How a ‘Lonnie Deals’ Homebuyer Turned Community Owner Gained Long-Term Outlook, Business Expansion
15 years ago, what many manufactured housing professionals know as “Lonnie Deals” kept Kirby Horton and his colleagues busy. They would buy distressed homes, fix them up and sell them.
“We kept going and kept growing,” The Firm founder and owner Kirby Horton said. “Owning the community was a big step from renovating old homes, but it was sustainable.”
Horton said even then it was about buying properties that needed help, putting time, money, love, and labor into them before finding an institutional buyer that would be a good fit for the community.
“We would re-do the infrastructure, replace homes, and sell,” Horton said.
That was when interest rates were low and the numbers for repeating a succession of transactions made sense. In the new higher-rate climate, the sales volume has slowed and The Firm has committed to holding on to the parks it has.
“There is a big disconnect between the owners of the park and what these investors want to buy,” Horton said. “It’s hard to see something today for what it was worth even three years ago… It’s a matter of catering up.”
‘Good Parks’
The industry needs quality infill, Horton said. “You have to judge multiple factors when bringing in homes, including size and position of the home, setbacks, prep work, setting the home, and finishing it so that it’s move-in ready,” he said. “You have to be careful not to do something that’s going to sacrifice affordability.”
The Firm bought and made available 109 homes in September of 2022. It had been at 600 homes per year, Kirby said, and in the new environment found it was down to placing about 90 per year.
“We were all staffed up, we have all of the equipment and know-how, but we no longer need this experience and these services as much as others do,” Horton said he realized. “We can take a lot of burden off the park manager.”
So now The Firm, in addition to owning and operating several parks, also is taking on clients that need expertise in how to revitalize properties and turn them into “good parks”.
“Honestly, we thought we were going to start slow…” Horton said. “But the phone has been ringing.”
Flexible Management Services
Horton said The Firm can work 50/50 with community staff accomplishing community milestones like repairing water or sewer disruptions, has local teams in Arkansas, Georgia, and Indiana. The traveling culture has caught on pulling out and fixing or replacing broken windows, managing trees and landscaping, providing guidance for the sales team, or setting up resident programs.
“It’s almost like third-party management,” he said. “We can do all of the things that park management is too busy to do, or we can take over and do everything.”
The Firm has a staff of 50 professionals that operate in Texas and to the east. They have experience with properties in Houston and Dallas, northeast to the Carolinas, and down to Tennessee, Georgia, Alabama, and Mississippi.
Horton said The Firm has local teams in Arkansas, Georgia, and Indiana.
The traveling culture has caught on among its employees. The Firm owns a pair of RV parks where employees can stay between jobs.
“A lot of employees have taken to RVing,” Horton said. “Most of the employees have fifth wheels so they jump in and go to stay on site until the job is done and then they’re off to the next location.”
“FHFA’s new data resource on manufactured homes provides relevant, up-to-date information on an important but less-understood segment of the housing market,” FHFA Director Sandra L. Thompson said. “In a housing market with elevated home prices, manufactured housing remains an affordable option. This new data should help advance discussions on responsible efforts to expand homeownership opportunities.”
Pricing data for manufactured homes will be updated quarterly and included along with the flagship FHFA HPI® — released monthly and quarterly — featuring publicly available data series on trends in single-family home prices.
The new data release for manufactured homes includes purchase-only as well as all-transactions house price indexes, the latter combining purchase and refinance data. Both measure quarterly changes in prices since 2000, on a national scale, based on repeat-sale transactions for individual homes.
Key Findings in Inaugural MHPI
House price indexes for manufactured homes increased by 7.9 percent between the second quarters of 2023 and 2024. They increased by 3.2 percent in the second quarter of 2024 compared with the first quarter.
In the second quarter of 2024, the median price of manufactured homes for sale was $231,000. This represents an increase of $1,000 from the second quarter of 2023.
A data series on median manufactured home prices list the national median prices in dollars for every quarter since the beginning of 1985.
The FHFA said the new price indices and data on median prices are still in development and may undergo changes in the future.
The FHFA HPI is a collection of publicly available house price indexes that measure changes in single-family home values based on data that extend back to the mid 1970s from all 50 states and more than 400 American cities. It incorporates tens of millions of home sales and offers insights about house price fluctuations at the national, census division, state, metro area, county, ZIP Code™, and census tract levels.
From the White House to Congress to state and local legislatures, solving the nation’s housing supply shortage has become a critical priority. Policymakers at all levels of government are hearing about the rising cost of housing and they are eager to explore policy solutions. In this environment, MHI’s efforts to engage policymakers about manufactured housing has placed the industry at the forefront of recent discussions about solving the nation’s housing supply crisis.
A recent announcement by the White House about actions the administration is taking to address the nation’s housing supply shortage included HUD’s actions around manufactured housing, noting that “manufactured housing provides an essential path to increasing overall housing supply and offers significant savings over site-built housing.”
