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                                                       Calendar No. 517

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106th Congress                                                   Report
 2d Session                      SENATE                         106-274                                                                
_______________________________________________________________________





                         MANUFACTURED HOUSING


                        IMPROVEMENT ACT OF 2000

                               __________

                              R E P O R T

                                 OF THE

                     COMMITTEE ON BANKING, HOUSING,

                           AND URBAN AFFAIRS

                          UNITED STATES SENATE

                              to accompany

                                S. 1452

                             together with

                            ADDITIONAL VIEWS




                 April 13, 2000.--Ordered to be printed

                                -------                                

                    U.S. GOVERNMENT PRINTING OFFICE
79-010                     WASHINGTON : 2000       





            COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS

                      PHIL GRAMM, Texas, Chairman

RICHARD C. SHELBY, Alabama           PAUL S. SARBANES, Maryland
CONNIE MACK, Florida                 CHRISTOPHER J. DODD, Connecticut
ROBERT F. BENNETT, Utah              JOHN F. KERRY, Massachusetts
ROD GRAMS, Minnesota                 RICHARD H. BRYAN, Nevada
WAYNE ALLARD, Colorado               TIM JOHNSON, South Dakota
MICHAEL B. ENZI, Wyoming             JACK REED, Rhode Island
CHUCK HAGEL, Nebraska                CHARLES E. SCHUMER, New York
RICK SANTORUM, Pennsylvania          EVAN BAYH, Indiana
JIM BUNNING, Kentucky                JOHN EDWARDS, North Carolina
MIKE CRAPO, Idaho

                   Wayne A. Abernathy, Staff Director
     Steven B. Harris, Democratic Staff Director and Chief Counsel
                Lendell Porterfield, Financial Economist
              Melody H. Fennel, Professional Staff Member
             Martin J. Gruenberg, Democratic Senior Counsel
             Jonathan Miller, Democratic Professional Staff
                       George E. Whittle, Editor

                                  (ii)



                            C O N T E N T S

                              ----------                              
                                                                   Page
Introduction.....................................................     1
Purpose and Summary of Need for Legislation......................     2
History of the Legislation.......................................     2
Purpose and Scope of the Legislation.............................     3
Section-by-Section Analysis of S. 1452: ``Manufactured Housing 
  Improvement Act of 2000''......................................     6
    Section 1. Short Title and References........................     6
    Section 2. Findings and Purpose..............................     6
    Section 3. Definitions.......................................     6
    Section 4. Federal Manufactured Home Construction and Safety 
      Standards..................................................     6
    Section 5. Abolishment of National Manufactured Home Advisory 
      Council; Manufactured Home Installation....................     7
    Section 6. Public Information................................     7
    Section 7. Research, Testing, Development, and Training......     7
    Section 8. Fees..............................................     7
    Section 9. Dispute Resolution................................     8
    Section 10. Elimination of Annual Report Requirement.........     8
    Section 11. Effective Date...................................     8
    Section 12. Savings Provision................................     8
Changes in Existing Law (Cordon Rule)............................     8
Regulatory Impact Statement......................................     8
Cost of Legislation..............................................     8
Additional Views of:
    Senators Sarbanes, Dodd, Kerry, Bryan, Johnson, Schumer, Bayh 
      and Edwards................................................    13



                                                       Calendar No. 517

106th Congress                                                   Report
                                 SENATE
 2d Session                                                     106-274

=======================================================================




 
              MANUFACTURED HOUSING IMPROVEMENT ACT OF 2000

                 April 13, 2000.--Ordered to be printed

                                _______
                                

 Mr. Gramm, from the Committee on Banking, Housing, and Urban Affairs, 
                        submitted the following

                              R E P O R T

                             together with

                            ADDITIONAL VIEWS

                         [To accompany S. 1452]

    The Committee on Banking, Housing, and Urban Affairs (the 
``Banking Committee''), to which was referred the bill (S. 
1452) to modernize the requirements under the National 
Manufactured Housing Construction and Safety Standards Act of 
1974 and to establish a balanced consensus committee process 
for the development, revision, and interpretation of Federal 
construction and safety standards for manufactured homes, 
having considered the same, reports favorably thereon with an 
amendment and recommends that the bill (as amended) do pass.

