Manufactured Housing InstituteMichael O'Brien, Manufactured Housing Institute Robin Pfeil, Triton Valley Estates Corp.Ken Rosevelt, Silvercrest HomesAndy Scholz, Genesis HomesThomas F. Sheppard, United States Gypsum CompanyChuck Spicer, Marlette HomesJohn Stevens, U.S. Department of Housing and Urban DevelopmentTony To, HomeSightFran Wagstaff, Mid-Peninsula Housing CoalitionPaul Wang, Paul Wang and AssociatesRichard Weinert, California Department of Housing and Community DevelopmentAndrea Vrankar, U.S. Department of Housing and Urban Development

Project coordination staff and consultants:

Emanuel Levy, Manufactured Housing Research AllianceJordan Dentz, Manufactured Housing Research AllianceChris O'Neal, Manufactured Housing Research AllianceSandra Ho, Manufactured Housing Research AllianceDeane Evans, New Jersey Institute of TechnologyDorothy FosterKami Watson Huyse, My PR ProRay Tucker, RADCO, Inc.Frank Walter, PEDonald C. Westphal, Donald C. Westphal AssociatesKen Bryant, Donald C. Westphal Associates

Disclaimer

This report was prepared by the Manufactured Housing Research Alliance, for the U.S. Department ofHousing and Urban Development, Office of Policy Development and Research. The contents of this reportare the views of the contractor and do not necessarily reflect the views or policies of the U.S. Department ofHousing and Urban Development, the U.S. Government, or any other person or organization. Trade or man-ufacturers’ names herein appear solely because they are considered essential to the object of this report.

Eliminating Barriers to the Use of HUD-Code Housing in Attached Construction iii

Credits for Figures

Cover photo courtesy of HomeSight.Figure 3 courtesy of Donald C. Westphal Associates.Figures 4–8 courtesy of Champion Enterprises, Inc.Figures 9–17 courtesy of Paul Wang and Associates.Figures 18–26 courtesy of John R. McKelvey, Architect.Figures 28–31 courtesy of Oakland Community Housing, Inc.Figures 32–35 courtesy of John McLaren, Architect, based in part on work by Susan Maxman.Figures 36–37 courtesy of Steve Hullibarger.

iv Eliminating Barriers to the Use of HUD-Code Housing in Attached Construction

Table of Contents

Preface . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .ix

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1

The Single-Family Attached Market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5

Factors That Drive Demand For HUD-Code Single-Family Attached Construction . . . . . . . . . . . . . . . .17

Regulatory Barriers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .27

Case Studies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .37

Appendix A: Changes Proposed to the Federal MHCSS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .75

Appendix B: Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .89

Endnotes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .93

Eliminating Barriers to the Use of HUD-Code Housing in Attached Construction v

List of Tables

Table 1 National housing starts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5Table 2 Starts of townhouse structures containing more than five units, by region . . . . . . . . . . . . . .7Table 3 Single-family housing annual construction permit totals (attached and detached) . . . . . . . . .8Table 4 Housing stock growth–top metropolitan regions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9Table 5 Starts of townhouse structures containing more than five units by region . . . . . . . . . . . . . . .9Table 6 Single-family attached structures as a portion of total existing housing units in 2000 . . . . .10Table 7 Chicago market area: single-family attached housing prices versus single-family detached

housing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13Table 8 Top builders of townhouses/condominiums . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13Table 9 Evaluating the fit of manufactured housing with single-family attached construction, in a

sampling of U.S. markets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20Table 10 State regulation of local zoning laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .34Table 11 Development costs for the Upton Street Community . . . . . . . . . . . . . . . . . . . . . . . . . . . .41Table 12 Pre-development cost estimate for the Foothill Work-Live Townhomes . . . . . . . . . . . . . . . .63

vi Eliminating Barriers to the Use of HUD-Code Housing in Attached Construction

List of Figures

Figure 1 Single-family attached starts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6Figure 2 Townhouse structures containing more than five units . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6Figure 3 Site plan of the Upton Street Community . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .40Figure 4 Elevation of two-story four-plex, Upton Street Community . . . . . . . . . . . . . . . . . . . . . . . .40Figure 5 First floor plan of two-story four-plex, Upton Street Community . . . . . . . . . . . . . . . . . . . .42Figure 6 Second floor plan of two-story four-plex, Upton Street Community . . . . . . . . . . . . . . . . . .42Figure 7 Plan of one-story duplex, Upton Street Community . . . . . . . . . . . . . . . . . . . . . . . . . . . . .44Figure 8 Elevation of one-story duplex, Upton Street Community . . . . . . . . . . . . . . . . . . . . . . . . . .44Figure 9 Site plan of Villas Del Paraiso . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .46Figure 10 Plan of 1-bedroom/3-bedroom structure, Villas Del Paraiso . . . . . . . . . . . . . . . . . . . . . . . .47Figure 11 Elevations of 1-bedroom/3-bedroom structure, Villas Del Paraiso . . . . . . . . . . . . . . . . . . . .47Figure 12 Plan of 1-bedroom/4-bedroom structure, Villas Del Paraiso . . . . . . . . . . . . . . . . . . . . . . . .48Figure 13 Elevations of 1-bedroom/4-bedroom structure, Villas Del Paraiso . . . . . . . . . . . . . . . . . . . .48Figure 14 Plan of 3-bedroom/2-bedroom structure, Villas Del Paraiso . . . . . . . . . . . . . . . . . . . . . . . .51Figure 15 Elevations of 3-bedroom/2-bedroom structure, Villas Del Paraiso . . . . . . . . . . . . . . . . . . . .51Figure 16 Plan of 2-bedroom/2-bedroom/2-bedroom structure, Villas Del Paraiso . . . . . . . . . . . . . . .52Figure 17 Elevations of 2-bedroom/2-bedroom/2-bedroom structure, Villas Del Paraiso . . . . . . . . . . .52Figure 18 Site plan of Golden Torch . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .56Figure 19 Plan of 4-bedroom/2-bath unit, Golden Torch . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .57Figure 20 Entry elevation of 4-bedroom/2-bath unit, Golden Torch . . . . . . . . . . . . . . . . . . . . . . . . .57Figure 21 First floor plan of 3-bedroom/2-bath unit, Golden Torch . . . . . . . . . . . . . . . . . . . . . . . . .58Figure 22 Elevation of 3-bedroom/2-bath unit, Golden Torch . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .58Figure 23 Plan of 2-bedroom/1-bath unit, Golden Torch . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .58Figure 24 First-floor plan of management building showing community room, Golden Torch . . . . . .59Figure 25 Second-floor plan of management building showing manager’s unit, Golden Torch . . . . . . .59Figure 26 Elevation of management building, Golden Torch . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .59Figure 27 Foothill Work-Live Townhomes site plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .62Figure 28 Foothill Work-Live Townhomes location map . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .62Figure 29 Foothill Work-Live Townhomes site as seen from Foothill Boulevard facing east . . . . . . . . .64Figure 30 Building directly adjacent to Foothill Work-Live Townhomes site to the east on

Foothill Boulevard . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .64Figure 31 Rear of Foothill Work-Live Townhomes site on Bancroft Avenue and adjacent buildings

to the west . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .65Figure 32 First-floor plan of HUD-code duplex, Noji Gardens . . . . . . . . . . . . . . . . . . . . . . . . . . . . .68Figure 33 Second-floor plan of HUD-code duplex, Noji Gardens . . . . . . . . . . . . . . . . . . . . . . . . . . .68Figure 34 Front elevations of HUD-code duplex, Noji Gardens . . . . . . . . . . . . . . . . . . . . . . . . . . . .70Figure 35 Rear and side elevations of HUD-code duplex, Noji Gardens . . . . . . . . . . . . . . . . . . . . . .70Figure 36 Noji Gardens duplex unit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .71Figure 37 Row of duplex units, Noji Gardens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .72

Eliminating Barriers to the Use of HUD-Code Housing in Attached Construction vii

ix

Preface

In the late 1970s, an innovative federalprogram called Operation Breakthroughpromised to reduce housing costs by apply-ing the techniques of industrialization,honed in industries such as automotive pro-duction, to the home building industry.The program fell short of its ambitiousagenda; however, the building industry andthe U.S. Department of Housing and UrbanDevelopment (HUD), recognizing theinherent advantages of building in volumeunder controlled conditions, have contin-ued to seek ways of applying the efficienciesof factory production to residential con-struction.

The majority of the nation's new homesstill are erected at the building site by a largenumber of small builders, and technologicaladvances are slow to make their way throughthis fragmented building community.However, some macro trends are in evi-dence. As housing prices have continued torise, traditional builders have looked towardprefabricated components and subassem-blies to better meet the demand for moreaffordable homes. At the same time, manu-factured, or HUD-code housing, hasexpanded into higher income markets andhas been increasingly used by innovativedevelopers.

Among the factors driving homebuilders to industrialize are: the decline inthe number of skilled tradespeople, difficul-ties with maintaining construction quality,the complex system of regulations that con-trol on-site construction, and the need toconstruct homes at a competitive price.This is particularly the case with affordablehousing, where small changes in price have ahuge impact on the financial viability of aproject. It is increasingly difficult for theaffordable home builder to deliver a qualityproduct without having some, if not most,of the components built off-site.

Along with these pressures, there havealso been significant incentives for theHUD-code home industry to produce inno-vative designs. While in the past, HUD-code homes have developed largely apartfrom the mainstream home-building indus-try, this housing type has been increasinglyused by on-site developers. As such, manu-factured home designs have become morecomplex and sophisticated to meet thedemands of a more affluent customer base.

Utilizing HUD-code homes in the sin-gle-family attached housing market is a nat-ural step for the manufactured housingindustry. It seems especially appropriatesince attached housing traditionally hasbeen considered an affordable choice in thesite-built industry. HUD-code homes, too,have long been recognized for their afford-ability. For some people, competitivelypriced manufactured homes are the onlyavailable avenue to homeownership.1

Proving the value of manufacturedhomes as a building block for single-familyattached construction is research thatrequires understanding and resolution ofseveral interrelated issues. There are severalmajor factors that determine under whatconditions manufactured homes are viablefor attached construction. These factors areaddressed in this report and include the fol-lowing:• The potential market size. The market

size was determined in order to measure ifthere is sufficient demand for this use ofmanufactured housing. Demographicand trend data were examined in order toestablish potential market size, distribu-tion, and characteristics.

• The combination of market conditionsmost likely to encourage single-familyattached developers to consider manufac-tured housing. This information was

Preface

This study presents compelling argu-ments for further research and developmentof new applications for manufacturedhomes, and highlights the significant costand time savings that this technology canoffer to the development community in itsefforts to provide affordable housing.

x

compiled through interviews with across-section of experts in the HUD-codeand single-family attached industries.

• The regulatory barriers to such applica-tions. A detailed review of the HUDstandards and enforcement procedureswas conducted in order to identify theimpediments to using manufacturedhomes in two-story and attached config-urations. The process of removing thesebarriers was begun by recommendingchanges in the federal regulations, undera procedure established by theManufactured Housing ImprovementAct, for updating the HUD constructionstandards and enforcement regulations.

• The architectural and engineering feasi-bility of using manufactured homes forsingle-family attached applications.Practical case studies providing real-lifeexamples, facilitated as part of thisresearch, clearly illustrate the feasibility ofthis new application. In spite of the longdevelopment cycles typical of multi-unitattached development, the currentresearch made significant headway withseveral developer partners. The status ofthese collaborations and lessons learnedthus far are described in this report.

• The cost impact of alternative methods ofconstruction. Cost information wasculled from the case studies in order todemonstrate the bottom-line impact ofdeveloping single-family attached hous-ing with manufactured homes. Whileanecdotal and preliminary, the data areencouraging and suggest that the hypoth-esized economic advantages of develop-ing with single-family attached manufac-tured homes are indeed being realized inpractice.

Preface

Introduction

The research reported in this documentwas predicated on the supposition thatincreasing the level of industrialization inresidential construction is one of the mosteffective strategies for improving homeaffordability. The purpose of the study wasto explore how the cost of single-familyattached construction might be reduced bybuilding with one of the most cost-efficientbuilding elements available in industrializedhousing: the HUD-code home.

This report is intended primarily forhome manufacturers and builder/developersinvolved or interested in the emerging sin-gle-family attached market segment formanufactured housing. This document alsocontains substantial information of vitalinterest to anyone with a vested interest inadvancing manufactured housing. It isintended to summarize and evaluate the keyissues that manufacturers and developersface when embarking on such projects, aswell as the latest developments affecting thismarket segment.

The guidance to home manufacturers isintended to:• Summarize the market for single-family

attached housing, including its opportu-nities and pitfalls.

• Describe the state-of-the-art design, tech-nology, and regulations with respect tomanufactured housing in the single-fam-ily attached configuration.

• Help manufacturers who wish to explorethis market get started.

The guidance to builder/developers andtraditional site builders is intended to:• Enable successful integration of single-

family attached manufactured homesinto appropriate developments.

• Assist developers in understanding the

special concerns of factory construction.

• Describe the opportunities and pitfalls ofdeveloping with manufactured homes.

The barriers to applying factory technol-ogy to single-family attached home con-struction are not primarily technical innature, although attached housing is moretechnically challenging than the typical dou-ble- or triple-section detached home.Manufacturers have already made greatstrides in developing home designs, such asfor multi-story homes, that can be adaptedto the needs of attached construction.Instead, the barriers mainly relate to the lim-itations of the HUD code, other regulatoryimpediments, and to the differences inbuilding process between traditional sitedevelopers and factory homebuilders.

This report addresses these concerns andhelps to bridge the gap between the existingtechnology of the manufacturer and themarket expertise of the developer.

Facilitating the elimination of these bar-riers furthers the goals of HUD’sPartnership for Advancing Technology inHousing (PATH) to improve the affordabil-ity and value of the nation's housing by. • Developing new housing technologies by

applying manufactured home technologyto single-family attached housing.

• Disseminating information about newand existing housing technologiesthrough case studies and published arti-cles and reports.

• Encouraging familiarity with, and theavailability and use of, advanced tech-nologies among the homebuilding andmanufacturing communities.

• Studying and establishing mechanismsfor sustained housing technology devel-opment, including investigating the insti-

Introduction 1

1

tutional barriers that impede innovationand proposing alternatives to overcomethe barriers.

This report also suggests some of thecommercial reasons for the HUD-codeindustry to more aggressively develop andmarket their technology to developers ofattached housing and for those developers totake a serious look at HUD-code homes.For example, the single-family attached sec-tor of the housing industry constructed160,000 units in 2002, a 36% increase over1998. A great number of these homes arebuilt as affordable or entry level homes insuburban and urban areas by developers forwhom cost and speed is critical. Developersof these projects will be interested to learnthat incorporation of manufactured housingtechnology has proven to shave 15 - 20% offconstruction costs if market conditions areright. Other advantages of manufacturedhousing include shorter construction time,increased control over quality and security,and repeatability over a wide geographicalarea.

BackgroundOver the last five years nationally, and

for a longer period in certain markets, themanufactured housing industry has startedto reach "outside the box" from its tradi-tional home designs. The typical HUD-code home is a one-story ranch, consistingof one, two, or sometimes three connectedboxes. These are the commonly referred to"single-, double- and triple-wides," whichare the backbone of the industry, accountingfor close to 100% of the homes producedeach year.

Although these are the bread-and-butterunits for the industry, several manufacturersrecently have begun to experiment withmulti-unit and multi-story configurations.

For example, in 1999, FleetwoodEnterprises constructed a nine-section"Lifestages" prototype home at the NAHBAnnual Convention in Dallas and now sellsa four-unit, two-story home through itsretail network. Champion Enterprises hasdone groundbreaking work in creating two-story homes. To meet developer demand,Champion Enterprises also started GenesisHomes, a division of the company thatbuilds innovative factory-built homes mar-keted to traditional site builders. Manyother manufacturers have subsequentlydeveloped an expertise in two-story manu-factured homes.

One of the earliest projects involvingtwo-story manufactured homes was under-taken by the Manufactured HousingInstitute, the trade association for the indus-try, in 1995. The Urban DesignDemonstration Project was a program inwhich a series of two-story urban infill units,designed by Schult Homes and New EraHomes, were constructed in cities across theUnited States. The demonstration programproved that manufactured homes couldindeed break out of the traditional housingforms and be an asset to developers in urbanand suburban centers.

Clearly the manufactured housingindustry is on the cusp of significantchanges to its core product: changes indesign and engineering, changes in produc-tion technology, changes in delivery andinstallation, and changes in marketing andconsumer education.

There is, at the same time, an emerginginterest in bringing factory fabrication tech-nology to the attached housing market, asector that is nearly equivalent in annualunit sales to the manufactured home mar-ket. Manufacturing homes for this sector ofthe housing market will engender profoundchanges in the technology, both in the fac-

2 Introduction

tory and at the building site. Attachedhousing is expected to become a huge mar-ket for manufactured housing in the future,a factor that underlines the importance ofdeveloping design solutions that are cost-effective, esthetically pleasing, adaptable,and energy-efficient.

Challenges for single-family attachedHUD-code homes

When attractive and cost-competitiveattached-home designs using manufacturedhousing begin to enter the market, the hous-ing landscape will be profoundly altered. Asthey were for two-story homes, the firstdesigns successfully completed will be imi-tated by following manufacturers. The ini-tial designs will quickly become the standardfor industry, because of their proven successin the marketplace and in the regulatoryapproval process. Since regulatory approvalsare expensive and can take months to com-plete, a successful design will include theengineering framework needed to move thedesign through the HUD certificationprocess.

The attached-home designs in thisreport utilize many off-the-shelf compo-nents and features associated with site-builtattached homes, such as party walls, perma-nent foundation systems, and on-site com-ponents. The integration of current tech-nologies into a new application for manu-factured housing required innovation indesign and construction detailing.

Some of the technical solutions for two-story and attached HUD-code constructionwere borrowed from the modular industry,where single-family attached homes are anestablished product. Modular solutions thatcan be applied with little or no modificationto HUD-code construction include: partywalls, fire separation, vertical utility connec-tions, egress requirements, and, in some

instances, response to local regulatory issues.However, some aspects of HUD-code con-struction will demand unique solutions,including the integration of the chassis intothe floor system to minimize second-floordepth; new foundation designs to accom-modate increased load transferred throughthe marriage line and sidewalls; and connec-tions between utility services, such as duct-work and plumbing systems, that are nor-mally completed in the factory.

Project strategies and structure of thereport

The overall goal of this project is toreduce barriers to the use of manufacturedhousing in single-family attached construc-tion. These barriers come in many forms,including technical, regulatory, marketawareness, and acceptance. This reportdescribes the progress made toward over-coming these barriers. • Chapter 2 summarizes the single-family

attached home market in the UnitedStates, including market demographics,regional distinctions, and the current sitebuilders in the market. This section pro-vides a summary of the market demo-graphics for this type of housing con-struction, including total starts, regionaldistribution, and trends in marketgrowth. Regional variations in the mar-ket are explored, including architecturalstyles, pricing, housing density, and size.The major builders of single-familyattached housing are identified.

• Chapter 3 of the report assesses theopportunities for and barriers to the useof manufactured housing for attachedconstruction. It outlines the competitivecharacteristics of manufactured homes invarious U.S. markets. It concludes with aset of recommendations for manufactur-

Introduction 3

ers and developers wishing to pursue thismarket. To develop this information,interviews were conducted with industryleaders and developers involved in thismarket, a literature review was per-formed, and case studies were undertaken(see Chapter 5).

• Chapter 4 analyzes the federal and localcode barriers to the use of HUD-codehousing in single-family attached con-struction and recommends changes toapplicable regulations to accommodatethe unique features of the attacheddesign. This section also evaluates thepotential effects of HUD's proposed on-site completion rule on the developmentof the single-family attached market formanufactured homes.

• Chapter 5 presents case studies of single-family attached housing developmentsutilizing manufactured homes. It givesthe background of each project, outliningthe opportunities, the considerationsunique to each case study, and the lessonslearned. Five projects were profiled atvarious stages of completion.

4 Introduction

The Single-Family Attached Market

Single-Family Attached Home: A one- or two-storyliving unit attached to another one- or two-story liv-ing unit. Adjacent units are structurally independentand have their own permanent foundations and utili-ties that are not shared, but have the appearance of aphysical connection. They may also be referred to astownhouses, duplexes, or row homes.

