Rule-Making Notices (Hearing Notices)

Notice of Hearing

Agriculture, Trade and Consumer Protection

rulemaking_notices CR 13-027 CR 13-027

(DATCP Docket # 12-R-06 )

The Wisconsin Department of Agriculture, Trade and Consumer Protection (DATCP) announces that it will hold public hearings on a proposed rule revising Chapter ATCP 125, relating to manufactured home communities – fair trade practices.

DATCP will hold two public hearings at the times and places shown below.

Hearing Information

Date:   Friday, Tuesday, April 30, 2013
Time:   2:00 p.m.
Location:   First Floor Meeting Room
  Marathon County Public Library
  300 N 1st Street
  Wausau, WI 54403

Date:   Wednesday, May 1, 2013
Time:   9:30 a.m.
Location:   Conference Room 172
  Department of Agriculture, Trade and
  Consumer Protection
  2811 Agriculture Drive
  Madison, WI 53718-6777

Hearing impaired persons may request an interpreter for this hearing. Please make reservations for a hearing interpreter by April 23, 2013, by writing to Kevin LeRoy, Division of Trade and Consumer Protection, P.O. Box 8911, Madison, WI 53708-8911; or by emailing [e-mail]; or by telephone at [phone]. Alternatively, you may contact the DATCP TDD at [phone]. The hearing facility is handicap accessible.

DATCP invites the public to attend the hearing and comment on the proposed rule. Following the public hearings, the hearing record will remain open until May 15, 2013, for additional written comments. Comments may be sent to the Division of Trade and Consumer Protection at the address below, or to [e-mail], or to http://adminrules.wisconsin.gov.

You can obtain a free copy of this hearing draft rule and related documents including the economic impact analysis by contacting the Wisconsin Department of Agriculture, Trade and Consumer Protection, Division of Trade and Consumer Protection, 2811 Agriculture Drive, P.O. Box 8911, Madison, WI 53708. You can also obtain a copy by calling [phone] or by emailing [e-mail]. Copies will also be available at the hearing. To view the hearing draft rule online, go to: http://adminrules.wisconsin.gov.

Comments or concerns relating to small business may also be addressed to DATCP's small business regulatory coordinator Keeley Moll at the address above, or by email to [e-mail], or by telephone at [phone].

Analysis Prepared by the Department of Agriculture, Trade and Consumer Protection

Statutes interpreted

Section 100.20 (1), Stats.

Statutory Authority

Sections 93.07 (1) and 100.20 (2), Stats.

Explanation of statutory authority

DATCP has broad general authority to interpret statutes under its jurisdiction (see s. 93.07 (1), Stats.)

DATCP has authority under s. 100.20 (2) (a), Stats., to promulgate rules forbidding methods of competition or trade practices which the department determines to be unfair, and to prescribe fair methods of competition and trade practices. Section 100.20 (2) (b), Stats., prohibits DATCP from promulgating any rules that regulates the provision of water or sewer service by a manufactured home community operator.

Related statutes and rules

Subchapter V of Ch. 101, Stats., regulates manufactured homes and mobile homes and establishes licensing programs within the Wisconsin Department of Safety and Professional Services (DSPS) for manufactured home community operators, dealers, installers, salespersons, and manufacturers. This subchapter also establishes the state system for certifying titles of ownership on mobile homes and manufactured homes; and contains a number of requirements and standards related to the homes themselves, water and sewer connections, and standards for manufactured home communities.

Chapter 704, Stats., regulates transactions between landlords and both residential and non-residential tenants. The department does not administer ch. 704. Stats.

Section 710.15, Stats., contains several provisions related to manufactured and mobile home community regulations, including a prohibition against operators considering the age of a mobile home or manufactured home as a determining factor in leasing a lot to that resident.

Chapter ATCP 134, Wis. Admin. Code, regulates relationships between landlords and tenants in residential rental transactions, including prohibiting a landlord from renting condemned premises and prescribing procedures for handling security deposits.

Chapter SPS 326, Wis. Admin. Code, regulates standards for manufactured home communities, including the regulation of park operators' delivery and billing of water and sewer services. Chapter SPS 326 specifies the minimum width of streets and the provision of fire hydrants, and all plans for new manufactured home communities or the expansion of existing manufactured home communities, must be approved by DSPS.