                              INTRODUCTION

    On March 8, 2000, the Senate Committee on Banking, Housing 
and Urban Affairs met in legislative session and marked up and 
ordered to be reported S. 1452, the Manufactured Housing 
Improvement Act of 2000, a bill to modernize the requirements 
under the National Manufactured Housing Construction and Safety 
Standards Act of 1974 ('74 Act) and to establish a balanced 
consensus committee process for the development, revision, and 
interpretation of Federal construction and safety standards for 
manufactured homes, with a recommendation that the bill do 
pass, with an amendment. The Banking Committee adopted a 
Managers' Amendment, offered by Senators Shelby, Kerry, Allard, 
Edwards, Bayh and Bryan, making certain substantive and 
technical amendments. The Committee reported the bill favorably 
by voice vote.

              PURPOSE AND SUMMARY OF NEED FOR LEGISLATION

    The purpose of this legislation is to set up a process to 
update manufactured housing safety and construction standards 
on a timely basis. The '74 Act created the Federal manufactured 
housing program under the authority of the Department of 
Housing and Urban Development (HUD). Currently, the program is 
a division of the Office of Consumer and Regulatory Affairs and 
has no full-time director. The program's staff has been reduced 
from 35 full-time employees in 1984 to eight professional 
employees today. Meanwhile, manufactured housing has become one 
of the fastest growing segments of the housing industry, 
growing by 100 percent over the last decade and now accounting 
for one in every four new single-family home starts.
    Presently, over 19 million Americans live in approximately 
9 million manufactured homes. According to the Department of 
Commerce, the average cost of a new manufactured home in 1998 
was $43,800 (excluding land) compared with $136,425 (excluding 
land) for a new site-built home, thus extending home ownership 
to Americans who may otherwise be unable to purchase their own 
home. The median income for a manufactured home owner was 
$24,500 in 1996 and according to Mr. Rutherford Brice, who 
testified on behalf of the American Association of Retired 
Persons (AARP), ``44 percent of the manufactured home owners 
are aged 50 and above.'' \1\
---------------------------------------------------------------------------
    \1\ Testimony of Rutherford Brice, Member of the Board of 
Directors, AARP, S. 1452 Hearing in the Subcommittee on Housing and 
Transportation, October 5, 1999, p. 2.
---------------------------------------------------------------------------
    What started as a ``travel trailer'' and gained popularity 
for recreational outdoor activities in the 1940's and 50's, has 
become a very reasonable, affordable option for permanent 
housing. Indeed, once shipped and anchored (most commonly to a 
concrete foundation), these homes are rarely, if ever, moved. 
Thus, manufactured housing has become a private-sector solution 
to affordable housing. For this reason, the Banking Committee 
believes Congress should update the laws to reflect the 
technological developments and increased reliance on this 
sector of the housing industry, which contributes more than $33 
billion annually to our domestic economy.

                       HISTORY OF THE LEGISLATION

    The Manufactured Housing Improvement Act of 2000, S. 1452, 
was introduced on July 28, 1999 by Senators Shelby, Bayh, 
Bryan, Rockefeller and Bingaman. Senators Craig, Hutchinson, 
Inhofe, Burns, Lott, Snowe, Santorum, Mack, Smith (OR), 
Cochran, Helms, Bunning, Lugar, Collins, Crapo, Roberts, 
Sessions, Johnson, Cleland, Hagel, Hollings, Abraham, Bennett, 
Coverdell, Daschle, Lincoln, Edwards and Allard were all added 
as additional cosponsors.
    The Subcommittee on Housing and Transportation conducted a 
legislative hearing to consider S. 1452 on October 5, 1999. The 
Subcommittee received testimony from: Senator Evan Bayh (D-IN); 
the Honorable William Apgar, Assistant Secretary for Housing & 
Federal Housing Commissioner, Department of Housing and Urban 
Development; Mr. William Lear, Vice President & General 
Counsel, Fleetwood Enterprises, Inc., who testified on behalf 
of the Coalition to Improve the Manufactured Housing Act (the 
``Coalition''); \2\ and Mr. Rutherford Brice, a member of the 
Board of Directors, American Association of Retired Persons.
---------------------------------------------------------------------------
    \2\ The ``Coalition'' is comprised of the manufactured housing 
industry's two national trade associations--the Manufactured Housing 
Institute and the Manufactured Housing Association for Regulatory 
Reform.
---------------------------------------------------------------------------
    On March 8, 2000, the Banking Committee met in Executive 
Session to consider S. 1452. The Committee considered and 
adopted, without objection, a bipartisan Managers' Amendment 
offered by Senators Shelby, Kerry, Allard, Edwards, Bayh and 
Bryan. This amendment changed the composition of the consensus 
committee and included three additional provisions regarding: 
technical support for the consensus committee; installation 
programs; and dispute resolution programs for the timely 
resolution of disputes regarding the responsibility for the 
correction or repair of defects.
    The Banking Committee ordered S. 1452 reported, as amended, 
to the Senate by voice vote.