The single-family attached housing formin America originated in high-density townand city centers, where narrow lots encour-aged its development. Many eastern andmidwestern cites were developed with town-houses in the 19th and early 20th centuries.As the cost of suburban land increased, thetownhome form spread to other areas, oftenas entry-level, affordable housing. Today'ssuburban townhouses are typically clusteredin planned communities. As the newurbanist movement has spread, with itsappreciation of the benefits of higher densi-ty development, single-family attachedhousing has gained new favor in small townsand planned community centers across thenation.

Single-family attached homes make up agrowing share of the nation's housing starts2

and an even larger share in urban and high-density suburban areas. As the statistics inthis chapter show, these areas are thestrongest market for single-family attached

The Single-Family Attached Market 5

2

TABLE 1National housing starts

Housing startsTotal housing starts

Multi-family starts

Single-family starts

Single-family attached starts

Manufactured home placements

20011,602,700

329,400

1,273,300

140,000

196,200

20021,704,900

346,400

1,358,600

160,000

171,600

% Growth1998-2002

5.4

0.3

6.9

36.8

-54.1

20001,568,700

337,800

1,230,900

126,000

280,900

19991,640,900

338,500

1,302,400

127,000

338,300

19981,616,900

345,500

1,271,400

117,000

373,700

Source for Total Housing Starts, Multi-family Starts and Single-family Starts: U.S. Census Bureau ConstructionReports, New Privately Owned Housing Units Started - Annual Data, available athttp://www.census.gov/const/www/newresconstindex.html. Source for Single-family Attached Starts: U.S.Census Bureau Construction Reports, Quarterly Housing Starts by Purpose of Construction and Design Type(United States - Annual Data), available at http://www.census.gov/const/www/newresconstindex.html. Sourcefor Manufactured Home Placements: U.S. Census Bureau Manufactured Housing Statistics, Placements of NewManufactured Homes by Region and Size of Home, available at http://www.census.gov/const/www/mhsindex.html.

homes. This trend, along with other marketforces in these regions,3 such as the high costof labor, may contribute to increased accept-ance of single-family attached manufacturedhomes.

Single-family attached homes inperspective

Nationwide Starts

The United States housing market con-tinues to experience one of the longestexpansion periods on record. Since 1991total housing starts nationwide haveincreased almost every year, and the total of1,704,900 starts in 2002 represented a 68%increase from 1991's total.

Total housing starts grew by 5.4% from1998–2002 and starts of single-familyattached structures increased by almostseven times that rate.4 More than 9% of sin-gle-family starts in 2002 were attachedunits. Table 1 shows the number of starts byhousing type for the past five years.

Trends in market growth

As seen in Figure 1, nationwide starts ofsingle-family attached structures declinedfrom peak levels in 1984, reached near-termlows in 1991 and have generally increased

annually ever since.The single-family attached market has

shown strength recently as compared to themulti-family market. Single-family attachedstarts rose 14.3% in 2002 from 2001 totals,while multi-family starts only rose 5.2%(Table 1).

Townhouse apartments are similar tosingle-family attached townhouses in thatthey are attached with no other units aboveor below them, but they are not fully inde-pendent and share some infrastructure facil-ities such as water supply, and sewage dis-

6 The Single-Family Attached Market

FIGURE 2Townhouse structures containing more than five units

Source: U.S. Census Bureau Construction Reports, Series C-20, Housing Starts: Report for Feb. 1999 and Feb2000. Data for years after 1999 is not available.

FIGURE 1Single-family attached starts

posal. Townhouse apartments are includedin Table 1 as part of multi-family starts.Starts of attached townhouse apartments instructures with five or more units declinedfrom peak levels in the middle 1980s, andhave remained relatively constant since theearly-1990s. Starts of townhouse apart-ments with five or more units remain smallcompared to single-family attached starts,holding at between 10,000 and 20,000starts per year since 1991 (Figure 2).Regionally, they are largely built in theMidwest and South (Table 2).

Source: U.S. Census Bureau Construction Reports, Quarterly Housing Starts by Purpose of Construction andDesign Type (United States - Annual Data), Table Q-1, New Privately Owned Housing Units Started in the UnitedStates, by Intent and Design, available at http://www.census.gov/const/www/newresconstindex.html.

19996,000

1,000

6,000

2,000

15,000

Distribution of single-family attachedhomes

Rural versus urbanDuring the early to mid-1990s, popula-

tion continued to shift away from urbancenters and toward suburban and exurban(areas farther away from the city center thantraditional suburbs) regions. The majorityof housing construction growth occurred inthese low-density metropolitan counties,with only small increases in high-densitymetropolitan counties. Population growthin suburbs and rural areas outstripped thatof cities in all regions, and many cities in theNortheast and Midwest experienced a netpopulation decline.5

Despite these trends, single-familyattached structures continued to be concen-trated in urban areas. Total sales6 of new sin-gle-family attached homes in 2000 amount-ed to 91,000 units. Of the total, 85,000were located inside Metropolitan StatisticalAreas (MSAs) and 7,000 were outside.7

RegionalHousing starts and housing start growth

vary widely across the country. The Southand West typically contain the lion's share ofnew home starts, mirroring populationshifts and growth trends. Five states togeth-er account for 42% of home building activ-

ity nationwide: Florida, Texas, California,Georgia, and North Carolina. Total hous-ing production in these states increased in2001 and 2002. Nationally, annual con-struction permits for single-family housingincreased significantly from 1993 to 2002,with the South and West regions showingthe largest growth during this period (Table3).

Table 4 shows housing stock growth forthe 23 metropolitan areas that experienced a25% or more increase in total housing stockbetween 1990 and 1998, ranked in order ofthe total permits for all types of housing andby the ratio of permits to housing stock.The dominance of the South and West isalso evident in these figures.

However, starts for single-familyattached homes do not necessarily followthis pattern. High-density regions, such asmidwestern metropolitan areas, have experi-enced the strongest growth of single-familyattached starts in recent years (Table 5).More highly developed regions such as theMidwest, where land is more costly, are driv-en to develop at higher densities and have alonger tradition of single-family attachedhousing.

This pattern can also be observed in thetotal existing single-family attached stocknationwide. In 2000, there were approxi-


19984,000

250

4,000

3,000

11,250

Starts of townhouse structures containing more than five unitsMidwest

Northeast

South

West

Total

TABLE 2Starts of townhouse structures containing more than five units, by region

Source: MIT-Harvard Joint Center for Urban Studies, State of Nation's Housing, 2000. Original source: U.S.Census Bureau, Construction Reports, Series C-40 and U.S. Census Bureau, 2000 Census.


91,30069,60062,70047,60045,90034,70039,40036,20033,70034,10035,90025,90025,90030,40024,10018,70023,00019,50021,70021,10025,40021,30018,30013,90012,40015,20010,40012,80015,800

8,3008,8008,1008,9007,4006,9007,8007,0005,5003,7003,6004,6004,6002,2002,3002,0002,4001,9001,4001,6001,100

100

90,30084,10082,20059,60055,50044,40035,90032,80040,20032,70032,30031,90028,10027,80026,70022,20020,10023,50020,60019,60021,10023,50018,80014,80013,70016,30013,20013,60015,200

8,5008,8008,2009,7007,4007,8007,8006,8005,6004,6004,3004,1002,6002,9002,5001,6002,3001,5001,9001,5001,300

0

97,90093,40099,80067,90062,40050,50040,00036,20044,20036,60035,10036,10031,60028,60028,30024,50025,00024,40024,00022,80023,80025,50020,00016,30015,40016,90013,90014,70016,300

9,70010,300

9,20010,900

8,9008,7009,1007,2006,0005,3005,7004,6002,9003,1002,6001,8002,5001,5002,0001,7001,600

300

106,600102,800101,80071,50064,10053,20042,10039,20045,40040,00036,60038,40033,40028,10029,90027,20026,70024,30024,80024,70024,20025,10020,70016,60016,50016,60014,60014,90015,50011,10010,5008,600

11,3009,7009,6009,2007,7006,6005,7005,4004,8003,4003,6002,9002,2002,7001,6001,5001,4001,500

300

118,700107,400111,90071,50062,70051,80024,80039,40040,50038,80034,80036,40032,40026,70026,20024,80026,90027,00025,40024,10023,70021,50018,80016,30015,00015,00013,30014,00013,0009,9009,7009,000

10,1008,8008,1007,8007,5006,6005,9005,9004,4004,0003,5004,5002,3002,2001,8001,5001,5001,800

100

128,700123,000122,60075,50066,40055,80045,70042,50041,70039,80038,70035,00030,80030,20029,10028,60028,60027,60026,10025,60024,00022,40020,70017,40016,30015,70015,20015,10013,60011,20010,80010,40010,30010,0008,9008,5008,0007,2006,8006,4006,1004,6004,5003,8002,5002,2002,1001,8001,8001,700

400

1310231719123003

141

272

160303100203

101

1902524010030101011000000

223

U.S. State

FloridaCaliforniaTexasGeorgiaNo. CarolinaArizonaVirginiaIllinoisMichiganOhioPenn.ColoradoIndianaWashingtonTennesseeSo. CarolinaMinnesotaNevadaWisconsinNew YorkMarylandNew JerseyMissouriUtahKentuckyOregonLouisianaAlabamaMass.OklahomaIdahoNew MexicoKansasIowaMississippiConnecticutArkansasNebraskaNew Hamp.MaineDelawareHawaiiW. VirginiaSo. DakotaVermontRhode Is.MontanaAlaskaNo. DakotaWyomingD.C.U.S. Total

91,30069,60062,70047,60045,90034,70039,40036,20033,70034,10035,90025,90025,90030,40024,10018,70023,00019,50021,70021,10025,40021,30018,30013,90012,40015,20010,40012,80015,800

8,3008,8008,1008,9007,4006,9007,8007,0005,5003,7003,6004,6004,6002,2002,3002,0002,4001,9001,4001,6001,100

100

96,30077,80070,40052,50049,10042,10039,50038,50038,50035,60037,00029,30028,50031,50026,80020,00021,30022,90022,80022,20025,00022,40020,90014,70014,20016,10012,80014,40016,500

8,2009,3009,200

10,2007,9008,0008,1007,8005,4004,1004,3004,7004,5003,3002,4002,0002,3002,1001,5001,6001,700

100

84,10068,10070,40055,00047,70039,90034,70035,40039,30032,60032,00028,40027,90026,80027,70019,30020,70022,50020,70019,90023,20018,30019,00015,20012,80015,40012,50013,40014,400

7,8008,4008,6008,7007,3007,3007,6007,3005,2004,1004,2004,3003,9002,9002,2002,0002,1001,7001,7001,5001,400

0

41.076.795.558.644.760.816.017.423.716.7

7.835.118.9-0.720.752.924.341.520.321.3-5.55.2

13.125.231.5

3.346.218.0

-13.934.922.728.415.735.129.0

9.014.330.983.877.832.6

0.0104.5

65.225.0-8.310.528.612.554.5

300.035.0

106,400105,000108,60068,90059,10048,80040,00037,80043,00038,00034,50038,60030,40025,50024,40024,90025,50025,70024,00023,90025,10025,30017,90015,60014,80014,70013,10013,70014,2009,0009,7008,2009,3008,5007,6008,2006,9006,5006,1005,7003,9004,2003,3003,1002,2002,3001,6001,4001,3001,600

200987,100 1,068,300 997,500 987,100 1,062,400 1,187,600 1,246,700 1,198,100 1,235,600 1,332,600

1993Permits

1994Permits

1995Permits

1996Permits

1997Permits

1998Permits

1999Permits

2000Permits

2001Permits

2002Permits

Growth1993 -

2002 (%)

Mfd.housing

plants(2003)

Source for Permit Data: U.S. Census Bureau, Housing Units Authorized by Building Permits, Annual Data, Table 2au, New PrivatelyOwned Housing Units Authorized, available at http://www.census.gov/const/www/C40/table2.html#annual. Source for ManufacturedHousing Plant Data: Manufactured Housing Institute.

TABLE 3Single-family housing annual construction permit totals (attached and detached)


Metropolitan area

Atlanta, GAPhoenix, AZLas Vegas, NVOrlando, FLCharlotte, NCRaleigh-Durham, NCFort Myers, FLBoise City, IDNaples, FLMcAllen, TXWilmington, NCReno, NVProvo, UTFayetteville, ARMyrtle Beach, SCFort Collins, COFort Walton Beach, FLClarkesville, TNBellingham, WALaredo, TXGreenville, NCColumbia, MOLawrence, KS

Permits1990-1998

361,000278,200233,600163,200124,100113,80047,60044,20044,10032,90030,20028,60028,40025,50025,20022,80016,90016,40014,20012,90012,50012,000

8,900

1990 housing stock (units)

1,224,4001,004,800

376,100524,200472,900359,300189,100114,00094,200

128,20094,200

112,20072,80088,80090,00077,80062,60060,70055,70037,20043,10044,70031,800

Permits as share of

1990 stock(%)

29.527.762.131.126.231.725.238.846.925.732.125.538.928.728.029.327.027.025.534.728.926.728.0

TABLE 4Housing stock growth - top metropolitan regions

Metropolitan area

Las Vegas, NVNaples, FLProvo, UTBoise City, IDLaredo, TXWilmington, NCRaleigh-Durham, NCOrlando, FLAtlanta, GAFort Collins, COGreenville, NCFayetteville, ARMyrtle Beach, SCLawrence, KSPhoenix, AZFort Walton Beach, FLClarkesville, TNColumbia, MOCharlotte, NCMcAllen, TXReno, NVBellingham, WAFort Myers, FL

Permits1990-1998

233,60044,10028,40044,20012,90030,200

113,800163,200361,000

22,80012,50025,50025,2008,900

278,20016,90016,40012,000

124,10032,90028,60014,20047,600

1990 housing stock (units)

376,10094,20072,800

114,00037,20094,200

359,300524,200

1,224,40077,80043,10088,80090,00031,800

1,004,80062,60060,70044,700

472,900128,200112,20055,700

189,100

Permits as share of

1990 stock(%)

62.146.938.938.834.732.131.731.129.529.328.928.728.028.027.727.027.026.726.225.725.525.525.2

Ranked by total permits Ranked by ratio of permits to stock

199831,000

24,000

45,000

17,000

117,000

Single-family attached startsMidwest

Northeast

South

West

Total

TABLE 5Starts of townhouse structures containing more than five units by region

199937,000

26,000

45,000

19,000

127,000

200038,000

24,000

49,000

15,000

126,000

200143,000

19,000

59,000

18,000

139,000

200255,000

23,000

62,000

21,000

161,000

% Growth 1998-200277.4

-4.2

37.8

23.5

37.6

Notes: Metropolitan areas are CMSAs and MSAs with only the name of the principal central city given. Metropolitan areas are definedby the Office of Management and Budget as of 1993. Estimates understate actual growth because they exclude manufactured hous-ing placements. Source: U.S. Census Bureau, Construction Reports C-40, and U.S. Census Bureau 1990 Census.

Source: U.S. Census Bureau Construction Reports, Quarterly Housing Starts by Purpose of Construction and Design Type, availableat http://www.census.gov/const/www/newresconstindex.html.

states with high population densities, alongwith California and Florida, topped the listof states with the highest percentage andlargest stocks of single-family attached hous-ing.

mately 115,904,641 housing units in thenation with single-family attached struc-tures totaling 6,447,453 units, or about5.6% of all existing homes (Table 6). Notsurprisingly, mid-Atlantic and northeastern


Ranked by percent of total existing housing units that aresingle-family attached

2000 housingunits

274,8452,145,2835,249,750

343,0722,904,1923,310,275

460,54212,214,549

260,9781,808,0372,189,1897,302,947

827,4572,065,9461,385,9757,679,307

768,5944,885,615

780,579547,024289,677

2,621,9894,234,2794,783,0511,847,181

223,8541,131,200

294,3822,321,1441,452,7092,451,0758,157,5753,523,9442,532,319

722,668439,837527,824

3,281,7372,439,4432,442,017

412,6331,514,4001,753,670

323,2081,232,511

651,9011,750,9271,963,7111,173,0431,161,953

844,623

115,904,641

% Single-family

attached26.421.017.914.1

9.68.68.37.67.06.36.05.95.45.25.14.94.94.84.54.44.14.03.93.83.83.63.53.43.43.33.13.13.02.92.92.92.92.92.82.72.72.42.32.32.32.22.12.01.81.71.6

5.6

Total single-family

attached72,668

451,411940,396

48,340279,789285,268

38,260931,873

18,340114,410131,317429,457

44,977107,385

71,185379,926

37,902235,485

35,45424,23311,779

104,129164,910183,922

70,8638,165

39,49510,08077,79547,67175,807

249,018106,066

74,22420,91612,68215,21194,15068,96967,12011,04436,34440,185

7,38128,11814,38736,12438,56020,90820,14513,209

6,447,453

State

PennsylvaniaCaliforniaMarylandFloridaNew YorkNew JerseyVirginiaTexasIllinoisOhioMichiganArizonaColoradoMinnesotaNo. CarolinaMassachusettsGeorgiaWisconsinWashingtonIndianaDist. of Col.ConnecticutLouisianaTennesseeMissouriDelawareOregonNevadaSo. CarolinaKansasAlabamaHawaiiUtahOklahomaKentuckyNew MexicoIowaNew Hamp.NebraskaArkansasMississippiAlaskaIdahoMaineWest VirginiaRhode IslandNorth DakotaMontanaVermontWyomingSouth Dakota

United States

2000 housingunits

5,249,75012,214,549

2,145,2837,302,9477,679,3073,310,2752,904,1928,157,5754,885,6154,783,0514,234,2792,189,1891,808,0372,065,9463,523,9442,621,9893,281,7372,321,1442,451,0752,532,319

274,8451,385,9751,847,1812,439,4432,442,017

343,0721,452,709

827,4571,753,6701,131,2001,963,711

460,542768,594

1,514,4001,750,927

780,5791,232,511

547,024722,668

1,173,0431,161,953

260,978527,824651,901844,623439,837289,677412,633294,382223,854323,208

115,904,641

% Single-family

attached17.9

7.621.0

5.94.98.69.63.14.83.83.96.06.35.23.04.02.93.43.12.9

26.45.13.82.82.7

14.13.35.42.33.52.08.34.92.42.14.52.34.42.91.81.77.02.92.21.62.94.12.73.43.62.3

5.6

Total single-family

attached940,396931,873451,411429,457379,926285,268279,789249,018235,485183,922164,910131,317114,410107,385106,066104,129

94,15077,79575,80774,22472,66871,18570,86368,96967,12048,34047,67144,97740,18539,49538,56038,26037,90236,34436,12435,45428,11824,23320,91620,90820,14518,34015,21114,38713,20912,68211,77911,04410,080

8,1657,381

6,447,453

State

Dist. of Col.MarylandPennsylvaniaDelawareVirginiaNew JerseyHawaiiCaliforniaAlaskaColoradoArizonaFloridaNevadaMinnesotaConnecticutNew YorkUtahIllinoisNew MexicoNew Hamp.North DakotaMassachusettsMichiganOhioLouisianaWyomingKansasVermontWisconsinOregonWashingtonTexasNo. CarolinaIndianaNebraskaRhode IslandIdahoGeorgiaTennesseeMissouriMontanaOklahomaSo. CarolinaSouth DakotaIowaMaineKentuckyAlabamaArkansasMississippiWest Virginia

United States

TABLE 6Single-family attached structures as a portion of total existing housing units in 2000

Ranked by total number of existing single-family attached units

Source: U.S. Census 2000, DP-4, Profile of Selected Housing Characteristics.

Single-Family Attached Market Characterization Description 11

Physical and market features of single-family attached homes

Architectural styles and featuresThe following drawings and photos illus-trate the typical site-built, single-familyattached housing developments that arebuilt today, along with approximate pricing.The homes range from one to three stories.Most have garages, while a few do not. Thetownhouse style is most common, with any-where from four to eight units per building.The main ridge line of the roof typicallyruns parallel to the row of homes, and inmany examples, turn-gables open up towardthe street. Most roofs are high-pitched, withthe exception of the development in Florida,which contains a number of shallow, hippedroofs. A combination of turn-gables, dorm-ers, entryways, finish materials, and offsetsare used to visually distinguish a unit fromits neighbor. The homes in these examplesrange in sales price from approximately$100,000 to $235,000.