The national building code, the HUD code, that manufactured¬ homes are constructed to has emerged as a federal seal of approval for quality, ensuring buyers receive resilient, energy efficient homes at prices within reach thanks to the economies of scale that the federal building code facilitates.
Advocacy for Attainable Homeownership
In addition to elevating the homes themselves, though, MHI’s work ensures that policymakers understand the range of locations where homes can be placed. The variety of designs that exist for today’s HUD code manufactured homes, such as single-section, multi-section, CrossMod, duplexes, and ADUs allow manufactured homes to meet a wide range of needs around the country. MHI’s work includes highlighting the importance of land-lease communities as a critical affordable housing model. About 30 percent of the manufactured homes produced are placed in communities. The financial and lifestyle benefits of owning a manufactured home in a land-lease community have resulted in millions of individuals and families choosing this housing option.
The desirability of land-lease communities is evidenced in both U.S. Census data and independent research conducted by MHI, showing manufactured housing community residents report high levels of satisfaction and that they are likely to recommend land-lease community living to others. The research shows that the satisfaction levels are increasing. Low vacancy rates and waiting lists also demonstrate the strong appeal of this hybrid-homeowership option.
For those who have visited or have lived in a land lease community, it is no surprise to see such strong satisfaction and demand. MHI research shows that affordability is consistently a key reason for choosing a land-lease community over other options, including:
Having more space
Not having to share walls with a neighbor and, having an immediate outdoor space
Pools, walking paths, and trails
Parks
Fitness centers
Lawn Care
Other areas that residents and potential residents favor are the social events, such as summer barbecues and movie nights.
Value of Community Living
With U.S. housing costs universally skyrocketing, MHI research shows that the majority of community residents believe their rent is the same or lower than other housing options.
It is critical that the land-lease segment of the industry disallows the anecdote to be the narrative about community living. The facts are clearly on the industry’s side, and through continued advocacy efforts MHI will continue to communicate the positive housing option that land-lease communities offer, with desirable homes at price points within reach, and with a community setting that offers more than a house, but a lifestyle.
While there is strong demand by consumers and exceptionally positive resident feedback, the growth of the land lease community sector is hindered by barriers, such as zoning, which limit the expansion of the model. Across the country, there are countless examples of state and local zoning, planning, and development restrictions that either severely limit or outright prohibit the placement of a new manufactured home or the development of a new community.
The recent increased attention to manufactured housing has helped raise awareness about these barriers and MHI has expanded engagement with policymakers to address the barriers.
Beyond federal-level advocacy to address barriers, partnerships with state associations and National Community Council members have allowed MHI to provide support for conversations at the state and local levels about expanding access to manufactured housing and land-lease communities. To do this work effectively, we constantly are updating the research and information MHI uses to provide the clearest picture, and dispel misconceptions or misperceptions about homes and communities our industry creates.
Furthermore, by working with our members, MHI has had the opportunity to bring manufactured homes and other dwellings our industry builds to events where policymakers are able to personally tour the homes, see the depth of quality housing our industry creates, and hear about the benefits of land-lease community living.
Through constant and diligent engagement MHI strives to elevate and grow awareness and understanding of the vital role of manufactured housing and land-lease communities.
Convene with Industry Colleagues
MHI’s work does not end with the policymakers. Providing support and resources for community owners to create high quality communities is equally as important as raising awareness with lawmakers. Through events like our National Communities Council forums in the Fall and Spring, MHI provides spaces and opportunities for community owners and operators to learn from one another, build connections, and improve their businesses.
MHI’s 2024 National Communities Council Fall Leadership Forum will take place on Nov. 13-15 at the Westin Michigan Avenue in Chicago. Top-notch speakers will share real-world strategies that attendees can put into action now to strengthen their businesses. The program focuses on topics most relevant to manufactured home community leaders — owners, managers, manufacturers, service providers, brokers, lenders, and consultants.
Beyond events, MHI works to support communities through education programs. Through MHI’s two-part Accredited Community Manager education program, land-lease community owners, managers, and workers can expand their skills on a host of topics related to managing communities, from best practices for resident relations to federal and state laws that govern community operations to budget analysis.
It is undeniable that manufactured housing communities play an important role in addressing the national housing crisis. As Rep. Marc Molinaro — (R) N.Y., put it when he toured manufactured homes on the National Mall in June… “these homes build a community.”
As the only national trade association that represents every segment of the factory-built housing industry, MHI seeks to elevate housing innovation and expand attainable homeownership in America. At a time when policymakers on both sides of the political aisle and from all across the country are seeking ways to address the housing supply shortage, MHI welcomes the opportunity to support land lease community owners and operators by facilitating homeownership through manufactured housing for more people. Together, MHI and its members will harness the opportunities before and continue to elevate the industry to grow the market across the country.