                    PURPOSE AND SCOPE OF LEGISLATION

    The bill, as ordered reported by the Banking Committee, 
contains provisions that will improve and modernize the 
National Manufactured Housing Construction and Safety Standards 
Act of 1974 (P.L. 93-383) by: (i) setting up a balanced 
consensus committee to recommend construction and safety 
standards and codes; (ii) ensuring a timely update of those 
standards and codes; (iii) strengthening installation standards 
and dispute resolution mechanisms; and (iv) increasing funding 
for the Federal program through industry label fees.

Balanced consensus committee

    First and foremost, S. 1452 sets up a consensus committee 
appointed by an administering organization and subject to the 
approval of the Secretary of HUD (Secretary) to develop, review 
and recommend manufactured housing construction and safety 
standards and procedural and enforcement regulations on a 
timely basis. The consensus committee will be comprised of 
three groups with seven members in each group: (i) producers; 
(ii) users; and (iii) general interest and public officials. In 
addition to public officials, group (iii) may include 
architects, engineers, homebuilders, academicians, developers 
and others. HUD will also be allowed one non-voting member of 
the consensus committee so as to communicate the views and 
concerns of the Secretary of HUD. Consistent with American 
National Standards Institute (ANSI) guidelines, the consensus 
committee is represented by balanced interests and ``all 
affected interests have the opportunity for fair and equitable 
participation without dominance by any single interest.'' The 
Banking Committee has taken the extra measure of defining 
``dominance'' to ensure representation on the consensus 
committee will be balanced.
    In testimony offered by William Lear on behalf of the 
Coalition, Mr. Lear testified to the inability of HUD to update 
the code in a timely manner:

          HUD has failed over the years in its most important 
        obligation--to update the standards on a timely basis. 
        Even reference standards developed by outside 
        organizations have taken years to adopt after their 
        implementation by other segments of the housing 
        industry. The cumulative impact of this neglect is a 
        code that has not kept pace with technological 
        innovation within the industry.\3\

    \3\ Testimony of William Lear, Vice President and General Counsel, 
Fleetwood Enterprises, Inc., on behalf of the Coalition to Improve the 
Manufactured Housing Act, S. 1452 Hearing in the Subcommittee on 
Housing and Transportation, October 5, 1999, p. 8.

Thus, one of the keys to streamlining the process of updating 
the standards lies in the schedule for review specifically 
outlined in the legislation. The Banking Committee believes the 
need to provide such a mechanism for the timely development of 
standards is of paramount importance to both consumers and 
industry.
    The bill provides that the consensus committee will meet at 
least once every two years to consider revisions to the Federal 
manufactured home construction and safety standards and 
regulations, procedural and enforcement regulations, and to 
submit proposed revisions. Revisions require a two-thirds 
majority vote of the consensus committee. Once adopted, the 
consensus committee will provide a proposed revised standard or 
regulation to the Secretary who shall have one year--and 
complete authority--to adopt, modify or reject the 
recommendation. If the Secretary chooses to reject the 
recommendation, the Secretary must publish the reasons for the 
rejection in the Federal Register. If the Secretary fails to 
act, the construction and safety standards recommendations 
shall be considered to have been adopted by the Secretary and 
automatically take effect 180 days after the conclusion of the 
twelve-month review.
    As reported, the legislation provides that the consensus 
committee recommendations on both the construction and safety 
standards and procedural enforcement regulations will have the 
effect of law if the Secretary fails to act. The Banking 
Committee considered the implications of including the ability 
of the consensus committee to recommend both the safety 
standards and enforcement regulations. The Banking Committee 
recognized the significance of allowing the consideration of 
standards and the enforcement of those standards to be 
undertaken jointly so as to provide a seamless continuity 
between the two. However, at no time did the Banking Committee 
consider an enforcement action of a State Administrative Agency 
against a manufacturer to be subject to the approval of the 
consensus committee. Indeed, that is not contemplated by this 
legislation.
    Lastly, the consensus committee language includes a 
provision requiring the administering organization to provide 
technical support for any of the interest categories 
represented so long as the support is ``necessary to ensure the 
informed participation of the consensus committee members'' and 
``the costs of providing the support are reasonable.'' Mr. 
Apgar recommended a technical assistance provision so that the 
consensus committee could enjoy the ``maximum participation of 
all the groups represented.'' \4\
---------------------------------------------------------------------------
    \4\ Testimony of William Apgar, Assistant Secretary for Housing & 
Federal Housing Commissioner, Department of Housing and Urban 
Development, S. 1452 Hearing in the Subcommittee on Housing and 
Transportation, October 5, 1999, p. 2.
---------------------------------------------------------------------------

