A Step in the Right Direction - HUD Proposes New Rule for AFFH

Tuesday, January 14, 2020 12:25:38 PM

In the post-holidays malaise that comes when life returns to our normal routine, there was a significant rule release from HUD that needs our attention.

I’ll start with a cautionary caveat that this article is about: 1) a proposed rule, which means that it isn’t a final rule and thus not effective yet, and 2) in the give-eth and take’eth sense, the proposed rule is both significant in setting out a new standard specific to manufactured housing, but measured in that the standard will not be mandated on states and cities.

So what am I talking about?

On January 7, 2020, HUD published a proposed rule change relating to the implementation of the Fair Housing Act, in particular the aspect of the Act that conditions a local jurisdictions’ eligibility to receive federal HUD funds on the local laws, rules and ordinances to align with the mandate that their housing programs “Affirmatively Further Fair Housing” (AFFH).

This latest from HUD on AFFH is just one of several regulatory actions currently in motion.  HUD is also reviewing the rules applicable to “disparate impact” and currently has open for public comment a solicitation to the public on how best they should remove barriers to affordable housing.  But focusing for a second on the recent 84-page proposed rule for AFFH, this new proposed rule is of particular interest to our industry.

The reason?

HUD proposes to define a list of 16 specific obstacles “to fair housing choice,” and sitting right there at number 13 is, “[u]nnecessary manufactured-housing regulations and restrictions.”

Why is this significant? Because the prior rule never even mentioned manufactured housing. If these provisions go on to become part of a final rule, there would be a new opportunity for local housing programs in every state and city in the U.S. to prove their AFFH adherence by crafting local rules in a way that promotes manufactured housing.

This is good news.  Mostly from a broader policy and trend perspective. 

First, explicitly securing specific language in the proposed rule to the benefit of our industry is a testament to the work done at the national level by MHI to advocate to HUD for the inclusion of manufactured homes in the broader discussion regarding all housing.  In fact, the proposed rule even calls out manufactured housing early on in one of the most positive lights we have seen in years, when the rule states, “[f]or example, there have been significant improvements in housing design and production products, as demonstrated in new designs for manufactured housing and reduced-size housing.” (page 11)

Alright, I said the proposed rule is good news, but it isn’t great news, at least not yet.

While the proposed rule includes unnecessary manufactured-housing regulations and restrictions in the lists of obstacles local jurisdictions can choose to address when stating their compliance with AFFH, it does not mandate that they address this obstacle.

Jurisdictions will be required to address three goals or obstacles when submitting for an AFFH certification and if one of those three happens to be relating to reducing manufactured housing regulations or restrictions, the locality will not have to provide any further description on the obstacle. The rule would be bettered by requiring localities to submit how they are lessening unnecessary manufactured housing regulations.

The proposed rule also does not provide any details on what constitutes “unnecessary” regulations or restrictions against manufactured housing.  We need to advocate for our industry in the other iterations of this rule and others to clearly define what constitutes unreasonable restriction and regulation at all levels – federal, state, and local. 

If this rule goes on to become a final rule, it provides a toe-hold by which we can advance even more specific and meaningful guidelines to local housing policies.

To offer up just a few suggestions, if we could successfully advocate that “unnecessary” restrictions and regulations against manufactured housing mean:

  • No blanket prohibitions against all manufactured homes;
  • No local reasoning for prohibition or restriction against manufactured homes based on building code type (HUD code versus the IRC);
  • No local reasoning for prohibition or restriction against manufactured homes based on any attempt to argue the homes are “sub-standard,” “unsafe,” “lesser quality,” or “deficient in any code or construction manner compared to site-built housing;”
  • No local reasoning for prohibition or restriction against manufactured homes based on any unsubstantiated claim that inclusion of manufactured homes would have a negative impact on surrounding property values or tax values;
  • No local reasoning for prohibition or restriction against manufactured homes based on exterior home aesthetics or architectural designs targeted against manufactured homes;
  • No local reasoning for prohibition or restriction against manufactured homes based on a unique characteristic only exhibited in manufactured homes as opposed to other housing that serves as a pretextual target against manufactured homes; or
  • No prohibitions or failure to include as eligible housing in single-family zoned areas/programs:
    • Any manufactured home that could be supported by any of the federally back loan programs, such as VA of FHA, or any program eligible for Government Sponsored Entities (Fannie Mae or Freddie Mac) purchase; or
    • Any manufactured home that would increase housing supply and housing choice for active military, veterans, first responders, the elderly, teachers, families with children, recovery housing following a natural disaster, increased housing supply that will serve statistically higher populations of persons from a “protected class” such as race, ethnicity, national origin, sex and/or familial status.

The rule also is clear that HUD’s goal moving forward is to allow greater flexibility and less federal oversight on local jurisdictions to foster creative approaches to housing that can be examined and then replicated.  Meaning, it doesn’t currently appear that HUD is going to aggressively go on the war-path to oversee local jurisdictions. 

It will be on us as advocates for our industry to continue to advance our goals of greater inclusion and parity to permeate all levels of housing policy. 

But glass-half-full, this recent proposed rule from HUD is certainly a solid step in the right direction.