Dr. Lesli Gooch is the CEO of the Manufactured Housing Institute, the national trade organization representing all aspects of the factory-built housing industries. Mark Bowersox is a seasoned trade association executive with experience leading nonprofits at both the state and national levels. In his role as president of the Manufactured Housing Institute he is dedicated to elevating housing innovation and expanding attainable homeownership. Bowersox is a federally registered lobbyist and regularly speaks on behalf of MHI and the industry to a variety of constituent groups and industry associations.
University’s Joint Center Touches on Manufactured Housing
The book “The State of Housing Design”, put out by the Harvard University Joint Center for Housing Studies, sheds light on how housing demand, market concepts, and thought leadership in residential offerings has merged with what the manufactured housing industry has been doing for decades — optimizing production, creating efficiency and affordability, and providing options for rural living or thoughtful urban density.
“A consistent message across the most recent decade of these reports has been a sobering, comprehensive overview of high demand, low inventory, and skyrocketing costs, particularly for those Americans in the middle and below,” the publication states in its opening paragraph, penned by Sarah M. Whiting, an architect, critic, and academic administrator.
The book seeks to reveal “the extent to which design — the form and space of rooms, residences, and collective spaces; building densities, heights, and setbacks; and programming — can and should affect our country’s collective life and future, in addition to all our safety standards and economic bottom lines.”
Urban planner Daniel D’Oca and architect Sam Naylor in describing the state of housing design pointed to the value of factory built system.
“While good design is always site-specific, the magnitude of the housing shortage means we must also deploy elements that can be repeated. Scalability is addressed most directly in our chapter on ‘Modular, Panelized, and Pre-Made’ but scalable solutions for flood proofing, circulation, financing, and other elements can be found throughout,” the authors stated.
Researchers from the center circulated a short survey in August through November of 2022. More than 1,300 people from 42 U.S. states responded. More than half of the field reported themselves to be mid- to late-career professionals in an array of housing related fields.
The survey was intended to inform the framing of the publication and to “gut-check our early assumptions on emerging design trends.”
It asked “In the last two years, what design ideas have you noticed the most in newly built housing?”
Responses fit into a pair of primary categories: Size and Density. Among the top single-word and short phrase responses were “smaller”, “modular”, “micro”, “higher density”, “ADUs”, “Tiny”, and “For Families”. One respondent, a code official in Montana, said simply “smaller living spaces but more storage space”, while an academic and designer in Oregon said “Smaller residences, tiny houses, clustered developments and townhouses”. An academic and researcher in Georgia noted a trend toward “Prefabricated structures sited in smaller infill lots.”
The survey asked respondents if they could change one thing, what might it be? The resounding answer was “zoning.”
Mimi Zieger, a Los Angeles-based architecture and design critic, wrote about “disguised density” which fills a gap between single-family residential and large-scale multi-family.
For instance, a smaller rental apartment or condo building could look from the street like a pair of midsize homes on neighboring parcels but have offstreet parking and multiple residences in a shared courtyard setting.
The authors are looking for “Stealth. Disguised. Gentle.”
The 184-page book, which can be ordered and downloaded at the HJCHS website, covers everything from “Creative Corridors” to “Emergency Villages”, and adds in “Small and Skinny” construction, kind of like putting a manufactured home on its nose and building a staircase. “We highlight projects built on this knife’s edge of a cultural battle — creating compelling character within the tight constraints of neighborhood and market demands,” the authors assert.
One respondent said an interpretation of the phrase “right-housing” is the idea of putting simple parameters on design and zoning and let people innovate and require engagement with residents and the neighborhood.
The U.S. Department of Labor reported a jump in the work force, adding 254,000 jobs in September, 100,000 over the most optimistic expectation.
Unemployment went down a tenth to 4.1 percent.
Employment in food services rose by 69,000 in September and health care added 45,000. Construction employment continued to trend up with more than 25,000 jobs added. Manufacturing was down slightly.
Average hourly earnings rose 0.4 percent in September and are up 4 percent in 12 months. Aggregate hours declined a tenth in September but are up 0.9 percent from last year.
Additionally, July and August non-farm payroll were increased by a total of 72,000 jobs.
After the Fed cut rates a half point in September, analysts speculated whether another half point cut would come in November and/or December. However, the overachieving labor market may provide the Fed with the real option for a series of quarter point cuts instead.
The current inflation rate is 2.5 percent, a half point above the Fed’s goal. But a slower simmer, if possible on the rates, and leveling in the bond markets coming at an easier pace could provide the time for lagging effects in the market and increase the odds of a “soft landing” that is increasingly likely.