Installation programs and dispute resolution

    As reported, S. 1452 gives the States five years to adopt 
an installation program ``established by State law'' that 
includes: (i) installation standards; (ii) the training and 
licensing of installers; and (iii) the inspection of the 
installation of manufactured homes. During this five-year 
period, the Secretary of the Department of Housing and Urban 
Development and the consensus committee are charged with 
constructing a ``model'' manufactured housing installation 
program. In States not having or not choosing to adopt an 
installation program, HUD may contract with an appropriate 
agent in those States to implement the ``model'' installation 
program.
    In order to address problems that may arise with 
manufactured homes, S. 1452 also gives the States five years to 
adopt a dispute resolution program for the timely resolution of 
disputes between manufacturers, retailers, and installers 
regarding the responsibility for the correction or repair of 
defects in manufactured homes that are reported during the one-
year period beginning on the date of installation. In States 
not having or not choosing to adopt their own dispute 
resolution program, HUD may contract with an appropriate agent 
in those States to implement a dispute resolution program.
    The Banking Committee considered extending the duration of 
the dispute resolution provision from one year to the life of 
the warranty. However, current warranties vary from one to five 
years from State to State and manufacturer to manufacturer. The 
Banking Committee decided that such a provision could provide 
an incentive for the industry to shorten the effective warranty 
period. Nevertheless, the dispute resolution provision does not 
affect voluntary manufacturers' warranties or State mandated 
warranties in any shape, form or fashion.

Fees

    This bill amends Section 620 of P.L. 93-383, allowing the 
Secretary to use industry label fees for carrying out the 
responsibilities under this Act, including: conducting 
inspections and monitoring; funding for States; increased 
personnel at HUD for the manufactured housing program; and 
administering the consensus committee. As amended, Section 620 
would prohibit the use of label fees to fund any activity not 
expressly authorized by this Act unless such activity was 
already engaged in by the Secretary prior to the date of 
enactment. Furthermore, any fee, or change in expenditure would 
be subject to the annual Congressional appropriations process. 
It is the intent of the Banking Committee that all fees 
collected pursuant to Section 620 be used in support of the 
manufactured housing program.

                      section-by-section analysis

Section 1. Short title and references

    This Act is cited as the ``Manufactured Housing Improvement 
Act of 2000.''

Section 2. Findings and purpose

    This provision will add a more positive, detailed statement 
to the purpose of the '74 Act. This section will add a 
``balanced, consensus standards development process'' and also 
express the continuing need for consumer protection while 
emphasizing the need for affordability, performance based 
standards, and for fair and reasonable enforcement regulations.

Section 3. Definitions

    The bill would add several definitions to Section 603 of 
P.L. 93-383 concerning the consensus committee and the 
consensus standards development process. It also adds a 
definition for the monitoring function and related definitions 
for Production Inspection Primary Inspection Agency and Design 
Approval Primary Inspection Agency duties, which have not been 
previously defined. To update the '74 Act, the outdated term 
``dealer'' has been replaced throughout with the term 
``retailer.''

Section 4. Federal manufactured home construction and safety standards

    Section 604 of P.L. 93-383 would be revised to establish a 
consensus committee to submit recommendations to the Secretary 
of HUD for developing, amending and revising both the Federal 
Manufactured Home Construction and Safety Standards and the 
procedural and enforcement regulations. These recommendations 
would be published in the Federal Register for notice and 
comment prior to final adoption by the Secretary. The Secretary 
of HUD will maintain final authority in his ability to accept, 
reject or modify consensus committee recommendations, within 
twelve months of receipt.
    The administering committee would function in accordance 
with the ANSI procedures for the development and coordination 
of American national standards. The consensus committee would 
consist of 21 voting members and one non-voting member who 
would represent the Secretary. The following three interest 
categories would be equally represented: producers, which 
include producers and retailers of manufactured housing; users, 
which include consumer organizations, recognized consumer 
leaders, and owners who are residents of manufactured homes; 
and general interest and public officials.
    The Secretary may disapprove for any reason, in writing, 
the appointment of an individual to the consensus committee, 
and members of the committee shall be reimbursed for their 
actual expenses for attendance at the meetings. The revisions 
to Section 604 would also clarify the scope of Federal 
preemption to ensure that disparate State or local requirements 
do not affect the uniformity and comprehensive nature of the 
Federal standards. Language also reserves to the States the 
right to establish standards for the stabilizing and support 
systems or for the foundations on which manufactured homes 
sited are installed and the right to enforce compliance with 
such standards, subject to Section 605.

