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Section II: Methodology
CCRH began this study with interviews of strategically selected affordable housing developers and housing program administrators to help scope out manufactured housing development issues and usage within California. These interviews yielded potential case studies and also informed the next phase of the research process – a developer survey regarding experience with manufactured housing.
In the survey, developers were queried about their use of manufactured housing and their perceptions of it. Developers who had not completed a manufactured housing project were questioned about the reasons they had not developed with it and their perceptions of the advantages and disadvantages of manufactured housing. For developers who completed projects, CCRH inquired about the types of projects they developed, their experience with the development process, overall satisfaction with the manufactured housing, and what they perceived as its strengths and weaknesses.
Through the strategic interviews and developer survey, CCRH identified key issues pertaining to the successful employment of manufactured housing for affordable applications, formed criteria to select case study projects, and compiled a case study short list of prospective ownership and rental manufactured housing developments. CCRH then conducted site visits for developments on the short list and interviewed staff regarding their experience with manufactured housing.
Based on the first round of project interviews and site visits, CCRH then selected the six case studies that are presented in this guide. These developments were selected because they were representative of common affordable housing applications, offered important lessons for effective utilization of manufactured housing, readily demonstrated important advantages of manufactured housing, and showed the kinds of conditions and situations where manufactured housing can be particularly effective. These six developments were studied in depth with the aim of distilling the factors that contributed to their success, identifying the challenges they faced and documenting cost savings and other development efficiencies that were achieved through the use of manufactured housing.
Pueblo Orchard, 14 unit affordable infill rental
Napa, CA. Developed by James Jones Development
Section III: Types and Descriptions of Factory Built Housing
Manufactured Housing Defined: Although manufactured housing is a distinct type of factory built housing, it is often mislabeled, confused with or lumped together with several other forms of factory constructed housing. Often the terms trailer, mobile home, modular home and prefab are used interchangeably with the term manufactured home. Much of this stems from a lack of experience and corresponding unfamiliarity with the manufactured and factory built housing industry and the state and federal policies regulating construction and engineering of different forms of this type of housing.
Factory Built Housing: As a starting point, factory built housing usually is a generic term for a housing product characterized by construction of most or all of a housing unit at an industrial facility. In California and a few other states, the term refers to a specific type of factory-constructed housing that complies with state building codes. Under these codes, factory construction can entail the production of a fully completed housing unit, sections of a unit or components in the form of modules, panels or materials. Once completed at the factory, the housing unit is then shipped to a prepared site where it will then be installed or assembled upon its foundation. Typically, at least some components of the house, such as a garage, porch, or roof will be added or built at the site.
Unless factory built housing is granted either federal or state preemptions from local building codes, such housing is subject to local standards, inspections and approvals. Absent policies that provide parity with site-built housing, local jurisdictions are free to develop specialized regulations targeting factory built housing that can severely limit where and how it can be placed. Also, without state protections, private codes, covenants and restrictions may also contain provisions that significantly limit or prohibit the use of factory built housing.
Mobilehomes: Mobilehome is a somewhat generic term that refers to factory built residential housing units completed prior to the establishment of federal standards effective in 1976. Before 1976, mobilehomes were manufactured to whatever building standards – if any – that were established by state and/or local jurisdictions. Mobilehomes grew out of an evolution within the travel trailer industry in which recreational trailers were adapted and upgraded for long-term residential use. Although mobilehomes were designed for long-term residential use, they typically were not recognized as real property by state and local governments and instead treated as trailers or vehicles. Parallel lending standards evolved that relegated financing to the higher interest and unfavorable consumer terms of chattel or personal property lending. As a result, mobilehome owners were forced to obtain expensive and sometime predatory financing and had few protections as consumers.
A major consequence was that mobilehomes became stigmatized and stereotyped. The very term “mobilehome” often conjures up images of very large travel trailers or long, rectangular, flat-roofed structures with aluminum siding and little visual appeal. Because of its low cost and perceived – although not always warranted – lack of quality, mobilehomes gained a reputation as inferior and undesirable housing. This negative
perception was reinforced by concentrations of manufactured housing in residential communities or “parks” – even though most units are outside these communities.