Beazer Homes: "The Madison",High Point, NC ($99,990 and up)

Beazer Homes: "The Huntington",Lawrenceville, GA ($111,900 and up)

Fox Ridge Homes: "The Villas at Belle Parke",Nashville, TN ($120,000 - $130,000)

Fox Ridge Homes: "Fairway Pointe atNashboro Village", Nashville, TN ($130,000)

Ryan Homes: "The Villages of Adams Ridge",Adams Township, PA ($160,000 - $170,000)

Pulte Homes:"Jasmine Pointe at Colonial Country Club",

Fort Myers, FL ($166,900 and up)

Pricing

Single-family attached homes are gener-ally less expensive nationwide than theirdetached counterparts. The average salesprice for a single-family attached home in1999 was $169,800, and the median pricewas $140,000. The average price for a sin-

Brookfield Homes: "Dunbarton",Bristow, VA ($200,000 and up)

Ryan Homes: "Inniscrone View",Avondale, PA ($190,000)

Crana Homes: “The Fahan”,Brookside Glen, IL ($234,900)

12 Single-Family Attached Market Characterization Description

gle-family detached residence was$201,900, and the median price was$162,800.8

One of the significant target markets formanufactured, single-family attached homesappears to be the middle to lower-middleincome sections of the U.S. population.However, the higher price housing marketsshould not be discounted, given the successof some manufactured housing companiesthat have provided two-story, middle- andupper-income housing in selected markets.Potential customers in this income range arewealthy enough to consider purchasing asite-built home, but cost-conscious enoughto value the savings that a manufacturedhome offers.

Market Focus: Chicago AreaPrices for single-family attached homes

in relation to those for detached homes canvary depending on local market conditions.Home sales data from Illinois for 1999-2000 indicate that, contrary to initial expec-tations, single-family attached homes aresignificantly more expensive than single-family detached homes in the city ofChicago – although this may be due to thecost of land in the neighborhoods in whichattached homes are located. This trend isreversed in the suburbs and outlying coun-ties surrounding the city. Table 7 displaysthe median cost for both types of homes inChicago and the counties surrounding it.

Organizations that build or purchasesingle-family attached housing

A variety of organizations, includingmajor home building firms, build or pur-chase single-family attached dwellings. Inaddition to for-profit developers, a signifi-cant number of single-family attached hous-ing units are constructed or funded in wholeor in part by HUD; state or local publichousing agencies; and non-profit corpora-

Community Development Block Grant(CDBG) Program: $4.7 billion (2004proposed) 10

CDBG provides funding to meet locallyidentified community and economic devel-opment needs. It gives cities and smallercommunities flexibility to meet local hous-ing and economic development priorities.The $4.7 billion proposed for 2004 is thesame as was budgeted in 2003.

13Single-Family Attached Market Characterization Description

tions, often in coöperation with governmentfunding sources.

For-profit builders

The top 10 list of for-profit builders oftownhouses/condominiums in 1999 (Table9) contains many names that are among thetop single-family detached productionbuilders in the U.S., with the exception ofHeritage Construction Co. and HuntBuilding Corporation. These companiesspecialize in attached housing and build lit-tle or no single-family detached housing.

Heritage Construction produces a smallnumber of single-family detached homes,but the company's primary focus is onmulti-family housing such as townhouses,condominiums, and apartment complexes.Hunt Building Corporation is a leader inthe upgrade and conversion of militaryhousing, creating private residential com-munities and commercial properties byredesigning former barracks and com-pounds.

U.S. Department of Housing and UrbanDevelopment

HUD provides funds through a varietyof programs to local housing authorities andissues grants to housing developers, includ-ing non-profit organizations, to stimulatethe construction and rehabilitation ofaffordable housing. HUD also builds andmanages a portfolio of public housing projectsnationwide. HUD's proposed budget forfiscal year 2004 is $31.3 billion.9 HUD'sbudget has been roughly this amount since2001. The following major elements of theHUD budget may directly or indirectly pro-vide funds to construct single-familyattached housing:

Single-family

detachedmedian

priceQ3/2000

$138,000$172,000$215,000$125,750$167,900$167,500$213,000$174,900$161,500

Single-family

attachedmedian

priceQ3/2000

$200,500$118,500$123,000$109,750$130,000$125,000$143,000$113,000$112,000

Single-family

attachedmedian

priceQ3/1999

$175,000$111,000$116,000$105,500$124,500$117,000$137,000$110,500$105,000

Geographic area

ChicagoSuburban Cook Co.Du Page CountyGrundy CountyKane CountyKendall CountyLake CountyMcHenry CountyWill County

TABLE 7Chicago market area: single-family attached housing prices versus

single-family detached housing

Single-family

detachedmedian

priceQ3/1999

$135,000$165,500$195,000$129,000$159,000$151,000$204,300$165,000$157,900

Source: Chicago Association of Realtors, available at www.chicagobusi-ness.com/cgi-bin/article.pl?portal_id=32&page_id=643.

Builder

Pulte CorporationNVR Corporation, Inc.Heritage Construction Co.U.S. Home CorporationCentex CorporationD.R. Horton, Inc.Lennar CorporationHunt Building CorporationThe Ryland Group, Inc.K. Hovnanian Enterprises, Inc.

1999 Total revenue

$3,840,642,000$1,942,660,000

$147,500,000$1,752,834,000$3,320,267,536$3,225,703,000$2,671,744,000

$85,024,558$1,937,387,000

$908,553,000

1999 Single-family attached

unit closings10,608

3,0742,0241,7311,5811,4751,2391,0811,050

996

Total 1999 housing revenue includes a company's entire production, notjust its townhouse/condominium output. Source: "Builder 100" Builder:The Magazine of the National Association of Home Builders, Vol. 23Issue 6, May 2000, p. 126.

TABLE 8Top builders of townhouses/condominiums

tured housing. Like manufactured housingbuyers, developers of affordable housing areextremely cost-conscious. Also, many non-profits work in inner cities on narrow lotswhere manufactured housing provides theadditional advantages of security, rapid con-struction, and a reduced need for skilledconstruction trades on site.

Trade associations representing thesenon-profit developers, such as the LocalInitiatives Support Corporation (LISC),were asked to publicize an offer for technicalassistance to those that were willing to devel-op single-family attached housing projectsusing HUD-Code homes. The technicalassistance offer appeared in trade publica-tions and association newsletters. While afew of the non-profit developers contactedin this process were strongly negative aboutthe idea of using manufactured housing,most were intrigued by the idea and severalwere enthusiastic.

Forty-three organizations either contact-ed MHRA after reading announcements ofthe opportunity or were contacted directlybetween the fall of 2001 and the spring of2002. Of these, approximately 10 had proj-ects at the right stage of development (i.e.,the concept phase) that might benefit fromthe use of manufactured units to help drivedown costs and improve quality. Of the 10potential developers, 6 were non-profithousing developers and 4 were for-profitdevelopers of affordable housing. It becameclear that non-profit as well as for-profitdevelopers of affordable housing were apotential market for single-family attachedtechnology. However, a great deal of educa-tion about the product and benefits wasneeded since many, if not most, of theorganizations were unfamiliar with manu-factured homes or had outdated perceptionsof them.

14 Single-Family Attached Market Characterization Description

Home Investment Partnership (HOME)Program: $2.2 billion (2004 proposed)11

The HOME program is another flexibleblock grant program that communities useto build and maintain affordable housingand expand home ownership. States andlocalities use HOME grants to fund a widerange of activities that build, buy, and/orrehabilitate affordable housing for rent orhome ownership, or provide direct rentalassistance to low-income households. The$2.2 billion proposed for 2004 is up slight-ly from the $2.1 billion budgeted in 2003.

HOPE VI program: $574 million (2003budget)12

The HOPE VI program has a mandateto replace poorly maintained public housingdevelopments with mixed-income, livablecommunities. A principal goal of the pro-gram has been the demolition, replacement,and rehabilitation of 86,000 severely dis-tressed public housing units identified in the1992 final report issued by the NationalCommission on Severely DistressedHousing. Because progress is often slowunder the HOPE VI program, billions ofdollars in HOPE VI funds remain in thepipeline. No new funds were allocated toHOPE VI in the proposed 2004 budget.

Public housing providers

Thousands of public housing authoritiesexist across the United States. Many ofthese are operated at the local level. Someactively build new housing, while othersmanage rental units. HUD maintains adatabase of U.S. housing agency profiles onits web site.13

Non-profit organizations

Non-profit developers are strategicallypositioned to benefit from utilizing theemerging building technologies in manufac-

15Single-Family Attached Market Characterization Description

An important consideration in workingwith non-profits or other housing develop-ers who are dependent on either governmentfunding or grants is the length of time ittakes to assemble a complete financingpackage. The duration from concept toconstruction may be difficult to predict andthe development process may be subject tomore funding approvals than private devel-opments are, which may impact the likeli-hood of success. The Foothill case study dis-cussed in Chapter 5 illustrates this potentialstumbling block. After over a year of workon the project, including conceptual archi-tectural designs and detailed site analysis,the City of Oakland rejected the developer'sfunding application for political reasons.However, the site could still be developed inthe future as the developer works throughthe political process to procure funding.

IntroductionThis chapter describes the major factors

that affect the attractiveness of manufac-tured homes as a construction option forsingle-family attached housing develop-ments. It examines how specific characteris-tics of local markets in the United States canimpact the potential success of manufac-tured housing for single-family attachedconstruction. Suggestions for counteringbarriers to success are provided. Twelveexamples of regional U.S. markets are exam-ined with respect to these characteristics.

Along with the market, attributes of thedeveloper and the project also affect a pro-ject’s chances of success, and some charac-teristics and business practices of the manu-factured housing industry pose potentialbarriers to the development of the single-family attached market segment. The rea-sons these practices conflict with the needsof single-family attached developers are dis-cussed in this chapter, and suggestions areoffered to resolve this problem.

The reader should come away from thischapter with a sense of the major issues thata manufacturer will face, and the changes amanufacturer must make in order to suc-ceed in the single-family attached housingmarket.

The information in this chapter wasdeveloped by polling representatives ofhome manufacturers, developers, industrysuppliers, government, and other industrysegments. It was then supplementedthrough in-depth communications withdevelopers, some of whose projects areincluded as case studies in Chapter 5.

Factors that impact the appeal of manu-factured housing for single-familyattached developments

Certain conditions enhance the compet-itive position of manufactured housing rela-

tive to site-built as a construction technolo-gy option for a single-family attached devel-opment, while others impede it. It is impor-tant for manufacturers and developers torecognize the effects of these characteristics.Factors that favor the use of HUD-codehomes for single-family applications includethe following:• Local construction costs. High local site

building costs, in the range of $80 persquare foot or more, enable manufac-tured homes to compete favorably withon-site construction. This figure includesthe foundation and construction cost,but not the land, site-work, permits, orfees.

• Construction labor availability. A short-age of trained construction labor availableon-site may increase the advantage ofmanufactured housing. Whereas siteconstruction may be impeded by theneed to import or train workers, the man-ufacturer has a trained labor force thatcan deliver finished product to the site.Shortages of trained labor are oftenprevalent in areas of low populationand/or high growth, in resort regions, inareas where blue-collar workers cannotafford to live, and in inner cities whereskilled construction tradespeople may bein short supply.

• Proximity of housing plant to the market.A manufactured housing plant typicallycan ship product cost-effectively within arange of approximately 250 miles.Beyond this range, transportation coststend to erode the cost advantage. Thisdistance will be impacted by highwayconstraints such as roadway size andspeed limits, as well as the level of pre-transportation economic advantage of themanufactured units. If there are multiplemanufactured housing plants serving the

Factors That Drive Demand 17

3Factors That Drive Demand For HUD-CodeSingle-Family Attached Construction

market segment within this range, thedeveloper may enjoy more competitivepricing.

• Availability of alternate technologies(such as modular). Some markets andprojects will be more suited to modularconstruction than HUD-code construc-tion. Modular manufacturers enjoymany of the same factory advantages asHUD-code manufacturers and oftenhave more experience with single-familyattached and other multi-story, multiple-unit structures.

• Risk of site theft and vandalism.Reducing theft is an advantage manufac-tured housing brings to areas where this isa risk. Because the home is installed and"buttoned up" within a matter of days,versus months, the chance for theft isgreatly reduced as compared to site con-struction. In some areas, losses due totheft can be substantial.

• Impacts of local zoning ordinances.Zoning may impart advantages or disad-vantages to the use of manufacturedhousing.

o As urban and suburban areas havegrown, many older manufacturedhome communities may be locatedon land that has become quite valu-able. In these cases, the owner hasoptions to benefit from the increasedvalue of the property: apply to re-zone the land or re-develop withHUD-code homes. The latteroption presents two distinct advan-tages: 1) it avoids a potentially costlyand time-consuming legal and regu-latory process; and 2) sites zoned forHUD-code homes typically permitdevelopment in a less costly manner,

such as higher densities, reduced set-backs, and less stringent roadwayspecifications. Changing the zoningwould eliminate these advantages.

o Manufactured housing is in manymarkets subject to restrictive localzoning ordinances. This phenome-non is discussed in Chapter 4.

• Availability of blanket regulatoryapprovals. Some national, regional, orstate blanket approvals that preempt localrequirements may be available for manu-factured housing. For example, inCalifornia, the seismic calculations andapprovals required by the local codes(which also govern modular construc-tion) for home foundations can be exten-sive, time-consuming, and expensive.HUD-code earthquake foundations arepre-approved and therefore no additionalengineering expense is required.However, developers should be cautionedto consider building to the local require-ment when the seismic risk is very high.

• Tradition of, and attitude toward, manu-factured housing technologies.Awareness of manufactured home tech-nology and receptiveness on the part ofthe local building department, lenders,local contractors, and the local communi-ty will smooth the approvals process for aproject utilizing manufactured units. Ifthis awareness does not exist, the manu-facturer and developer may be faced withan extensive process to educate key mem-bers of the community. The developermust take the lead role in this process.Strong technical support from the manu-facturer will be critical, particularly if thedeveloper does not have experience withmanufactured units.

18 Factors That Drive Demand

• Strength and prevalence of local buildingtrade unions. Local building tradeunions may oppose the use of off-siteconstruction because it transfers jobsaway from local workers to those at theplant. This may diminish the likelihoodof local approval for a project. However,manufactured housing may insteadincrease local employment in locationswhere site-built development would oth-erwise be impractical, by creating localjobs for on-site work, such as buildinggarages, installing foundations, and land-scaping. To date, local construction tradeunions have not been a major impedi-ment to manufactured housing projectsof this type; however, most manufacturedhome developments have not been locat-ed in areas with strong unions.

Examples of MarketsTable 9 contains examples of 12 market

regions in the United States ranging fromvery receptive to manufactured housing forsingle-family attached construction to lessreceptive, based on the market criteriadescribed above. These examples wereculled from discussions with manufacturedhousing industry members and developersof attached housing. They are sample mar-kets and not inclusive of all markets in thenation.

Developer attributes that increase thelikelihood of a project succeeding

In addition to the basic design character-istics of a proposed development—such ashaving one- to three-story single-familyattached homes on an accessible lot—a fewother key factors should be assessed whenevaluating the potential for success of agiven project or developer, including the fol-lowing:

• Replicable designs and quantity ofhomes. The developer must plan to con-struct a minimum number of units of likedesign that make the project practical forthe manufacturing plant. There are threeadvisable approaches:

o Using a home model that is alreadyproduced by the plant and has beenpre-approved and engineered. Thisallows purchases on an as-neededbasis.

o Committing to the plant for a largenumber of homes, perhaps 50 to100, and ordering in smaller batcheskeeping pace with sales. The plantmay request engineering andapproval fees from the developer.However, these fees can usually becredited back to the developer after acertain number of homes are pur-chased.

o Making a bulk purchase of perhaps15 to 20 homes to be produced at atime convenient for the factory whilestill meeting the developer's sched-ule. The factory may also requestengineering and approval fees,depending on the number of homesordered.

• Developer standing. Financial strengthand outstanding relationships with thelocal building department and local tradeunions will assist a developer in any typeof project, but may be more crucial whenusing a technology unfamiliar to localauthorities and trades. A strong trackrecord and construction experience arecrucial.



Characteristics relevant to manufactured housing

• Cost of land and construction quite high• Positive attitude and experience with

manufactured housing• Beneficial regulatory environment for

HUD-code homes • Numerous manufactured housing plants

locally


manufactured housing• Beneficial regulatory environment for

HUD-code homes


manufactured housing• Numerous manufactured housing plants

locally


manufactured housing

• Limited number of manufactured housingplants

• Wind Zone 3 presents added technical chal-lenges

• May be more receptive to modular con-struction

• Trade unions may resist off-site construction

• Zoning is not favorable• May be more receptive to modular con-

struction• City of Atlanta does not permit HUD-code

housing

MarketAdvantageous for manufactured units Disadvantageous for manufactured units

• Cost of land and construction is high

• Cost of land and construction is high

• Brief construction season enhances theadvantage of manufactured housing

• Construction cost is high

• Construction cost is high • Trade unions may resist off-site construction • Zoning is not favorable• May be more receptive to modular construc-

tion

• Many zoning restrictions

• Cost of land and site construction is low

• Distant from manufactured housing plants• Cost of land is not great enough to require

higher densities

GOOD FITSouthern California from SanDiego to the L.A. metropolitanarea, including the InlandEmpire

San Francisco Bay area, fromMonterey to Santa Rosa

Salem, Eugene, Portland,Oregon; and Vancouver,Washington

Puget Sound, Washington

TABLE 9Evaluating the fit of manufactured housing with single-family attached construction,

in a sampling of U.S. markets

MODERATE FITSalt Lake City, Utah; ColoradoSprings, Boulder, and Denver,Colorado

South Florida

Metropolitan areas in Minnesotaand Wisconsin

Atlanta, Georgia metropolitanarea

POOR FITMidwestern and Eastern cities

Urban areas of the Carolinas

The Southeast, outside urbanareas

Central plains urban centers

• Developers working in multiple markets.Where a developer is building acrossmany jurisdictions, manufactured hous-ing allows use of a single product typeand building code. The developer mayalso be able to switch manufacturingplants if more capacity is needed, or workwith a closer plant on a specific projectwithout changing home suppliers andlosing time. Developers should take careto ensure that the additional plant loca-tions have the requisite capability andexperience with the single-familyattached product. Re-using similardesigns on subsequent projects can savesignificant amounts of time and moneysince engineering and HUD approvalshave already been completed and theplant has had experience building theproduct.

Manufactured housing industry prac-tices that impact the likelihood of a suc-cessful single-family attached project

A number of characteristics of the man-ufactured housing industry were identifiedthat rendered the use of manufactured hous-ing for single-family attached developmentsdisadvantageous compared to site-builthousing. These non-regulatory barriersoften stem from traditional business prac-tices that evolved with the manufacturedhousing industry and have served it well inconducting business with the traditionalretail customer who typically purchasesaffordable single-family detached homes.

Many of these practices, however, are inconflict with the needs and expectations ofdevelopers of single-family attached hous-ing. Other practices relate to financing orregulatory procedures that were designed tofacilitate traditional single-family detachedmanufactured housing construction. While

these practices do present difficulties for themanufacturer-developer relationship, theyare not insurmountable. Through creativerethinking by manufacturers of how theyoperate and a deeper understanding bymanufacturers and developers of theirrespective counterpart’s practices and con-straints, these hurdles may be overcome.Indeed, many of these potential impedi-ments have been surmounted in practice(see case study descriptions in Chapter 5).

Sales process

• Manufacturers' sales staffs typically areattuned to their traditional retail networkand so are product-oriented rather thanproject-oriented. To work with a devel-oper, one needs to be focused not on mer-chandise, but on longer term projectplanning. To succeed in this market seg-ment, manufacturers will need salespeo-ple with education or experience in com-munity development, real estate, plan-ning, and finance. Manufacturers willneed to know the single-family attachedmarket. They will also need to extendtheir planning horizons because develop-ers, especially non-profit developers whofigure prominently in this market seg-ment (see Chapter 2), have planninghorizons spanning many years.

• Plants are accustomed to working withretailers with whom they have repeatbusiness for similar products over manyyears. Each transaction is relatively sim-ple and similar to previous ones.Developer projects will be radically dif-ferent in the terms of the deal as well asthe product. Developers may requiremore complete product specificationsspelled out in writing in the sales agree-ment or in an attached specificationbook, as is standard practice in site-built


multi-family construction. This mayinclude complete specifications on eachproduct and material going into thehome, such as door hardware, lightingand plumbing fixtures, appliances, etc.Manufacturers will need to provide thisinformation to develop successful rela-tionships with developers of single-familyattached housing.