Section 5. Abolishment of national manufactured home advisory council; 
        manufactured home installation

    Section 605 of P.L. 93-383 is rescinded, abolishing the 
National Manufactured Home Advisory Council. The establishment 
of a consensus committee would make the council redundant and, 
therefore, unnecessary.
    In addition, this Section provides that States have five 
years to adopt an installation program ``established by State 
law'' that includes: (i) installation standards; (ii) the 
training and licensing of installers; and (iii) the inspection 
of the installation of manufactured homes. During this five-
year period, the Secretary and the consensus committee are 
charged with constructing a ``model'' manufactured housing 
installation program. In States not choosing to adopt an 
installation program, HUD may contract with an appropriate 
agent in those states to implement the ``model'' installation 
program.

Section 6. Public information

    Section 607 of P.L. 93-383 is amended by clarifying that 
manufacturers must submit to the Secretary their opposition to 
any of the Secretary's actions in order for the Secretary to 
evaluate the manufacturers' statement. Also the Secretary must 
submit such cost and other information to the consensus 
committee for evaluation.

Section 7. Research, testing, development, and training

    Section 608 of P.L. 93-383 is amended by adding two 
activities which the Secretary of HUD may conduct to carry out 
the purposes of the Act: encouraging the government sponsored 
housing entities to develop and implement secondary market 
securitization programs for Federal Housing Administration 
(FHA) manufactured home loans and other loan programs; and 
reviewing the programs for FHA manufactured home loans and 
development of such changes to promote the affordability of 
manufactured homes, including changes in loan terms, 
amortization periods, regulations and procedures.

Section 8. Fees

    The legislation amends Section 620 of P.L. 93-383 by 
allowing the Secretary to use industry label fees for carrying 
out the responsibilities under the Act, and for the 
administration of the consensus committee. Additionally, fees 
may be used for the hiring of additional HUD program staff, 
along with additional funding for their travel; the funding of 
a non-career administrator position to oversee the Federal 
program; and HUD's facilitation of the acceptance of the 
quality, durability, safety, and affordability of manufactured 
housing within the Department.
    The amended provision would prohibit the use of label fees 
to fund any activity not expressly authorized by the Act unless 
such activity was already engaged in by the Secretary prior to 
the date of enactment; and it would make the expenditure of 
label fees subject to annual Congressional appropriations 
review. The provision would specifically require that any fee, 
or any change in the expenditure of such fee, shall only be 
modified as specifically authorized in an annual appropriations 
act.

Section 9. Dispute resolution

    This Section provides that States have five years to adopt 
a dispute resolution program for the timely resolution of 
disputes between manufacturers, retailers, and installers 
regarding the responsibility for the correction or repair of 
defects in manufactured homes that are reported during the one-
year period beginning on the date of installation. In States 
choosing not to adopt their own dispute resolution program, HUD 
may contract with an appropriate agent in those States to 
implement a dispute resolution program.

Section 10. Elimination of annual report requirement

    This section strikes Section 626 of P.L. 93-383, 
eliminating HUD's annual report to Congress regarding the 
manufactured housing program. This should no longer be required 
because under Section 8 of this Act, program expenditures would 
be subject to annual Congressional appropriations.

Section 11. Effective date

    The amendments made by this Act shall take effect on the 
date of enactment of this Act.

Section 12. Savings provision

    Standards and regulations in effect prior to enactment of 
this Act will remain in effect until modified or superseded.

                 changes in existing law (cordon rule)

    In the opinion of the Banking Committee, it is necessary to 
dispense with the requirements of paragraph 12 of the Rule XXVI 
of the Standing Rules of the Senate in order to expedite the 
business of the Senate.

                      regulatory impact statement

    In compliance with paragraph 11(b) of the Rule XXVI of the 
Standing Rules of the Senate, the Banking Committee makes the 
following statement regarding the regulatory impact of the 
bill.
    This legislation will not create a regulatory burden on 
producers or users of manufactured housing. Any direct economic 
impact is considered to be minimal, while it is believed that a 
secondary impact of greater commerce will result. This 
legislation does not impact the personal privacy of affected 
individuals. Lastly, there will be no additional paperwork on 
the manufactured housing industry as it relates to the passage 
of this bill.