Understand the Ins and Outs of the Popular Lending Tool
By Dan Dempsey and Joanna Stevens
A DSCR loan refers to a loan where the primary consideration is the Debt Service Coverage Ratio. The lender pays close attention to the borrower’s ratio to assess creditworthiness and ability to manage debt. The DSCR is a financial metric used to assess a borrower’s ability to cover debt payments with operating income and is commonly used in commercial real estate and for business loans. Below is a breakdown of the primary aspects of a DSCR loan:
Debt Service Coverage Ratio and Its Purpose
This ratio is calculated by dividing a borrower’s net operating income by their total debt service. Total debt service includes principal and interest payments. For example, if a business has an NOI of $120,000 and debt payments of $100,000, the DSCR would be 1.2.
Lenders use DSCR to evaluate the risk associated with lending to a borrower. A DSCR greater than 1.0 means the borrower can cover debt obligations. A ratio less than 1.0 indicates possible payment struggles. For commercial real estate loans, lenders usually require a minimum DSCR of 1.2. This ensures the property generates enough income to cover payments.
Advantages of a DSCR Loan
Focus on Cash Flow
DSCR loans focus on cash flow rather than just credit score or collateral. They can be accessible to borrowers with strong income but limited assets or imperfect credit.
Predictable Requirements
The DSCR requirement is a simple metric that clarifies the income needed for a loan. It helps borrowers plan their finances effectively.
Flexibility in Use
These loans can fund commercial real estate acquisitions, business expansion, or refinancing, as long as income covers the debt service.
Risk Mitigation
A higher DSCR requirement can mitigate risk for both borrowers and lenders. It ensures that there is a buffer for unexpected fluctuations in income.
Disadvantages of a DSCR Loan
Higher Requirements
Loans with high DSCR requirements might be challenging to qualify for, especially for businesses or properties with fluctuating or lower than average income streams.
Income Sensitivity
If a borrower’s income goes down, it might affect their DSCR and their ability to pay back the loan. This could lead to refinancing challenges or higher costs.
Potential for Higher Rates
Some lenders might offer higher interest rates for loans where DSCR is a primary consideration, to account for the risk of income variability.
Complex Evaluation
Assessing DSCR requires thorough analysis of financial statements and projections. Missing financial statements can make these evaluations difficult or nearly impossible.
Term Length and Amortization
DSCR loans often have terms from five to 20 years, the most common terms being five to 10 years. But, based on property specifics and the lender agreement, the term can be longer. The amortization period, which is the time it takes for the loan to be repaid, might be longer than the term. For example, a 10-year loan might have a 20- or 25-year amortization period dependent on cash flow.
Interest rates can be fixed or variable, and there may be prepayment penalties. Some loans might require a balloon payment at a specific time. There are different approaches, and much of the value in this type of loan is its flexibility and the reduced number of documents required when closing or refinancing.
Dan Dempsey joined NAI Iowa Realty Commercial in early 2022 after years of building his own personal portfolio. His area of focus is in investment properties, with expertise in multifamily properties. Being a real estate investor himself, Dempsey enjoys working with investor-clients to help them determine and meet their real estate needs now and as the portfolio grows. As one of the most recognizable names in the mobile home park industry, Joanne Stevens is consistently sought out to provide her expert market insight to a wide range of audiences. Stevens is a real estate agent with more than 15 years of experience of listing and selling mobile home parks.
The word itself comes from Old English, a portmanteau from a pair of words creating something new that also retains the meaning of both the previous.
Barn, the first part meaning grain and the second meaning house or dwelling. Grain house. So what to make of the barndominium? Or its cool siblings the barndos?
“We’ve always been known for being kind of an outside the box builder,” Steve Lawler, the president and CFO at Deer Valley, said.
The 20-year-old company based in Guin, Ala., has made a name for itself building homes that don’t look like what other people build, homes for odd shaped lots or big broad shouldered homes for open land, homes with floor plans that bring the outside in, stated Lawler.
“You see a lot of those barndominium go up, and we began to kick it around,” Director of Sales James McGee said. “We have that tradition of doing something a little different, so we began to put some ideas together.”
Visualizing What Deer Valley’s Build Might Be
The team at Deer Valley dedicated a substantial amount of time to the idea of a barndominium, which was a fair amount of dedication for a home style that had only begun to pick up a few Google searches.
“We met on this three to four times a week for months,” Deer Valley Executive Vice President and General Manager Joey Aycock said.
The original barndominium from Deer Valley, is a four-section modular home that marries a rustic charm with contemporary design. After the four boxes are crane lifted in for the first floor, the Deer Valley crew comes in and installs the second floor.
“The upstairs, from the very first time we did this, was put together through a panelized process,” Aycock said. “From an installation perspective, it’s a lot simpler to have the builder go set up and install the house. They just stand back and watch.
“The two outside boxes are 41 feet and can be run at the same time end to end on the same line. The center boxes are 62 feet,” he said.
Tim Gann, production manager at Deer Valley, said it’s a two-day installation if all the parts are in place and the crew is graced with good weather.
How Customers React to the Barndominium
Deer Valley has sold a couple of the new barndominium homes in Alabama, Louisiana, Mississippi, and Texas. All of those homes are scheduled for production.
