FEMA criticized for trailer auctions
By Noel E. Oman
The Arkansas Democrat-Gazette
LITTLE ROCK, Ark. — Mobile-home and recreational-vehicle manufacturers and dealers are trying to halt online auctions being conducted by the federal government in five states, including Arkansas, to sell 100,000 Hurricane Katrinaera mobile homes and travel trailers.
Industry officials say the large-lot auctions of Federal Emergency Management Agency disaster trailers reflect poor public policy and will hurt an already depressed market and are pressing members of Congress to halt the auctions, which are scheduled to close Friday.
On the auction block are 8,872 mobile homes, which is equivalent to 85 percent of all the mobile homes sold in Alabama, Arkansas, Florida, Louisiana and Mississippi in the first 10 months of last year, said J.D. Harper, executive director of the Arkansas Manufactured Home Asso- ciation.
The auctions will also allow the federal government to sell 92,028 travel trailers and 2,579 park models, according to association statistics. The travel trailers, which are about 34 feet long, can be towed by a properly equipped car. The park models are larger, upgraded versions of the travel trailer, Harper said.
The 15 FEMA staging sites in the five states include Hope, where federal officials are auctioning off 11,164 travel trailers, 3,719 mobile homes and 30 park models. The highest bid among the nine submitted through Tuesday was $1,604,000 for the entire lot, according to the U.S. General Services Administration auction Web site gsaauctions.gov.
The latest bid amounts to $106.84 per mobile home and trailer. The first bid, submitted Jan. 2, was $143,000, or $9.52 per unit.
Bidders are required to offer on the entire lot at each staging site.
"The government's handling of this `wholesale disposal' will benefit only a small number of investors or buying groups that will compete with a very limited number of other potential purchasers," an industry coalition spokesman said in a news release.
The coalition includes the National Association of State Agencies for Surplus Property, which would like to see more of the units made available to local governments to use as command posts, temporary housing or storage, said Scott Pepperman, the organization's executive director.
The organization's members have obtained 6,500 units through FEMA, but could use 2,000 more, Pepperman said. "It's a drop in the bucket, but for us, it's an important drop in the bucket," he said.
Dealers in Arkansas say they are worried about what the fire sale would do to their market.
Jimmie Don McKissack of Pine Bluff said he has been selling mobile homes for 45 years and recreational vehicles for 25. Both industries are struggling, he said Tuesday.
"We used to have 225 mobile home dealers in Arkansas," said McKissack, who operates J&M Homes in Pine Bluff and RV City dealerships in Pine Bluff and Benton. "We now have 31." He knows of four or five recreational-vehicle dealers who have gone out of business in recent months.
Now isn't the time for the government to sell thousands of mobile homes and trailers for pennies on the dollar at auction, he said.
"They probably could do that in places like California and Florida, where there are 25 or 30 million people," McKissack said. "But it's going to kill us in a small, rural state like Arkansas." Kevin Hawks, whose company - Hawks Mobile Homes - has dealerships in Conway and Little Rock, said the "fire sale" will dampen demand for new homes, which he said will put manufacturing jobs at risk.
Also worrisome, he said, is what happens when the mobile homes eventually reach the buying public. Because they will not go through regulated channels, such as a manufacturer and dealer network, they won't have warranties or be within the regulatory reach of the Arkansas Manufactured Home Commission, said Hawks, a board member of the Arkansas Manufactured Home Association and a newly appointed commission member.
Sens. Mark Pryor and Blanche Lincoln, both D-Ark., are working with members of the Arkansas congressional delegation and the delegations in other states to ask the federal government to halt the auctions.
"These sales will cripple our manufactured housing industry in an already tough economy" as well as raise health concerns, Pryor said in a statement. "This auction of more than 100,000 housing units does not address legitimate health concerns involving formaldehyde. It also ignores the consequences of flooding a small market, such as Arkansas, with a large volume of cheap inventory." Lincoln said the units should be used by the taxpayers who bought them.
"While this manufactured housing needs to be removed, I do not believe that simply dumping thousands of units onto the market in an auction is a responsible solution," she said.
"Flooding our small markets with so much inventory could further damage the already-struggling manufactured housing industry and those it employs." Both senators called for suspension of the auctions. Lincoln wants a plan that "adequately addresses" those concerns while Pryor called for a "responsible plan that addresses public safety risks and private sector economics." FEMA spent some $2.7 billion for roughly 145,000 units after Hurricane Katrina and Hurricane Rita struck the Gulf Coast in 2005. But the agency then had trouble finding suitable sites to place the units for people to use them because under federal law the units may not be set up in flood plains.
Then concerns over formaldehyde levels in the units surfaced, which further limited the trailers' distribution. Trailers eventually were sent to southeast Texas for victims of Hurricane Ike in 2008, and to tornado victims in Arkansas and Tennessee.
Industry hackles were raised in October when the General Services Administration, at the direction of FEMA, began selling lots in the hundreds. The auctions of 1,047 units from Hope raised $7.2 million. Before that, the General Services Administration was disposing of excess units through federal surplus and to American Indian tribes.
Several thousand units remain on the grounds of the Hope Municipal Airport, which is paid $30,000 monthly to lease more than 200 acres to the federal government, said Paul Henley, the airport's manager.
At the time of the October auctions, FEMA spokesman Clark Stevens said the sales reflected prudent use of taxpayer resources by the agency, which at the time had paid more than $1 million on its Hope airport lease.
"The GSA-managed auctions are part of a fiscally responsible inventory-reduction plan to dispose of excess temporary housing units," Stevens said then. "Many of the units will have limited uses, such as storage or use at work sites." While there are no provisions limiting how the mobile homes can be used, the agency is taking measures to prevent the travel trailers from being used as permanent housing.
"As with all earlier sales, purchasers will be required to sign a buyer's certificate acknowledging that a purchased travel trailer is not to be used as permanent housing and will not be resold as housing," Stevens said. "In addition, prior to sale, FEMA will place a clearly visible decal `Not to be used for housing' on the window nearest the door of each travel trailer." Efforts to reach Stevens through e-mail and telephone were unsuccessful Tuesday afternoon and evening.