Manufactured Housing Metropolitan Opportunity Profile: Policy Snapshot

MARCH 2013

LOWER RIO GRANDE VALLEY, TX

STATE, LOCAL AND MUNICIPAL MANUFACTURED HOUSING POLICY
Though the policy environment in the South Texas metro area is not outright hostile to homeowners and other stakeholders concerned with preserving or development manufactured housing as affordable housing, it is not incredibly supportive either. The state lacks a number of strong protections for homeowners living in manufactured home communities and incentives for community owners to sell to their residents, which ultimately undermines homeowners capacity to organize to purchase their communities and preserve the land beneath their homes for the long-term. Further, Texass titling law requires some onerous permissions from landowners and lienholders for homeowners living on leased land, which has implications for homeowners access to financing in the long run. On the other hand, the state housing finance agency offers several programs and products that can be used by owners (or buyers) of manufactured homes and utility companies appear to offer several programs for energy upgrades that can be used on manufactured homes.
Note: The South Texas metro area includes four counties along the border with Mexico, including Cameron, Hidalgo, Starr and Willacy.

This policy snapshot reviews state and local policies that affect homeowners, home buyers, nonprofit dealers and developers and others with a stake in manufactured housing as a source of affordable housing, namely: Laws protecting homeowners living in manufactured home communities The right to treat manufactured homes as real property State programs & policies Local & municipal policy environment

LAWS PROTECTING HOMEOWNERS IN MANUFACTURED HOME COMMUNITIES

A manufactured home community can be a vibrant neighborhood that is an asset to the community at large. However, because the residents own their homes but not the land on which the homes sit, they are uniquely vulnerableto confiscatory rent increases, arbitrary rule enforcement, failure to maintain the roads, utilities, and common areas, and even closure of the community. If the community closes, the neighborhood disappears and many residents have to abandon their homes. Most states, including Texas, have special laws protecting residents of manufactured home communitiesthese laws have some strengths and some room for

KEY

STRONG PROTECTION

WEAK PROTECTION

NO PROTECTION

AFFIRMATIVE PROTECTIONS FOR FUNDAMENTAL FREEDOMS. Almost half the states affirmatively guarantee fundamental freedomssuch as the right to canvas their neighbors, hold meetings, distribute flyers, and invite public officials and candidates to speakto residents of manufactured home communities. Texas has a law to protect the rights of manufactured home community residents to form resident associations and hold meetings. PROTECTION AGAINST RETALIATION. Most states, even if they do not provide affirmative protections for fundamental freedoms, at least prohibit community owners from retaliating against residents for exercising these rights. Texas has a law which prohibits retaliation against a tenant for attempting to enforce rights, complaining to a government official about health or safety issues, or exercising a lawful act such as participating in a resident organization.

NOTICE BEFORE COMMUNITY CLOSURE. About half the states require a substantial notice period before a manufactured home community closes. Texas requires that community owners provide 120 days notice before any change of use of the propertythis is helpful, but shorter than many other states that have this protection. PURCHASE OPPORTUNITY. The fundamental reason that homeowners in manufactured home communities are so vulnerable is that they do not own the land under their homes. Eighteen statesbut not Texas have a policy on the books that requires or encourages community owners to give residents the opportunity to purchase the land on which their homes sit. PROTECTION AGAINST ARBITRARY EVICTION. Some states protect homeowners in manufactured home communities from eviction or nonrenewal of their leases unless they have done something wrong such as failing to pay lot rent or violating a rule. Texas has no statute addressing grounds for termination of a tenancy in a manufactured home community. RIGHT TO SELL HOME IN PLACE. Manufactured home community owners can effectively prevent homeowners from selling their homes by reserving the right to reject any potential buyer as a resident. Many states prohibit arbitrary rejection of a buyers application for residency. While Texas law addresses the sale of homes by homeowners, it does not prohibit arbitrary denial of a prospective purchasers application to rent the lot.

of the manufactured homes in the Lower Rio Grande Valley metro area or

15,987 28%
are located in manufactured home communities

413

RELOCATION EXPENSES. About 15 statesbut not Texashave programs, usually funded at least in part by community owners, for paying the costs of moving the homes if a manufactured home community closes. REQUIREMENT OF LEASE OF AT LEAST ONE YEAR. About 20 states require the owner of a manufactured home community to offer homeowners leases of at least a year. This requirement provides a modicum of security of tenure. In Texas, community owners are only required to offer leases of at least six months. REQUIREMENT THAT COMMUNITY OWNER MAINTAIN THE COMMUNITY. Many states specifically require manufactured home community owners to maintain common areas, utility service, and other services so that they are clean, safe, and in good working order. Texas law requires that community owners to make a diligent effort to repair or remedy a condition, but does not require the community owner to provide utilities from a utility company if the companys utility lines are not reasonably available. ADMINISTRATIVE COMPLAINT PROCEDURE. Some states offer a simple administrative procedure for resolving residents complaints about their manufactured home community. Texas does not. There does not appear to be any such system in Texas. RESIDENT ABILITY TO ENFORCE THE LAWS. A right without a remedy is unlikely to be effective. Recognizing this, many states specifically provide that residents have the right to enforce the manufactured home community protections. Texas provides that residents may recover actual damages, a civil penalty, and attorneys fees and costs for a community owners violation of the laws regarding manufactured home communities. Some specific sections of the law allows also allow for additional remedies.

