August 21, 2000

To all interested parties:

     Over the past few years, many of the organizations interested in manufactured housing have approached the Department about allowing completion of manufactured homes "on-site." While the Department has given the issue some consideration, I would be interested in some feedback from you and your organization before we move forward any further on this issue. There are a number of specific issues on which we would like to get your thoughts.

     The Department is considering changing the standards and regulations regarding on-site completion of manufactured homes. The Department is committed to maintaining a high level of safety and durability, and requiring construction that would provide performance equivalent or superior to that required by the standards.

     So far, discussions have centered around the possibility of authorizing In-plant Primary Inspection Agencies (IPIAs) to approve and inspect manufactured homes completed on-site, under limited circumstances. Such an approach would be consistent with HUD's desire to give the industry more flexibility and accommodate innovative approaches, while remaining faithful to the Secretary's responsibilities under the Act to ensure durable and safe housing.

     One possible approach is to extend the manufacturer's quality control system to on-site work. If the Department took such an approach, the IPIA could concur with the manufacturer's quality control system and accept responsibility for assuring that the system is working, and that on-site construction is completed in conformance with the standards and approved designs. In such a system, only persons authorized by the manufacturer would complete the construction work on-site.

     Only the IPIA in the factory of origin, or other qualified independent inspectors acceptable to and acting on behalf of the IPIA (including, possibly, an IPIA in the State where the home is sited), would be able to perform the oversight monitoring, including inspections. The goal of such a process would be to eliminate routine, extensive reporting for site inspections of homes completed under this proposal. Instead, the manufacturer would need only to report to HUD or its agent the location of the home, its serial number, and a brief description of the work done on-site for each home. Such a process would require an adequate quality control and inspection plan with good record-keeping, to ensure protection for consumers and the public.

     Obviously, any procedure the Department might permit would apply only to those aspects of construction over which HUD exercises preemptive authority. Thus, approval of construction completed on-site under any new process could not be extended to requirements imposed under State or local authority in construction-related areas that are not preempted by Federal standards.

     Construction activities that could qualify for approval under newly developed procedures could be the partial completion of structural assemblies or systems (e.g., electrical, plumbing, heating, cooling, fuel burning, and fire safety systems) and components built as an integral part of the home.

     HUD has already been allowing certain details of manufactured homes to be finalized on-site as an extension of the siting process. This work includes: (1) final framing and decking of hinged roofs that are not penetrated for other connections; (2) close-up details for multiple sections (e.g., exterior roof coverings; siding; ridge caps; sheathing; roof, wall, and floor connections; crossover ducts; and utility connections); and (3) close-up details for single sections (e.g., utility connections, and exterior roof coverings and siding for expandable rooms). HUD would consider continuing to allow this type of work to be finalized at the home site, as an extension of the siting process, without having to proceed under the alternative construction or on-site completion processes.

     Items that might not qualify as limited on-site completion are another issue we need to consider. Such examples would not qualify under any new procedures, and could include, for instance:

     Because this is such a complex process that will have an impact on so many interests, we are interested in your consideration and feed back.

     For instance, we need to consider how we define "on-site" and how we differentiate it from our current siting of manufactured housing.

     (1)  How can we define the limits of the construction work that may be completed on-site? Should the current definition of a manufactured home that is "substantially completed" in the factory be improved? What about multi-story construction?

     (2)  Where should HUD draw the proper line between our current siting process and any on-site completion? This includes those aspects that are currently allowed as an extension of the siting of the manufactured home, including final framing and decking of unpenetrated hinged roofs and close-up details for multiple and single sections. Should we include them? What about hinged roofs to be completed by factory-certified installers? Conversely, should any aspects of the home that could not be completed in the factory because of transportation height restrictions be allowed to be completed on-site, as an extension of current siting processes, without special approval? If so, how should those aspects be defined or delineated? Can we, as the Department, monitor those aspects effectively and, if so, how?

     (3)  How would the Department monitor the work that is done? What is the best method for assuring that the on-site construction work is inspected for compliance with the standards? How many on-site inspections would be the most effective? Should authorized inspectors be limited to State and local inspection officials, rather than permitting IPIAs to choose some other? What are the value of qualified independent inspectors? Should they be required for all work, or only the more complex work identified by the IPIA and/or the Department? Can manufacturers inspect their own work, and IPIAs spot check the on-site work?