Distribution

• HUD-code home manufacturers havedeveloped a retail distribution networkthat is very effective at distributing single-family detached homes to retail cus-tomers. Unlike for single-family homes,there is no formal distribution system inplace to supply the developer market, norare most of the traditional retailers in aposition to add value to the developertransaction. Developers will need towork directly with the plant in thedetailed design process and to coordinatelogistics for large developments.Retailers, who see no place for themselvesin the process, could be expected to resistthe commitment of industry resources toa business that will not involve them.Manufacturers will either need to developdealers who are knowledgeable about thesingle-family attached market and canadd value to projects by offering suchservices as design, installation, or on-siteconstruction elements, or they will needto set up direct relationships with devel-opers and bypass their retail network forlarge scale development projects.

Regulatory

• The alternate construction (AC) letterprocess is the route by which manufac-turers must get HUD approval for con-struction methods that differ from, or arenot anticipated in, the Manufactured

Home Construction and SafetyStandards (MHCSS). This processentails up-front design and engineeringcosts and an unknown and uncontrol-lable delay (estimated at two to ninemonths) as HUD considers the request.A few promising developments mayreduce this barrier in the future: possibleimplementation of a new HUD rule per-taining to on-site construction, andpotential revisions to the HUD code thathave been incorporated into the NationalFire Protection Association's 501Standard on Manufactured Housing (seeChapter 4). One way manufacturerstoday are minimizing the impact of thisbarrier is to eliminate the need for a newAC approval by building units for whichdesign approvals already exist.

• Site work requires approval by local codejurisdictions. The manufacturer anddeveloper must have a method in place todeal with issues such as zero-lot-line con-struction, which is not covered by theHUD code. This is a potential role forthe installation contractor, the develop-er's general contractor, a retailer if one isinvolved, or the developer (once theybecome familiar with using HUD-codeunits).

Financing

• Manufacturers typically require upfrontpayment from their retailers for productand are very reluctant to accept otherterms or methods of payment.Manufacturers rarely work with liens,notes, trust deeds, or mortgages—instru-ments often used by developers of single-family attached housing. Manufacturers,developers, and their finance partners willhave to find common ground in this area.Since some manufactured housing


finance providers may not be interestedin this market segment and may resistcommitting industry resources to itsdevelopment, alternative financingsources may be needed.

Production

• The traditional way homes are producedin a HUD-code factory imposes con-straints on home design and customiza-tion that are difficult and expensive tomodify. Introducing a new product to aplant involves changing well-honedmaterial acquisition and production pro-cedures. The majority of manufacturingplants are typically production driven andemphasize volume versus design flexibili-ty, resulting in a built-in bias againstproduct customization or changes. Thisresults in a smaller appetite on the part ofmanufacturers to create radically newdesigns that will likely not be purchasedin great quantities, at least in the nearterm.

Additionally, some products and materi-als required by a developer, such asupgraded fixtures, hardware, or appli-ances, may be alien to factories and notavailable from their current suppliers.Purchasing managers can be expected toresist the addition of new inventory itemsto their already formidable material man-agement process.

Expanding a plant's capacity to cus-tomize product without inflating costs isa challenge that manufacturers areincreasingly taking up and meeting, justas many other industries have done in thepast few decades. Future industryresearch will continue to advance thiscapability. Suppliers to manufacturerswill need to keep in step by offering prod-ucts demanded by this market.

• Manufacturers new to the single-familyattached market, and developers new tomanufactured housing, undoubtedly willexperience a learning curve. Developersinterested in manufactured housing forthe lower costs should approach it with along-term attitude. A developer's costsfor manufactured single-family attachedunits may not be lower than for a site-built structure for the first single-familyattached project attempted, especially ifthe design is dramatically different fromthe plant's typical portfolio of homes.However, as manufacturers figure outhow to produce such homes more effi-ciently, and construct them in higher vol-umes, costs will drop significantly.

• Manufacturers have engineered multi-section one-story manufactured homes tohave a great deal of tolerance in theirassembly (i.e., installers can accommo-date some imprecision in the manufac-tured units through the use of matingwalls and trim joints). Single-familyattached housing, especially if it is multi-story, requires greater precision. Thisprecision is attainable in the plant and isincreasingly achieved by manufacturersconstructing multi-story homes or homesthat are installed over basements.

• Manufacturers will need to increase thelevel of sophistication of the technicaldocumentation they provide to their cus-tomers. The installation of attached,multi-story homes is more complex thanfor the traditional double-section homesthat are the bulk of most plants’ produc-tion. Developers may hire general con-tractors who are unfamiliar with manu-factured homes and therefore this docu-mentation takes on an added degree ofimportance and requires an increased


level of specificity. In addition, each proj-ect may require special instructions spe-cific to that design. This will require anadditional investment by the plant indocumentation, technical support in thefield, or both. Fortunately, manufactur-ers are getting experience with this due tothe increased prevalence of two-storymanufactured home projects.

• Manufacturers typically are not involvedwith anything on-site, such as installa-tion, permitting, or infrastructure. Theyare geared toward performing as much ofthe work as possible in the plant, where itis most cost-effective. In developments ofattached construction, more work will berequired on-site, including attachmentsbetween the manufactured units, add-onstructures, roofs, and stairways.Manufacturers must design and ship theunits to accommodate this need; if theydo not perform the work themselves, theymust facilitate the completion of the on-site work by the installation contractor.Once again, the increased demand fortwo-story manufactured units is allowingmanufacturers to gain valuable experi-ence in this area. HUD-code manufac-turers may benefit by studying modularmanufacturers, many of whom dobecome involved in on-site activities, par-ticularly in setting up a home.

Warranty

• Many HUD-code manufacturers offerone-year warranties on their products.Extended warranties are offered less fre-quently for manufactured homes than forsite-built homes, although ten-year,HUD-approved third-party warrantyprograms that are identical to those in thesite-built industry are available, and man-ufacturers and manufactured home retail-

ers are offering these warranties inincreasing numbers. Developers mayexpect these longer warranties and manu-facturers should be prepared to negotiatethis item.

While each of these barriers is significantand can potentially derail a project, theymay all be overcome by determined pro-fessionals who are open to new ideas andpossibilities. The greatest barrier of allmay simply be the lack of a history to"prove" to the manufacturer that a com-mitment of time and resources in the sin-gle-family attached market is a goodinvestment. It is hoped that the casestudies in Chapter 5 will demonstratethat the investment can pay generous div-idends to manufacturers, builder/devel-opers, and the homebuyers they serve.

Summary of recommendations to man-ufacturers and developers

The first step in considering a single-family attached project should be for themanufacturer and developer to evaluate thecompetitiveness of manufactured housing inthe particular market with respect to thecharacteristics described in the first part ofthis chapter. Will manufactured housing becost competitive compared to local site-builthome costs? Can the community and localofficials be expected to embrace or opposethe use of HUD-code units?

When interacting with a developer, amanufacturer should be prepared to work ina somewhat different manner than it is nor-mally accustomed. A manufacturer must beproactive in educating the developer aboutmanufactured housing and not assume thedeveloper is familiar with the terminologyand practices of the industry. Plants musthelp developers prepare for the specializedissues that arise when using manufactured


housing. The plant salesperson must makea greater effort to understand more fully thedevelopment process and the particularneeds and concerns of the developer, andespecially to think in terms of long-rangeproject planning rather than expecting aquick sale.

The plant should be prepared to providea copy of the complete specifications for thehome prior to going to contract, and be pre-pared to upgrade certain materials or prod-ucts that are not part of the plant's typicaloffering. Importantly, the plant mustincrease the level of flexibility it offers indesign and customization and be preparedto earn a slimmer profit margin as it learnsthis new business.

Finally, when the project is engineered,the manufacturer should develop a designpackage for the approval of HUD and theplant's design approval primary inspectionagency (DAPIA) that allows maximumdesign flexibility, can be efficiently producedat the lowest production volume, and maybe re-used for future projects.

Developers of single-family attachedhousing must make an effort to understandthe manufacturing process and how it differsfrom the on-site process. Developers arewell advised to take several plant tours andto limit the number of modifications theyexpect from the manufacturer. In the end,this extra effort in understanding the manu-facturing process will save both headachesand money.

The developer should be open to learn-ing about manufactured housing technology

and the manufacturer's business practices.By understanding the constraints faced byeach side, rather than fighting them, the fulladvantages of constructing HUD-codehomes can be attained to the benefit ofeveryone involved.


Regulatory Barriers

IntroductionThis chapter reviews the regulatory

framework in which manufactured housingoperates and describes the constructionstandards and enforcement procedures thatshape how HUD-code homes are used forsingle-family attached applications. It alsodescribes a number of developments under-way that may alter the regulatory landscape,with an emphasis on changes that may facil-itate single-family attached manufacturedhousing construction.

The regulations governing the construc-tion and placement of manufactured homesare likely to undergo substantial change inthe next few years, and the changes are like-ly to reduce hurdles to using HUD-codehomes in innovative ways. However, theregulatory environment in which the indus-try operates will continue to be quite unlikethe code process faced by site builders. Thedifferences are significant and success inbridging between site-built attached-homeand manufactured home development prac-tices requires understanding the trends andmastering the differences.

The main elements of the regulatoryframework when building manufacturedhomes, regardless of the form of the struc-ture, are the following:

Manufactured Home Construction andSafety Standards (MHCSS) (24 CFR Part3280).

Also known as the HUD code, thesestandards were implemented by HUD in1976 to provide minimum requirements forthe construction of what were at the timeprincipally "mobile homes." The standardswere then and continue to be progressive intwo important respects: first, they werenationally preëmptive, allowing manufac-turers to ship the same home design acrossstate and regulatory boundaries. This is an

essential condition if manufacturers are torealize the economies of scale afforded byfactory building. The fact that the industrytoday constructs three-quarters of thenation's affordable housing14 is partly theresult of preëmption. Second, the standardsare performance-based rather than prescrip-tive. This encourages manufacturers to beinnovative while meeting a widely acceptedtarget of building performance.Performance-based standards also lead tocost-effective construction, and with regardto this report, the flexibility to use manufac-tured homes in new and innovative waysthat may not have been considered by thedrafters of the 1976 standards.

Under the current HUD enforcementprocedures, manufacturers wishing to buildhomes that are interpreted as outside thepractices described in Part 3280 mustrequest from HUD an alternative construc-tion approval (the approval is referred to asan AC letter). This is oftentimes a cumber-some process. This chapter discusses possi-ble changes to the HUD standards. Thesechanges, which are intended to eliminatethe AC letter requirement when buildingsingle-family attached housing, wereauthored as part of this research.15 Elementsof the HUD standards pose barriers to theconstruction of single-family attached hous-ing and the recommended changes areintended to accommodate the unique fea-tures of attached design while maintainingthe safety and quality provisions embodiedin the standards.

Manufactured Home Procedural andEnforcement Regulations (MHPER) (24CFR Part 3282).

The MHPER, the "regulations," werepromulgated in 1976 to implement theHUD Secretary's responsibilities under theNational Manufactured Housing

Regulatory Barriers 27

4

Construction and Safety Standards Act of1974. Under this Act, the Secretary should:

1. Conduct inspections and investiga-tions necessary to enforce the con-struction standards (the HUD code);

2. Determine if and when a manufac-tured home fails to comply with thestandards or contains a defect orimminent safety hazard (bothdefined in the regulations);

3. Direct the manufacturer, when nec-essary, to furnish notification ofthese failures and, in some cases, totake remedial actions; and

4. Describe procedures for implement-ing these responsibilities.

The regulations establish operating rulesfor manufacturers, retailers, state adminis-trative agencies, primary inspection agencies(the design approval and production inspec-tion agencies), and the Secretary's monitor-ing agent(s), and also outline departmentaloversight policies.

The regulations that stipulate proceduresfor enforcement of the standards were devel-oped when the industry was exclusivelybuilding one-story single-family detachedhomes. As with the standards, a number ofproposed changes to these regulations arepresented below to facilitate use of manufac-tured homes in attached applications.

To address the growing demand for sitecustomization of manufactured homes,HUD intends to issue a draft proposed on-site completion rule for public comment.The proposed on-site rule is intended togive manufacturers greater latitude in com-pleting on-site work for a home that cannotreasonably be completed in the factory, butwhich will conform to the HUD code whencompleted. This chapter contains an analy-

sis of the potential effects of this proposedrule on the development of the single-fami-ly attached market for manufactured homes,including language proposed as part of thisresearch.

State and local regulations

Local codes governing site work and zon-ing laws affect how and whether HUD-codehomes can be placed on a particular site.Zoning ordinances often stipulate housingdensity, parking requirements, buildingheights and set-backs, and other site-relatedparameters. Local building codes impactmany of the site-constructed elements of aproject, including the foundation, garage,stairways, and infrastructure. The role thesefactors can play in developing with manu-factured homes is explored later in thischapter.

Of particular interest is a State ofCalifornia law that establishes a specialmulti-unit non-HUD-code manufacturedhousing program. This chapter discussesthe potential implications of the law and les-sons it offers to users and stewards of theHUD standards.

Manufactured Home Construction andSafety Standards

Procedures for updating the MHCSSwere formalized, and the time frame forconsidering changes to the standards explic-itly defined, with passage of theManufactured Housing Improvement Actof 2000 (the Act). The Act is expected togreatly accelerate the pace at which changesare made in the standards and enhance theability to use manufactured homes in newand innovative ways.

Under the Act, the ManufacturedHousing Consensus Committee (MHCC)(established by the Act) makes recommen-dations to HUD at least every two years for

28 Regulatory Barriers

changes to the MHCSS, which HUD mustact upon within one year of receipt.(MHCC consists of representatives fromindustry, regulators, and consumer groups.)The MHCC is provided administrativeservices by the National Fire ProtectionAssociation (NFPA) following ANSI-accepted procedures. The MHCC appearsto be adopting for HUD's consideration themajority of changes to the MHCSS incor-porated in NFPA standard 501, a documentthat has evolved to incorporate new techno-logical developments. In this way, NFPAproposes updates for the HUD code everytwo or three years.

The National Fire Protection Associationstandards revision process

The NFPA 501 standards revisionprocess consists of the following steps:

1. Changes to the NFPA 501 standard,including a substantiation of thosechanges, are proposed by the publiceach time the NFPA announces thatthe standard is under revision.

2. The appropriate NFPA 501 techni-cal committee (TC)—Administra-tion, Electrical, Fire Safety,Mechanical, Plumbing, orStructural—evaluates the proposedchanges and responds with a recom-mendation for each change. Thisrecommendation is reviewed by theTechnical Correlating Committee(TCC), which oversees the work ofthe six TCs. The responses of all ofthe TCs and TCC that are approvedin whole or part by written ballot(where two-thirds approve) or thatare rejected are published in a"Report on Proposals” (ROP) forpublic review and comment.

3. The public has the opportunity tocomment on the decisions of theNFPA committees and make recom-mendations for modifying or reject-ing the proposed revisions.

4. Each NFPA 501 TC then considersthe public comments, which theymay accept, modify, or reject, andproduces final recommendationsthat are subject to committee letterballots. The TCC also reviews andvotes by letter ballot on the com-mented items. The recommenda-tions receiving two-thirds acceptanceare published in a "Report onComments” (ROC).

5. The final approved changes to thestandard (those reflected in the ROPthat were not changed, as well asthose reflected in the ROC) then gobefore the full NFPA membershipfor vote at a general meeting. Thoseaccepted by the membership areincorporated into the next edition ofthe NFPA 501 standard, but are sub-ject to a two-part appeal process thatmay occur before publication.

Eliminating barriers to single-familyattached construction

In the 2000 edition of the NFPA 501standard, omissions were identified in theHUD standards that, by their absence, posebarriers to the construction of single-familyattached housing. As part of this effort, 35recommended changes were submitted,two-thirds of which were incorporated inthe 2003 edition of NFPA 501. The reject-ed items were not resubmitted, as theirexclusion was considered not critical to thesuccessful use of manufactured homes insingle-family attached applications.


A summary of the proposed changes, asaccepted for the NFPA 501, 2003 edition,can be found in Appendix A. Also includedis a recap of the NFPA committees' respons-es to each of the recommendations and anassessment of the impacts of these changeson the single-family attached constructionprogram, if and when they are accepted byHUD for inclusion in the MHCSS.

Changing the standards: how the NFPA501 recommendations for updating theHUD standards impacts rulemaking

The NFPA 501, 2000 edition recom-mendations for updating the HUD stan-dards have been accepted by the MHCC,except for a voluntary fire sprinkler stan-dard. The MHCC is expected to forwardproposed revisions to the HUD code toHUD in final-rule format early in 2004.HUD will consider the proposal, acceptingor rejecting individual changes, and thenissue a proposed rule for public comment byfall 2004. The final rule could becomeeffective in late 2005. These recommenda-tions include 150 or more changes to theMHCSS. If and when adopted by HUD,they will be the first major update of thestandards since 1994.

The 2003 NFPA 501 recommendationsfor updating the HUD standards includethose recommendations submitted as part ofthe initiative that will facilitate single-familyattached construction with HUD-codehomes. These could be submitted byMHCC to HUD by the fall of 2004. Basedon this set of recommendations, HUDcould issue a proposed rule by late 2005 thatcould become effective in late 2006.

Recently, the MHCC announced that itwill be accepting proposed revisions to theHUD standards directly from the public,allowing anyone to bypass the NFPA 501standards process. Interested parties could

take advantage of this opportunity to sub-mit directly to the MHCC further recom-mended changes to the HUD code relatedto single-family attached program. Ifincluded with the changes the MHCC maysend to HUD in the fall of 2004, this couldsave perhaps two years in the process.

Once these changes are incorporated inthe HUD code, manufacturers will be ableto design and build single-family attachedhomes under the HUD standards and avoidmixing local code requirements in the samedesigns. Because of this, design costs and"red tape" requirements will be reduced. Atthis writing, it is not possible to estimate thenet savings on time and costs, but theimpact will be substantial.

Manufactured Home Procedural andEnforcement Regulations

Based on a review of the ManufacturedHome Procedural and EnforcementRegulations, a few substantive changes wereproposed to address issues related to single-family attached housing. The proposedchanges were intended to integrate theenforcement regulations with the changesproposed to the HUD code. Because thereis no formal process for proposing changesto the enforcement regulations, these pro-posals were provided to the ManufacturedHousing Institute, which incorporated theminto comments on the HUD-proposed on-site rule (see below) submitted to theMHCC. The full text of the proposedchanges is included in Part 2 of Appendix A.

Proposed rule for on-site construction

HUD has asked the MHCC for com-ments on a pre-publication draft of a pro-posed rule for on-site construction of man-ufactured homes. The draft proposed ruleand its potential effects on the developmentof the single-family attached market for


manufactured homes are described below.Overview of the Draft RuleOn March 4, 2003, in a draft rule pre-

sented to the MHCC for comment prior torelease for public comment, HUD proposesto allow limited on-site construction of newmanufactured homes without the need foralternative construction letters—if thehomes would otherwise be in compliancewith the HUD code once completed on site.HUD is proposing a process by which man-ufacturers and state and private primaryinspection agencies (PIAs) could agree topermit limited work on site under certainconditions.

The new process will continue to requiresubstantial completion of the home in thefactory. Under the draft section 3282.15,work to be permitted on site in accordancewith the HUD code will include partialcompletion of structural assemblies or sys-tems (e.g., electrical, plumbing, heating,cooling, thermal, fuel burning, and fire-safe-ty systems) and components built as anintegral part of the home when:• Completion of the partial structural

assembly or system during the manufac-turing process would result in transporta-tion damage or would be precludedbecause of road restrictions;

• the homeowner is or may be providing abuilding component on site, such as abath tub, water heater, gas appliance, orcooking range;

• the home design involves work that can-not reasonably be completed in the factory;

• the home design allows additions, such asgarage, basement, room addition, or nat-ural gas ready home, to be completed onsite based on the requirements of theauthority having jurisdiction; or

• the home has exterior or marriage linedesigns that are susceptible to transitdamage, such as exterior doors, installa-tion of dormers, or non-load-bearingmarriage line walls.

The proposed new rule does not changethe current authority for the followingdetails of home completion on site as a partof the siting process, in accordance with themanufacturer's installation instructions:• Close-up details for multi-section units,

including exterior and roof coverings, sid-ing, ridge caps, sheathing, roof, wall andfloor connections, crossover ducts, andutility connections;

• close up-details for single-section units,including utility connections, exteriorroof coverings, and siding for expandablerooms; and

• the final framing and decking of hingedroofs that are not penetrated for otherconnections or windows.

Nor does the proposed rule change thecurrent AC letter regulations, at 24 CFR3282.14, for work that may be permitted onsite that is not in compliance with the HUDcode.