Manufactured Homes: Manufactured homes, which are the focus of this guide, are residential units built in a factory to standards established by the Manufactured Housing Construction and Safety Standards Act of 1974. Commonly known as the “HUD Code”, this law authorized the U.S. Department of Housing and Urban Development (HUD) to establish and enforce a federal building code for factory built residential units that previously had been known as mobilehomes. Under this law, the term
“mobilehome” became synonymous with “manufactured housing.” Now manufactured housing had to meet strict engineering, energy efficiency, structural, and safety standards established by HUD. It should be emphasized that the HUD Code does not establish standards for architectural appeal and nonstructural quality such as interior closet doors, plumbing fixtures, floor coverings and the like. Most of the HUD Code standards are performance standards and are not prescriptive or specific as building codes are.
Once completed, manufactured homes must pass a factory inspection and have a red HUD inspection seal placed in the unit that certifies the unit meets HUD Code standards. The HUD Code also preempts almost all local building codes and thus allows manufacturers to build homes that can be installed in any state or jurisdiction in the United States. Unfortunately, absent state protections such as those in California, the HUD Code does not prevent either private deed restrictions or local land use and zoning policies that preclude or severely restrict the use of manufactured housing. The HUD Code does not regulate certain items such as fire sprinklers or ignition resistant exteriors; these can be regulated by local governments unless states develop preemptive standards.
Manufactured homes are built in the factory on a nonremovable steel chassis. Wheels are installed on the chassis that allow the unit to be towed to the site. All the major elements of the home such as exterior and interior walls, electrical wiring, HVAC, roofs, floors, plumbing, cabinetry, doors and windows are constructed or installed into a complete home. Depending on the size and number of stories, the homes may be constructed into one or more completed sections and then joined together when the house is installed on its site. The HUD Code, since 2008, also includes installation standards and minimum procedures which allow for more stringent state standards and procedures.
Modular Homes: Modular homes are constructed at a factory in multiple three dimensional boxes or modules. In California and a few other states, modular homes are called “factory-built housing”. Almost all of the exterior and interior components of the modules are completed at the factory. Once the modules are completed, they must be inspected by an authorized third-party inspector and certified to be in compliance with the appropriate state and/or local building standards. These components are then transported to the intended site of use and joined together upon a foundation.
In California, modular homes must be constructed to meet California Building Standards Code (CBSC) standards that are incorporated into Title 25, Chapter 3 of the California Codes of Regulations. Homes built to these standards are inspected by third party,
certified inspectors at the factory. If the unit meets state standards, an insignia will be issued and placed on the unit. Under Section 19981 of the California Health and Safety Code, housing units bearing this insignia are considered “factory-built homes” and are deemed to have met all local ordinances and regulations pertaining to housing construction. Factory-built homes are exempt from local building standards and they cannot be treated differently by local jurisdictions than other residential units of similar size. They do however have to meet the same zoning standards that apply to site-built homes in terms of setbacks, minimum lot sizes, garages, etc., and must meet the local jurisdiction?s foundation requirements which are inspected by a local inspector.
Panelized Homes: Panelized house production consists of factory construction of all of the wall or “panel” sections of a home at a factory instead of building them onsite. The degree of completion of the panels and their size is flexible. Panels are large wall sections that are partially or fully completed. Typically they include windows, doors, wiring, and outside sheathing. However, panel sections can be produced as turn-key with all components, exterior siding and interior drywall and finishes completed. Once the panels are inspected at the factory, they are trucked to the site and assembled. Using the panels as the structural foundation of the house, additional finishes and components such as the roof are added onsite. Like modular or factory-built housing, panelized homes must meet applicable state or local building codes.
Pre-Cut Homes: Pre-cut homes are essentially kit homes. All of the building materials, such as lumber, are assembled at the factory and cut to specifications. Once completed, they are assembled into a „kit? and shipped to the home site for assembly. They are subject to the same building code requirements as panelized homes.
