George Allen, a longtime manufactured housing industry community owner and consultant, founded the Roundtable.
George Allen’s 27th Annual International Networking Roundtable starts today in Indianapolis, at The Alexander hotel through Friday Sept. 7. The event includes more than 20 presentations from manufactured housing industry experts.
Topics range from finance options to marketing opportunities to property management issues.
Event Founder George Allen will greet attendees Thursday morning and introduce 2018 keynote speaker Joe Stegmayer, chairman of Cavco Industries and chairman of the board for both the Manufactured Housing Institute and the RV/MH Hall of Fame.
At 10:15 that same day, Mike Price from the Federal Housing Finance Agency will serve on a panel with Griffer Cotter and Michael Harn from Freddie Mac, as well as Jose Villarreal and Ben Navarro from Fannie Mae.
Who Goes to the International Networking Roundtable?
FMHA is creating awareness and avenues for jobs in manufactured housing.
The Goal of FMHA Workforce Development Initiative is to Meet High Demand for Manufactured Housing Through Dedicated Talent Recruitment
Demand for manufactured housing in many parts of the country, including Florida, outpaces supply, and the FMHA workforce development initiative looks to address a labor shortage that could improve home deliveries.
“Several Florida home builders have reported lengthy backlogs,” Florida Manufactured Housing Association Executive Director Jim Ayotte said. “Some builders are forgoing sales because they are unable to complete homes in a manner that would satisfy any additional demand.”
Lengthy backlogs eliminate one of the industry’s important value propositions – speed to market. And this could have ramifications for the long-term growth of the industry.
Several factors have heightened manufactured housing demand, including escalating single family home prices, which are tied to the steady growth in need for workforce, millennial and retiree housing.
The demand for moderately-priced housing won’t wane any time soon, so the solution is to increase production capacity. The question is: how, and how quickly can it be done?
Several things can be done to increase homebuilding capacity:
Open new factories
Expand existing factories and production
Added automation and other factory efficiencies
Increased skilled and semi-skilled labor
The introduction of new plants and more automated systems, including the use of robotics, is pricey and involves months if not years to develop.
Ayotte said he anticipates the FMHA workforce development initiative will not only work for his members, but can serve as a model for other industry associations.
“There are no secrets when it comes to strategies for identifying, attracting and training qualified workers,” Ayotte said. “The real secret is having the discipline to follow through on a plan of action.”
The FMHA Workforce Development Initiative Task Force
FMHA launched its workforce development initiative in early 2018 by creating a Task Force of member volunteers. The Task Force was charged with identifying specific employment needs and creating strategies for communicating to young people why they should consider a career in manufactured housing. Task Force members have agreed to personally deliver the industry’s message to school administrators, career counselors and students.
Byron Stroud, director of community sales for Skyline Champion Corporation, is among the Task Force members.
Byron Stroud from Skyline Champion Corporation serves on FMHA Work Force Development Task Force.
“The task force objective is in regard to the entire workforce in our industry. We want to develop a program to find, train, education and maintain our workforce,” Stroud said. “The first thing is to communicate in a way that cuts through the perceptions that people might have of the industry. We have to do a better job of helping people understand the value and importance of manufactured housing.
Stroud said multiple manufacturers are ready and willing to dedicate resources to the effort, and would like to see the effort expanded beyond Florida and south Georgia.
“We are considering setting up training centers right in our facilities and working with the industry to set up certification criteria within the trades for our industry, including electrical, framing, plumbing, welding and possibly even HVAC,” he said. “Our company has voiced this willingness and we think we can initiate good processes and programs that can be emulated and used in other markets.”
Recruitment Goes Beyond Home Building Trades
Recruiting goes beyond the trades, as well, Stroud said. In most of the same factories where homes are being built, there is a need for skilled team members to work in purchasing, IT, and drafting and design, for instance.
FMHA and its task force also will be setting up job fairs, starting with a yet-to-be-announced location in Gainesville, where model homes will be set up. Task force members and other builders and retailers will be at the fair to show the homes and answer questions from prospective employees. The homes will remain on site for a month or more, and will be open to the public and community owners for tours and purchase.