Other noteworthy aspects of the draftrule

• The manufacturer must request in writ-ing and obtain DAPIA approval for workcompleted on site, and the in-plant pri-mary inspection agency (IPIA) must con-cur in the applicable quality assurancesystem. The manufacturer must includeinstructions, approved by the DAPIA, forcompleting the on-site work.

• A home approved to comply with thisrule will be shipped with a tag, or otheridentifying marker, that permits it to bemoved to the home site.


• The manufacturer must inspect allaspects of the work completed on site. Itmust also prepare a final site inspectionreport and arrange for the IPIA to reviewand approve of the completed on-sitework, as provided for in the agreementbetween the manufacturer, DAPIA, andIPIA.

• The IPIA must inspect enough of thework on site to assure itself that the man-ufacturer's on-site quality control systemis working adequately. It must also havea tracking system for homes built underthese rules.

• Within 30 days of the IPIA's notificationto the manufacturer of acceptance of itsfinal inspection report, the manufacturermust also report the completed workback to HUD or its agent.

• Each home that is shipped under this rulemust include a notice to the consumerthat on-site work will be completed inaccordance with the HUD code.

Potential effects of the on-site rule on single-family attached construction

As noted earlier, HUD currently permitslimited work on site through the AC letterprocess, found at 24 CFR 3282.14. Thatregulation, created in 1984 to encourageinnovation, permits a manufacturer to con-struct manufactured homes with some fea-tures that are not in full compliance with theHUD code at the factory, but that otherwisewill meet acceptable standards (such as froma model building code).

For the last several years, HUD has alsorequired manufacturers to use the AC letterprocess to gain permission to complete lim-ited work on site that, for safety-related rea-sons, would require IPIA oversight, eventhough the completed home on site meetsthe HUD code. This procedure is time con-

suming and costly. Hence, the HUD on-site rule, once enacted, would cut down onthe "paper work" and eliminate the need formany AC letters by permitting the manu-facturer to coordinate closely with its PIAsto speed up the completion of on-site workdesign, approval, and construction. Thenew rule will eventually appear at 24 CFR3282.15.

Presently, construction of single-familyattached homes typically requires manufac-turers to request and obtain one or more ACletter approvals from HUD for safety-relat-ed on-site construction, such as a heatervent through the roof. The above outlined"on-site construction" draft rule, once it isfinalized and enforced, will reduce dramati-cally the number of AC letter requirements.All on-site work that meets the HUD stan-dards may then be completed under thedraft proposed rule or as a part of the sitingprocess.

Only work performed on the home thatdoes not meet the HUD standards, such asan innovative roof assembly that meets amodel building code, will continue torequire prior approval from HUD under theAC letter process.

How the on-site rule may proceed

It is noteworthy that the above"overview" of the draft rule is subject tothree future events: MHCC final commentsto HUD; HUD's modifications of the draft,released as a proposed rule for public com-ment; and HUD's final rulemaking.

The following are the key milestones inthis process:

1. The MHCC completed its com-ments for HUD in August 2003.

2. Most likely, HUD will make modifi-cations to both the rule and its draft


preamble and release a proposed rulefor public comment by late 2003.

3. Following an approximately 45-daypublic comment period, HUD willprepare a final rule for release by late2004.

4. The final rule might become effec-tive as soon as early 2005.

State and local regulations

Working with local code officials

Manufacturers routinely work with localofficials to complete work on site for con-struction features such as basements andgarages, in a way that meets the local build-ing codes. These construction features areeasily identified on house plans and asunique structures on site. Therefore, localofficials have no difficulty in their planreviews and on-site inspections.

However, for single-family attached con-struction, a number of construction featuresin the home, such as stairwells, are not cov-ered by the HUD code. Many local officialsare reluctant to attempt to approve plansand inspect inside a HUD-code home onsite. Consequently, HUD requires manu-facturers to include such features in AC let-ter requests. As noted above, that paper-work will be eliminated when such con-struction elements are picked up in theHUD code and the proposed on-site rule,described above, is placed in the HUD reg-ulations.

When these actions are completed, theseparate authorities of HUD and local codeofficials will become even more easily distin-guishable.

Restrictive zoning

The degree to which local zoning regula-tions can infringe on the use of manufac-

tured housing for single-family attachedconstruction varies dramatically dependingon geographic region. Zoning requirementsare written and enforced at the local level(city, county, etc.), usually under state-enabling legislation or constitutionalauthority. Historically, manufactured hous-ing has often been subject to restrictive localzoning ordinances. Due to the increasedproduction of multi-section manufacturedhomes and improved construction standardsas defined in the HUD code, there has beena trend by states during the 1980s and1990s to limit the authority of local govern-ments to exclude detached manufacturedhousing or to confine it to specifically desig-nated communities.16 The interpretation ofzoning regulations as they impact placementof manufactured single-family attachedstructures has not yet been addressed.

Since 1987, eighteen states have adoptedrevised zoning standards that are less restric-tive to single-family detached manufacturedhousing: Arkansas, Connecticut, Florida,Idaho, Iowa, Kansas, Kentucky, Maine,Michigan, Minnesota, Mississippi,Nebraska, Nevada, New Mexico, Ohio,Oregon, Utah, and Virginia.17 The growthof more inclusive statewide zoning lawsfacilitates broader use of manufacturedhousing outside of traditional communitiesand expands its potential markets.

Across the nation, state laws regulatinglocal zoning of manufactured housing canbe organized into several categories, depend-ing upon their inclusivity. Table 11 lists sixgroups of states in order of the degree towhich they prevent or restrict local govern-ments from zoning to exclude manufactureddetached housing (ranked from most restric-tive of local governments to least restrictive).


California multi-unit manufacturedhousing

In 1996, California amended existinglaw, enabling the construction of affordablemulti-unit housing using manufacturedhome technology. This law should be ofinterest to the HUD-code industry acrossthe nation as it demonstrates an innovativeuse of HUD-code manufacturing technolo-gy and may serve as a template for futurechanges to the MHCSS. While theCalifornia law pertains to multi-familyhousing, which is explicitly outside thepurview of the HUD code, it may also pro-vide lessons for single-family attached (orzero-lot-line row housing). Currently,HUD has no authority to set standards forthe multi-family application of HUD-codehomes. This authority can be granted onlyby Congress.

The California law was created primarilyto facilitate the construction of duplexes onsmall San Francisco Bay area lots usingHUD-code homes. It permits the demising


TABLE 10State regulation of local zoning laws

State laws regulating local zoning of manufactured housing

Prohibit exclusion from single-family districts ifesthetic, installation, age, size, and/or other stan-dards are met.

Prohibit exclusion of some (or all) units, unless basedon criteria applicable to other types of housing.

Prohibit total exclusion from the jurisdiction, but per-mit special criteria to be applied to manufacturedhousing.

Prohibit exclusion from specified districts (i.e., withinagricultural areas or urban growth boundaries).

Exclusion not prohibited but some protection is avail-able for manufactured housing.

No specific mandatory state legislation existsaddressing exclusion of manufactured housing.

States

California, Idaho, Iowa, Kansas, Michigan,Nebraska, Nevada, Ohio

Arkansas, Colorado, Connecticut, Florida, Indiana,Kentucky, Minnesota, New Jersey, New Mexico,Utah

Maine, Mississippi, New Hampshire, Tennessee,North Carolina

Oregon, Virginia

Montana, Washington

Alabama, Arizona, Delaware, Georgia, Illinois,Louisiana, Maryland, Massachusetts, Missouri,New York, North Dakota, Oklahoma, Pennsylvania,Rhode Island, South Carolina, South Dakota,Texas, Vermont, West Virginia, Wisconsin,Wyoming

wall between the two units of the duplex torun perpendicular to the home's marriageline rather than in line with it. This resultsin two units, one behind the other, roughlysquare in proportion rather than two long,narrow units in a side-by-side configuration.In the seven years since the law was passed,it has not been used extensively. Accordingto California Department of Housing andCommunity Development (HCD), thestate agency responsible for the program,there has been an increase in its use recently,with high-end projects being built in Napaand on Catalina Island.

The applicable sections of the Californiacode18 provide for the construction of multi-unit (or multi-family) dwellings utilizingmanufactured home design. This mayinclude attached units such as townhousesand duplexes on a commonly owned lot.

The units must be built on a permanentchassis and designed to be used as dwellingunits with or without a permanent founda-tion. If the structure contains three or more

Source: Manufactured Housing Institute.

dwelling units, it must be installed as a fix-ture or improvement to real property with acorresponding permanent foundation sys-tem. Two-dwelling unit structures may bedesignated as chattel. Structures may be oneor two stories.

Multi-unit manufactured housing mustcomply with California’s egress and fire sep-aration requirements that apply to structurescontaining two dwelling units. Multi-unitmanufactured housing that contains threeor more units must comply with the accessi-bility and adaptability requirements foundin the California Building Standards Code,Title 24, which are applicable to dormito-ries, hotels, and apartment houses. Thedwelling units must be designed and con-structed to comply with the federalMHCSS, but are not labeled as HUD-codeunits. Rather, they are labeled withCalifornia insignia.

The process for utilizing the code is rela-tively straightforward. Construction draw-ings and specifications are prepared by aCalifornia licensed architect or engineer andsubmitted to an HCD-approved third partyquality assurance agency (QAA). If thedesign and inspection of the units areapproved, the QAA issues to the manufac-turer California insignia, which is affixed tothe unit in place of the HUD label. As thehomes are no longer under the purview ofthe federal MHCSS, no alternative con-struction approval from HUD is required;approval is however, required throughHCD.

While the law has been in effect since1996, HCD has never drawn up specificregulations governing its implementation.It is therefore crucial for a project's successthat the manufacturer contact their third-party design and inspection agencies andHCD early in a project's development toclosely coordinate project plans and specifi-

cations with department staff.California's experience with this law,

while limited, does provide some useful les-sons for the industry at large. While thenumber of attached projects constructed issmall, they further demonstrate the techni-cal and economic feasibility of producingHUD-code units in attached configura-tions. The recent increase in the applicationof this option for manufacturers and devel-opers, including the Villas Del Paraisiodevelopment discussed in Chapter 5, mayindicate a strengthening of the market forcesthat make this an attractive constructiontechnology. Anecdotal reports indicate thatthe state regulatory process is straightfor-ward and not unduly burdensome on theplant or developer. A number of the devel-opments completed under the provisions ofthis law are higher end projects, demonstrat-ing that HUD-code technology is viable forthis market.


Case Studies

The case studies described in this reportprovide an opportunity to evaluate the real-world application of manufactured homesin the single-family attached housing mar-ket. Several organizations interested in pio-neering this new technology were selected toreceive technical support to develop withmanufactured single-family attached homes.

While it is recognized that design andengineering are important to the successfulapplication of the technology, the projectswere undertaken to test the equally impor-tant regulatory and approvals process.

These case studies clearly illustrate toindustry and government a variety of tech-nical and regulatory solutions needed forwidespread application of this technology.They also document the economic viabilityof manufactured single-family attachedhomes under various circumstances byrevealing costs and exposing unforeseen bar-riers that were encountered by the develop-ers and manufacturers. Where it was possi-ble, the costs were weighed against compa-rable on-site development.

Aided by the example of these pioneers,the next generation of builders and develop-ers can gain some guidance to successfullynavigate future projects utilizing single-fam-ily attached manufactured homes.

The projects selected demonstrate theapplication of the technology at geographi-cally diverse sites with strong single-familyattached housing markets. The projects thatemphasized affordable housing were givenpreference in the selection process.

Candidate developments had a mini-mum of 20 dwelling units, to achieve theeconomies of scale inherent in factory pro-duction. While no maximum size was set, aproposed development of 20 to 60 units waspreferred.

Because of the innovative approach ofusing manufactured units to produce

attached housing, candidate developers wererequired to have experience, expertise, and asuccessful track record in delivering conven-tional attached housing.

Ideally, chosen projects would have com-pleted the concept phase and be in, or aboutto enter, the predevelopment phase. In theinterest of time, the objective was to chooseprojects that were far enough along for theproject to be successful, yet early enough inthe process to design the project from thebeginning with the special considerations ofattached manufactured homes. (See Chapter2 for a brief description of the search processfor the demonstration projects.)

Due to the lengthy nature of the landdevelopment process, particularly whenworking with non-profit organizationsdependent on government or other outsidefunding sources, most of the case studiesdescribed here (with the notable exceptionof Noji Gardens) are still in the process ofdevelopment, and so progress to date isdescribed herein.

Learning from the case studiesAs the projects progressed, the develop-

ers and manufacturers were interviewedabout the lessons they learned. These find-ings are included at the conclusion of eachcase study. Within these sections, severalthemes emerged:

• A manufacturer that wants to develop amarket aimed at developers needs toemploy a liaison who will shepherd theproject through each step of the process.This person should be trained to under-stand the needs of the developer. Theplant should treat the developer as a cus-tomer and work toward meeting hisneeds.

Case Studies 37

5

• The plant should develop recommendedguidelines for the developer to followwhen preparing the site, mapping a trans-portation route, and installing the home.The manufacturer should be willing tosend someone to the site to assist in theinstallation.

• The developer and architect need a thor-ough education about the manufacturingprocess and the limitations of the HUDcode. Recommendations include indus-try seminars such as the annualDeveloping with Manufactured andModular Homes seminar, given by theManufactured Housing Institute, andeducational and training programsoffered by some states.

• Manufacturers and developers must real-ize that developing with manufacturedhomes may require a planning cycle ofseveral years, both because developersmust win local approvals and because ofthe current AC letter process at HUD. Itis advisable to use designs that are alreadyapproved to shorten the cycle.

• Common sense changes to the HUDcode are needed to streamline the processfor single-family attached manufacturedhomes. One example is the requirementthat an "attached" unit must be able to beremoved from its neighbor without dam-age. Currently, recommendations takenfrom this study are making their waythrough the NFPA process (see Chapter5).

• Site work is a critical component todeveloping with any home, includingmanufactured homes, and must be care-fully considered in the process, especiallyas it relates to preparing foundation sys-tems. Accuracy in this aspect is morecritical than with a site-built project.

• The transportation of manufacturedhome units through urban areas is com-plicated. The route to the site and theclearance for the installation must becarefully orchestrated and planned. Thestate department of transportation andcity officials must be contacted and oftennegotiated with for the timely delivery ofhomes.

• A plan to tackle any political or zoningissues must be developed at the start ofthe planning process. Sophisticated pre-sentations and close contact with neigh-borhood groups can ensure the success ofthe development. Conversely, ignoringthese realities can make a developmentimpossible.

38 Case Studies

Case Study: Upton Street Community

BackgroundMetro Triton Realtors is a longstanding and well-established manufactured home com-

munity owner, retailer, and real estate developer with strong ties to the manufactured hous-ing industry in upstate New York. They enjoy a good relationship with Lancaster, NY townofficials, including chairmen of the Lancaster Village Economic Development Committee,Zoning Board of Appeals, and Planning Committee.

Lancaster is a fast growing suburb of Buffalo. Over 30 years ago, Metro Triton Realtorsacquired a property in Lancaster that they hoped to develop with an apartment complex.Zoning problems led them to abandon their plans, and the property was never developed.

In the meanwhile, the company gained a lot of experience in the manufactured housingbusiness, buying their first community in 1978. Today they own five communities and tworetail sales centers.

A fortuitous acquisition of the access road to the Lancaster property led the developer torethink developing it with manufactured homes. The initial reaction of the town officials tothe proposed project has been positive.

Project descriptionMetro Triton Realtors conducted the necessary market research and introduced the proj-

ect to the town planning board. Lancaster officials were quite interested in facilitating newdevelopment in their town, particularly one that would cater to seniors. On July 17, 2003,the planning commission granted a preliminary approval to the Upton Street Community sitelayout.

Case Study: Upton Street Community 39

Upton Street CommunityUpton Street, Lancaster, NY

Metro Triton Realtors

For profit

Roberto Kritzer, Champion Homes

Mike Metzger

Donald C. Westphal Associates, Rochester Hills, MI

Titan Homes (division of Champion Homes), Sangerfield , NY

Suburban

Vacant

One-story duplex and two-story townhomes, two bedrooms each

12 one-story duplexes and 8 two-story townhomes

55-and-older

Rental

$985,000

Site-work spring 2004, installation summer 2004

Project name:Location:

Developer:

Developer type:

Architect:

Engineer:

Planner:

Manufacturer:

Type of site:

Pre-development site use:

Type of units:

Number of units:

Market:

Rental/fee-simple/land-lease:

Total estimated development costs,including land:

Status as of report completion:

40 Case Study: Upton Street Community

FIGURE 3Site plan of the Upton Street Community

FIGURE 4Elevation of two-story four-plex, Upton Street Community

The plan calls for a total of 20 attached rental units: 12 one-story and 8 two-story. Theone-story units are grouped in pairs and the two-story units are assembled into rows of fourhomes each. The market research indicated that 750 to 850 square foot, two-bedroom unitswould be desirable to the target market of seniors 55 and older, and that rental rates up to$500 per month could be supported.

The two-story units will include internal stairs, with the kitchen, living, dining, and ½bath on the lower level, and two bedrooms and a full bath on upper level. Appliances will beincluded in the package.

The developer did look at a cost comparison of using modular versus HUD-code homes.An analysis of the two-story unit was conducted and it was determined that it would beapproximately 10% less expensive ($6,000 to $8,000, depending on length of the unit) to


build with HUD-code construction. This difference would be reduced by $1,200 to $1,300if the HUD-code unit included a 5/12 pitch roof and by a further $1,000 if it had sheetrockwalls. This reduced the price advantage of the HUD-code construction to approximately 6%.One-story HUD-code units, however, were significantly cheaper, costing only 61% of thetwo-story HUD-code units. A large chunk of this difference was due to higher transporta-tion costs of the wider two-story units. By using a mix of one- and two-story HUD-codehomes, the project could meet its financial goals. Table 12 breaks down the estimated totaldevelopment cost of the project into its major components.

Opportunities and considerationsTriton had some difficulty developing a site plan that enabled it to fit enough living units

on the site in an esthetically attractive and economical manner. When the developer wasunable to come up with a workable site plan, MHRA enlisted a planner experienced withmanufactured home community design to develop an attractive and feasible layout. This lay-out was well received by the local planning officials and given a preliminary approval by thetown planning board.

One concern was that the building inspector was confused about how the HUD codedovetails with the codes of New York state and the International Residential Code, recentlyadopted by the state. The New York State Administrative Agency (SAA), the entity that reg-ulates manufactured housing at the state level, was enlisted to help answer these code-relatedquestions and the local inspector was satisfied.

The developer was interested in using 14-foot-wide, two-story homes because 14-foot-wide units are simpler and less expensive to transport in New York than 16-foot-wide units.

Housing unitsOne-story housing units ($22,000 per unit x 12 units)

Two-story housing units ($33,000 per unit x 8 units)

Sales tax on housing units

Transportation

One-story housing units ($1,000 per unit x 12 units)

Two-story housing units ($3,600 per unit x 8 units)

Permits

Engineering fees

Foundation slabs

Utility connections

Installation and trim-out

Crane fees

Site-work and paving

Total development costs not including land

$528,000

$264,000

$264,000

$26,136$34,800

$12,000

$28,800$12,000

$15,000

$100,000

$40,000

$44,000

$35,000

$50,000

$885,000

TABLE 11Development costs for the Upton Street Community


FIGURE 6Second floor plan of two-story four-plex, Upton Street Community

FIGURE 5First floor plan of two-story four-plex, Upton Street Community


The manufacturer did not have a HUD approval in place for that particular configuration,however, it did have approvals for a 16-foot-wide, two-story home. Since the manufacturerestimated that re-designing the unit as 14-foot-wide would be costly to engineer and take upto six months for regulatory approval, Triton agreed to use the existing approved design, butlimit the number of two-story units included in the plan.

StatusAs the project moves forward, Triton will focus on shepherding the Upton Street

Community project through the necessary town planning board approvals, and on comple-tion of required environmental reviews to resolve a wetlands issue. This is a time-consumingand protracted process, but not unusual for land development.

Simultaneously, Triton will refine the site plan; line up subcontractors for site work, infra-structure, and installation; develop foundation designs; and work with Titan Homes to engi-neer the homes. It expects this process to take through the winter of 2003/2004. Barring anymajor roadblocks, Triton expects to order units by early spring 2004. As such, site work isplanned for spring 2004, with home installation planned for summer 2004, and occupancyby fall 2004.

