However, because funds from  LIHEAP, which assists low-income families in reducing their energy bills  by making long-term energy efficiency improvements to their homes, precluded from being used for new construction, they cannot be used to  replace existing homes with newer, more efficient models. Three States Have Replaced Older Manufactured Homes with More Energy Efficient Models

We identified three states––Maine, Montana, and Washington—that have  used a combination of state and federal funds to conduct pilot programs  that replaced older manufactured homes with more energy efficient  models. The three programs were relatively small, accounting for about  $4.5 million in spending and responsible for replacing 81 homes, over  about 2 years. The programs differed in program requirements, the types  of financing used, and the types of replacement homes used. To be eligible,  beneficiaries’ manufactured homes were required to have been built  before 1976 and deemed unsuitable for weatherization. The pilot was funded by a $2  million grant funded by HUD’s HOME Program. Table 1 provides a comparison of the three replacement programs. States Reported Facing Challenges, Including Difficulty Finding Potential Beneficiaries Who Were Eligible and Willing to Participate

Officials from all three state replacement pilot programs and  representatives of organizations and agencies that aided these programs  told us that they faced three key types of challenges: (1) many potential  beneficiaries were not eligible to participate; (2) some potential  beneficiaries were not willing to participate; and (3) other logistical  challenges, such as finding suitable replacement homes within a  reasonable distance to transport them to beneficiaries, which resulted in  higher costs. Did not own or have a long-term lease for the land. Poor credit histories. Some potential beneficiaries were  doubtful that such a program would be legitimate. Unwilling to take on any debt. Unwilling to move from their current location. Some potential beneficiaries  may be unwilling, or unable, to pay the increased property taxes that  would result from the increased value of their homes. After replacement, the  sales value of the new home would be added to the land value, and  the beneficiary’s property taxes would have tripled. Officials from all three pilots also identified other challenges that were  primarily logistical in nature. Energy Savings Alone Did Not Fully Offset the Costs of Replacing Older Manufactured Homes, but Replacements May Have Had Other Benefits

In the three replacement pilot programs we examined, the energy savings  alone were not sufficient to fully offset the costs of replacing older  manufactured homes, but program officials told us that these programs  were not specifically focused on doing so and that they had health and  welfare benefits for beneficiaries. Specifically, the two programs that  maintained information on energy use and estimated savings spent an  average of about $56,119 per unit to replace each older manufactured  home and estimated about $489 in annual energy savings per home. The average cost of replacement homes varied across the three  programs we examined. The least costly program we examined was  Montana’s, which replaced some older manufactured homes with used,  but newer and more energy efficient models, with an average cost of  about $42,339 per home. Officials reported that the replacement homes in these programs were  significantly more energy efficient, resulting in improved quality of life for  the beneficiaries and significantly lower projected energy costs on a  square foot basis; however, officials in all three states said these energy  savings alone were generally not sufficient to pay for the cost of the  replacement over a typical loan period. Nonetheless, state officials told us that these replacement programs were  not specifically designed for energy savings to offset replacement costs,  and some officials told us that energy efficiency gains were secondary to  the health and welfare benefits of getting occupants into safer, more  weather-tight manufactured homes. HHS  provided technical and clarifying comments, which we incorporated as  appropriate.
Why GAO Did This Study

Approximately 2 million of the nations 130 million housing units are manufactured homes (i.e., mobile homes) that were built before 1976. These older manufactured homes are generally considered to have some of the poorest energy efficiency of all housing units. Many of the occupants of these homes qualify for federal assistance to help pay their energy bills through the U.S. Department of Health and Human Services Low Income Home Energy Assistance Program. A portion of this programs funds can be used to improve the energy efficiency of these homes; however, program funding may not be used for new construction, or replacing existing homes. Some states have conducted pilot programs to replace older manufactured homes with newer, more energy efficient models.
GAO was asked to identify and review state programs and the extent to which they may be cost-effective based on reduced energy costs. For this report, GAOs objectives were to (1) identify states that have funded replacement programs and describe these programs; (2) identify challenges, if any, these states reported facing in implementing these programs; and (3) determine the extent to which these programs resulted in energy savings sufficient to offset replacement costs. To address these objectives, GAO surveyed all 50 states and the District of Columbia, examined data from pilot programs spanning about 2 years, and interviewed officials from three state-based programs.
HHS provided technical and clarifying comments, which GAO incorporated as appropriate.

What GAO Found

GAO identified three statesMaine, Montana, and Washingtonthat have developed pilot programs focused on replacing older manufactured homes using a combination of state and federal funds. The three programs were relatively small, accounting for about $4.5 million in spending and responsible for replacing 81 homes, over about 2 years. The programs differed in requirements, including whether the land that the replacement home would occupy had to be owned or could be leased; the types of financing used, with some replacements requiring recipients to take on a partial mortgage; and the types of replacement homes.
Program officials and representatives of organizations that aided them from the three state replacement pilot programs identified three key types of challenges in implementing these programs. First, they told GAO that many potential beneficiaries were not eligible to participate because (1) they had liens on their existing properties, (2) they did not own or have a long-term lease for the land the homes would be placed on, or (3) their credit histories made them ineligible for any type of loan. Second, these officials told GAO that some potential beneficiaries were unwilling to participate because they were: (1) mistrustful that such a program would be legitimate; (2) unwilling to take on any debt, regardless of the poor condition of their home; (3) unwilling to move from their current location; or (4) unwilling to take on increases in property taxes resulting from increased home value. Third, they identified challenges that were primarily logistical in nature, such as the need to construct wheelchair ramps or update utilities, which could raise the cost of replacement.
In the three pilot replacement programs GAO examined, the energy savings did not fully offset the costs of replacing older manufactured homes over a typical loan period. The two programs that maintained information on energy use and estimated savings spent an average of about $56,119 per unit to replace each older manufactured home and estimated about $489 in annual energy savings per home. The average cost of replacement homes varied across the three programs GAO examined. The least costly program GAO examined was Montanas, which replaced some older manufactured homes with used, but newer and more energy efficient models, with an average cost of about $42,339 per home. However, state officials told GAO that these replacement programs were not specifically focused on energy savings and that energy efficiency gains were secondary to the health and welfare benefits of getting occupants into safer, more weather-tight manufactured homes.