The association staff is developing educational materials and creating a platform on social media and its website to connect prospective employees with interested employers. It conducted research on career and technical schools, employment centers and job fairs in proximity to each member manufacturing plant to enhance the likelihood of identifying and attracting qualified employees.
Facebook, Twitter and Instagram ads were developed to catch the attention of young people who are ready to choose a career path. Those who click the ad links arrive at the FMHA Employment Opportunity landing page, where all FMHA member manufacturers’ contact information is listed and linked directly to their websites.
After connecting employees to employers online, the next step was for potential candidates in high schools and tech schools to receive information in person, by a knowledgeable, engaging member of FMHA. A slideshow presentation has been used with counselors and teachers, as well as a full-color brochure aimed directly at young prospects.
The Value of ‘Hand-Built Homes’
Hand Built Homes, a campaign on product awareness and workforce opportunities.
In 2017, FMHA created an image campaign, called “Hand-Built Homes”, to dispel misconceptions about this industry. The workforce development initiative, the Hand-Built campaign and the association’s research and on home quality in assessing storm damage to manufactured homes post-Irma all work in concert to raise the profile of manufactured housing.
FMHA’s workforce initiative Task Force members also will use a 3-minute video and brochure for supporting materials. A team of FMHA members has committed to take these tools on personal visits with students and educators in their locales. After a period of feedback from those visits, adjustments can be made, and new tools can be developed.
“Creating industry career paths that continue through generations ensures that as advanced building techniques occur, there will be enough skilled workers ready to implement those improvements,” Ayotte said. “Production can begin to fill the need for high-quality, affordable housing for Florida’s workforce and income-restricted homebuyers.”
As a state association, FMHA has the unique ability to drive the workforce development initiative because of existing relationships with state and local government officials, Florida’s school systems and forward-thinking industry leaders.
“By deploying our task force ‘ambassadors’ with effective tools, we enable them to make one-on-one connections in rooms full of eager minds,” Ayotte said. “And the blueprints FMHA has developed are not Florida-specific; our efforts to solve the industry worker shortage can and should be used as a model throughout the country.”
The 2019 Louisville Manufactured Housing Show is warning guests and interested parties to be on the lookout for an unauthorized solicitation in regard to the show attendee list.
Avoid Unauthorized Solicitations for Attendee List, Report Suspicious Activity
The 2019 Louisville Show, to be held Jan. 30-Feb 1., put out a warning that guests and interested parties should avoid a recently circulated unauthorized solicitation for sale of the event’s attendee list.
“We discovered an unauthorized solicitation email in regards to the Louisville Show. This email is offering an ‘Attendee List’,” show organizers said in a prepared statement. “As we have done in the past, we send out an up-to-date ‘retailer’ list… The Midwest Manufactured Housing Federation is the only ‘official and correct’ source for our attendee list.”
Ignore and delete emails from a “shelly” or other party with an email extension of @prodataleads. The show organizers indicated that a respondent to the solicitation could be putting their personal and digital information at risk.
“We are working on getting to the bottom of this,” the prepared statement read. “Please note that despite this solicitation, your information hasn’t been compromised through the show.”
Attendees strongly urged to ignore “@prodataleads” solicitation
Anyone with questions about this information should call (770) 587-3350.
Roundtable Returns to Indianapolis in its 27th Year
George Allen’s 27th International Networking Roundtable will take place in Indianapolis at The Alexander hotel Sept. 5-7, drawing a few hundred of the leading land-lease community owners and operators for a discussion on best practices and deal making.
Allen, who founded and runs Community Owners Business Alliance (COBA7), will greet attendees Thursday morning and give way to the 2018 keynote speaker, Joe Stegmayer, who is chairman of Cavco Industries and chairman of the board for both the Manufactured Housing Institute and the RV/MH Hall of Fame.
Two Days of Professional Programming from Industry Experts
In addition to the presentation by Stegmayer, there will be a pair of conversations on chattel capital, which will include information from Fannie Mae and Freddie Mac.
Spencer Roane, a champion of smaller to mid-size community owners who is a co-founder of the SECO annual symposium in Atlanta, will present on the development of a new chattel capital program for owners and operators.