Plain language analysis

Background

Chapter ATCP 125 was first promulgated as ch. Ag 125 in 1972. At the time, zoning restrictions led to a shortage of mobile home sites in many areas of the state, which inhibited competition and market choice. The rule was promulgated to address unfair trade practices and methods of competition that emerged in the industry. The rule prohibited mobile home park operators from using unfair or deceptive trade practices. It also required that rental contracts be in writing and contain specific disclosures. The rule was revised in 1976 and again in 1987.

Rule content

This rule does all of the following:

•   Updates the existing rule by incorporating and defining “manufactured home" and “manufactured home community." Current definitions applies only to “mobile homes" and “mobile home parks."

•   Repeals the definition “television service" and creates the definition “electronic communication service" which will specify the mechanisms operators are allowed to use, or are prohibited from using, when billing tenants for these services.

•   Amends the definition “utility service" to exclude water and sewer services. Section 100.20 (2) (b), Stats., was created after the promulgation of the current rule, which prohibits DATCP from regulating water and sewer services provided by manufactured home community operators.

•   Updates the phrase “mobile home parking fee assessed by local units of government" with the term “municipal permit fee," as specified under ch. 66, Stats.

•   Repeals outdated and obsolete provisions in the current rule.

Under the current rule, rent and other charges may not be increased during the term of the rental agreement. However, this provision does not apply to “mobile home parking fees" and charges for utility services not included in rent. This rule expands the exceptions to include waste hauling or recycling fees that are assessed by local units of government.

Under the current rule, rental agreements are required to express the amount of rent due in each rent paying period in dollars. Under the proposed rule, if the tenant requests a rental agreement that is three years or greater, the amount of rent due in each rent paying period may be expressed in either a dollar amount or a defined formula based on the consumer price index.

Under the current rule, a rental agreement may not include a security deposit greater than either $350 or three months' rent, whichever is less. This rule updates the maximum security deposit to $750, or two months' rent, whichever is less.

Summary of, and comparison with, existing or proposed federal statutes and regulations

The federal government does not generally regulate manufactured home sales or rental practices. However, Congress did pass the National Manufactured Housing Construction and Safety Standards Act of 1974, which direct the Department of Housing and Urban Development (HUD) to develop regulations; which are now known as the Federal Manufactured Housing Construction and Safety Standards.

Comparison with rules in adjacent states

Illinois statutes contain the Mobile Home Landlord and Tenant Rights Act. Among other things, this act restricts park owners from prohibiting television antennas, requires written leases, allows for temporary occupancy in certain situations, requires park owners to disclose information about rent charged during the last five years and projections for the next three, and restricts park owners' ability to control the sale of mobile homes within the park.

Minnesota administrative code regulates mobile home parks and the methods park owners can use to bill residents for utility costs incurred by the community. For example, rental agreements must be in writing and specify certain terms and conditions related to the location of the lot, amount of rent, services or facilities that the park owner agrees to provide, and the name of any person holding a security interest in the resident's home. Minnesota law prohibits park owners from requiring residents to use the services of a particular dealer or broker when selling their home, or buy goods or services from a particular vendor.

Iowa does not have any laws in place related to mobile or manufactured homes or parks. Iowa legislation was introduced in 2011 to grant mobile home residents rights similar to tenants and proposed to place restrictions on park operators operating as real estate agents. This legislation did not pass.

Michigan has law in place related to mobile home park owners and specifies the rights of a tenant. Park owners are prohibited from charging entrance and exit fees, charging more than 1.5 times the amount of monthly rent as a security deposit and cannot require a person to buy a mobile home from another person as a condition of renting space in that park. Park owners must offer tenants a written lease for one year or more, and provide a copy of rules that govern maintenance, pets, fees, and charges that may be incurred by the tenant. Park owners must keep specific written records for each tenant.

Summary of factual data and analytical methodologies

According to the Department of Safety and Professional Services web page (www.dsps.wisconsin.gov), there are approximately 1,074 licensed manufactured home communities in Wisconsin, with a total of 52,316 home sites (these statistics are from an on-line listing of licensed manufactured home parks by DSPS (March, 2011)).