                        cost of the legislation

    Senate Rule XXVI, section 11(b) of the Standing Rules of 
the Senate, and Section 403 of the Congressional Budget 
Impoundment and Control Act, require that each committee report 
on a bill containing a statement estimating the cost of the 
proposed legislation, which has been prepared by the 
Congressional Budget Office. The estimate is as follows:

                                     U.S. Congress,
                               Congressional Budget Office,
                                     Washington, DC, April 6, 2000.
Hon. Phil Gramm,
Chairman, Committee on Banking, Housing, and Urban Affairs,
U.S. Senate, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for S. 1452, the 
Manufactured Housing Improvement Act.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contacts are Mark Hadley 
(for federal costs), Susan Sieg Tompkins (for the state and 
local impact), and Bruce Vavrichek (for the private-sector 
impact).
            Sincerely,
                                          Barry B. Anderson
                                    (For Dan L. Crippen, Director).
    Enclosure.

S. 1452.--Manufactured Housing Improvement Act

    Summary: CBO estimates that S. 1452 would reduce revenues 
(government receipts) by $90 million and reduce direct spending 
by $82 million over the 2001-2005 period. Because S. 1452 would 
affect direct spending and receipts, pay-as-you-go procedures 
would apply.
    S. 1452 would make changes to the joint federal and state 
program for ensuring the safety and soundness of manufactured 
housing. The bill would require the Department of Housing and 
Urban Development (HUD) to develop a program for monitoring the 
installation of manufactured homes and resolving disputes. The 
bill also would create a consensus committee to make 
recommendations to HUD on regulations concerning manufactured 
homes. S. 1452 would expand current research and information 
gathering activities performed by HUD and would eliminate 
certain reports HUD prepares for Congress. Finally, the bill 
would make spending for this work subject to appropriation and 
expand HUD's authority to charge fees to recover all associated 
costs. When this program is fully implemented, after 2005, the 
bill would have no net effect on discretionary spending because 
additional fees would completely offset additional 
discretionary spending.
    S. 1452 contains several intergovernmental mandates as 
defined in the Unfunded Mandates Reform Act (UMRA), but CBO 
estimates that the costs of complying with these mandates would 
not exceed the threshold established under that act ($55 
million in 2000, adjusted annually for inflation).
    The bill also contains private-sector mandates as defined 
in UMRA. Because those new requirements would depend on 
specific standards that would be established by the Secretary 
of Housing and Urban Development, CBO cannot determine whether 
their direct cost to the private sector would exceed the 
threshold in UMRA ($109 million in 2000, adjusted annually for 
inflation).
    Estimated Cost to the Federal Government: The estimated 
impact of S. 1452 is shown in the following table. The cost of 
this legislation falls within budget function 370 (commerce and 
housing credit).

----------------------------------------------------------------------------------------------------------------
                                                                      By fiscal year, in millions of dollars
                                                                 -----------------------------------------------
                                                                   2000    2001    2002    2003    2004    2005
----------------------------------------------------------------------------------------------------------------
                   CHANGES IN DIRECT SPENDING

Estimated Budget Authority......................................       0     -17     -17     -18     -19     -19
Estimated Outlays...............................................       0      -9     -17     -18     -19     -19

                       CHANGES IN REVENUES

Estimated Revenue Loss..........................................       0     -17     -17     -18     -19     -19

          CHANGES IN SPENDING SUBJECT TO APPROPRIATION

Changes in Offsetting Collections:
    Estimated Authorization Level...............................       0     -26     -32     -39     -46     -55
    Estimated Outlays...........................................       0     -26     -32     -39     -46     -55
Changes in Spending of Collections:
    Estimated Authorization Level...............................       0      26      32      39      46      55
    Estimated Outlays...........................................       0      18      30      37      44      52
Net Changes in Discretionary Spending:
    Estimated Authorization Level...............................       0       0       0       0       0       0
    Estimated Outlays...........................................       0      -8      -2      -2      -2      -3
----------------------------------------------------------------------------------------------------------------