Allen himself will present on the idea of preserving industry history though written stories that can be compiled into a memoir. MHVillage, a sponsor and presenter, also will provide information on writing for publication.
Attendees stand to gain a lot at this year’s International Networking Roundtable, with the industry on the rise and energy among its top contributors at an all-time high.
Manufactured Housing Managers Training Available on Wednesday
Indeed, even hard-to-impress industry leaders can appreciate that the 200 people Allen draws are owners, CEOs, CFOs and highly regarded analysts and consultants.
Katie Hauck and Kathy Taylor, who each own and operate 11 communities in the Midwest, will kick off the unofficial first day of the Roundtable on Wednesday Sept. 5 with the Manufactured Housing Manager Class.
Attendees to the 2017 Roundtable chat during check-in.
In addition, there will be more than a dozen other presentations ranging in topic from how to acquire or refinance a community, how to host a sales seminar, information on third party fee management and a talk on writing for publication
And for Allen himself, with those decades of experience and the way he weaves a story, the Roundtable is well worth the visit.
So, come to Indianapolis again this year for the George Allen International Networking Roundtable, grab a copy of the updated “Swan Song”, and let Allen tell you how he once, long ago, purchased a community for $400,000 and a couple years later sold it for $2.5 million in cash.
There has never been a better time to sell a mobile or manufactured home park than right now
Kevan Enger is a seller-focused broker for manufactured housing communities.
The need for affordable housing is at an all-time high as baby boomers retire in record numbers, home prices hit historic highs, and fewer affordable housing units are being supplied to the market for either the low-income or 55+ segments.
In addition, interest rates remain low, at least for the time being, and recent publicity about the opportunity mobile home parks provide — and the need they fill — has prompted increased demand across the country, and investors are taking notice.
While the demand for manufactured home properties as investments is rapidly growing, the supply is not. The inventory of available manufactured home parks is low and decreasing. The barriers for new entrants are high, and the path to approval and profitability for new developments can be long and difficult.
This high demand versus the supply/inventory dynamic is driving prices for mobile home communities higher than ever with record prices being achieved across the spectrum.
It’s a seller’s market
If you’ve been thinking about selling your community, now is the time
Whether you’re ready to retire or simply interested in moving into another property class, there has never been a better time to sell your mobile home park than now.
Regardless of the optimum market conditions, there are other factors every seller should consider.
As a seller-focused broker, the three questions I get asked most are:
How do I know how much my property is worth?
How do I get the highest sales price for my property?
How do I reduce my tax liability?
It’s important to note that a seller’s market provides owners the opportunity to get a great price, but it doesn’t guarantee it. To leverage that opportunity and maximize your property’s sales price and proceeds, there are three things you must do:
Increase the number of prospects and competition for your property
Know how much your park is worth and how much to ask
Mitigate your taxes
Let’s take a closer look at these three areas and how they can impact your bottom line.
Courtesy of EquityLifestyle Properties
How to Get the Best Price
While all sellers want the best market price, not all will get the best available market-driven price. Make sure you do by selling your property through a seller-focused broker, also known as a seller’s representative or listing agent.
As I mentioned earlier, I am a seller-focused broker, but I am not making the recommendation for my benefit. There are several reasons to work with a seller-focused broker, all of which can have a significant impact on your bottom line.
Leverage: There are buyer-focused brokers and seller-focused brokers. A buyer-focused broker, also known as a buyer’s agent or representative, does as their title implies. They represent the buyers and their interests first, not the seller’s interests. Their primary objective is to get their buyers the lowest possible price for the property at terms that are most beneficial to them. This is great for the buyer but not the seller. The result: Your property sells for less than it should.
A buyer’s agent also wants to market your property exclusively to their buyers so they can maximize their commission in what is called an off-market deal. Because off-market deals are offered only to a closed and small pool of potential buyers, competition for your property will be minimized. They are essentially taking your property off the current seller’s market.
In addition to being at a disadvantage by working with an agent whose primary goal is to get the buyer the best deal, off-market deals keep the price of your property artificially low, typically extend the length of time it takes to sell your property, and puts you at a disadvantage at the negotiating table. We’ve seen deals bounce around for 6 to 12 months while the comings and goings of potential buyers disturb and unsettle the tenant base, and as buyer’s agents try to make the deal work with their limited portfolio of prospects.