Analysis and supporting documents used to determine effect on small business or in preparation of an economic impact analysis

DATCP anticipates that the economic impact of this rule will be minimal. This rule makes some changes and updates to existing ch. ATCP 125; but the policy changes from existing rule are generally minor and are not expected to have a significant effect on small business or economic impact.

Effect on small business

The rule impacts manufactured home park operators. Many manufactured home park operators are small businesses. This rule does make minor changes to park operators' duties and responsibilities, but will only have a very minor monetary impact. For more detail on the effect of the proposed rule on small business, see the attached Initial Regulatory Flexibility Analysis.

DATCP Contact

Kevin LeRoy, Department of Agriculture, Trade and Consumer Protection, P.O. Box 8911, Madison, WI 53708-8911, Telephone [phone], E-Mail: [e-mail].

Initial Regulatory Flexibility Analysis

Rule summary

This rule does all of the following:

•   Updates the existing rule by incorporating and defining “manufactured home" and “manufactured home community." Current definitions applies only to “mobile homes" and “mobile home parks."

•   Repeals the definition “television service" and creates the definition “electronic communication service" which will specify the mechanisms operators are allowed to use, or are prohibited from using, when billing tenants for these services.

•   Amends the definition “utility service" to exclude water and sewer services. Section 100.20 (2) (b), Stats., was created after the promulgation of the current rule, which prohibits DATCP from regulating water and sewer services provided by manufactured home community operators.

•   Updates the phrase “mobile home parking fee assessed by local units of government" with the term “municipal permit fee," as specified under ch. 66, Stats.

•   Repeals outdated and obsolete provisions in the current rule.

Under the current rule, rent and other charges may not be increased during the term of the rental agreement. However, this provision does not apply to “mobile home parking fees" and charges for utility services not included in rent. This rule expands the exceptions to include waste hauling or recycling fees that are assessed by local units of government.

Under the current rule, rental agreements are required to express the amount of rent due in each rent paying period in dollars. Under the proposed rule, if the tenant requests a rental agreement that is three years or greater, the amount of rent due in each rent paying period may be expressed in either a dollar amount or a defined formula based on the consumer price index.

Under the current rule, a rental agreement may not include a security deposit greater than either $350 or three months' rent, whichever is less. This rule updates the maximum security deposit to $750, or two months' rent, whichever is less.

Small business affected

This rule will have some limited effect on manufactured home community operators. Many operators are small businesses. According to the Department of Safety and Professional Services (DSPS) web page (www.dsps.wisconsin.gov), there are approximately 1,074 licensed manufactured home communities in Wisconsin, with a total of 52,316 home sites (these statistics are from an on-line listing of licensed manufactured home parks by DSPS (March, 2011)).

Many of the differences between this rule and the current rule are technical in nature (such as updating terms to conform to other rules and statutes, etc.) and have no impact.

One change that has an impact on small business involves the definition of “utility" in the rule. The current rule includes “television services" in the definition of “utility". The proposed rule repeals “television services" and replaces it with “electronic communication services" which includes such services as cable service, video service, and internet access service as well as television service. These are services that in recent times are commonly bundled under one fee. Under the proposed rule, the manufactured home community operator must follow the current rules for charging for television services for these additional types of electronic communication services. This change may require the operator to incur the cost of sending an invoice to the tenant whenever charging the tenant for any of the services added to the definition of “utility."

Other changes that might have some limited impact are listed below.

•   Municipal waste hauling or recycling fees. Current rule prohibits manufactured home community operators from increasing rent and other charges during the term of the rental agreement. There are exceptions to this prohibition for utility services (that are not included in rent) and municipal permit fees. This rule also allows an exception for waste hauling fees charged by a municipal government.

  This change may benefit manufactured home community operators because it allows them to pass municipal fee increases to tenants at the time they are incurred, rather than waiting until the next rental agreement renewal date.

•   Inflation indexing on rental agreements of three years or longer. Current rule requires rental agreements to include the amount of the rent due in each rent-paying period. Under this proposed rule, rental agreements that are three years or longer may include a formula for adjusting future rental amounts based on the Consumer Price Index.