“We knew that this would gain some attention, but the response has really been overwhelming,” McGee said.
“We’ve had inquiries from Los Angeles to Canada. It brought us a different buyer. “We had a couple that were looking to have a barndominium built on site and they saw our home built in the factory and called us,” he said. ”They were very thorough, we went over the whole thing and told them how it’s built and what they’d get. I told them in their market it likely will end up costing more than half a million and they said ‘We’re in.’”
“I’m amazed,” McGee said. “They’re flying in to see the display barndominium.”
McGee said Chance of Chance’s Home World, a popular YouTube offering of factory built home tours, was “chomping at the bit” to get in the barndominium.
He was adamant on being the first one in.
Chance’s Home World said in the video of the home tour, “The people have got to see this!”
The channel has 757,000 subscribers and the video has gained more than 1.5 million views.
Building a Barndo Family
Deer Valley is pushing forward with the barn-inspired concept, laying plans for a series of such homes.
The effort is largely inspired by the innovative legacy of their former leader, Chet Murphree, who passed away in October of 2020.
“The entire Deer Valley team wants to dedicate this to him,” McGee said. “This is something in his honor his vision.”
The extension of the series is to provide smaller homes in the same style; the Hay Barn, the Dairy Barn, and the Tobacco Barn.
Barndominium Specs and Materials
Building Specs
2×8 Double Perimeter and Marriage Wall Rails
12” I-Beams with 8’ OC Outriggers
Continuous Ridge Beam – Entire Length of Home
Fully Vented 10” Residential Eaves
Fiber Cement Fascia Plank
Exterior Wall On Center: 16” OC
Exterior Wall Studs: 2×6 Exterior Wall
Floor Decking: 23/32” OSB Tongue and Groove Floors
Exterior Specs
Exterior Doors Features Steel Jambs
Pex Plumbing T/O Home
Exterior Frost Proof Faucet
Front Door: (38×82) 3680 Steel Front Door with Deadbolt Raised Panel Vinyl Shutters Front Door
Side Exterior Lighting: Deluxe Exterior Coach Lamps
Kitchen Specs
Extra Electric Outlets in Utility and Each End of Island
The Center for High Performance Buildings at Purdue University is about two years into a project that strives for more efficient ways to incorporate vital systems within a factory built home.
NextHouse organizers are looking for manufacturers and other partners in the off-site homebuilding sphere in pursuit of $160 million in federal funding. “We need better homes that prioritize affordability, sustainability, and resilience,” center director and Purdue Engineering Professor James Braun said. “The only way to do that is to change our paradigm of how homes are built.”
The NextHouse team’s initiative depends on harnessing industry expertise to work alongside its academic efforts “to create a revitalized, fully-automated, and scaled-up factory-built housing industry.”
Combine the Best Elements
Braun said NextHouse is assembling an industry consortium of housing companies, material suppliers, architectural firms, supply chain providers, and governmental stakeholders to continue to build relationships so that there will be a smooth pathway from conducting research and putting into practice its advancements.
He said he envisions NextHouse not just as a housing “think tank” but as a new pipeline of labor and manufacturing processes to help transform the sector.
The team has been “building within a building” since 2022 to work through fully-reconfigurable climate control equipment that is pre-built in a wall. This and similar experiments can be expanded with the planned development of a large factory-lab for prototyping and testing.
“This enables experimentation of construction techniques for modular housing and serves as a training center for workers,” Braun said in a Purdue University release.
The facility will have will a “massive house-sized environmental chamber” called the Housing Environmental Evaluation Testing (HEET) Lab, enabling controlled testing and evaluation of full-scale finished housing products under varying environmental conditions.
NextHouse has been awarded $1 million from the National Science Foundation and continues to compete for the $160 million in funding from NSF’s Regional Innovation Engines program, with a mind toward cementing Indiana and southern Michigan as the Silicon Valley for sustainable, cost-effective housing.
The effort is overseen by Purdue Applied Research Center and includes by Purdue’s Travis Horton and Panagiota Karava, both a professors of civil engineering. University of Michigan, Notre Dame, Michigan State, Ivy Tech, and Lansing Community College have all committed to partnering on NextHouse.
“We definitely have a long history in the area of factory-built housing,” Horton stated in an Indiana business magazine. “We think there are opportunities to go far beyond what has been done today and go to a fully industrialized model for housing.”
How Lack of Proper Care of a Prime Asset Sets Up a Financial Nightmare
By Justin Eldredge
There is an asset that’s often overlooked in the manufactured housing industry. It’s widely used by residents and owners, and it’s often one of a community’s most valuable investments. It’s also one of the most neglected.
We are talking about asphalt.
Asphalt is one of the most widely used materials on the planet. Roughly 94 percent of all roads in the U.S. are paved with asphalt, and industry revenue is approximately $33 billion a year. Asphalt is widely used because it is durable and cost-effective. If you own or manage a manufactured housing property, that property probably has asphalt roads or parking lots.
