Here are some interesting developments taking place at the State and Federal level that directly effect our industry.

In Washington State, a bill was heard (HB1741) which would prohibit local governments from discriminating against a consumers' housing choice. This bill made some progress in the 2003 Legislative Session but ultimately again fell victim to a very vehement opponent, Representative Steve Kirby (D) Tacoma. Rep. Kirby, a former Tacoma City Council member has taken his opposition to manufactured housing to an unprecedented level in which he utilizes blackmail threats to his party and preaches gross misinformation about manufactured housing.

The House Local Government Committee, where the Chair is Representative Sandra Romero (the bill's primary sponsor) heard testimony on the bill. The hearing was routine with WMHA's lobbyist and Director speaking for the measure with the support of the realtors. A small panel of city officials, lead by the city of Vancouver spoke in opposition on the basis that zoning is a local option. With no comments or questions, the Committee then voted the bill out unanimously 10 to 0 much to the shock of the city officials. 7 of the 10 voting Committee members for former city council members which was a huge victory against the local rights argument.

The bill then proceeded to House Rules Committee from where it must be passed out onto the House calendar for a vote. As in past years, Representative Kirby immediately threatened to vote against all future party issues if House Bill 1741 passed out onto the calendar. But unlike last year, the Democratic party had a large enough majority to ignore the blackmail and the legislation passed onto the House calendar. When the Democratic Caucus met to decide which bills were to go to the voting calendar, Representative Kirby then put on what was later described as an "emotional tirade" about ruining good neighborhoods with single-wides on wheels and axles. His vehemence was so strong that the issue was tabled. With only 8 hours before the passage deadline, the bill was dead for the session. WMHA lobbyist, Mike Ryherd, felt confident that the factual knowledge and votes were present in the caucus and that with more time the measure would have been passed. The good news is that next session, the bill starts back in Rules Committee with time on the industry's side.

In Oregon State OMHA has succeeded in successfully passing their Freddie Mac bill, which is on the Governor's desk for his signature. DMV is already drafting the necessary forms to exempt the title of a home on 20+ year leased land in approved communities and OMHA will be sponsoring a seminar in the very near future to educate retailers, community owners, lenders and manufacturers on the Freddie Mac long term lease program. Legislation (SB468) moving manufactured housing from DMV to Building Codes Division (BCD) continues to make steady progress, but legislation mandating the licensing and back ground checks of retailers and sales people looks to be dying. It's not because of a lack of support, but because BCD has concerns about the costs related to implementation and managing this program. This is a personal defeat for me, as I have been a very vocal proponent of this movement and have spent 3+ years working toward the ultimate goal of improving the quality of people selling manufactured homes in Oregon. The original idea for this legislation came as a result of Attorney General Hardy Myers Manufactured Housing Task Force which convened on March 30, 2001. It's amazing how the government wants you to clean up your own industry, so you work for 3 years to bring unprecedented reform and regulation upon yourself, and then it's that very same government that lets you down at the 11th hour. The important thing to remember, and the real victory in all of this, is the tremendous ground swell of support this measure received from nearly every respected industry leader in manufactured housing. While a few opponents felt it didn't go far enough to bring reform to the industry it was a giant leap in the right direction and would have been the first big step toward bringing a new level of credibility and professionalism to manufactured home sales. There's always next session.

Manufactured home production in Oregon (which reflects directly on Washington sales too) appears to be 8% lower year-to-date than 2002, and 62% lower than the peak of 1998. While this decline continues to puzzle many people, the bigger issue is that the demand for manufactured homes remains constant but the vast majority of sales are still in the repossession market versus new homes. The good news is that if consumers continue to absorb these repossessions at this rate the repo market will eventually dry up and people will return to purchasing new homes in greater numbers. All lenders are reporting their long lists of repossessed manufactured homes are getting shorter, which means that we really can see substantial light at the end of this tunnel.

OMHA's Don Miner met with Molly Bordonaro, a member of the Fannie Mae board of directors regarding Fannie Mae's newly announced modifications to manufactured home mortgage financing. She anticipates that the manufactured housing issue will be discussed at the July 2003 meeting of the Fannie Mae Board of Directors. She appeared to be very knowledgeable regarding the issues and has asked for help in preparing for the meeting. She has asked the industry to provide her with a short memorandum outlining our concerns with recommendations on what should be done to preserve the program in it's current state. Don will provide her with that information, with some assistance from MHI. Molly said that she believes it is important for Fannie Mae to continue providing financing for manufactured housing in order to meet it's Congressionally mandated affordable housing obligations.

Nationally, Conseco Finance will re-emerge from Bankruptcy next month as Greentree once again. They will slowly re-enter the financing market, first financing their own repos then eventually financing new and pre-owned homes with chattel and land/home financing. This is great news for all of us and points towards another element of the overall industry recovery we've been looking for. Also, there appears to be a snag in the sale of Clayton Homes to Warren Buffett's Berkshire Hathaway Company, with shareholders accusing Clayton of breaching their fiduciary responsibility by selling the company too cheap. Insiders tell me they'll all kiss and make-up and the sale will go through, but who knows for sure? Is there a Clayton/Oakwood merger in our future once the dust settles? Stay tuned.

In May 2003 we welcomed three new management clients to Commonwealth. Manasco's Mobile Park in Kelso, Washington, Battleground Mobile Estates in Battleground, Washington, and Hidden Meadows in Eugene, Oregon. Welcome to Commonwealth!

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