Lessons learned

• Laying the proper groundwork in relationship-building with the local government canfacilitate the approvals process.

• Factory tours for local officials help to educate them on the quality aspects of manufacturedhousing.

• It is critical to understand the local politics and local building process.

• It is important to educate the local building inspector about the HUD-code.

• The cost difference between HUD-code and modular construction can be very minimal.It is advisable to consider both options when planning a project.

• Even if they are not ideal for the project, using pre-approved designs, instead of pursuingnew alternative construction approval from HUD, will save money and time on engineer-ing and approvals.

• A well thought-out and professional presentation of the project is important to winapproval.


FIGURE 7Plan of one-story duplex, Upton Street Community

FIGURE 8Elevation of one-story duplex, Upton Street Community

Villas Del Paraiso324 Amesti Road, Watsonville, CA

Mid-Peninsula Housing Coalition

Non-profit

Paul Wang Architect, Berkeley, CA

SSA Landscape Architects

Silvercrest Homes, a unit of Western Homes Corp. (division ofChampion Homes), Woodland, CA

Segue Construction

Suburban

Former travel-trailer campground

One-story duplex and triplex, one to four bedrooms per unit

22 residential buildings containing 51 dwelling units plus onecommunity building with a manager’s unit

Rental

$2,170,350 (50 units - does not include modular communitybuilding containing one apartment)

$620,000

$500,000

Site-work summer 2003, homes installed spring 2004

Case Study: Villas Del Paraiso


Developer:

Developer type:

Architect:

Landscape architect and site design:

Manufacturer:

General contractor:

Type of site:


Type of units:

Number of units:


Estimated costs:

Housing units:

Foundations:

Transportation, installation,and finishing:


Case Study: Villas Del Paraisio 45

BackgroundMid-Peninsula Housing Coalition (MPHC) is a non-profit organization that develops

high-quality affordable housing communities, professionally manages the properties in thosecommunities, and provides services to residents. MPHC is one of the largest and mostrespected non-profit developers of affordable housing in the San Francisco and Monterey Bayregions. Between 1970 and 2001, MPHC designed and built or acquired and rehabilitatedmore than 5,100 units of affordable housing. MPHC is one of the leading non-profit spon-sors and developers of assisted rental housing for low- and moderate-income families, seniors,single adults, and persons with special needs in Northern California.19

Affordable housing is a critical need in this region. Santa Cruz County itself has a direshortage of affordable housing options. According to the California Association of Realtors,only 16% of California households were able to afford the median-priced Santa Cruz Countyhome in April 2003.20

Mid-Peninsula acquired two former travel-trailer parks that were being used for perma-nent housing by low-income residents of the county, and is in the process of redevelopingthem in an effort to address a portion of this need.

Project descriptionMid-Peninsula elected to re-develop the property known as "Marmo's at Pinto Lake" first.

This property sits alongside Pinto Lake on a sharply sloping site. The planned developmentincludes 52 housing units in two groups of about 11 duplex and triplex structures each. Onegroup sits low along the lakeshore while the other sits higher up on the slope.

Buildable space is at a premium on the site. The hilly conditions have resulted in a sharpescalation of site construction costs. The septic system is now estimated to cost about $1 mil-lion more than originally expected, and unforeseen earthmoving was required to stabilize thesite. These issues resulted in an approximately $2.5 million budget overrun, forcing Mid-Peninsula to seek additional funding.

Due to the extensive extra site work, the project will be built in two phases. Phase I, con-sisting of the units on the hill, will be constructed first, followed a year later by those alongthe lakeshore.

Mid-Peninsula hired Paul Wang, an architect with extensive experience designing projectsusing manufactured homes, to design the homes. Silvercrest Homes, a division of ChampionHomes, was selected as the manufacturer because of its experience building innovativeattached manufactured homes for developers.

The cost of the homes will be approximately $50 per square foot, not including trans-portation, installation, or work performed on the site. Upgrades to the typical Silvercrestspecification package include: a 5/12 roof pitch, foundation-ready design, 96-inch sidewalls,12-inch eaves, 16-inch roof overhangs, Tyvek wrap, Energy Star specifications, grided win-dows and doors, solid-surface countertops, upgraded millwork, garbage disposals, stainless

46 Case Study: Villas Del Paraiso

FIGURE 9Site plan of Villas Del Paraiso

Case Study: Villas Del Paraiso 47

FIGURE 11Elevations of 1-bedroom/3-bedroom structure, Villas Del Paraiso

FIGURE 10Plan of 1-bedroom/3-bedroom structure, Villas Del Paraiso




steel sinks in the kitchen, upgraded plumbing fixtures, copper plumbing lines, and fluores-cent lighting. Flexibility on the part of the manufacturer to accommodate these requirementswas essential to the project.

Mid-Peninsula paid Silvercrest for the engineering of the custom units. This is a commonpractice, but it is also common to negotiate for the return of those fees after an agreed-uponnumber of homes have been purchased.

Opportunities and considerationsSince the site was already zoned for manufactured housing, using HUD-code homes to

redevelop the new community was a key advantage. Rezoning would have carried the risk ofnon-approval by the authority having jurisdiction and could have led to significant delays andincreased costs. Additionally, the high cost of labor in the area leads to steep costs for site con-struction. In this environment, homes manufactured in the factory can be extremely cost-competitive.

An advantage specific to California is that a HUD AC letter is not required, both simpli-fying the construction process and making these innovative units cost-effective.

Because the homes for the project include demising walls that run perpendicular to themarriage line, the homes are considered duplexes or triplexes under a special California law.As such, the project can be built under the state of California Multi-Family Code instead ofthe MHCSS. Plans are then approved by the state of California, which issues a label for thehome. In all other respects the home is constructed under the HUD-code. See Chapter 4 fora description of this law.

This California Multi-Family Code was created in the early 1990s primarily to facilitatethe construction of HUD-code duplexes on small San Francisco Bay Area lots while avoidinghaving two long, narrow residences. The code provides for one- or two-story homes.

One regulatory barrier for the developer has been that California law requires manufac-tured homes to be sold through licensed manufactured home retailers. Since this would haveadded unnecessary transaction costs, the developer preferred to purchase the homes directlyfrom the manufacturer. Under the state law, a contractor may purchase the homes directlyfrom the plant if the manufacturer grants them corporate approval for a specific project.Silvercrest granted corporate approval to a specially created unit of MPHC as a Silvercrestretailer specifically for the Villas Del Paraisio project.

In this type of innovative HUD-code development, there is a learning curve for both themanufacturer and developer that must be negotiated to ensure success. One of the most dif-ficult barriers to overcome is managing expectations and learning to appreciate the needs andrequirements of the business partner. This is especially difficult because the way that tradi-tional site-developers and manufacturers conduct their day-to-day business is so different.

One example where differing business practices led to a near impasse in this project wasthe developer's expectation of a product specification book. Developers of site-built multi-family housing are accustomed to soliciting bids from contractors based on a fixed set of plansand product specifications drawn up by the developer's architect. The specifications typical-ly include brand name and model number of hardware, fixtures, and all other products goinginto the home. The contractor selected to build the project submits samples and/or product


specifications for the developer’s and the architect's approval throughout the building process.The contractor may also request to substitute an alternative product in this manner. A com-plete set of specifications was important to MPHC, as they wanted to know what they weregetting and to have these specifications guaranteed in the sales agreement. Because the homeswill be rentals and MPHC is going to manage the property, they were particularly concernedwith maintenance costs. MPHC wanted the option to substitute materials that might have alonger service life.

Initially, the manufacturer was reluctant to provide a complete set of specifications as it isaccustomed to providing "like materials" based on availability. Manufacturers are typicallyleery of committing to particular brands and models of building materials lest these materi-als stray too far from the standard or cause a slowdown on the line. In their opinion, thedeveloper did not appreciate this limitation of large-scale factory production of houses. Inthe end, an agreement was reached whereby the specifications would be provided to MHPC.

One issue that complicated the design process for Silvercrest was that the architect did notalways adhere to factory-specified constraints, such as available window and doors sizes.Silvercrest modified the architect’s designs to meet the plant’s specifications. Manufacturersare accustomed to getting very specific directives from retailers who are intimately familiarwith their product, so these types of designs changes were unexpected and consumed time andmoney. This point highlights the need for the developer and the manufacturer to understandeach other's business and to make an effort to find a middle ground. This is difficult to do,however, unless the need to educate the partner is recognized. MPHC was quite concerned,for example, that they did not fully understand the particular characteristics of the manufac-tured housing product, an issue that was addressed partially by reading industry publications.

StatusAt the time of this report, MPHC and Silvercrest Homes had consummated an agreement

for sale. The project was designed, engineered, specified, and priced. Site work was under-way, and a plot plan showing utility hook-ups was completed.

The plant is undergoing final plan approvals and MPHC is soliciting installation bids.Once the plant gets final stamped approvals, MPHC will apply for local permits. The plantneeds four weeks lead time to build the homes.

Mid-Peninsula expects to complete the site work for the project in fall 2003, with thehomes manufactured in the winter and installed in spring 2004. The project should be com-pleted by fall 2004.

Lessons learned

• Even non-profit developers of affordable housing may require significant specificationupgrades, particularly if the units will be rentals.

• Developers are much more sophisticated about life-cycle costs than the typical manufac-tured home purchaser, and will want to minimize long-term maintenance and energyexpenditures.






FIGURE 17Elevations of 2-bedroom/2-bedroom/2-bedroom structure, Villas Del Paraiso

FIGURE 16Plan of 2-bedroom/2-bedroom/2-bedroom structure, Villas Del Paraiso


• The developer may require a book of specifications and wish to have it guaranteed in thesales agreement. They want to know what materials will be used and what they may needto specify as an upgrade.

• The project architect should work within the agreed-upon constraints of the manufactur-ing process; these constraints should be negotiated in advance.

• Education of the developer is important to assure the developer’s comfort level with, andunderstanding of, the manufactured home product.

• Site work delays, including order and delivery of the manufactured units, can significant-ly impact a project schedule.

• The manufacturer must establish a direct relationship with the developer. There is oftenno role for an intermediate retailer.

• A clear delineation of responsibilities and division of labor is important. Additionally,someone needs to orchestrate all of the interrelated responsibilities. This may require a newposition that supervises the whole process, similar to a construction manager, to make surethat nothing falls through the cracks.

54

Case Study: Golden Torch

BackgroundMid-Peninsula Housing Coalition (MPHC), which is also developing Villas Del Paraiso,

is the developer of Golden Torch. MPHC is a non-profit housing developer and manager inSanta Cruz County, CA that builds low-to-moderate income rental housing and manages theproperties.

Project descriptionThe Golden Torch site is the second of two former travel-trailer parks that MPHC is

developing with single-family attached manufactured housing units. As with the Villas DelParaiaso site, Golden Torch is being used for permanent housing by low-income residents ofthe county.

The Golden Torch community will be located in Aptos, a city located on the Californiacoast, halfway between Santa Cruz and Watsonville in Santa Cruz County.

Golden Torch will be comprised of 67 one- and two-story units, arranged in buildings oftwo to seven units each. This project will have a site-built look, with many of the manufac-tured sections nearly square in proportion.

Opportunities and considerationsLike the Villas Del Paraiso, Golden Torch is zoned for manufactured homes. Rezoning

would carry the risk of non-approval by the county and could lead to significant delays andincreased costs. Additionally, the high cost of labor in the area would lead to steep costs forsite construction. In this environment, homes manufactured in the factory can be extremelycost-competitive.

The developer plans to use HUD-code homes, which will require alternative constructionapproval from HUD.

Project Profile: Golden Torch 55

Golden Torch6100 Freedom Boulevard, Aptos, CA

Mid-Peninsula Housing Coalition

Non-profit

John McKelvey, Santa Cruz, CA

To be determined

Suburban

Former manufactured home community

One- and two-story units with one to four bedrooms

67 units in 16 residential buildings, each with two to seven units perbuilding plus a community building

Low-income families earning 70-90% of the area market index

Rental

Not available

To be constructed in 2004/2005


Developer:

Developer type:

Architect:

Manufacturer:

Type of site:


Type of units:

Number of units:

Market:


Estimated costs:


56 Project Profile: Golden Torch

FIGURE 18Site plan of Golden Torch


StatusThe developer plans to build the Villas Del Paraiso first, with the Golden Torch commu-

nity to follow later. Mid-Peninsula expects to start the site work on this project in summer2004.

FIGURE 19Plan of 4-bedroom/2-bath unit, Golden Torch

FIGURE 20Entry elevation of 4-bedroom/2-bath unit, Golden Torch

58 Project Profile: Golden Torch

FIGURE 22Elevation of 3-bedroom/2-bath unit, Golden Torch

FIGURE 23Plan of 2-bedroom/1-bath unit, Golden Torch

FIGURE 21First floor plan of 3-bedroom/2-bath unit,

Golden Torch


Lessons learnedSince this project is yet to be started, it is too early for many concrete lessons; however the

design phase of the project instructs that:• Relatively straightforward manufactured units can be configured to have a site-built

appearance.

• The design illustrates the variety of layouts and designs that can be expected in a project ofthis size.

FIGURE 24First-floor plan of management building

showing community room, Golden Torch

FIGURE 25Second-floor plan of management building

showing manager’s unit, Golden Torch

FIGURE 26Elevation of management building, Golden Torch

60

Case Study: Foothill Work-Live Townhomes

BackgroundOakland Community Housing, Inc. (OCHI) has developed and managed affordable

housing, including homeownership and rental units, since 1973. OCHI's primary targetpopulations are low-income families, the elderly, disabled, and other special needs popula-tions in Oakland, California and the East Bay. OCHI specializes in developing housing inlow-income areas where private development activity is minimal. OCHI works closely withcommunity groups to incorporate their desires and needs into proposed housing develop-ments.

The Foothill Work-Live Townhomes is proposed to be constructed in a depressed area ofinner-city Oakland. The project has been delayed because it did not receive the necessaryfunding approval from the Oakland City Council. The funding was rejected due to a dis-agreement about the best use of the site. It is, however, generally agreed that the neighbor-hood is in dire need of housing, and OCHI is hopeful that the funding will be approved inthe next cycle (fall 2003).

Although the Foothill project has not yet come to fruition, an examination of the experi-ence of the developer as well as the project design up to this point will be of interest to devel-opers and manufacturers considering similar projects.

Project descriptionThe proposed Foothill Townhomes site is a 42,913 square foot vacant lot in the heart of

Central East Oakland. One of Oakland's older residential areas, the neighborhood is char-acterized by single- and multi-family homes along the major thoroughfares. Some propertiesin the area are well-kept, while others have deteriorated. A significant portion of commercialspace is vacant or underutilized.

Case Study: Foothill Work-Live Townhomes 61

Foothill Work-Live Townhomes5803-33 Foothill Blvd., Oakland, CA

Oakland Community Housing, Inc. (OCHI)

Non-profit

Michael Pyatok, Oakland, CA

To be determined

Urban

Vacant; a bowling alley and movie theatre previously occupied the site

Three-story (ground floor site-built), two to three bedrooms

27 units in six buildings with one to six units per building

Low-income families earning 70-90% of the area market index

Fee-simple

$7,205,886

OCHI will re-submit funding application to the city of Oakland inNovember, 2003


Developer:

Developer type:

Architect:

Manufacturer:

Type of site:


Type of units:

Number of units:

Market:


Estimated total development costs,including land:


62 Case Study: Foothill Work-Live Townhomes

FIGURE 27Foothill Work-Live Townhomes site plan

FIGURE 28Foothill Work-Live Townhomes location map

In this neighborhood, OCHI planned to construct six buildings of three-stories each, con-taining a total of 27 living units in a neo-traditional architectural style. An additional 50 sitesin the area were available for future development. Each building would contain up to sixattached townhomes. The top two floors of each unit would be assembled from manufac-tured units; these would sit atop a site-built ground floor containing a one-car garage and a"flex room" for use as a home-based business or extra bedroom. This is especially helpful asthe center units have only two exposures on the third floor and can accommodate only twobedrooms. Placing a third bedroom in the site-built ground floor is an innovative solutionfor providing three bedrooms. Each unit measures 15½ feet wide by 38 feet long.

OCHI's preliminary schedule calls for an architectural design and engineering phase last-ing 180 days followed by a construction phase of another 180 days.

Opportunities and ConsiderationsOCHI's incentive for looking at using manufactured homes in its development was cost

savings. The non-profit developer was looking for alternatives to control its skyrocketing con-structions costs and provide "truly affordable" housing.

According to the architect's estimate, using manufactured units with site-built groundfloors would result in a savings of $1,323,250 compared to a 100% site-built project (Table 14).

StatusWhile the land acquisition was completed with funds from the city of Oakland, an appli-

cation made to Oakland for housing development funds that was critical to financing theproject was not granted. The next round of financing applications will be considered inNovember 2003 and OCHI hopes to receive approval and move forward with the project atthat time.

Even if this particular project does not proceed, OCHI feels that using manufacturedhousing is the key to providing affordable housing in urban areas such as Oakland.

OCHI is also working with a manufacturer to develop three additional sites in Oaklandwith single-family attached manufactured homes. They are committed to developing withmanufactured homes due to the cost savings they expect to achieve. OCHI hopes to realizean approximately 37% saving over using site-built homes on these projects.

Lessons learned

• Non-profit developers have amulti-year planning horizon,which can be an obstacle formanufacturers that operate onshorter business time frames.

• One pitfall in the large-scalehousing development business,which is exaggerated in thenon-profit developmentprocess, is the possibility that


Price per sf

Unit size (sf)

Cost per unit

Number of units

Project constructioncost, excluding land

Combined site-builtand manufactured$119

1600

$190,250

27

$5,136,750

100% site-built

$155

1,600

$248,000

27

$6,696,000

Costs include all site work, infrastructure, and foundations.Source: Architect’s estimate.

TABLE 12Pre-development cost estimate for the

Foothill Work-Live Townhomes

64 Case Study: Foothill Work-Live Townhomes

FIGURE.30Building directly adjacent to Foothill Work-Live Townhomes site to the east on Foothill Boulevard

FIGURE 29Foothill Work-Live Townhomes site as seen from Foothill Boulevard facing east


the project can come to a temporary or even permanent halt due to political factors. Theseforces may not have to do with the project's economic viability.

• Non-profits can recognize the benefits of manufactured housing, even if an initial projectdoes not go to completion. OCHI is embarking on at least three new single-familyattached manufactured home projects in addition to working with local officials to resumethe Foothill project.

• The planning for the Foothill project illustrates the potential for significant cost savings byusing single-family attached manufactured homes.

• The project plan shows the level of innovative design that is possible with manufacturedhomes—such as site-building a ground floor to make a three-story, three-bedroom unitpossible.

• The developer emphasized the importance of finding a manufacturer that would invest theresources necessary to the make the project successful.

• The project illustrates the potential of using HUD-code homes for the inner-city housingmarket, particularly where site building costs are high.

FIGURE 31Rear of Foothill Work-Live Townhomes site on Bancroft Avenue and adjacent buildings to the west

66

Case Study: Noji Gardens

BackgroundSeattle-based non-profit developer HomeSight had seven large site-built developments

and 11 years of experience under its belt when it started Noji Gardens in 1999. With a mis-sion of providing homeownership opportunities to moderate-income, first-time homebuyersin Seattle, HomeSight offers housing to people making 67% or less of the area medianincome.

HomeSight used manufactured home technology in this $13 million project to help it bet-ter realize its mission through cost savings that simply could not be realized with site-builthomes alone. The developer’s analysis of the duplex manufactured units revealed that usingmanufactured homes cost an estimated 15% less in hard construction costs, not including thefoundation, than a site-built structure would have. Now that HomeSight has some experi-ence with manufactured home duplexes, it expects to realize closer to a 20% savings for futureprojects of this type.

According to the Northwest Multiple Listing Service, the median single-family home pricein King County was $290,000 at the time that Noji Gardens was completed in June 2002.In June 2003, median home prices were up 1.7%, to $295,000. The homes at Noji Gardenslisted far below this median home price, at $155,000 to $250,000, a bargain by Seattle stan-dards. Additionally, these prices did not take into account down payment assistance, whichwas available to qualifying buyers.

The land chosen for the project is situated four miles southeast of downtown Seattle andwas once a garden center owned by the Noji family. The 6.5 acres of previously vacant andblighted urban land was transformed into a vibrant, high-density community located nearjobs, shopping, parks, neighborhood resources, and a proposed light rail station.