But for all its positives, asphalt is not infallible. It is a deteriorating asset that, if neglected, can end up costing thousands or hundreds of thousands of dollars to repair or replace. In this article, we’ll discuss why you should pay attention to your asphalt, the importance of proper maintenance, and the drawbacks and costs of deferred maintenance.
Understanding Asphalt Degradation
Before we go too far, it’s essential to understand a few basics.
Asphalt has two parts: the aggregate (small rocks) and the binder (the glue that holds everything together).
Asphalt begins to deteriorate almost immediately after it’s installed. Several factors cause the asphalt to oxidize, which makes the asphalt binder harden and eventually crack.
Weather conditions like rain, snow, and extreme temperatures can accelerate oxidation.
In the manufactured housing industry, these environmental factors are usually some of the biggest culprits of asphalt aging and oxidizing.
Asphalt’s life expectancy can dramatically decrease without proper maintenance, leading to costly repairs. According to the Asphalt Pavement Alliance, well-maintained asphalt has a life expectancy of 15 to 20 years. In contrast, neglected surfaces may need significant repairs or replacement in as little as five years.
The Cost of Neglect
The financial implications of neglecting asphalt maintenance depend on the amount of asphalt in the community, but the numbers can be staggering.
Regular maintenance costs are significantly lower than the expenses of extensive repairs or complete replacements. For example, the National Asphalt Pavement Association estimates that for every $1 spent on preserving and maintaining asphalt assets, owners save $6 to $10 in future repairs.
In the HOA industry, when communities perform proper preventative maintenance on their asphalt assets, they routinely see projected savings of over $1 million over the life of the asset.
Community Acceptance and Aesthetic Considerations
Beyond the financial aspects, the condition of your roads, parking areas, and pathways directly impacts community acceptance.
Poorly maintained asphalt can lead to cracking or potholes, which can decrease the property’s perceived value and negatively impact the living experience in that community.
Aesthetically, well-kept roads enhance the overall look of a community, boosting curb appeal and potentially increasing property values. A National Association of Home Builders study found that good exterior aesthetics could enhance property values by up to 7 percent.
Maintenance and Strategies for Longevity
Several maintenance strategies can be employed to ensure the longevity of asphalt assets. It’s important to remember, though, that early action is paramount. There is a common misconception that once you install new asphalt, it will stay good for decades before it requires any maintenance.
This isn’t the case.
A large portion of asphalt deterioration occurs within the first four years of its life, so the earlier you act to prevent age hardening, the longer you can expect asphalt to last.
Surface treatments should be utilized early in the asphalt’s lifecycle to protect and extend the life of the underlying pavements.
This is where you need to be careful, though. Seal coats are often used as a catch-all in the pavement preservation industry, but seal coats are just one category of surface treatment, and they are usually not the most effective at preserving asphalt assets.
Depending on the condition of the asphalt, treatments like high density mineral bonds and slurry seals might provide more extension of asphalt life than traditional seal coats.
Financial Planning for Asphalt Maintenance
We’ll likely cover this topic in more detail in future articles, but proactive financial planning for asphalt maintenance is vital. Setting aside funds for regular upkeep can prevent the need for unexpected financial outlays on major repairs. Communities can take a page straight out of the HOA playbook and consider establishing a dedicated reserve fund for infrastructure maintenance.
These types of funds are required for associations in certain states and could benefit the manufactured housing industry as well.
Leveraging Professional Help
Before undertaking an asphalt project, it is best practice to consult an expert. Pavements aren’t created equal, and taking the wrong course of action can have almost as much of a negative impact as taking no action. A professional in the asphalt industry will help you determine the best course of action to maintain your asphalt assets and achieve the maximum extension of asphalt life for every dollar spent.
Maintaining asphalt assets in manufactured housing communities is not just about avoiding costs but investing in the community’s future. Regular upkeep not only saves money in the long term but also enhances safety and aesthetic appeal, contributing to a more vibrant and desirable living environment.
Justin Eldredge, of Holbrook Asphalt Company, consults with public agencies and HOAs throughout the U.S. to extend the life of asphalt assets. He frequently contributes to industry and community publications, advocating for and educating asphalt owners on cost-effective best practices for asphalt ownership. Eldredge serves as the marketing director at Holbrook Asphalt. He can be reached at justin@preserveasphalt. com. For a free Asset Preservation Journal detailing the pros and cons of various maintenance treatments, email report@ preserveasphalt.com with Asset Journal in the subject line.
There has been a lot of media commentary about recent opinions from the Supreme Court of the United States. But there is one opinion, in particular, the manufactured housing industry should be aware of and start tracking for its potential impact.