     (4)  We also need to draw clear lines between Federal standards and local standards. Do we need to identify those aspects of completion of the home that are not subject to preemption (e.g., stairs and handrails) and inform local inspectors that they may inspect those aspects? For example, in its request for approval to complete construction on-site, should a manufacturer be required to identify those design aspects that are not covered by the standards and, therefore, are subject to local or State building codes? Should these design aspects also be listed individually on the Notice required to be displayed in the home?

     (5)  Completing work in a timely fashion is also an issue. Should we consider a deadline for completion of the work on-site and final inspection? Should we define protections for the consumer who has entered into an arrangement to purchase a manufactured home that is to be completed to standards on-site? How can HUD ensure that a purchaser can occupy the home at the earliest time possible, consistent with the completion of acceptable inspections? Should we develop regulatory protections for a manufacturer or retailer that has entered into a contract in which the construction of the home is to be completed on-site by a certain date, but where there are delays outside of the manufacturer's or retailer's control in the construction or final inspection?

     (6)  Corrections and repairs also need to be considered. When the home does not comply with the standards, what shall we do? Clarify responsibilities? And what shall they be? Should the procedures for inspecting the work on-site also apply to the repairs that are sometimes completed and labeled in the factory?

     (7)  What if a home does not pass inspection on-site? Should the Department consider requiring that such a home be removed or repaired?

     (8)  Discussions with some groups have suggested the Department initiate a new labeling procedure where the home is labeled in two stages and includes a consumer notice referencing the procedures. Do you think such a system would be workable? What if the IPIA would red tag the labeled home at the factory, and then itself remove the red tag at the site when all work is completed and found satisfactory? Would additional protections be necessary then?

     (9)  The date of manufacture is an issue. Many wish us to clarify the "date of manufacture" for units completed under this procedure, because this information is required on the data plate. If so, how shall we clarify it? Without clarification, what date would manufacturers use on the data plate?

     (10)  Monthly reporting has also been raised. We need recommendations on how to report production information on homes completed on-site. Would individual reports be more helpful, rather than combining the required extra information with the existing production report (Form 302) information?

     (11)  We need to consider the process of fee assessments. There will be additional inspections outside of the factory, resulting in additional fee assessments. Will these be governed by agreements among the parties involved? How can we outline these procedures? Several State IPIAs have raised concerns about the costs of out-of-state inspections. How should we address that?

     (12)  Should we consider a surcharge for inspection of homes completed under this process?

     (13)  Jurisdictional concerns have also been discussed, especially among IPIAs. Should the manufacturer's IPIA agree to allow any other IPIA to provide the on-site inspection services for which they have been traditionally responsible? Or would that conflict with any State inspection requirements?

     (14)  And then finally, what about exclusive State IPIAs unable to conduct out-of-state inspections on homes approved for completion under this new process? What type of procedures would accommodate their limitations, and the Department's requirement for inspection, and the current requirement for independent inspection?

     As you can see, there are many questions that have already been discussed in informal arenas, and some groups have already consulted Department staff on these and related questions. The Department is interested in hearing from you on as many of these issues as you would like to respond to. Please direct your responses to the address below. If you have technical questions on these issues, you may wish to speak to one of the technical staff, also at this address. The best way to reach staff with technical questions or issues is via e-mail, at mhs@hud.gov. Technical staff will be available for questions, and can be reached between 2 and 4 pm, EDT, at (202) 708-6409. The mailing address is:

Manufactured Housing and Standards Division
U.S. Department of Housing and Urban Development
451 7th Street, SW, Room 9152
Washington, DC 20410

     Please encourage others who might be interested to review this letter and contribute their comments. The sooner we receive your response, the sooner we will take some formal action on this issue. We will also post this letter on our website at:

www.hud.gov/fha/sfh/mhs/mhshome.html

It would be most helpful if we could receive your feedback by September 11, 2000.

     Thank you for your assistance and taking the time to consult on this issue with the Department. I look forward to moving ahead in addressing this issue.

Addressees:

PIAs
SAAs
COSAA
MHI
MHARR
Nat. Manuf. Home Owners Assn.
AARP
NCSBCS-HBT
PD&R