  Manufactured homes can be financed using home mortgages. However, many lenders are hesitant to offer a mortgage if the term of the mortgage is longer than the term of the rental agreement. But, community operators are generally unwilling to commit to long-term leases under current rules because they are unwilling to specify a dollar amount that will be in place far into the future. This proposed rule should benefit manufactured home owners by making it more likely that they will be able to finance the purchase of their home as a mortgage (rather than personal property).

•   Maximum security deposits. Current rule limits the amount of security deposit that an operator can collect to three months' rent or $350, whichever is less. This rule provision dates back to 1987. $350 in 1987 is roughly equivalent to $715 in 2012. This proposed rule revises the maximum security deposit to either two months' rent or $750, whichever is less.

  Raising the dollar amount to $750 may benefit some manufactured home community operators because it allows them to collect security deposits that are more realistic with current economics. Limiting the security deposit to two months rather than three will benefit tenants whose monthly rents are relatively low.

Reporting, bookkeeping and other procedures

This proposed rule does not make any changes from current rule relating to reporting, bookkeeping and other procedures.

Professional skills required

The proposed rule does not make any changes from current rule relating to professional skills required.

Accommodation for small business

Many of the businesses affected by this rule are “small businesses." For the most part, this rule does not make special exceptions for “small businesses." The nature of the subject matter does not lend itself to differentiating between business sizes.

Conclusion

This rule will generally benefit affected businesses, including “small businesses." Negative effects, if any, will be few and limited. This rule will not have a significant adverse effect on “small business," and is not subject to the delayed “small business" effective date provided in s. 227.22 (2) (e), Stats.