Full disclosure: this article is probably only interesting to my fellow uber-legal nerds out there. We are talking about federal administrative law, which understandably gets a pronounced eyeroll from family members. That said, I am grateful for an outlet to delve into the nerdy minutia of federal administrative law and try to vividly imagine the world that changes as a result.
By now I’m sure you have read the opinion in Loper Bright, the case that overturned Chevron. Technically, it was a pair of cases in Loper Bright Enterprises v. Raimondo and Relentless v. Department of Commerce, where the court overruled Chevron… but for those few who maybe haven’t gotten around to it, let’s hit the high points.
The Cases in Question
In 1984 there was a case — Chevron v. Natural Resources Defense Council — that created for the last 40 years the “Chevron doctrine.” Basically, the idea was that when a federal law wasn’t clear or was “ambiguous” the courts had to defer to the federal agencies’ interpretation so long as the bureaucracies’ interpretations were “reasonable.” To most, a reasonable standard (or burden) sounds, well, reasonable. But legally a reasonable threshold is, in fact, a very low bar to clear. It really can mean nearly any justification under the sun so long as the reasoning is not so blatantly shocking that a normal reasonable person would conclude, “that’s too far.”
Now before I get on with hyperbolic conjecture, I need to address the “no big deal” counterclaim. Full disclosure, Chevron deference hasn’t really been used in recent years. In fact, SCOTUS hasn’t relied on Chevron for the past eight years. More so in recent opinions the Court distinguished and clearly indicated a growing distance from Chevron. So much so Chief Justice Roberts wrote in his majority opinion that the Court’s recent “constant tinkering” of Chevron contributed to the doctrine being “unworkable” and “misguided.”
Many federal administrative law practitioners, including some of the federal rule writing bureaucracies, will tell you that they haven’t used or relied on Chevron as any sore of rule writing safety net for a long time because they were able to read the tea leaves of the court anticipating Chevron’s eventual overturning.
More Than a ‘Nothing Burger’
Perhaps this article should end there. Perhaps, this is a bit of a “nothing burger” formality. But I don’t think so. During the 40-year span, Chevron has been cited in federal courts case more than 18,000 times. Clearly even if everyone now claims to have foreseen the eventual overturning by SCOTUS, and even steered clear of relying on it with prior administrative cases before SCOTUS, that doesn’t mean it wasn’t used in arguments and cited in briefs in lower federal courts. Plus, “a thing is a thing, until it isn’t a thing anymore,” … uncertain of the attribution on that quote, probably Yogi Berra, but the point is there is significant weight and importance when SCOTUS overturns any precedent. So, don’t let anyone convince you this isn’t impactful. My last point and evidence of the significance of the opinion is that Justice Elena Kagan announced her dissenting opinion along with reading a summary of her dissent from the bench. This is a bit of inside baseball, but for anyone who casually follows the court, most of the time dissenting opinions are merely filed. Only when a justice feels significantly impassioned, as they might in the movie “A Few Good Men” shouting “I strengously object” do they announce their dissent. She also wrote that the opinion “will cause a massive shock to the legal system.”
Vehement dissenting opinions aside, officially with the June 28 decision by the justices (6-3 vote) to overturn Chevron, the world of federal administrative law has forever changed. I won’t go into particulars of the case, only to say it had to with fishing regulations, so if that hook doesn’t grab you (had to do it), then you can read the cases on your own.
What Does This All Mean Now?
Well, like any pivotal opinion from the highest court in the land, it will take some time and more cases to follow to fully understand the impact. But fundamentally what it means is that federal judges will decide what a law means based on the court’s own judgment. Part of the concept behind Chevron, and the claim by those who support Chevron, was that the people, experts, and career administrators have a greater depth of understanding and expertise in the subject they regulate, so deference should be afforded to their opinions when interpreting unclear or ambiguous laws passed by Congress. This changes all of that. There is no more “tie-goes-to-the-federal-agency” interpretation.
The majority opinion essentially says that courts and judges are more than capable of understanding complex cases, even those dealing with ambiguities in technical or scientific issues. A quick barrage from Chief Justice Roberts’ opinion on this line of analysis is as follows: “Chevron… demands that courts mechanically afford binding deference to agency interpretations, including those that have been inconsistent over time.”
“A statutory ambiguity does not necessarily reflect a congressional intent that an agency, as opposed to a court, resolve the resulting interpretive question.” “And when courts confront statutory ambiguities in cases that do not involve agency interpretations or delegations of authority, they are not somehow relieved of their obligation to independently interpret the statutes.”
“Chevron’s presumption is misguided because agencies have no special competence in resolving statutory ambiguities. Courts do. “
“The Framers anticipated that courts would often confront statutory ambiguities and expected that courts would resolve them by exercising independent legal judgment.”
“Chevron’s broad rule of deference, though, ambiguities of all stripes trigger deference, even in cases having little to do with an agency’s technical subject matter expertise. And even when an ambiguity happens to implicate a technical matter, it does not follow that Congress has taken the power to authoritatively interpret the statute from the courts and given it to the agency.”