Case Study: Noji Gardens 67

Noji GardensJuneau Street, Seattle, WA

HomeSight

Non-profit

John McLaren, Seattle, WA

Marlette Homes (division of Oakwood Homes), Hermiston, OR

Marpac Construction, LLC

Urban

Garden center

75 total dwelling units, including:

40 two-story, single-family attached HUD-code duplexes11 two-story, single-family detached HUD-code homes24 site-built four-plexes in a row housing configuration

Typical buyer earns 67% of the area median income or less

Fee-simple

$13 million

Completed in 2002

Project name:Project location:

Developer :

Developer type:

Architect:

Manufacturer:

General contractor

Type of site


Type and number of units:

Market:

Rental/Fee-Simple/Land-Lease:

Estimated costs:


68 Case Study: Noji Gardens

FIGURE 32First-floor plan of HUD-code duplex, Noji Gardens

FIGURE 33Second-floor plan of HUD-code duplex, Noji Gardens


Project descriptionHomeSight was the first developer in the nation to build single-family attached homes

with HUD-code units. The project included 75 homes, 40 of which were single-familyattached manufactured homes. The remainder were single-family detached manufacturedhomes and site-built row houses that could not be built as manufactured homes because thedesign was not approved by HUD.

The site-built single-family attached homes were two-bedroom, 1½ bath, 1,000 squarefoot townhomes. The manufactured homes were three-bedroom, 1½ bath, 1,200 to 1,300square foot duplexes or single-family detached homes. The manufactured home duplexdesign was approved by HUD through an AC letter.

The duplexes were constructed in four sections with a two-story configuration. The roofswere 8/12 pitch, which is common for attached homes in the Seattle area. A one-car, site-built garage was constructed adjacent to each townhome, in some cases creating rows of man-ufactured housing duplexes separated by site-built garages, with the appearance of a continu-ous structure. Each home abuts another townhome, in a zero-lot-line configuration, butshares no utilities or supporting walls.

The project was financed with a combination of loans and grants, including $4 million inconstruction financing from Wells Fargo Bank; $2.75 million in construction financing fromLocal Initiatives Support Corporation/National Community Development Initiative; $1.1million in construction financing from U.S. Bank; and $3.4 million in HUD CommunityDevelopment Block Grant funds obtained through the city of Seattle's Float Loan program.

Additionally, $1 million from the State of Washington Housing Trust Fund and $500,000in HUD HOME funds were obtained through the city of Seattle for purchase assistance. A$500,000 HUD Special Purpose Grant and a $500,000 program-related investment loanfrom Fannie Mae Foundation were obtained for down payment assistance.

Fannie Mae Foundation also provided $145,000 in grant support to the Noji Gardensproject through its Home Team program and its partnership with HomeSight and the SeattleSupersonics.

Opportunities and considerationsNoji Gardens was a successful project primarily because HomeSight's leadership and staff

were willing to work with city leaders and funding sources to remove preconceived ideasabout, and regulatory obstacles to, the use of manufactured homes.

Additionally, the manufactured homes producer, Marlette Homes, was eager to work withthe non-profit to develop an innovative product and create a new market. The combinationof HomeSight's determination and identification of innovative manufactured home architec-ture, as well as a flexible manufacturer, paved the way for Noji Gardens.

This spirit of coöperation was essential because the team faced many obstacles as they pro-ceeded. The first was the design review boards. The five design review boards in Seattle havegreat influence in the esthetic appearance of any new development. The project architect,John McLaren, provided leadership in working closely with these citizen groups to meet theirconcerns. As a result, the project enjoyed community support.

The transportation of the units to the site also proved to be a hurdle. The city adminis-tration sets the rules for transportation in any urban area and this proved to be a difficult


FIGURE 34Front elevations of HUD-code duplex, Noji Gardens

FIGURE 35Rear and side elevations of HUD-code duplex, Noji Gardens

sticking point. HomeSight finally worked out an acceptable solution with the city, but notbefore being told at one time that only three homes a week could be delivered, and only from3:00 to 5:00 a.m. on Sundays.

One of the barriers to using homes built to the HUD-code was a requirement that thehomes be sited to avoid damage to the adjacent structure if an owner ever chose to move thehouse. This requirement led to unnecessary costs, since it was clear that these homes wouldnever be moved. In the future, code changes may help to alleviate this problem, but for nowit was a costly and arguably unnecessary nuisance for the developer.

The financing for the project was complex. The lines between acquisition, construction,and permanent financing were blurred. The development and finance team had to determinewhen the homes became real property for financing purposes, a complication that is uniqueto manufactured units.

The developer estimates that using manufactured homes cut two months from the con-struction schedule. Each home could be sited in less than two hours by a relatively small con-struction crew, resulting in major labor and cost savings. Additionally, HomeSight was ableto offer better amenities, such as appliances and upgraded cabinetry, which would not havefit into the budget without the use of manufactured homes.

The developer feels that a limiting factor preventing manufactured housing from takingoff in the single-family attached market segment is the lack of developers who have experi-ence with the product and the small number of consultants that specialize in this area. Toovercome this lack of experience, HomeSight sent one of its employees to a HUD-code train-


ing class offered by the Washington Department of Labor and Industries. The general con-tractor also sent the superintendent for the Noji Gardens project to the class. The installerwas certified by the program as well. This significant commitment of time and money tounderstand the product enabled HomeSight to get the most from its investment.

The Local Initiatives Support Corporation (LISC), a Washington D.C.-based organiza-tion that assists community development corporations in expanding homeownership oppor-tunities for inner city neighborhoods and distressed rural communities, offered the followinglist of attributes needed by developers who hope to replicate a project like Noji Gardens:21

• A non-profit developer that is willing to pro-actively educate and negotiate with local offi-cials and lenders to build support for and remove regulatory or statutory hurdles to man-ufactured homes.

• The identification of an innovative design and a flexible manufactured home producer.

• Willingness to work with the neighborhood and accommodate neighborhood concerns.

• Flexible financing sources that can accommodate changes.

• A certain amount of in-house development capacity.

• A careful plan of production logistics, including the transportation, staging, and installa-tion of the structures.

FIGURE 36Noji Gardens duplex unit


FIGURE 37Row of duplex units, Noji Gardens

StatusNoji Gardens was completed and sold out in 2002. HomeSight is currently working on

a similar project on Airport Road in Snohomish County, north of Seattle. The 35 units ofmanufactured home duplexes in this project are scheduled to be installed in spring 2004.

Lessons learned:

• Working within the political framework of the neighborhood council system assured thesuccess of Noji Gardens. Getting public and political support is a key element of anydevelopment, especially one that utilizes new technologies.

• The potential for savings is impressive. The developer estimates savings of 15 to 20% oversite-built housing. This savings can be of even greater value to non-profits, which are oftenmore cost-constrained than for-profit developers.

• There is a learning curve in the first project that might reduce initial cost savings.However, if a successful project such as Noji Gardens is completed the experience can beleveraged into future projects, which will enjoy even greater cost and time savings.

• Developers that understand HUD-code regulations and construction are critical to the suc-cessful utilization of the technology in the attached housing market. It is of great value fora developer to invest in training of its employees in the HUD-code product and process.

• Investing the time to understand the developer's business and champion the project maybe key to a successful venture. A plant employee should represent the interests of thedeveloper in the plant, and be invested in the project.

• A spirit of coöperation between the developer and manufacturer is paramount to the suc-cess of a project. Since the parties may have conflicting business models, they must sharea willingness to be flexible.

• Careful planning of logistics, including the transportation, staging, and installation of thestructures, is critical to a complete development plan utilizing single-family attached man-ufactured homes.

• The HUD alternative construction approval process can take much longer than expected.Developers should expect this time delay and build it into the process.


Changes Proposed to the Federal MHCSS A

Appendix A 75

This appendix contains proposed changes to 24 CFR 3280, Manufactured HomeConstruction and Safety Standards, and to 24 CFR 3282, Manufactured Home Proceduraland Enforcement Regulations.

MHRA Proposed Changes to NFPA 501This section of Appendix A contains a summary of each proposal submitted by MHRA to

NFPA as a proposed revision to the 2000 edition of NFPA’s Standard on ManufacturedHousing, which is a shadow standard for 24 CFR 3280. Also included for each proposal isthe NFPA committee’s action and a summary of its response. If MHRA submitted a com-ment on the response, this is included, along with the NFPA committee's final action.

NFPA501Section Recommendation / Response

1.2 Intent of recommendation:Add new definitions required to incorporate single-family attached dwellings for: Attic;Exterior Balcony; Basement; Common Wall; Deck; Draft Stop; Fire SeparationDistance; Guard; Hand Rail; Height, Story; Single-family Attached Dwelling; andStory.

Committee Action: Accept in PrincipalNo specific action to be taken at this time. The technical committee chose not toincorporate the definitions into the document, but instead to accept the concept inprincipal. A recommendation will be forwarded to the technical correlating committeeto investigate the possibility of establishing a separate chapter within the document, orpossibly any other document, that would address the required on-site construction ele-ments.

1.11.4 Intend of recommendation:Permit the certification label to be installed at alternative locations if the normal loca-tion will prevent the label from being visible after installation, since sections in multi-unit homes may not be oriented in a side-by-side position.

Committee Action: Accept in PrincipleAccept the proposal with minor revisions to wording.

Final Analysis:Intent accomplished.

2.3.1.3 Intent of recommendation:Provide that windows facing a porch may be part of the required room glazed area

Committee Action: Accept in PrincipleAccept the proposal with minor revisions to wording.


76 Appendix A

2.5.1.2.5 Intent of recommendation:Add requirements for fire sprinklers when the maximum 35 foot travel distance fromeach bedroom door to an exit door cannot be maintained.

Committee Action: Accept in Principle in PartAccept the fire sprinkler requirement, but not provisions regarding exit door to garage,sprinkler head location and testing.

MHRA comment:Add text prohibiting exit doors from exiting through a garage to a new location in thestandard.

Committee Action: RejectThe committe rejected this requirement, explaining that it relates to activities thatoccur at the site and are not under the control of the manufacturer and thereforeshould not be in the standard.

Final AnalysisIntent accomplished. The committee action to incorporate NFPA 13D has no effecton single-family attached manufactured homes. The committee action to remove thecaveat that a door discharging into a garage is not an exit door has no effect. However,it is noted that Section R3111.1of the International Residential Code (IRC) requiresthat the exit door shall provide for direct access from the habitable portions of thedwelling to the exterior without requiring travel through a garage.

2.14 Intent of recommendation:Include stairways and stairway requirements.

Committee Action: Accept in PartAccept all the provisions except for that relating to lighting which is being replaced byanother proposal.

Final Analysis:Intent accomplished. The proposed section included a paragraph on stairway illumi-nation. The committee rejected this paragraph in favor of a similar requirement pro-posed by others. This substitution has no effect on single-family attached manufac-tured housing.

2.15 Intent of recommendation:Include stair landings and landing requirements.

Committee Action: Accept in PartAccept the basic requirement for landings with specifics from another proposal.

Final AnalysisIntent accomplished. The committee action editorially clarified that the exception atSection 2.15.1.1 applies only to basement stairs. The clarification has no effect on sin-gle-family attached manufactured housing.

Appendix A 77

2.16 Intent of recommendation:Include handrails and handrail requirements.

Committee Action: RejectAlternative proposal for handrail requirements was accepted.

Final Analysis:Intent accomplished. The requirements of the alternative proposal accepted are morestringent than those of the MHRA proposal, and of the IRC. However, the acceptedrequirements will adequately serve the purposes of single-family attached manufac-tured housing.

2.17 Intent of recommendation:Include guardrails and guardrail requirements.

Committee Action: Accept in PrincipleThe committe accepted the proposal with a minor revision requiring 42-inch highinstead of 36-inch high guardrails on upper floors.

Final Analysis:Intent accomplished. The amended proposal is acceptable for single-family attachedmanufactured housing.

3.6 Intent of recommendation:Add new section on fireblocking, since the probability of concealed spaces between sto-ries exists with the advent of two-story manufactured housing.

Committee Action: RejectThe technical committee chose not to require this provision because of the limitednumber of units for which it would be applicable and because the unique constructionof a manufactured home may not require the same construction provisions needed forhomes built on-site.

MHRA Comment:Change title of proposed section to draftstopping. To reject this proposal, which isessential to residential fire safety, on the basis that there are a limited number of suchunits is both irrational and irresponsible.

Committee Action: Accept in PrincipleAccept the proposed text with minor revision.


3.11 Intent of recommendation:Provide for fire separation since manufactured homes may be installed as single-fami-ly attached dwellings with a zero lot line, or with a separation of less than three feetbetween dwelling units.

Committee Action: RejectThe technical committee requested that the technical correlating committee review allthe applicable proposals related to site-specific activities and consider establishing aseparate chapter that would address them.

Final Analysis:Intent accomplished. While this proposal was rejected for inclusion in Chapter 3, it isincluded in its entirety in the proposed new Chapter 11. Inclusion in proposedChapter 11 satisfies the requirement for single-family attached manufactured housing.

3.12 Intent of recommendation:Provide for fire separation between the home and the garage.

Committee Action: Accept In PrincipleAccepted the proposed text with minor wording revisions.


4.5.1 Intent of recommendation:Address the structural connections between stories of multi-story manufacturedhomes.

Committee Action: Accept


4.5.8 Intent of recommendation:Codify the requirements for completion of roof systems on-site and specify the condi-tions that must be met for on-site installation of part or all of the roof assembly.

Committee Action: RejectThe committee requested additional information, stating that the recommended lan-guage was vague.

MHRA Comment:Revised proposal with more specificity.

Committee Meeting Action: Accept in Principle in PartAccepted the proposed text with minor wording revisions.


4.7 Intent of recommendation:Codify the process whereby units are shipped without the exterior finish in place andare temporarily protected from the elements, as is necessary for on-site completion.

78 Appendix A

Committee Action: RejectThe Technical Committee encouraged a Technical Correlating Committee (TCC) taskgroup for on-site completion issues to consider the issues brought forward by this pro-posal.

MHRA Comment:It is recognized that the TCC included this recommendation in a new proposed chap-ter because it is applicable to single-family attached housing. However, the require-ments are also applicable to single-story, multi-unit homes and to multi-story homes.

Committee Meeting Action: Accept


4.7.6 Intent of recommendation:Permit the bottom board to be omitted on transportable sections intended to becomethe floor/ceiling assemblies for the upper stories of a two-story dwelling unit.

Committee Action: RejectThe bottom of the home must be in place for protection of the unit during transit.

Final Analysis:The rejection does not affect the single-family attached concept as the section can betransported and installed with the bottom board in place.

6.2.2 Intent of recommendation:Revise the definition of Thermal Envelope to include the definition of, and calculationprocedures for, multi-story dwelling units.

Committee Meeting Action: Accept in PartAccept with minor change.


6.4.1 Intent of recommendation:Permit the omission of the ceiling vapor retarder when, in multi-story units, the storydirectly above is part of the same dwelling unit.



6.4.2 Intent of recommendation:Emphasize that a vapor retarder is required in the common wall of a single-familyattached dwelling unit.

Appendix A 79

Committee Action: Accept in PrincipleRevised wording.

MHRA Comment:Revised wording back to the original “common wall”, instead of “mating wall”, since“common wall” is defined in the Standard.

Committee Meeting Action: Accept in PrincipleMade wording changes to clarify intent.


6.6.1.2 Intent of recommendation:Emphasize that insulation is required in the common wall of a single-family attacheddwelling unit and that insulation between stories of a multi-story dwelling unit is notnecessary.

Committee Action: Accept in PrincipleAccept with wording changes.

MHRA Comment:Clarified intent.



7.8.2 Recommendation:Address the vertical support of water and drain lines.

Committee Action: Accept in PartAccept with request for clarification.

MHRA Comment:Proposal clarified.

Committee Meeting Action: Accept in PrincipleAccepted with minor change.


7.9.1.2/2.1 Intent of recommendation:Clarify that each dwelling unit within a series of single-family attached dwelling unitsmust have its own hot water supply and water supply connection.

Committee Action: RejectThe committe rejected the proposal, stating that the additional terms used in the pro-

80 Appendix A

posal do not add the needed clarification but introduce the possibility of confusion asdwelling unit is currently defined within the document.

MHRA Comment:Clarified terminology and relocated the proposal to another section within theStandard.



7.9.1.3 Intent of recommendation:Codify the requirements for shipping the water heater loose with the home for on-siteinstallation, such as in a site-built garage, or in a basement.

Committee Action: RejectThe technical committee was not comfortable with the inclusion of these requirementswithin the document since these appliances can be located in a basement or anattached garage, which would not be covered by the Standard. This provision wasrelated to heat producing appliances and should not be addressed within this section.

MHRA Comment:Relocate to mechanical chapter with some revisions.

Committee Meeting Action: Accept in PrincipleAccept with addition of an exception for water heaters listed as resistant to the ignitionof flammable vapors.


7.9.3.1 Intent of recommendation:Permit installation of a water heater in a garage, basement or upper story by providingfor alternative locations to terminate the pressure relief valve. Additionally, when thewater heater is installed in the garage, require any source of ignition to be at least 18inches above the floor.

Committee Action: RejectFurther review and direction is needed to determine how this document will addressprovisions for multi-story facilities.

MHRA Comment:This proposed revision was originally proposed as one of three proposals related towater heaters. The entire proposal was rejected on the basis of objection to the othertwo parts of the proposal.

Committee Meeting Action: Accept in Principle in PartThe proposal is accepted with minor wording changes.

Appendix A 81


7.10.3.5 Intent of recommendation:Provide for on-site connection of drain lines between stories of a multi-story dwellingunit.

Committee Action: Accept in PrincipleAccept with wording change.


7.12.5 Intent of recommendation:The manufacturer's installation instructions must include the requirement to test anyon-site connections of the water and drain, waste and vent systems.

Committee Action: RejectThe committee recognized that testing of the piping is already done in the factory. Theproposed text, if strictly enforced would require each and every field connection to betested. The committee requested greater clarification as to the level of testing thatshould be required for these connections.

MHRA Comment:Added more specificity to testing requirements.

Committee Meeting Action: RejectProposed requirements are not adequate.

Final Analysis:Single-family attached manufactured housing includes plumbing connections whichmust be made on-site and most of the connections will be concealed when the houseis finished. It is essential that these connections be properly made to prevent damagein the concealed spaces. The integrity of the water and drainage systems cannot beassured without appropriate testing after all on-site connections are made. Testing willprotect the homeowner from future damage and the manufacturer from future liability.

8.4 Intent of recommendation:Define the accessibility requirements for connections of gas lines between stories ofmulti-story dwelling units.

Committee Action: Accept in PartAccept with wording changes.


82 Appendix A

8.4.12.7 Intent of recommendation:Provide for support of vertical piping of gas lines between stories.



8.4.12.8 Intent of recommendation:Test field connections of gas pipes that run between stories.



8.7.1.1 Intent of recommendation:Provide for field connection of the gas dryer exhaust system.



8.7.1.6 Intent of recommendation:Limit the length of the dryer exhaust duct so as not to be excessive for proper opera-tion of the dryer vent system.

Committee Action: RejectThe Standard addresses this issue by requiring following manufacturers' instructions;therefore this recommendation is unnecessary.

Final Analysis:Rejection of this proposal is not critical to single-family attached manufactured hous-ing.

8.8.1 Intent of recommendation:Provide the opportunity for heating appliances to be installed in the basement orgarage by allowing the appliance to be shipped loose for field installation while stillassuring the proper safeguards.

Committee Action: RejectThe committee objected to the lack of inspection and safety-related provisions, such aslack of specifics on non-sealed combustion and integrity of venting system require-ments.

MHRA Comment:Added provisions addressing the committee's concerns.

Appendix A 83

Committee Meeting Action: Accept in PrincipleAccepted with changes to wording.


8.9.2.1 Intent of recommendation:Provide for on-site installation of parts of the fuel-fired heating appliance ventilationsystem in multi-story dwelling units that may extend to the roof through upper storiesof the unit.

Committee Action: RejectThe committee objected to the absence of inspection and safety provisions.

Final analysis:On review, this section is more applicable to heating appliances which are installed inthe factory without completely installing the vent system. Revisions made under to8.8.1 adequately address the concerns for site-installed appliances and this proposedrevision is not required.

8.14.6.1 Intent of recommendation:Editorially change section on connecting ductwork to include multi-section and multi-story dwelling units that are installed or erected as opposed to coupled.

Committee Action: RejectThe committee felt the proposed recommendation needed substantial editorial correc-tions.

Final analysis:Although this section should be revised to reflect the installation of modern manufac-tured housing, rejection is not detrimental to single-family attached manufactured housing.