    Basis of Estimate: Under current law, HUD charges 
manufacturers fees for the cost of inspecting manufactured 
homes. The budget records the receipt of these fees as 
revenues, and they are spent by HUD without further 
appropriation action. CBO estimates that under current law such 
spending and revenue will be about $18 million a year over the 
2001-2005 period. S. 1452 would make federal spending and the 
collection of fees associated with manufactured housing subject 
to appropriation action, and would direct that fees collected 
to cover these costs be credited as offsetting collections to 
this new appropriation account. Because the fees would shift to 
the discretionary side of the budget, revenues would decline by 
about $90 million over the five-year period. The spending for 
these activities would also become discretionary, so that 
direct spending would also decline--by about $82 million.
    Discretionary spending would be affected both by changing 
the current program from mandatory to discretionary, and also 
by an expansion of federal activities related to manufactured 
homes. The bill would require HUD to establish a committee to 
advise it on regulations, a program to resolve disputes, and a 
program to monitor the installation of manufactured housing. 
The bill also would require HUD to increase its use of private 
contractors for administering the program. Based on information 
from HUD, CBO estimates that the bill would increase the cost 
of this program by $12 million a year when the legislation is 
fully implemented in 2005, assuming appropriation of the 
necessary funds.
    S. 1452 would authorize the federal government to pay 
states for their costs associated with inspections of the 
installation manufactured homes. Based on information from HUD 
and the states, CBO assumes the installation program would 
require on-site inspections for about 25 percent of the 400,000 
homes installed annually. Based on information about similar 
programs in various states, CBO estimates that the cost per 
visit will be about $250. Thus, CBO estimates that the 
installation program will cost about $25 million a year when 
fully implemented in 2005.
    HUD's new responsibilities would gradually increase federal 
spending in this area to more than $50 million a year, but such 
costs would be offset by higher fees paid by the manufactured 
home industry. Because we expect such fees to be collected more 
quickly than they would be spent, CBO estimates that net 
discretionary outlays would decline by $17 million over the 
2001-2005 period.
    Pay-as-You-Go Considerations: The Balanced Budget and 
Emergency Deficit Control Act sets up pay-as-you-go procedures 
for legislation affecting direct spending or receipts. The net 
changes in outlays and governmental receipts that are subject 
to pay-as-you-go procedures are shown in the following table. 
For the purposes of enforcing pay-as-you-go procedures, only 
the effects in the current year, the budget year, and the 
succeeding four years are counted.

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                           By fiscal year, in millions of dollars
                                                                  --------------------------------------------------------------------------------------
                                                                    2000   2001    2002    2003    2004    2005    2006    2007    2008    2009    2010
--------------------------------------------------------------------------------------------------------------------------------------------------------
Changes in outlays...............................................      0      -9     -17     -18     -19     -19     -20     -21     -22     -23     -24
Changes in receipts..............................................      0     -17     -17     -18     -19     -19     -20     -21     -22     -23     -24
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Estimated Impact on State, Local, and Tribal Governments: 
S. 1452 contains several preemptions of state authority:
          From the date of enactment of the bill until the date 
        that HUD finalizes its standard governing the 
        installation manufactured housing, states would be 
        prohibited from lowering their standards from those 
        that are already in place;
          Once the federal installation standard is finalized, 
        if they choose to create their own installation 
        standard and program, states would be required to set 
        standards that are no less rigorous than the federal 
        program. State installation programs that do not meet 
        the federal minimum would be superseded by the HUD 
        standards; and
          Similarly, states that choose to create a dispute 
        resolution program would be required to set standards 
        that are at least as stringent as the federal program; 
        otherwise HUD would administer the program in the 
        state.
    CBO treats such preemptions of state law as mandates under 
UMRA. The mandates would impose no costs on state, local, or 
tribal governments, however, because the affected entities 
would not be required to take any action. States that chose not 
to establish their own standards would be regulated and 
monitored by HUD.
    Other provisions of the bill would broaden the activities 
HUD is authorized to include in its calculation of inspection 
fees for manufactured housing, and expand its authority to 
collect those fees in states where such collections are 
prohibited under current law. Though these provisions would 
change the method by which inspection fees are calculated and 
levied on builders of manufactured housing, CBO estimates that 
states would continue to receive at least the same amount of 
funding under this program as they collect under current law.
    Estimated Impact on the Private Sector: S. 1452 also 
contains private-sector mandates as defined in UMRA. Currently, 
builders of manufactured housing must pay a fee to cover the 
cost of construction and safety inspections and other 
administrative activities. The bill would increase the cost of 
that mandate by expanding the activities paid by the fee to 
include items such as the on-site inspection of newly installed 
homes and the operation of a dispute resolution program. CBO 
estimates that those changes would increase private-sector 
costs by $9 million in 2001 and by a total of $108 million over 
the 2001-2005 period, assuming that 25 percent of new-home 
installations would be inspected. (The added cost could be 
higher or lower depending on the requirements specified by the 
Secretary of HUD.)
    The bill would also impose new federal standards on the 
installation of manufactured homes, including requiring 
installation inspections and mandating that all installers be 
trained and licensed. The cost of those new requirements to the 
private sector would also depend on the specific standards 
established by the Secretary of HUD.
    Overall, because the requirements imposed by the bill would 
depend in large part on future actions of the Secretary of HUD, 
CBO cannot determine whether their direct cost to private-
sector entities would exceed the threshold specified in UMRA 
($109 million in 2000, adjusted annually for inflation).
    Previous CBO Estimate: S. 1452 is similar to Title XI of 
H.R. 1776, which was reported by the House Committee on Banking 
and Financial Services on March 29, 2000. CBO's estimate of the 
budgetary impact of Title XI of H.R. 1776, prepared on April 4, 
2000, is identical to the estimated impact of S. 1452.
    Estimate Prepared by: Federal Costs: Mark Hadley. Impact on 
State, Local, and Tribal Governments: Susan Sieg Tompkins. 
Impact on the Private Sector: Bruce Vavrichek.
    Estimate Approved by: Robert A. Sunshine, Assistant 
Director for Budget Analysis.