Market-rate infill developed by Winslow-Edwards, Inc.,
15Section IV: Production and Development of Manufactured Housing
Manufactured Housing Production: Manufactured housing is constructed in factories certified by HUD as capable of producing homes that meet HUD Code standards. This requires demonstrating that a factory quality assurance program is in place and an approved set of plans, called structural approvals, for the home models the manufacturer wishes to construct have been completed. These structural approvals also serve the same function as the local government plan check for site-built housing. Finally, the manufacturer must contract with a HUD-approved third-party entity to inspect and certify completed units.
Factories that produce manufactured housing range in size from 30,000 to 250,000 square feet and employ from 100 to 450 workers. Large factories can easily turn out 30 to 50 standard to large homes a week with smaller factories produced 10 to 15 homes weekly.
Houses are built as fully completed sections, known as floors. The home is generally made up of one to four floors. Each section or floor is constructed on a steel undercarriage or frame to provide structural and transportation support. Construction occurs on assembly lines that are organized around the construction of major components and systems of the units. Large-scale industrial tools and machinery enable factories to work with large, one-dimensional unit components such as roofs, walls and floors at one time. Tolerances are quite tight and construction accordingly must be quite precise to keep the assembly line moving. This is in contrast to site-built construction where house components such as floors or walls must be broken down into components small enough to be manhandled and installed largely by human labor and hand tools.
Manufactured Housing Procurement: A manufactured housing project begins when a developer sets out to procure a unit. Ideally, the procurement process is informed by a clear project concept for a site that has been determined suitable for manufactured housing. Presumably, some type of feasibility analysis has been conducted that not only has assessed financial feasibility but also evaluated different housing types such as manufactured, site-built or modular. This process should have yielded specifications in terms of affordability levels for prospective buyers, house sizes, basic design, desired amenities and architectural standards. Armed with a clear project goal and requirements for the housing units, the developer then is in a position to begin the procurement process. The manufactured housing industry has two main procurement systems.
Dealer or Retail Procurement: Most manufactured homes are sold on a retail basis through local and regional independent retail dealers. Dealers purchase or order manufactured homes from factories and then sell them to individual consumers. Typically, dealers also provide transport of the units and installation services as part of the sale. Often dealers arrange for chattel or property financing at rates and terms much less favorable to borrowers than home mortgages. Increasingly though, consumers and lenders, are treating manufactured homes as real property if they are installed on permanent foundations and financing purchases through traditional real estate mortgages.
If a developer procures units through a dealer, it essentially will be making a retail purchase. Depending on the number of units, the developer might be able to negotiate some volume discount as dealers receive financial incentives from factories for their sales volume. But whatever the ultimate price, it will include a dealer mark-up or profit. The developer also will have to select from the models available through the dealer and whatever upgrades or options the factory offers.
For very small unit projects, purchasing from a reputable dealer offers some definite advantages. The dealer can often provide a one-stop purchase by providing the unit, transport from the factory and installation services. For larger project, the mark-up or dealer profit may negate the cost advantage of using manufactured housing. Also, if the sale is through a dealer, and there are construction defects, both the dealer and manufacturer are jointly responsible for remediation under California law.
Factory Direct Procurement: The other distribution system is a direct sale by the manufacturer to the developer. Increasingly manufacturers are investing in this market sector by creating model lines specifically designed for developer projects, dedicating sales and support staff and increasing marketing to developers. The developer and manufacturer will have to negotiate the following areas:
? Final specifications of units
? Purchase price of units and delivery dates
? Payment terms and invoicing systems
? Shipping and installation
? Additional quality control measures
Dealer License: In California, factory direct purchasing requires that the developer obtain a manufactured housing dealer license from the California Department of Housing and Community Development Department (HCD) unless the sale is to a general contractor with 5 or more homes sold each year, the homes are for a specific subdivision and are delivered directly to the site for installation on a permanent foundation. Government entities such as a redevelopment agency or housing authority are not required to have a dealers license for factory direct purchases.
Purchase and Specifications: Factory direct purchases are negotiated between the developer and the manufacturer in terms of price, specifications and delivery date. Developers either purchase unmodified manufactured models or require some
customization of the units to meet project needs. If units are customized, it will usually require collaboration between the developer and manufacturer to arrive at a redesign. Whether the purchase is for customized units or a standard model line, it is imperative that specifications for dimensions, components, standards, systems, materials, finishes and amenities are spelled out in great detail using terminology that both the developer and manufacturer understand and agree upon.