It’s a seller’s market, so don’t give up your leverage!
Your Advantage: The competitive environment is prompting buyers to approach owners/sellers directly. They are doing this for two reasons: To avoid paying full price for your property and to put themselves at an advantage.
While it may seem that negotiating directly with a potential buyer allows you greater control, it puts the unrepresented seller in an non-beneficial position by:
Reducing or eliminating competition for your property
Putting the burden of establishing the value and setting the price for the property on you
Taking time and money to draft the sales and other documents
Having to directly negotiate the deal without the market data and expertise that will support your obtaining the best price for the property
Ensuring you are protected on the path to closing
Your Interests: A seller-focused broker, also known as a seller’s agent or representative, puts the seller’s interest first. They will:
Broadly yet discreetly market your mobile home park to all relevant buyers (This is particularly important since the best buyers often come from outside the market/region.)
Create a competitive environment for your property
Conduct a proper value analysis on your property to set the right price
Shorten the time it takes to close on your deal
Have market comps and data available to support your property’s sales price
Increase the number of qualified offers you receive
Provide guidance and ensure you are properly and beneficially represented from beginning to end
Get the best price and terms for you, the seller
How to Find Out How Much Your Park Is Worth
Knowing how much your mobile home park is worth today, including its intrinsic and market value, and how much to ask, is essential. The analysis is extensive and has to be backed by market data and property variables such as:
Size of the property
Location
Occupancy rate
Cash flow
NOI
Private vs public utility connectivity
Park-owned homes vs lot rentals
Amenities
Financing availability
Market conditions
Available on-market inventory of similar properties
The price/value of other comparable properties that sold in your market
The asking price of other on-market properties
The best way to arrive at the proper price is through a market analysis. A market analysis includes all of the considerations listed above to arrive at a market-driven price, while many appraisals can place more weight on the intrinsic value of a property. The difference is akin to looking backward through the rearview mirror with an property appraisal versus looking forward through the windshield with a market analysis.
Look for a seller-focused broker that will provide you with a no-obligation market analysis that shows you the cap rates of other properties that have sold in your market, as well as the potential cap rates for your property.
The desired cap rate dictates the purchase price and is one way to measure the efficiency of your sale. To find the cap rate, divide your property’s NOI by the Sales Price. To find your Sales Price, divide your NOI by the desired cap rate. For sellers, the lower the cap rate, the higher your return because it means the sales price was higher.
Cap Rate = NOI/Sales Price
A ½ point difference in the cap rate can mean millions of dollars less or more in your pocket.
One of the most common ways owners reduce their tax liability is by using the provision in the Internal Revenue Code (IRC) Section 1031, which allows you to postpone paying tax on the gain if you reinvest the proceeds in a similar property as part of a qualifying like-kind exchange.
This is commonly called a 1031 Exchange.
Many retiring owners, or those who wish to take on investments with less intensive management and responsibilities, opt for triple-net (NNN properties) for their exchange. In triple-net properties, the tenant is responsible for the rent and utilities, and other typical expenses stipulated in a leasing agreement for the property type. The tenant also pays for and manages the property’s real estate taxes, building maintenance and insurance.
The arrangement frees the landlord from the typical responsibilities of an actively managed property.
In addition to the “passive investment” nature of NNN deals, other benefits include, restarting your property depreciation schedules, steady income especially from properties with corporate-backed and/or established tenants, built-in rental rate increases, and long-term stability.
Delaware Statutory Trust
A Delaware Statutory Trust, or DST, is a separate legal entity that allows smaller investors to own high-quality institutional level and professionally-managed commercial properties as individual owners and not partners. In addition, a DST is a passive investment with no active management responsibility for the investor, provides an extra layer of protection through non-recourse debt preference, and offers stability, among other benefits.
Be sure to discuss the pros and cons of 1031 Exchanges and DSTs with your tax advisor.