ADMINISTRATIVE RULES FISCAL ESTIMATE AND ECONOMIC IMPACT ANALYSIS
Type of Estimate and Analysis
X Original ⍽ Updated ⍽ Corrected
Administrative Rule Chapter, Title and Number
Ch. ATCP 125, Mobile Home Parks
Subject
Manufactured Home Communities – Fair Trade Practices
Fund Sources Affected			Chapter 20 , Stats. Appropriations Affected
X GPR ⍽ FED ⍽ PRO ⍽ PRS ⍽ SEG ⍽ SEG-S			Section 20.115 (1) (a)
Fiscal Effect of Implementing the Rule
X No Fiscal Effect ⍽ Indeterminate	⍽ Increase Existing Revenues ⍽ Decrease Existing Revenues		⍽ Increase Costs ⍽ Could Absorb Within Agency's Budget ⍽ Decrease Costs
The Rule Will Impact the Following (Check All That Apply)
⍽ State's Economy ⍽ Local Government Units		X Specific Businesses/Sectors ⍽ Public Utility Rate Payers
Would Implementation and Compliance Costs Be Greater Than $20 million? ⍽ Yes X No
Policy Problem Addressed by the Rule
This rule updates the existing rule by incorporating and defining “manufactured home" and “manufactured home community." The current definition applies only to “mobile homes" and “mobile home parks." The current rule regulates how mobile home park operators can charge tenants for utility services, including “television service." This rule repeals the definition “television service" and creates the definition “electronic communication service" which will specify the mechanisms operators are allowed to use, or are prohibited from using, when billing tenants for these services. In current rules, the definition of “utility service" includes water and sewer services. This rule amends the definition “utility service" to exclude water and sewer services. Section 100.20 (2) (b), Stats., was created after the promulgation of the current rule, which prohibits DATCP from regulating water and sewer services provided by manufactured home community operators. This rule updates the phrase “mobile home parking fee assessed by local units of government" with the term “municipal permit fee," as specified under ch. 66, Stats. Under the current rule, rent and other charges may not be increased during the term of the rental agreement. However, this provision does not apply to “mobile home parking fees" and charges for utility services not included in rent. This rule expands the exceptions to include waste hauling or recycling fees that are assessed by local units of government. Under the current rule, rental agreements are required to express the amount of rent due in each rent paying period in dollars. Under the proposed rule, if the tenant requests a rental agreement that is three years or greater, the amount of rent due in each rent paying period may be expressed in either a dollar amount or a defined formula based on the consumer price index. Under the current rule, a rental agreement may not include a security deposit greater than either $350 or three months' rent, whichever is less. This rule updates the maximum security deposit to $750, or two months' rent, whichever is less.
Summary of Rule's Economic and Fiscal Impact on Specific Businesses, Business Sectors, Public Utility Rate Payers, Local Governmental Units and the State's Economy as a Whole (Include Implementation and Compliance Costs Expected to be Incurred)
This rule makes minor updates and revisions to the existing rule and does not represent any significant shift in policy. Therefore, the economic and fiscal impacts are expected to be minimal. This rule does make some minor changes to park operators' duties and responsibilities, but these changes are not expected to have an economic impact. Under the current rule, the maximum amount of security deposit that a park operator can collect is three month's rent or $350, whichever is less. Under this rule, the maximum security deposit is two month's rent or $750, whichever is less. This means that, in many cases but not all, park operators will be able to ask prospective tenants for higher security deposits. Under current rules, rental agreements are required to express the amount of rent due in each rent paying period in dollars. Under the proposed rule, if the tenant requests a rental agreement that is greater than three years, the amount of rent due in each rent paying period may be expressed in either a dollar amount or a defined formula based on the consumer price index. This provision should benefit some tenants by removing an impediment to obtaining home mortgage loans. Generally, banks are unwilling to finance the purchase of a manufactured home if that home is sitting on a rented lot and the term of the rental agreement will expire before the term of the mortgage. However, because current rules require park operators to state rent payments in dollar amounts; park operators are generally unwilling to agree to long-term rental agreements. This rule removes this disincentive, and therefore, may benefit residents.
Benefits of Implementing the Rule and Alternative(s) to Implementing the Rule
Benefits This rule will benefit mobile home owners and park operators. Generally, it continues policies that have been in place for a number of years. Alternatives The alternative to updating this rule is to do nothing. However, certain portions of the rule are now obsolete (such as the regulation of water and sewer services) and other portions are dated (such as the use of the term “mobile home" as opposed to “manufactured home").
Long Range Implications of Implementing the Rule
There are no long term implications of implementing this rule.
Compare With Approaches Being Used by Federal Government
The federal government does not generally regulate manufactured home sales or rental practices. However, Congress did pass the National Manufactured Housing Construction and Safety Standards Act of 1974, which direct the Department of Housing and Urban Development (HUD) to develop regulations; which are now known as the Federal Manufactured Housing Construction and Safety Standards.
Compare With Approaches Being Used by Neighboring States (Illinois, Iowa, Michigan and Minnesota)
Illinois statutes contain the Mobile Home Landlord and Tenant Rights Act. Among other things, this act restricts park owners from prohibiting television antennas, requires written leases, allows for temporary occupancy in certain situations, requires park owners to disclose information about rent charged during the last five years and projections for the next three, and restricts park owners' ability to control the sale of mobile homes within the park.
Minnesota administrative code regulates mobile home parks and the methods park owners can use to bill residents for utility costs incurred by the community. For example, rental agreements must be in writing and specify certain terms and conditions related to the location of the lot, amount of rent, services or facilities that the park owner agrees to provide, and the name of any person holding a security interest in the resident's home. Minnesota law prohibits park owners from requiring residents to use the services of a particular dealer or broker when selling their home, or buy goods or services from a particular vendor.
Iowa does not have any laws in place related to mobile or manufactured homes or parks. Iowa legislation was introduced in 2011 to grant mobile home residents rights similar to tenants and proposed to place restrictions on park operators operating as real estate agents. This legislation did not pass.
Michigan has law in place related to mobile home park owners and specifies the rights of a tenant. Park owners are prohibited from charging entrance and exit fees, charging more than 1.5 times the amount of monthly rent as a security deposit and cannot require a person to buy a mobile home from another person as a condition of renting space in that park. Park owners must offer tenants a written lease for one year or more, and provide a copy of rules that govern maintenance, pets, fees, and charges that may be incurred by the tenant. Park owners must keep specific written records for each tenant.
Comments Received in Response to Web Posting and DATCP Response
No comments were received in response to either to the posting on the DATCP external website or the statewide administrative rules website.

Notice of Hearing

Public Service Commission

rulemaking_notices CR 13-025 CR 13-025

(PSC # 1-AC-237 )