9.3.1 Intent of recommendation:Emphasize that each dwelling unit must have a separate power supply connection.

Committee Action: RejectCurrent language already states what the submitter intends.

Final analysis:This proposal is included verbatim in the proposed Chapter 11 as Section 11.6.

84 Appendix A

Proposed Revisions to 24 CFR 3282, Procedural and Enforcement RegulationsBased on a review of 24 CFR 3282, Manufactured Home Procedural and EnforcementRegulations three substantive changes are required to support the proposed single-familyattached dwelling standards. The proposed changes affect the following sections:

• 3282.7: new section proposed

• 3282.15: new section proposed

• 3282.362(c)(2)(i)(E): revision proposed

Proposed revision to 3282.7A new definition is proposed for section 3282.7 as follows:"Completed", as it applies to affixing a certification label, means that the manufactured

home, as it leaves the factory, is in full compliance with these Regulations and the Standardsexcept for structural, electrical, mechanical and plumbing installations and connections nec-essary to complete and connect the transportable sections onsite and the installation ofweather finishes designed to cover these field connections, provided that the approved designsand manufacturer's installation instructions specify the work, connections and coveringswhich are to be field completed.

SubstantiationThe Regulations, at 3282.204(c), require that the certification label be affixed only to

completed manufactured homes, but do not clearly define what a completed manufacturedhome is. Since the inception of the HUD program, double-section and even triple-sectionhomes have been labeled in the factory, even though certain structural and utilities connec-tions had to be made in the field. This practice has been tacitly accepted with the under-standing that the manufacturer's installation instructions will address the field completion.

However, the multi-section and multi-story manufactured homes currently being pro-duced can require extensive field finishing to include:• Horizontal and vertical structural connections.

• Installation and finish of roof components or even entire roof structures.

• Horizontal and vertical connections of electrical systems, gas line, plumbing lines and ductsystems.

• Appliances and appliance vent systems.

• Exterior weather resistance coverings.The regulations must properly address completion of as much of the home in the factory

as is practicable and must assure that the completion in the field maintains the home's com-pliance with the standards. This proposed definition provides the regulatory tools to assurecompletion of the home in accordance with approved designs, and the prevention of abuse inthe field installation process.

Proposed revision to 3282.15Add a new Section 3282.15 as follows:3282.15 Onsite completion of manufactured homes(a) Policy. When it is not possible or practicable to complete the home in the factory, the

Appendix A 85

manufacturer may make provisions for the onsite completion of the manufacturedhome without approval by the Secretary when the following requirements are met:

(1) The manufacturer shall submit to the DAPIA such information as the DAPIA mayrequire in order to carry out the design approvals in accordance with sections3282.203 and .361. This information shall include designs and supporting materi-als to define all work to be completed onsite, and to demonstrate that the complet-ed manufactured home will comply with the Standards. At a minimum, this infor-mation shall include the following:(i) A summary list of all work required to be completed onsite in order to assure that

the finished home complies with the standards.(ii) Construction drawings and/or specifications showing the details and layouts of

each item of construction or installation which is to be completed onsite. (iii) Structural analysis and calculations, test data and/or other accepted engineering

practices used by the manufacturer to validate the designs. (iv) Installation instructions and details when such instructions and details are not

clearly delineated in the construction drawings and specifications.(v) A list showing all materials, parts and components which shall be provided by

the manufacturer, and a list, with detailed specifications, showing which materi-als, parts and components are to be provided by the installer.

(vi) Specifications and instructions for the connection and/or installation of allappliances and utilities systems, including onsite test requirements.

(vii) Provisions for a warning label or other appropriate procedure to prevent theoperation of appliances or utilities systems prior to completion and test of thefield installation/connection.

(2) The manufacturer shall provide the IPIA approved plans and supporting materialfor the onsite completion of the manufactured home. At a minimum, such infor-mation shall include:(i) All DAPIA approved installation information required by 3282.15(a)(1).(ii) A quality control checklist which outlines all work to be completed onsite,

including appropriate tests and inspections.(iii) An inspection form, acceptable to the IPIA, which includes provisions for iden-

tifying the manufacturer, the manufactured home serial number, the installationsite, the installer or contractor, the IPIA, the IPIA's approved inspection agency(if different from the IPIA) and the name of the inspector.

(3) The manufactured home shall be completed onsite in accordance with the DAPIAapproved construction details and installation instructions. (i) All site work will be accomplished by a qualified installer or contractor selected

by the manufacturer, and acceptable to the authority having jurisdiction.(ii) The contractor or installer shall be provided with the DAPIA approved plans

and installation instructions required to complete the onsite work.(iii) The manufacturer shall maintain responsibility for all aspects of the onsite work

until all work required to complete the home in accordance with the DAPIAapprovals is performed and accepted by the IPIA, or its approved inspection

86 Appendix A

agency.(iv) The manufacturer shall provide, to prospective purchasers, a notice stipulating

that the manufactured home will meet all provisions of the Standards after com-pletion onsite.

(4) The completed inspection form shall be signed by the IPIA or its designated rep-resentative, and the manufacturer or its designated representative, and shall bemaintained on file by the manufacturer.

(5) All site construction shall be inspected by the manufacturer's IPIA or by a qualifiedand experienced inspection agency or individual acceptable to the manufacturer'sIPIA. The inspection entity shall inspect the site installation(s) for completion inaccordance with the DAPIA approved designs and installation instructions.(i) A construction site is a geographical location where all affected homes are in close

proximity and under the supervision of a single inspection entity and a singlecontractor or installer.

(ii) 100% of all onsite construction and installation of the first four homes at a con-struction site will be monitored. A minimum of 25% of all homes in excess offour homes at a construction site will be monitored, except that 100% of allappliances installations, utilities installation and connections and required test-ing will be monitored on all homes.

(iii) The inspection entity will document all inspections, deviations and correctiveaction, and will verify compliance of the home in a format acceptable to theIPIA. Upon completion of the inspection, the IPIA shall obtain the manufac-turer's concurrence in the report, and shall process the report in accordance withthe IPIA standard procedures and these regulations.

SubstantiationNFPA Standard 501 has been extensively revised to address the design and construction

of multi-section, multi-story manufactured homes, including provisions for completion ofcertain elements of the home onsite. Revision to the regulatory process is essential to assurethat the design, construction, inspection and installation of the home is in full compliancewith those regulations. This proposed revision addresses all of the elements.

Proposed revision to 3282.362Revise section 3282.362(c)(2)(i)(E) as follows:The label shall be located on the tail-light end of each transportable section of the manu-

factured home approximately one foot up from the floor and one foot in from the road side,or as near that location as practicable. The road side is the right side of the manufacturedhome when one views the manufactured home from the tow bar end of the manufacturedhome. When locating the label on the tail end of the transportable section will prevent thelabel from being visible after the manufactured home section is installed at the installationsite, the label shall be installed on a permanent part of the exterior of the manufactured home,in a visible location as specified in the approved design. It shall be applied to the manufac-tured home unit section in the manufacturing plant by the manufacturer or the IPIA asappropriate.

Appendix A 87

SubstantiationThe same wording has been proposed to (or has been approved by) the NFPA 501 on

manufactured homes as a revision to section NFPA 501 section 1.11.4 [MHCSS section3280.11(d)]. This proposed regulatory change will harmonize the standards and the regula-tions.

88 Appendix A

Resources

This section lists a variety of resourcesavailable to those who want to learn moreabout manufactured housing in general, aswell as for those who wish to study specificaspects of the market for HUD-Code homesin single-family attached applications.

The Manufactured Housing Institute(MHI), located at 2101 Wilson Boulevard,Suite 610, Arlington VA 22201 (telephone703-558-0400), is the principal nationaltrade association for the manufacturedhousing industry. MHI offers numerouspublications for sale or free of charge, spon-sors research, performs lobbying, and com-piles and publishes a variety of statistics con-cerning the industry. The MHI Web site isat www.mfghome.org.

MHI has state-level affiliates around theU.S. Many of these affiliates maintain theirown Internet sites, which are sources ofstate-level information about manufacturingplants, retailers and communities. Thesesites include:

Alabama www.amhi.orgArizona www.mhiaz.org Arkansas www.amha.netCalifornia www.cmhi.org Colorado www.coloradohome.orgConnecticut www.ctmha.comDelaware www.firststatemha.orgFlorida www.fmha.orgIdaho www.idahomha.orgIllinois www.imha.orgIndiana www.imharvic.org Kansas www.kansashome.netKentucky www.kmhi.orgLouisiana www.lmha.comMassachusetts www.massmha.orgMichigan www.michhome.orgMinnesota www.mnmfghome.orgMississippi www.msmmha.comMissouri www.mmha.netMontana www.mtmha.org

Appendix B 89

BNebraska www.nemanufacturedhomes.comNevada www.nevadamha.orgNew Jersey www.njmha.orgNew Mexico www.nmmha.comNew York www.nymha.orgNorth Carolina www.ncmhi.comNorth Dakota www.ndmha.comOhio www.omha-usa.orgOklahoma www.mhao.orgOregon www.omha.comPennsylvania www.pmha.orgSouth Carol www.mhisc.comSouth Dakota www.sdmha.comTennessee www.tnmha.netTexas www.texasmha.comUtah www.utahmha.orgVirginia www.vammha.orgWashington www.nwpride.orgWisconsin www.wmha.org

The Manufactured Housing ResearchAlliance (MHRA), located in New York, NY(telephone 212-496-0900), is an industryorganization with the mission of developingnew technologies for manufactured hous-ing. MHRA's research products are avail-able on its Web site at www.mhrahome.org.

The Housing and Building Technologydivision of the National Conference ofStates on Building Codes and Standards(NCSBCS), located in Herndon, VA (tele-phone 703-437-0100), is actively involvedin the HUD-code program and can provideinformation about national and state-levelregulatory issues relating to manufacturedhousing. The NCSBCS Web site is atwww.ncsbcs.org.

Thousands of public housing authoritiesexist across the United States. Many ofthese are operated at the local level. HUDmaintains a database of U.S. housing agencyprofiles at www.hud.gov/pih/systems/pic/hapro-files/

The National Congress for Community

90 Appendix B

Economic Development (NCCED) is thetrade association and advocate for the com-munity-based development industry.NCCED represents over 3,600 communitydevelopment corporations (CDCs) acrossAmerica. CDCs produce affordable housingand create jobs through business and com-mercial development activities. NCCEDservices the community development indus-try through public policy research and edu-cation, special projects, newsletters, publica-tions, trainings, conferences, and specializedtechnical assistance. To learn more aboutNCCED and its members visitwww.ncced.org.

Manufacturer Internet Sites

Virtually all home manufacturers main-tain Internet sites containing informationfor consumers, retailers and in some casesfor investors. Most offer the ability to searchfor plants or dealers by geographic locationor provide this information in the form ofmaps or lists. Some sites show floor plansand pictures of model homes. The Web sitesfor some of the largest publicly traded pro-ducers include copies of annual financialreports, which generally contain a great dealof information about the firm, its divisions,its operations and its finances. Mergers andacquisitions within the industry are con-stantly taking place, so this list may rapidlybecome out of date. American Homestar

www.americanhomestar.comBurlington Homes

www.burlingtonhomes.comCavalier Homes

www.cavhomesinc.comCavco Industries, Inc.

www.cavco.comClayton Homes

www.claytonhomes.comChampion Enterprises

www.championhomes.com

Commodore Corporation www.commodorehomes.com

Crestline Homes (Commodore) www.crestlinehomes.com

Fairmont Homes www.fairmonthomes.com

Fleetwood Enterprises www.fleetwood.com

Four Seasons Housing www.fourseasonshousing.com

Fuqua Homes, Inc. [Oregon] www.fuquahomes.com

Fuqua Homes, Inc. [Missouri] www.fuquahomes-mo.com

Hi-Tech Housing, Inc. www.hi-techhousing.com

Horton Homes www.hortonhomes.com

Jacobsen Homes www.jachomes.com

Kit Manufacturing www.kitmfg.com

Liberty Homes www.libertyhomesinc.com

Marlette Homes, Inc. (Schult) www.marlettehomes.com

New Era Building Systems www.new-era-homes.com

Nobility Homes, Inc. www.nobilityhomes.com

Oakwood Homes www.oakwoodhomes.com

Palm Harbor Homes www.palmharbor.com

Patriot Homes www.patriothomes.com

Pine Grove Manufactured Homes, Inc. www.pinegrovehomes.com

Ritz-Craft Corporation, Inc. www.ritz-craft.com

Rochester Homes, Inc. www.rochesterhomesinc.com

Schult Homes (Oakwood) www.schulthomes.com

Silvercrest (Champion) www.silvercrest.com

Skyline Corporation www.skylinehomes.com

Wick Building Systems www.wickmarshfield.com

Regulations and Financing Requirements7 CFR Part 1924: RHS rural housing loan

program regulations 7 CFR Part 3550: RHS direct single-family

loan program regulations 24 CFR Part 201: FHA financing rules for

Title 1 (personal property) loans 24 CFR Part 203: FHA financing rules for

Title 2 (real property) loans 24 CFR Part 3280: Manufactured Home

Construction and Safety Standards 24 CFR Part 3282: Manufactured Home

Procedural and Enforcement Regulations 38 CFR Part 36: VA personal property and

real property loan programs Federal National Mortgage Association,

Selling GuideFederal Home Loan Mortgage Corporation,

Single-Family Seller/Servicer Guide Note: The Code of Federal Regulations

(CFR) is accessible on-line atwww.gpo.gov/nara/cfr.

Periodicals, Newsletters and MagazinesAllen Letter. Monthly newsletter. PMN

Publishing, Indianapolis, IN. Automated Builder. Monthly magazine.

Ventura, CA. Crittenden's Manufactured Housing

Community Report. Monthly newsletter.Crittenden Publishing, Inc., Novato CA.

Manufactured Home Merchandiser.Monthly magazine. RLD Group, Inc.,Chicago IL.

Modern Homes. Monthly magazine.Manufactured Housing Institute,Arlington, VA.

Appendix B 91

Urban Land. Monthly magazine. ULI-TheUrban Land Institute, Washington, D.C.

Books and ReportsAlbern, William F. and M.D. Morris, Ed.,

Factory-Constructed HousingDevelopments, Planning, Design andConstruction. CRC Press, Boca Raton,FL.

Alley, David I., and Donald C. Westphal,Navigating the Manufactured HousingZoning Process. Manufactured HousingInstitute, Arlington, VA, 2002.

Allen, George, David Alley, and EdwardHicks with Joseph Owens, Development,Marketing and Operation ofManufactured Home Communities. JohnWiley & Sons, Inc., New York, NY. 1994.

Apgar, William, Allegra Calder, MichaelCollins and Mark Duda, An Examinationof Manufactured Housing as aCommunity- and Asset-BuildingStrategy, Joint Center for HousingStudies of Harvard University, CambridgeMA. September 2002.

Hullibarger, Steve, Developing withManufactured Homes. ManufacturedHousing Institute, Arlington, VA. 2001.

Manufactured Housing Institute, QuickFacts. Arlington, VA. 2003.

The Manufactured Housing ZoningForum, Report. Sponsored by U.S.Department of Housing and UrbanDevelopment, American PlanningAssociation and Manufactured HousingInstitute.

Sanders, Welford, Manufactured Housing:Regulation, Design Innovations andDevelopment Options. AmericanPlanning Association, Planning AdvisoryService Report Number 478. Chicago, IL,July 1998.

U.S. Department of Housing and UrbanDevelopment, Office of Policy

Development and Research, ACommunity Guide to Factory-BuiltHousing. 2001.

U.S. Department of Housing and UrbanDevelopment, Office of PolicyDevelopment and Research, Factory andSite-Built Housing: A ComparativeAnalysis. 1998.

U.S. Department of Housing and UrbanDevelopment, Office of PolicyDevelopment and Research, BuildingInnovation for Homeownership. 1998.

U.S. Department of Housing and UrbanDevelopment, Office of PolicyDevelopment and Research, Guide toFoundation and Support Systems forManufactured Homes. 2002.

U.S. Department of Housing and UrbanDevelopment, Office of PolicyDevelopment and Research, HomeBuilders' Guide to ManufacturedHousing. May 2000.

U.S. Department of Housing and UrbanDevelopment, Office of PolicyDevelopment and Research,Manufactured Home Producers Guide toWorking in the Site-Built Market. 1999.

U.S. Department of Housing and UrbanDevelopment, Office of PolicyDevelopment and Research, PermanentFoundation Guide for ManufacturedHousing. September 1996.

U.S. Department of Housing and UrbanDevelopment, Office of PolicyDevelopment and Research, TechnologyRoadmapping for ManufacturedHousing. March 2003.

Vermeer, Kimberly and Josephine Louie,The Future of Manufactured Housing,Joint Center for Housing Studies ofHarvard University, Cambridge MA.January 1997.

Visit the HUD Office of PolicyDevelopment and Research (PD&R) Website, www.huduser.org, to find this reportand others sponsored by PD&R. Otherservices of HUD USER, PD&R's ResearchInformation Service, include listservs; spe-cial interest, bimonthly publications (bestpractices, significant studies from othersources); access to public use databases.HUD USER maintains a hotline (1-800-245-2691) for help in accessing the infor-mation you need.

92 Appendix B

Endnotes

1. Meeting Our Nation’s HousingChallenges, Report of the BipartisanMellenial Housing Commission appoint-ed by the Congress of the United States,Washington, D.C., May 30, 2002, avail-able at www.mhc.gov. According to thereport, manufactured housing accountedfor 72% of new unsubsidized units afford-able to low-income homebuyers between1997 and 1999.

2. According to the U.S. CensusBureau, a housing start is registered at thestart of construction of a new structureintended primarily as a residential build-ing. The start of construction is defined asthe beginning of excavation of the build-ing's foundation.

3. See Chapter 3 for a more completediscussion of market forces.

4. U.S. Census Bureau ConstructionReports, Quarterly Housing Starts byPurpose of Construction and Design Type(United States - Annual Data), available athttp://www.census.gov/const/www/newresconstindex.html.

5. MIT-Harvard Joint Center forUrban Studies, State of Nation's Housing,2000. Original source: U.S. CensusBureau, Construction Reports, Series C-40 and U.S. Census Bureau 2000 Census.

6. U.S. Census Bureau defines "hous-es sold" in a given year as all houses forwhich a sales contract has been signed or adeposit accepted. This includes houses forwhich these transactions have occurredbefore construction has begun. It alsoincludes homes sold while under construc-tion or after completion. Land, in someform, is included in the sales transaction.

Endnotes 93

7. U.S. Census Bureau, Series C-25,Characteristics of New Housing Report,available athttp://www.census.gov/const/www/charindex.html.

8. U.S. Census Bureau, Series C-25,Characteristics of New Housing Reportfor July 1999.

9. U.S. Department of Housing andUrban Development Fiscal Year 2004Budget Summary, available athttp://www.hud.gov/about/budget/fy04/budgetsummary.pdf.

10. Ibid.

11. Ibid.

12. Ibid.

13. U.S. Department of Housing andUrban Development Public HousingAgency Profiles, available atwww.hud.gov/pih/systems/pic/haprofiles/.

14. See endnote 1.

15. The proposals, discussed in detail inAppendix A, were submitted by MHRA tothe NFPA Committee on ManufacturedHousing, a body convened by theNational Fire Protection Association toprovide guidance to HUD on changes tothe HUD standards.

16. U.S. Department of Housing andUrban Development, Office of PolicyDevelopment and Research, HomeBuilders' Guide to ManufacturedHousing. May 2000.

17. Manufactured Housing Institute,Arlington, VA.

18. California Health and Safety Code,General Provisions, Division 13-Housing,Part 2-Mobilehomes and ManufacturedHousing, Sections 18000-18014.

19. Mid-Peninsula Housing CoalitionWeb site, available at http://www.midpen-housing.org/.

20. California Association of Realtors,Interest Rates Keep California's HousingAffordability Index Unchanged in AprilDespite Rise in Median Home Price,C.A.R. Reports, June 12, 2003 pressrelease, Los Angeles, CA, available athttp://www.car.org/index.php?id=MzIxMzY=.

21. Local Initiative Support CoalitionCenter for Home Ownership, BestPractice Profile: ManufacturingAffordability in Seattle, September 2002.

94 Endnotes

Documents

Eliminating Barriers to the Use of HUD-Code …HUD-code home industry to produce inno-vative designs. While in the past, HUD-code homes have developed largely apart from the mainstream