TMHA’s Major Policy Goal - HB 2706 “Relating to the regulation of manufactured homes.”
H.B. 2706 by Rep. Shine is the TMHA supported bill that makes several enhancements to the manufactured housing laws of Texas. Effective September 1, 2023, the most important provision of the new law is the simplification of the inventory lien perfection process. Under the current law many of the inventory lenders were having to duplicate their efforts to perfect their inventory liens by filing paperwork with both the MH Division of TDHCA and the Secretary of State’s office. This duplication was the result of confusing state laws and a court case that essentially concluded the only way an inventory lender could be guaranteed their lien was perfected was to do both. This was unnecessarily burdensome and costly. TMHA received input from the large inventory lenders that resulted in the changes in HB 2706 to drastically simplify the process so that floorplan lenders need only file a UCC Financing Statement with Texas’ Secretary of State’s office once every five years to perfect their floorplan liens.
For manufactured home community commercial transactions, the law will now provide for a limited retailer exception when an entire community is sold to a new buyer and includes more than two community owned homes. Currently the law would require the seller of the MHC to get their own retailer’s license, affiliate with a retailer, or engage in other laborious title work to sell the entire property including the homes to a new buyer. The change will allow smaller “mom and pop” MHC sellers to more easily sell their communities without the unnecessary and burdensome retailer licensing hassle.
For all retailers, the new law aligns the state’s law with the changes made back in 2019 in federal HUD-code regulations to the federal formaldehyde consumer notice. The federal regulations eliminated the separate notice and included a new statement on the home’s data plate. However, Texas’ law was still referencing a consumer notice with content established in federal regulations, which no longer exists. The new change allows the MH Division board to set the content of the notice and adds the notice flexibility to be combined with the other consumer notices. The MH Division has already completed this work to consolidate the previous 6-page Consumer Notice down to two and a half pages with the pertinent formaldehyde content included in the now combined form. The Texas law still provides important liability protection, originally stemming from the class action suits from the 1980’s, if a state level formaldehyde notice is provided, which is why it remains necessary in the now combined Consumer Notice.
And finally, the law changes add flexibility to informally determine if a valid complaint against a license holder can be resolved more quickly and cost effectively without requiring an in-person meeting.
MH Division TDHCA Budget rider to end “the sweep”
Another of TMHA’s specific manufactured housing related lobby efforts, coupled with the budgeting request made by the Manufactured Housing Division of TDHCA, was to add a rider to the state’s massive state budget, H.B. 1 with its 1,030 pages, that would allow the MH Division to retain its unexpended balance of funds at the end of their fiscal year.
For years, going back to a law change in 2003, the MH Division historically collects more money in receipts from things like titling, licensing, and inspection fees than it expends during the fiscal year. The major restraint on their operations is that at the end of their fiscal year all monies left over would be swept out of their account and into the state’s general revenue. This starts the MH Division off at zero dollars at the beginning of each fiscal year and compresses their operating expense budgeting. This limitation greatly hindered the Division’s ability to retain and backfill employees with competitive state pay or take on any service improvement project that would require any ongoing high-skilled labor.
Deep within the state’s budget for this session (page 739), which controls all state operations and funding for two years, was a “rider” that modified the budget and allows the MH Division to retain its fund balance.
TMHA worked to help achieve this change with the goal that the department will be on more stable financial footing, can adequately staff its various internal departments, and retain those employees with critical institutional knowledge that keep vital systems important to the industry, namely the title records system, running smoothly. Industry dollars should go towards maintaining and improving the nation’s best titling system, not flow into the state’s general coffers.
TMHA’s Successful Defense; First Rule Do No (or Don’t Allow) Harm
A primary goal of TMHA’s Lobby Team each session is to ensure no harmful legislation is passed that will have an adverse impact on any aspect of our industry. This is a sizable task considering the broad range of issues, state laws, and far-reaching tentacles of all the policy that impact anything related to housing, land development, landlord/tenant issues, lending, occupational licensing and more. Of the nearly 300 bills we were tracking and working on, the vast majority of those were bills marked as problematic in one form or another and to varying degrees that range from existential threats, to less than ideal public policy.
This session we saw once again a flurry of bills that we were deeply concerned about. In our highest category of concern, the existential threat, were bills that would have greatly expanded land use and zoning authority to counties. More than 85 percent of manufactured homes are constructed outside of cities on unincorporated county land. Ensuring access to this rural market is always our first defensive priority. This session we saw bills that would have granted county land use authority either directly, as H.B. 3398 intended to do, or more surreptitiously by expanding county power via a new type of land use building code the Wildland Urban Interface Code as proposed in H.B. 152. None of these potentially devastating bills passed.
On the landlord/tenant front, this session continued recent trends with a flurry of bills that would be adverse policy for many landlords, which in our case are our manufactured home community owners. These bills included prolonged delay and burdensome procedural “hoops to jump through” on evictions, sealing of tenants’ records from initial screening, and even canceling leases after 48-hours without power following a natural disaster. Capped off by the first rent control bill filed in Texas in recent memory.
And while we successfully worked to fend off the bills that could harm our industry, we also log these bills in our institutional memory as they have a strong tendency to be refiled again and again in future sessions - assuming the same elected member returns to office.