Shipping and Installation: Dealers, rather than factories, typically contract with a transporter to ship the units to the site as part of the sales price. The developer, however, must arrange their own site preparation, foundation and installation services - although the factory may be able to recommend contractors who are experienced with their products.
Payments: Factory procurement systems customarily work through invoicing for delivery of a specified number of units that meet certain specifications by a specific date with complete payment made at the end of the production run. This is very different from site-built construction contracts that provided for a series of phased payments or draws that correspond to construction progress. Construction contracts include a substantial retention for each draw to protect the developer and construction lender from general contractor nonperformance and ensure that the project is completely finished before the general contractor receives its entire payment.
Factory invoicing, by contrast requires the developer make a substantial payment in order to commence production with the balance due to be paid when the units are completed and ready for shipping. It should be noted, however, that as manufacturers work with more market and affordable housing developers, they are becoming more flexible regarding invoice, payment and even retention terms in order to accommodate developer and project needs.
Quality Control: Especially on customized projects, the developer may negotiate additional quality control measures besides those of the factories. These may include measures such as building a prototype unit before commencing a production run, developer inspections during production, and inspection of units prior to shipping. Enhanced quality control can be both worth its weight in gold and also add to production costs. As a rule of thumb, the more customization deviates from a manufacturer?s model and entails structural changes, the more likely enhanced quality control will be cost effective.
Shipping: Typically the shipping is included as part of the purchase price whether procurement is done through a retail dealer or directly from a factory. Once a manufactured unit is completed, a specialized transport company will transport the unit, using the wheels attached to steel undercarriage, to a prepared site. Thanks to HUD Code standards, manufactured homes are engineered to be structurally very durable and are able to handle the strain of being transported several hundred miles to their ultimate destination.
Installation: Installation entails transporting manufactured housing sections to a prepared site, successfully installing the sections onto a prepared site and completing additional onsite enhancements or additions to the unit(s). Successful installation requires the following conditions to be present:
? Suitable site has been selected
? Site has been prepared for a manufactured housing installation
? An appropriate foundation has been laid to receive the unit
Evaluating Site Suitability: In many ways, site assessment for manufactured housing is no different than it is for site-built housing. Standard activities such as reviewing zoning requirements, availability of utilities, soils testing, evaluating drainage issues and environmental assessments differ little. There are however a few areas with crucially different assessment issues when using manufactured housing:
? Soil conditions
? Unit transport access: road system free of impediments
? Obstacles to the movement of house sections onto the property and foundation
Soil Conditions: The soil must be suitable for the type of foundation system to be employed and meet weight-bearing requirements. Manufactured homes are more heavily constructed than site-built, with weights of 20% to 30% higher than comparable site-built homes.
Shipping Access: The site must be accessible by a road system suitable for the transport of long (forty-foot to sixty-foot) rigid sections or “floors” that comprise the house. This means the route must be assessed for obstacles such as bridges, sharp curves, tunnels, trees and other physical impediments that could obstruct transport of the sections. Since the manufactured housing industry has developed technologies and methods of navigating many of these types of obstacles the transport assessment should be conducted by someone with experience with manufactured housing transport.
Lot Size and Dimensions: The lot must have sufficient size to maneuver the manufactured unit?s floors or sections onto the site where it can be set onto the foundation. A rough rule of thumb is that required space equals the house footprint plus sufficient staging area to temporarily park and maneuver the manufactured sections onto the foundation. If the area coverage of the foundation/unit footprint takes up most of the sites space, there must be sufficient off-site space available. Potential off-site space could include adjacent unobstructed public or private property or public streets. Whether on-site or off-site space is used, the dimensions needed for staging and maneuvering of sections and equipment during installation should be carefully established and checked.
Site Accessibility: The site must be examined to identify existing or potential physical obstacles that would prevent the installation of a manufactured home. These types of obstacles are usually readily observable and typically related to terrain, vegetation, structure or other physical objects on or adjacent to the site. Some obvious ones are trees
on or overhanging the site, tree stumps, telephone poles, street lamps, large boulders and existing structures. Any obstacle that can impede installation must be removed or otherwise mitigated.
