It has been nearly a month since our last Industry Update, and much has happened since that time.  Let’s get caught up.
 
OREGON: 
 
The 2005 Salem Manufactured Home Show concluded yesterday, and attendance was up nearly 20% from 2004!  Great weather and 17 beautiful new homes, mostly upscale triple-wides, were featured.  A two-story home was also on display and it was impossible to tell this home was built in a factory.  People managing the event said “they just kept coming” and reported ticket sales were brisk all weekend, even on Sunday afternoon with just a few hours to go before closing.  Retailers and manufacturers were all smiles yesterday afternoon as the show wound down, and the public response to the latest in factory-built housing was virtually 100% positive and encouraging (read my final paragraph below for more editorial observations).
 
In the legislature, The Oregon Manufactured Housing Association continues to make progress towards the passage of Senate Bill 328, allowing HUD-code manufacturers in Oregon to build modular homes for shipment outside the state.  This is in response to several key industry members repeated requests to build modular homes.  While it’s far from over and you can’t call the battle won yet, OMHA has made a great deal of progress moving this bill forward.  Also, as the date looms closer to the move from DMV to the Building Codes Division of the Department of Consumer and Business Services, tension mounts.   On May 1, 2005 we make the move, but several pieces of legislation needed to be introduced in this session to try and force DCBS to honor some of the commitments made during initial negotiations two years ago.  You can contact OMHA at 503-364-2470.
 
Manufactured Housing Communities of Oregon has enjoyed a productive and successful legislative session so far.  Absent this year are any substantial threats of rent control initiatives and other adversarial forms of legislation.  They’ve been replaced by numerous groups request for mandatory education of community managers.  MHCO and the Manufactured Housing Coalition have worked together to successfully introduce a bill (SB 636) that includes: 1) Minimal mandatory education for on-site managers or owners who manage their own communities, 2) Landlords gaining the ability to unilaterally change the rental agreement to allow the landlord to either master meter or sub meter for water and sewer, 3) Changes in the current law to allow RV’s to be placed in some predominately manufactured home communities, especially older parks with smaller spaces.  You can contact MHCO at 503-391-4496.
 
WASHINGTON: 
 
Manufactured Housing Communities of Washington House Bill 1640 is still alive, even though it’s been dramatically trimmed down, and all the heavy handed enforcement issues are gone (for now).  Some changes may include the “registration” of manufactured home communities, including an annual fee, of course.  Even though the fee may be split between the residents and community owners, it’s not good, but it may be the compromise we need in order to fend off further threats of stricter enforcement laws.  ”Unfair practices” linked to the Consumer Protection Act are still being batted around, much to the dismay of the industry insiders.  But when the dust settles, fees and more fees seem to be the overall theme.  You can contact MHCW at 360-753-8730.
 
At The Washington Manufactured Housing Association the big news is that no one introduced legislation that could threaten their zoning bill, which passed in the last session.  This was a session where WMHA and their members were better served to take a wait and see approach, ready to jump at a moments notice if anyone introduced adversarial legislation.  So far that hasn’t been the case.  In Washington as in Oregon there are a lot of problems with older mobile homes.  What to do with them, how to move them, even where to dispose of them.  Pre HUD homes are being dumped or abandoned, especially in Eastern Washington, and legislation or revised regulations dealing with this problem will eventually be discussed, but not this year.  This is becoming a bigger problem in Oregon and Idaho too and we must address it eventually.  You can contact WMHA at 360-357-5650.
 
IN OTHER NEWS:
 
Community (park) owners, brokers and operators are slowly witnessing an unexpected phenomenon in our industry.  All of the sudden investors are quietly knocking on their doors, inquiring about purchasing communities AT RETAIL PRICES just to obtain the land for eventual re-development to a “higher and better use”.  This is something we did not anticipate.  While it’s much too soon to determine whether or not this will become a widespread business practice, we didn’t think that the appetite for developable land in an urban or suburban location would become this valuable.  When I was selling manufactured homes, buyers from time to time would ask “what if I buy this home in this park and they want to kick us out later to build a shopping mall here?”  My response was always the same.  “This land is zoned residential and it’s almost impossible to get land re-zoned.  In my opinion this will always be a residential neighborhood”.  What I didn’t expect, nor ever anticipated in my wildest dreams, was land speculators or developers willing to pay the same price as a buyer purchasing the community as an ongoing, revenue producing business, just to get the dirt.  And we wonder why GMAC exited our industry.
 
If this continues it would spell disaster for some of our residents not to mention send the wrong message to chattel lenders.  It’s already tough enough to finance a home in a land-lease community.  If lenders feel every “park” is fair game for the D.R. Horton’s or Centex’s bulldozer we’ve got a problem.  Not to mention the bad press---this is a public relations nightmare.  Today, in Bend, Oregon, four manufactured home communities are being closed or are slated to be closed for re-development to site-built housing.  Manufactured home owners were on the TV news in Bend just last week, wondering what they’re going to do with this home they can’t afford to move.  In February a similar story ran on Portland TV about a community in Salem.  In October it was a newer community in Eugene closing.  What’s next?  What are we going to do about it?
 
FINALLY,
 
As several of us from Commonwealth toured the fantastic new homes at the Salem Home Show last Wednesday unanimously made one glaring observation.  For the most part, builders of manufactured homes are building homes for real property (private land) placement, not for land-lease communities.  Huge, triple-wide luxury homes designed for an attached garage best describes the typical show home.  Theses homes were beautiful, and it made me proud to be part of an industry that builds this caliber of home.  For the second year in a row a stunning two story home was also on display, and once again you couldn’t tell it was built in a factory.  A few two-section traditional manufactured homes were on display, and they were innovative and affordable.  But by in large, the industry is building what the public is buying and the mortgage companies want to finance….manufactured homes for suburban or rural placement.  In the land-lease community business, we’d better accelerate the promotion of what we have to offer and start working more closely with these fine manufacturers and lenders or we may wake up one day and find ourselves on the phone to ABC Development Company in New York saying: “Hi, my name is Greg, and I’ve got a manufactured home community on 12 acres in Beaverton, Oregon near the MAX light rail line and Nike World Headquarters, with city services and within walking distance of shopping and schools.   I’d be willing to sell it for $500,000/acre and the local planning and zoning people will happily participate in the redevelopment process.  Would your company be a potential buyer?”
 
Legislation to build modular homes…..new homes designed for real property placement…..chattel lenders continue to exit the industry.  Anybody see a trend here?
 
We must collectively work hard to rejuvenate the land-lease manufactured home community business in the Pacific Northwest.  One person or one company can’t do it alone.  It takes the combined efforts of our State associations and a diverse group of experienced industry leaders to tackle this issue.  Once the Legislators have gone home for the year I propose a tri-state commission (Oregon, Washington, Idaho) whose sole purpose it is to identify and address the key issues related to the continuing struggle of land-lease manufactured home communities, recommend specific solutions, and design a critical path to follow that will result in fixing the problems and redesigning our business model.  Do you agree?
 
In the meantime, thank you for reading this Industry Update, and have a terrific week.

Greg Harmon - President
Commonwealth Real Estate Services
E-mail: greg@cwres.com
Telephone 503.244.2300 Ext. 101