Making the decision to sell is not easy, but by aligning yourself with a broker that has your best interests in mind and ensuring you are fully informed on how to value your property, obtain the best price for it, and mitigate your tax liability, you will not only maximize your return for your years of hard work, you also will maximize your peace of mind.
Kevan Enger is a partner and manufactured housing director for Capstone MH. He specializes in helping mobile and manufactured home park property owners across the country successfully position, market and sell their properties to maximize returns. Capstone has seven offices in five states through Florida, the Southeast, Midwest and Mid-Atlantic regions.
Tiny House and Simple Living Jamboree Founder Darin Zaruba welcomes guests to the first-ever Tiny House Industry Days.
Hundreds Attend Jamboree for Tiny House Industry Days
More than 250 people were in attendance Thursday morning for the first ever tiny house industry days, a new element added to the annual Tiny House and Simple Living Jamboree, now in it’s fourth year.
The Travis County Exposition Center is the venue for the event, opening to the general public for Saturday and Sunday attendance.
Seminars and solo presentations by tiny house professionals — from builders to developers to members of the media — are being held in the banquet hall. Dozens of homes and park model RVs are being shown on the expo grounds and industry exhibitors are setting up shop in Luedcke Arena, all east of downtown Austin.
Jon Fontane, with event coordinator Reed Exhibitions, said tiny house industry days is off to a good start.
“We’ve had a steady audience of very engaged professionals sitting and listening, asking questions and participating in our conversation, even with the attraction of all the home set up outside,” he said. “We’ve had a good response from the media too, with all three area news networks coming out.”
New Zealander Mark Beckingham came all the way to Austin for answers on tiny living.
Jamboree’s Tiny House Industry Days Draws International Audience
Mark Beckingham and his wife Sasha traveled from the Northland region of New Zealand specifically to attend the tiny house industry days in Austin. He said an aging population, rising home prices, and recent government crackdown on caravan community living has created a dire situation that cries for solutions.
He and his wife are looking at everything from AC units to land practices, not for commercialization but for best practices in effort to help family.
“I have 3 1/2 acres of land and easily could have some of my family come and stay,” Beckingham said. “But my mom can’t come live on my property? We really want to just understand what can be done and hopefully come home with some answers.”
Scott Wilson of ZeroSquared is from Alberta, Calgary. He is in Austin to show his tiny
Scott Wilson of Zero Squared speaks with developers about the product they’ll use to fill a pending project in South Texas.
retreats, which utilizes expanding walls and deck space to get to 374-square-feet.
“What we’re doing is implementing a slide system that allows for simple transportation and added comfort when you reach your destination,” Wilsons said.
Tiny house industry days continues on Friday, and the Jamboree opens to the public for the weekend.
FMHA 2018 Annual Convention in Orlando, Fla., is Sept. 18-19 — Register Now!
In little less than a month hundreds of manufactured housing industry professionals will head to Orlando for the FMHA Annual Convention, one of the biggest state meetings in the industry.
Attendees at the FMHA 2018 Annual Convention can expect to find dozens of product and services representatives exhibiting at the show, as well as a host of solo presentations and panels on best practices in the manufactured housing industry.
FMHA 2018 Annual Convention Topics and Speakers Include:
The following three presentations here are only a selection of the 10 programming pieces on community management, leadership and disaster planning available at the FMHA 2018 Annual Convention.
Keynote Presentation: “The Passion of the Playmaker” from former New England Patriots All-Pro Brian Holloway. In what he calls the “Crown Jewel” of his motivational presentations, Holloway will (1) Get leaders “un-stuck” once and for all; (2) Uncover the untapped wealth, power and potential that lies harbored inside the flurry of business activity; (3) Provide solutions for “getting people onboard” once and for all; (4) Clearly define the pathway and momentum to get to the next level, and (5) Show that this mind-set is measured in decades.
Workshop: “Mistakes Managers Make” by President of The Housing Marketplace Joe Adams, who will talk about how managers of retail sales centers and communities must wear numerous hats to succeed in relationships with customers, residents and staff. Adams takes a positive and fun look at the common mistakes managers make when performing as a firefighter, accountant, teacher, counselor, architect and trustee.