Site Preparation: Prior to the arrival of the manufactured unit, the site must be prepared. The site will need to be graded and leveled with any soil remediation necessary to support the weight of the manufactured unit completed. Plumbing and utility hook-ups must correspond exactly to the location of their corresponding hook-ups in the units. Unlike site-built houses, it is very difficult to make adjustments of receptor and hook-up locations as these components already will have been constructed and integrated into the unit. Finally all structural, physical, terrain or vegetation impediments to movement of the unit onto the site must be removed or mitigated.
Foundations: The final piece in preparation of the site is the construction and installment of a foundation. The foundation consists of all the components and systems that support and anchoring a home to the ground. There are various types of manufactured housing foundations. Depending on the type installed, foundations are composed of systems of piers, jacks, straps, tie-downs and footings. Foundations may also include a weight-bearing concrete perimeter wall. Whatever the type of foundation used, it is imperative that the fit with the manufactured home is exact. Precision in the preparation of the foundation is essential in order to avoid utility and plumbing hook up problems or damage to structural elements and components of the unit such as walls, floors, doors and windows. For this reason, the installation contractor frequently also installs the foundation.
Generally, the manufactured unit will need to be placed on a foundation that will permanently attach it to the land in order for it to be treated as real property. Such a foundation must provide long-term, durable support and stability for the manufactured unit and protect it from adverse weather and wind conditions, seismic activity and water intrusion. This generally requires that the foundation be built to meet FHA guidelines and technical specifications that are published in the Permanent Foundations Guide for Manufactured Housing (PFGMH). Compliance with these guidelines and standards must be certified by a licensed professional engineer, or registered architect, who is licensed or registered in the state where the manufactured home is located. Permanent foundations may also have to meet other standards established by lenders and/or state regulations.
Installations: Once the site and foundation are ready, the manufactured home can be installed. Installations are best done by an experienced installation company with specialized crews and equipment. The method used depends on the type of foundation used and the size of the overall project. Work on manufactured homes in California must be done by a licensed “B” contractor or licensed “C-47” contractor.
Drive-On Method: For individual or small projects with certain types of foundations, house sections are maneuvered onto the foundation by backing or pulling them over. They are then lowered by hydraulic jacks onto the foundation.
Roll-on Method: When foundations prevent sections from being backed or pulled onto the foundation specialized equipment is used. The section is maneuvered lengthwise alongside the foundation and special equipment is used that essentially rolls the sections onto the foundation.
Crane Method: In this method, an industrial crane simply picks the unit up and lowers it onto the foundation. They must be used for two-story installations. Crane installations are expensive but are much faster than either the drive-on or roll-on methods. For large projects where costs can be spread across a number of units, this method can be quite cost-effective.
Completing the Installation: Once the section is lowered onto the foundation, the installation contractor will then level that section. For multi-section homes, the installer will join the sections together to form a complete home. Leveling is critical to make sure that weight is evenly distributed and structural components such as floors and walls don?t sag or crack. Once the unit is leveled, the installer will anchor it to the ground to protect the unit from crosswinds and shifting.
The remaining work, known as finish work, consists of setting up and finishing the remaining components. In this stage, the roof will be set up, any exterior siding or skirting work will be finished and the utilities will be hooked up. In the unit interior, carpets are joined, interior doors, drawers and other such „loose? items are installed and adjusted. Any transit or installation damage is repaired and the unit and job site cleaned up.
Other onsite work that may be completed at this stage is the attachment of garages, porches and architectural enhancements. Structural attachments like garages must be free standing and cannot be supported by the home even though they are attached to it. Consequently, manufactured units will come with built in tie-ins so that they home can receive the structural attachment seamlessly and without architectural impairment of the house?s appearance.
Final Approvals: Upon final completion of the installation, a careful inspection is necessary. As noted previously, the factory and/or dealer are liable for any construction defects under the standard one year warranty. However this warranty does not apply to damage caused by transportation or installation. Thus, any problems and their causes should be identified at this time and correction arranged. In addition, depending on state laws, some type of government or third-party inspection will be required, similar to the final inspection of site-built housing.
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Posted by Rob La Monica - CEO on November 5th, 2016 11:59 PM
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