RIGHT TO TREAT MANUFACTURED HOMES AS REAL PROPERTY

The way in which a state governs the titling of manufactured homes, especially when homes may be converted from personal property to real property, has major implications for owners and purchasers. Although a modern manufactured home may be indistinguishable from a site-built home to many observers, it is typically considered personal property, like a car or a television set, rather than real property, absent some sort of conversion to real property. This classification as personal property, along with other issues common to manufactured housing, often keeps homeowners from enjoying the same security and potential for wealth creation enjoyed by owners of site-built homes. In Texas, a manufactured home is eligible to be classified as real property if it is placed upon owned land or land for which the homeowner has a long-term lease as defined by state department of housing (currently five years as long as the home is not financed). In order for a manufactured home to be titled as real property, all liens on the home must have been discharged or all lienholders must have consented to the change, and the home must be habitable.

STATE POLICIES AND PROGRAMS THAT AFFECT NONPROFIT MANUFACTURED HOUSING DEVELOPMENT & PRESERVATION
LICENSING ISSUES FOR NONPROFIT MANUFACTURED HOUSING DEVELOPERS There do not appear to be any unusual barriers to licensure for nonprofit manufactured housing developers. To be licensed to buy and sell new and used homes and install homes, a dealer must post a $50,000 Surety Bond, attend classes, provide a copy of a business name filing or Articles of Incorporation, and pay a $900 fee. STATE WEATHERIZATION PROGRAMS AND OTHER MANUFACTURED HOUSING PROGRAMS The Texas weatherization assistance program serves families living in manufactured housing under the same processes and rules as any other household. Other than the use of a different energy audit (MHEA) there is no difference in treatment. In addition, there are a large number of utility providers in the area, which include electric cooperatives and public power utilities, most of whom offer their own energy efficiency programs. There appear to be no programs solely targeted to manufactured housing, but families living in manufactured homes do appear to be eligible on the same terms as other households for the energy efficiency programs offered. One example among the many utility providers in the South Texas MSA is American Electric Power Texas Central Company. It has two programs to reduce electricity usage during peak periods, the Residential Standard Offer Program1 and the Hard-to-Reach Standard Offer Program2 targeted to households at or below 200% of poverty. Residents of manufactured homes are eligible for both programs. PUBLIC FINANCING The Texas Department of Housing and Community Affairs has a number of programs to assist consumers, nonprofit organizations and community members. Most of these programs appear to include manufactured housing. For example, the Homeownership Assistance Program includes down payment and closing cost assistance and is provided to homebuyers for the acquisition of affordable singlefamily housing, including manufactured housing. A number of housing finance agenciesincluding Hidalgo-Willacy Housing Finance Corporation, McAllen Housing Finance Corporation, Harlingen Housing Finance Corp, a few other city housing finance entities as well as some parallel work by Texas Department of Housing and Community Affairs, Community Development Corporation of Brownsville, Colonia Self-Help Centers, and several othersserve the Lower Rio Grande Valley region.3 Although there appear to be no special programs for manufactured housing offered by these agencies, manufactured homes do not appear to be excluded from many of the programs such as low-interest loans or down-payment assistance.

Program Manual, Residential Standard Offer Program, American Electric Power, Texas Central Company, Texas North Company, 2012 Program Year, version2.0 available at http://www.aepressop.com/2012_TCC_TNC_RSOP_Program_Manual_012712.pdf 2 Program Manual, Hard-to-Reach Standard Offer Program, American Electric Power, Southwestern Electric Power Co, Texas Central Company, Texas North Company, 2012 Program Year, version2.0 available at http://www.aephtrsop.com/2012_AEP_HTR_Manual_V2.pdf. 3 Many of these housing finance agencies are members of the Texas Association of Local Housing Finance
1

LOCAL AND MUNICIPAL MANUFACTURED HOUSING POLICY

LOCAL ZONING AND FEE SIMPLE MANUFACTURED HOMES Texas law allows municipalities to prohibit the installation of a mobile home (a manufactured home built before the HUD Code went into effect in 1976) for use as a dwelling if the prohibition is prospective and does not apply to a mobile home previously legally permitted by and used as a dwelling in the municipality. If a mobile home is replaced by a HUD code manufactured home, the municipality shall grant a permit for use of the manufactured home as a dwelling. On application, a municipality must permit the installation of a HUD code manufactured home for use as a dwelling in any area determined appropriate by the municipality, including a subdivision, planned unit development, single lot, and rental community or park. LOCAL ZONING AND PRESERVING MANUFACTURED HOME COMMUNITIES: MORATORIUMS ON CLOSURE OR REDEVELOPMENT OF MANUFACTURED HOUSING COMMUNITIES Texas law allows municipalities to adopt a moratorium on property development if it complies with notice and hearing procedures and includes requisite written findings. There are limited bases upon which a moratorium on property development may be justified. Such a moratorium is limited to 90 or 120 days depending upon the basis for the moratorium, but may be extended for a limited time after public hearing and written findings. A moratorium may not be placed on new development for the purpose of completing land use assumptions, a capital improvements plan, or an impact fee. LOCAL TAX & OTHER FINANCIAL INCENTIVES Municipalities in Texas have not adopted tax or other financial incentives for preservation of manufactured home communities. LOCAL RENT CONTROL Municipalities in Texas have not adopted rent control ordinances for manufactured home communities. MANUFACTURED HOUSING INCLUSION IN CONSOLIDATED PLANNING, MUNICIPAL PLANNING AND COMPREHENSIVE PLANNING Texas allows local governments to adopt comprehensive plans for the long-range development of the municipality but does not require them to address manufactured homes or manufactured home communities.

Note: The content in this Policy Snapshot was collected by the National Consumer Law Center.

Innovations in Manufactured Homes (IM HOME) is a national initiative managed by CFED which seeks to ensure that owners of manufactured homes have the opportunity to build wealth through homeownership by improving the quality of new and replacement development, enhancing homeowners ability to enjoy long-term land security, expanding access to safe home financing and encouraging a supportive policy environment.