Workshop: “Ask the Lawyers” will involve a panel of Florida’s most experienced industry attorneys discussing changes and trends in community regulation, local government activities and the latest legal cases. The panel will conclude with an audience Q&A.
Additional Activities Planned for the FMHA 2018 Annual Convention in Orlando
The 2018 FMHA Annual Convention is pleased to have Sen. Wilton Simpson for its Awards Luncheon address on Wednesday. A long-time proponent of responsible regulatory practices for Florida business, Sen. Simpson specifically has supported the manufactured housing industry for many years. He represents District 10, composed of a portion of Pasco and all of Hernando and Citrus counties.
Also, the FMHA Board of Directors will meet the day prior to the opening of the convention. Manufactured housing professionals interested in serving on the board should contact FMHA Executive Director Jim Ayotte at (850) 907-9111.
Golf Outing Planned in Conjunction with FMHA Annual Convention
FMHA 2018 Annual Convention attendees can register for a golf outing at Shingle Creek Golf Club. The outing begins at 8 a.m. on Sept. 18, and registration is $75 per participant.
Convention registration is near full, and rooms for Sept. 18-19 can be booked while space remains at Rosen Shingle Creek.
Approximately 250 people will attend Florida’s largest gathering of manufactured housing professionals. Exhibitor booths will be open during the Tuesday night Welcome Reception and the following morning’s Continental Breakfast. The FMHA Welcome Reception includes open bar, a variety of catered foods and is among the best networking opportunities of the year.
HUD Fair Housing Complaint Against Facebook Centers on Advertising Options Regarding Religion, Gender, Geography
The Department of Housing and Urban Development (HUD) has filed a complaint against Facebook claiming it has allowed “landlords and home sellers to use its advertising platform to engage in housing discrimination.”
According to HUD’s press release, “Facebook enables advertisers to control which users receive housing-related ads based upon the recipient’s race, color, religion, sex, familial status, national origin, disability, and/or zip code.
Facebook then invites advertisers to express unlawful preferences by offering discriminatory options, allowing them to effectively limit housing options for these protected classes under the guise of ‘targeted advertising.’”
“The Fair Housing Act prohibits housing discrimination including those who might limit or deny housing options with a click of a mouse,” said Anna María Farías, HUD’s Assistant Secretary for Fair Housing and Equal Opportunity. “When Facebook uses the vast amount of personal data it collects to help advertisers to discriminate, it’s the same as slamming the door in someone’s face.”
The Complaint alleges Facebook’s current platform for home sales and rentals allows users to purposely filter advertisements for housing away from persons that are protected under the Fair Housing Act.
The press release regarding the complaint against Facebook notes that advertisers have the option to:
“display housing ads either only to men or women;
not show ads to Facebook users interested in an “assistance dog”, “mobility scooter”, “accessibility” or “deaf culture”;
not show ads to users whom Facebook categorizes as interested in “child care” or “parenting”, or show ads only to users with children above a specified age;
to display/not display ads to users whom Facebook categorizes as interested in a particular place of worship, religion or tenet, such as the “Christian Church,” “Sikhism”, “Hinduism”, or the “Bible”.
not show ads to users whom Facebook categorizes as interested in “Latin America”, “Canada”, “Southeast Asia”, “China”, “Honduras”, or “Somalia”.
draw a red line around zip codes and then not display ads to Facebook users who live in specific zip codes.
Facebook Responds to HUD Complaint
Facebook has responded that discrimination is strictly prohibited by its policies and they will respond in court, while continuing to work with HUD on the issues raised in the complaint.
The case against Facebook is what is referred to as a secretary-initiated complaint. This means the complaint was brought by HUD Secretary Ben Carson because the issue is national in scope.
And, the action comes following a recent announcement by HUD that the focus of fair housing enforcement is shifting to a goal of promoting more housing development overall. As HUD begins its formal fact-finding process against Facebook, MHI encourages ALL manufactured housing communities, retailers and manufacturers to review their on- line advertisements to determine if their targeting follows a pattern outlined in HUD’s Complaint. Any targeting of advertisements that purposefully excludes classes of persons protected from discrimination under federal, state or local law should be discontinued IMMEDIATELY.