“Congress expects courts to handle technical statutory questions, and courts did so without issue in agency cases before Chevron.”
To answer the million-dollar (more like multi-million dollar) question of, “Ok, so what?” I can give you the legally astute answer of, “We’ll see.” But from the cheap seats it appears that the decision opens the doors to more court challenges of federal agencies’ rules and interpretations.
We will see a lot more lawsuits in the coming years. When this materializes, federal court dockets will become even more strained, and litigation will take even longer. Perhaps not as visible as formal court challenges, there will be a real impact caused by a “chilling effect” going forward for agencies now reticent to make legal interpretations, especially bold ones. The mere threat of a legal challenge without the safety net of Chevron will cause federal regulators to think twice before issuing regulations.
This can cut both ways.
Chevron’s Impact in Manufactured Housing
I think mostly this will have an industry benefit, but if there are interpretations by regulators you like but others don’t, then you dislike this.
Recall that Chevron originally came out of efforts from the conservative President Reagan Administration with his appointees and agency heads running the EPA, who interpreted the Clean Air Act to ease regulations from the previous President Carter Administration. For our manufactured housing industry, one of the many thoughts that came to mind was the limited interpretation, certainly hesitancy in practice, of HUD’s interpretation of the 2000 Act: “Federal preemption under this subsection shall be broadly and liberally construed to ensure that disparate State or local requirements or standards do not affect the uniformity and comprehensiveness of the standards promulgated under this section nor the Federal superintendence of the manufactured housing industry as established by this title.”
For years, people in our industry have been asking for a HUD interpretation of federal preemption under the “broadly and liberally” mandate to encompass some degree of local zoning preemption. HUD has not done so, sticking only to elements of home construction preemption. And HUD’s silence on local zoning preemption, despite countless requests and prodding, in and of itself could infer their “reasonable” interpretation that Congress did not intend to play in the local zoning preemption sandbox.
In an alternative universe where HUD had interpreted the law to include local zoning preemption, then overturning Chevron would be a bad thing for us. But since that isn’t the case, perhaps a court can now more freely take on that role to decide the lengths of Congress’ intent nearly a quarter-century ago on just how far “broadly and liberally” should go. It would be logical to think that ambiguities in federal laws will diminish because of the ruling. That Congress will have to start drafting with greater specificity and clarity. Maybe.
Slowing Legislative Process
But ambiguity is sometimes what is needed for a bill to have a shot at ever passing to become a law in the first place. The more detailed, the lengthier, and the more specific provisions in a bill, the more targets the opposition can attack. This will make passing bills even more difficult. And even if ambiguity is not intentionally used in bill writing for political purposes, as the majority opinion points out, “[m]any or perhaps most statutory ambiguities may be unintentional.”
Not as pithy or catchy as the more vulgar version of the bumper sticker, but I’m thinking of adorning the back of my car with, “Ambiguity Happens,” guaranteeing another series of eyerolls from the family.
Regardless of how or why ambiguities come to pass, a significant impact is that this ruling will necessitate more bills to pass into law. If the first version turns out to not be specific enough and a court decision is perceived to take longer than writing and passing a new bill in Congress, then new legislation will be needed. And this doesn’t just impact legislation going forward. The opinion changed the landscape that allows for interpretations of old laws long on the books as taking on new meaning through new regulatory interpretations.
This route of modifying old laws to have new meanings through revised regulatory interpretations as time goes on has been the common route to, effectively, lash new regulatory sails to the masts of old law ships. No more. If you want a new regulation with a clear interpretation, you are going to have to go to Congress and have them build a brand-new boat.
Clearly the importance of crystal-clear bill drafting now comes at an even higher premium. And if the length and detail in bills explodes, then it becomes critical to have accomplished, skilled, and highly experienced people at the helm carefully reading every word and dissecting every angle.
And it’s probably time to beef up everyone’s expectations and budgets for litigation in the future.
The trickle-down impact of overturning Chevron at the state level will be another area to watch with focused interest. Granted the particulars of the case technically only apply to federal laws and agencies, but there is a chance some states, like Texas, will take queues from SCOTUS. And if we don’t overtly see a run of state litigation in this space, again, I expect there to be a chilling effect on a go-forward basis from state regulators when they consider issuing interpretations of state laws.
Challenging agencies (federal or state) in court has always been a tool in the toolbox. Case in point, the current litigation TMHA is involved in with MHI in federal court over the DOE energy standards. And going forward in a more crowded court docket, I think this will be a slow-moving tool.
That said, when needed I think the result of the recent SCOTUS decision is that perhaps it is slow moving, but it is now a much sharper tool when used.
D.J. Pendleton is the executive director for the Texas Manufactured Housing Association, and advocates at the national level for the manufactured housing industry. Pendleton earned a law degree from Baylor.
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