                            ADDITIONAL VIEWS

    We would like to join Senator Shelby and the other sponsors 
of S. 1452, The Manufactured Housing Improvement Act of 2000, 
in recommending this bill for passage. As the report makes 
clear, the laws governing the manufactured housing industry 
have been overlooked for far too long. This oversight not only 
adversely affects the producers of manufactured housing, but 
also consumers who purchase and live in these homes. S. 1452 
directly addresses the lack of progress in updating both 
statutes and regulations, which we believe, will be of 
significant benefit to all parties influenced by this section 
of the housing industry.
    This bill establishes a national model for installation of 
manufactured homes, which includes inspection, and a dispute 
resolution program. During our hearings on this bill we 
discovered that consumers are frequently passed back and forth 
between retailers, manufacturers and installers when they have 
a problem with their home, making it difficult to get the 
problem resolved. This requirement will enable consumers who 
live in states that do not have laws that govern manufactured 
housing to establish who is responsible for the defect, and 
have it repaired.
    However, there are a few deficiencies in S. 1452 which must 
be addressed before the full Senate passes this legislation. 
The bill establishes a consensus committee to review 
manufactured housing standards and regulations. Exemptions have 
been made to three ethics statutes for consensus committee 
members. While this was done to facilitate the ability to 
attract industry representatives--necessary participants in the 
consensus committee--we are concerned that the manner in which 
it has been done is too broad and far reaching. Before the bill 
passes the floor, we would like to see the ethics exemptions 
tailored. Specifically, we must ensure that there is a 
mechanism in place to ensure financial disclosure of the 
consensus committee members and an appropriate gift ban.
    There is also concern with the process established by the 
legislation to develop enforcement regulations. While we agree 
that HUD should and must move efficiently, the method passed by 
the committee which allows both regulations and standards to go 
into effect in the absence of Secretarial action, would result 
in an inappropriate delegation of enforcement authority to a 
non-governmental entity. Enforcement of the law is an 
inherently governmental function. It is a potential conflict 
for a non-government entity such as the consensus committee to 
draft both the standards and the regulations to enforce those 
standards. This latter role should be reserved exclusively for 
HUD. We suggest that the provision be revised to reflect this 
important principle.
    Lastly, we support changing the bill language to give the 
Secretary of HUD the authority to appoint the members of the 
consensus committee from among recommendations made by the 
administering organization, rather than to approve selections 
made by that organization. According to the Administration, the 
latter approach raises Constitutional concerns.
    Both industry and consumer groups have expressed their 
desire to cooperate on these matters and we feel that these 
remaining issues can be rectified without jeopardizing the 
passage of the bill. Again, it is our intention that this bill 
move forward expeditiously. It is a good bill for both 
consumers and industry.

                                   Senator Paul Sarbanes.
                                   Senator John Edwards.
                                   Senator Richard Bryan.
                                   Senator Evan Bayh.
                                   Senator John F. Kerry.
                                   Senator Chris Dodd.
                                   Senator Tim Johnson.
                                   Senator Charles Schumer.