And while the Fair Housing Act prohibits ads that show discrimination against protected classes, there is nothing in the law that prohibits advertising to attract protected classes as residents. Thus, an advertisement stating the property has a “family playground” or a “handicapped accessible club-house” or similar protected class targeting is acceptable under the Fair Housing Act.
Additional Best Advertising Practices
Advertise the virtues of the property itself instead of the types of tenants desired.
Do not exclude protected classes in your social media targeting.
Include the Fair Housing logo in all advertising (traditional and social media).
A disparate impact claim allows a plaintiff to attack a housing policy that may seem nondiscriminatory on its face, but which has a disparate impact on certain protected classes
Community owners and operators dealing with Fair Housing has become a top issue as more and more owners are shoveling out money for fines and lawsuits.
Hardly a week goes by that I don’t hear about another community owner getting nailed over these issues. Thanks to Rick Robinson of MHI, industry leaders are learning about the dangers that community owners, and to a more limited extent, retailers face every day.
The Fair Housing Amendments Act of 1988 (“FHAA”) is a federal law prohibiting discrimination in the rental of dwellings for certain protected classes.
The exhaustive list of protected classes consists of:
Donna Rishel, contributing columnist to MHInsider on issues of Fair Housing
Race
Color
Religion
Sex
National origin
Familial status
Handicap
The Americans with Disabilities Act, ADA, also provides additional protection for individuals with disabilities.
In addition to federal laws, there are a morass of state, regional, and local laws, rules, regulations, and letters of advisement to deal with as well.
HUD Guidance on Disparate Impact Stems from Screening Practices
The Fair Housing Act, FHAA, ADA, and state or local laws are called the “Acts”, which seek to prevent discrimination in housing. A community owner should adopt clear and uniform application and leasing practices to ensure that members of all protected classes are treated equally.
The Department of Housing and Urban Development (HUD) issued guidance on background checks in a document, dated April 4, 2016, conducted during the application process.
This is a very new area of compliance for Fair Housing and is based on a Supreme Court ruling affirming the validity of applying disparate impact to the screening methods and standards of community owners and other community owners.
How Criminal Background Checks Affect Disparate Impact
HUD warned on April 4, 2016 that criminal records-based barriers to housing are likely to have a disproportionate impact on minority home seekers. This is in light of statistics that show African Americans and Hispanics are incarcerated at rates disproportionate to their share of the general population.
Accordingly, community owners will need to have a substantial, legitimate, and nondiscriminatory reason for implementing a policy that considers criminal records in the housing application process. Moreover, community owners and management should ensure the interest achieved by criminal background screening cannot be achieved by another practice that has a less discriminatory effect.
Criminal background checks are being reviewed by HUD to determine whether processes have a potential “disparate impact” (meaning “unintentional impact”) on protected classes. This is regardless of whether a background check policy is non-discriminatory on its face.
Thus, while criminal background checks should be conducted in a uniform manner, the results should be reviewed and analyzed on an individual basis to ensure that applicants are not denied based on discriminatory purpose or disparate impact.
When this subject comes up, the question I most often hear is, “How exactly does a disparate impact claim work? And is it as draconian for community owners as it seems?
The short answer is that while the threat of a disparate impact claim may give management a bit of heartburn, there are safeguards in place to protect legitimate, nondiscriminatory policies and practices.
As I’ve written about before, a disparate impact claim allows a plaintiff to attack a housing policy that may seem nondiscriminatory on its face, but which has a disparate impact on certain protected classes. As upheld by the Supreme Court, and as originally promulgated by HUD, a disparate impact claim encompasses a burden shifting framework.
Courtesy of Zeman Homes
A Deeper Examination of Disparate Impact
So, what does that mean in plain English? Well, under the Supreme Court’s guidance, a disparate impact claim works as follows:
First, the plaintiff must make a threshold showing of disparate impact, meaning that the plaintiff must show that a challenged practice or policy has caused, or will cause, a discriminatory effect.
Importantly, pursuant to the Supreme Court’s guidance, there must be a causal relationship between the defendant’s practice or policy and the discriminatory effect – if there is not, then the plaintiff cannot make its required initial showing, and the case is dismissed.
If the plaintiff does make this initial showing, then the burden shifts to the defendant to show that the practice or policy is necessary to achieve one or more substantial, legitimate, non-discriminatory interests. Presuming the defendant makes this showing, then the burden shifts back to the plaintiff to prove that the interests offered by the defendant in support of the practice or policy could be achieved by another practice or policy with a less discriminatory effect.
The above framework may seem complex. But the key takeaway is that ownership is still able to articulate and rely on a valid interest served by the challenged practice or policy as a defense to a disparate impact claim.
Threshold Requirements are ‘Robust’
The causal requirement set out by the Supreme Court – which the Court itself described as needing to be “robust” – is designed to ensure that defendants will not be held liable for disparities that they did not create. In fact, the Supreme Court specifically has cautioned that courts should examine with care whether a plaintiff has met the threshold requirements to make a disparate impact claim. And that courts should promptly dismiss those cases where the plaintiff’s initial showing is insufficient.
While the safeguards can provide community owners with a little peace of mind, it is still instrumental for them to analyze all practices and policies to determine if they might have a discriminatory impact on any protected classes. If so, consider whether there are any less discriminatory means that might equally achieve the intended goals of the practice or procedures.
Professional, Legal Counsel Recommended in Many Cases
It is strongly suggested that most operations will either need to retain a qualified consultancy, or an experienced regulatory attorney or firm, as this requires careful calculation and documentation.
In the rental of manufactured homes or lots to homeowners, ignorance of the Acts is not considered an excuse for avoiding liability. A discriminatory act or statement at any stage of the rental process can place community owners on the losing side of a lawsuit.
Community owners can be held liable, through vicarious liability, for any discriminatory act made by an employee who is at any level in the company, or an agent of the community owner.
By holding community owners liable for all levels of employment or third-party agents, the community owner must take affirmative action to provide training to all staff. Community owners should protect against liability under the Acts by making sure their employees are highly trained in what to say and what to do when dealing with prospective residents and current residents as well.
Donna Rishel is Rishel Consulting Group’s Director of Compliance Issues and Training. A Certified Compliance Trainer, she oversees all consulting and customer employee training for Fair Housing, ADA, and a variety of other issues. While the above safeguards should provide management with a little peace of mind, it is still instrumental for management to analyze all practices and policies to determine if they might have a discriminatory impact on any protected classes and, if so, to consider whether there are any fair means that might equally achieve the intended goals of the practice or procedures.
Finance News Publication Bloomberg Looks at Rising Influence of Manufactured and Factory-Built Housing Industries
In a stellar Bloomberg write-up published today, the leading finance news outlet takes a look at manufactured and factory-built housing and how it may be a key player in solving the domestic housing crisis.
The headline says a lot: “A New Home for $90,000? Manufactured Housing Is Making a Comeback”, the Bloomberg piece by Jeremy Hill begins.
But read beyond the headline, because the story tells a deeper tale:
About the passion of leadership in the industry
In regard to the high quality of new homes; granite surfaces, hickory cabinets among the options
Toward efforts underway to counteract the sometimes negative perceptions regarding manufactured and factory-built housing
How the regulatory environment has improved, and progress will continue
Hill interviews and shares insight from Triad Financial Services‘ Don Glisson Jr., whose Jacksonville, Fla.-based group now writes $2 million in loans each day. The story also features Cavco Industries CEO Joe Stegmayer, who intones “I think our industry’s time has come.”
Scott Richards, a salesmen for Rona Homes in Pataskala, Ohio, says his “whole arsenal” of homes, options and amenities are turning heads and changing ideals.
The Bloomberg Story on Manufactured and Factory-Built Housing looks at annual shipments for manufactured home floors, using U.S. Census data. We’ve pulled the same data and compare it against U.S. median home price and U.S. median household income. All numbers come from the Census Bureau.
Take a look at MH home shipments versus media home prices and household income through 27 years.
*2016 median household income data with 2017 numbers yet to be released
In August, the RV/MH Hall of Fame will celebrate the 2025 class of inductees, five from each industry.
“Our selection committees held meetings to review...
issues.
