Modular Briefs July/August 2003

Genesis Expands Into Apartment Developments
Genesis Homes, a member of the Champion Enterprises (Auburn Hills, MI) family of homebuilders and the only nationwide producer of modular homes, is celebrating Genesis’ venture into the production of a new modular residential housing product for builders and developers.

Genesis began construction of its first major multi-family housing complex that will include 20 modular apartment buildings. The buildings are being produced for a Lansing, Mich., low-income housing development designed and planned by A&S Development (Winter Park, FL) and will be the city’s first modular apartment buildings.

Developed on approximately 19 acres of land located within city limits, the apartment complex will feature 150 living units. Genesis Homes’ Topeka, Ind., facility began installing the first of 300 modules on June 2, the first day of the State of Michigan’s 2003 Conference on Affordable Housing.

“Genesis Homes is proud to embark on its first major apartment complex with A&S Development and looks forward to showcasing it as an example of our ability to build better homes, faster, in any housing application,â€? says Kevin Flaherty, vice president of marketing for Genesis Homes. “This project is an excellent example of how one developer is using the off-site construction process as part of an overall tax-reduction strategy while simultaneously helping a city address its need for high-quality, low-income housing.â€?

A&S Development’s investment in affordable housing is part of the Low-Income Housing Tax Credit program, signed into law in 1993. The program promotes private investment in affordable housing by reducing investors’ federal tax liability — by a percentage of construction, acquisition or rehabilitation costs — over a period of 10 years.

Through the Tax Credit program, owners and investors in affordable rental housing must agree to offer the units to low-income individuals. This means keeping rents below an allowable maximum over a period of 15 years to receive a credit applied directly against their federal tax liability. The program is as beneficial to investors and cities as it is to low-income families and individuals.

According to Mark McDaniel, president of the Michigan Capital Fund, a nonprofit housing corporation that helps investors take advantage of the Tax Credit program, the need for decent, affordable rental housing in many areas of Michigan is substantial. McDaniel states that, while Michigan’s housing stock is considered to be among the more affordable in the country, two thirds of the households that are in need of affordable housing are renters.

Genesis Homes has a history of helping builders and developers meet the need for affordable rental properties. Recently, Genesis’ Topeka facility assisted the Matt Wick Group in three Tax Credit program projects designed to provide affordable rental housing, and help revitalize older urban neighborhoods, in Springfield, Dayton and Toledo, Ohio. In each case, Genesis built urban infill homes at the staggering pace of approximately two homes per week, and at a cost of about $40 per square foot, including set and finish. The projects demonstrated the efficiencies of Genesis’ off-site construction process have the ability to reduce costs, save time and deliver high-quality modern homes that feature traditional architectures well-suited to older residential settings.

Genesis’ first modular apartment buildings will be under construction both at its Topeka, Ind., off-site construction facility and in the 1000-1200 block of Edgewood Blvd. through September 2003. Details 877-523-1887.

Mid-Atlantic Going Strong
To paraphrase Mark Twain, the reports of the demise of Mid-Atlantic Building Systems (Candor, NC) have been greatly exaggerated.

The company, which was launched in 1999 by two veteran home builders, Jeff Smith, chief executive officer, and Tommy Townsend, president, has carved an enviable reputation for quality. It has attracted a loyal cadre of builders who are virtually universal in their praise of the company. Many in its builder network breathed a collective sigh of relief when the company reopened its doors again for business shortly after shutting them for a few days in April.

The modular producer is back in full operation and it will likely bring on a private investor to ensure it is on solid financial ground, says Tommy Townsend, president.

“We are putting an agreement together with another individual that will allow us to be stronger than we ever have been before,â€? says Townsend. “Our prospects are good. We think we’ll be up to producing two and half floors a day by the end of this year.â€?

The company constructs homes in a 91,000-sq.-ft., state-of-the-art plant, which features innovative engineering and production technologies designed to provide maximum flexibility and productivity. For example, thanks in part to the factory’s 48-foot-high ceiling, all Mid-Atlantic homes are completely test-assembled in-factory, including roof structures and dormers. This gives builders in the field added confidence that the homes will come together on site without any problems.

Keiser Increases Production by 50%
Due to strong demand for high-end modular homes, Keiser Industries (Oxford, ME) is implementing a plan to increase its production capabilities 50% by the end of the year. “We’ve experienced phenomenal growth in sales capacity. Now we have to get the production side to match it,â€? stated Steve Miller, director of finance.

The company is currently in the process of building a 50’x100’ steel building. This building will be used as a welding shop and warehouse. The existing welding shop will be used as Off-line production space for components such as dormers, garages and roof panels. The existing warehouse will be used as additional finishing area, virtually adding another bay to the production line. Keiser plans to add 30 employees to the second shift, and another 20 to first shift to increase production.

The Keiser Industries management group considered several off-site options before deciding to expand the Oxford facility. According to CEO Clyde Pingree, “Keiser Industries has been fortunate to attract and retain a superior work force from the Oxford Hills and surrounding areas, and we continue to show our faith in the skills of local workers to support this expansion.â€?

Keiser Industries is a subsidiary of Saunders Brothers of Westbrook, ME which also own and operates National Wood Products of Oxford, Saunders Brothers of Locke Mills and Forest Industries of Fryeburg, ME.

Apex Expands
Both buyers and builders are hungry for the tasty designs served up by Apex Homes (Middleburg, PA). So much so the company is expanding its kitchen, so to speak. The company is adding 16,000 more sq.ft., explains Lynn Khuns, vice president.

“We started planning this a year ago because we saw such an increase in orders. This is attached to our existing building and it is designed to help improve our quality and efficiency,â€? Kuhns explains. “What we have done is expand our finishing area for plumbing and other final finishes. Now we will be able to perform all our final finishes under roof.â€?

The company is also looking at adding more space to the opposite end of the building, “Again to improve our efficiency,â€? says Kuhns. That construction will begin this fall and will house additional workstations for the factory line.

The company, which employs 245 and ships homes to 19 states, is expa
nding to handle a dramatic increase in orders from its 175-member builder network. “Last year we had our second best year in our 13-year history. And as things are shaping up this year we are on track to beat our best year ever, which was $32 million in sales in 1996.â€?

The increase in business is directly attributable to its willingness to customize and its ability to use panelized components for roof systems, garages, bump outs and other features that add curb appeal, Kuhns says.

The total cost of the additions is estimated at $400,000. Once complete, the company will be hiring additional personnel.

All American Announces Appointments
All American Homes (Decatur, IN), one of the largest modular manufacturers in the nation, has announced two new appointments. Mike Donley is the company’s new marketing manager. Donley is overseeing advertising efforts, builder and customer data gathering and analysis, web site development and sales brochures for the various divisions of the company. In his spare time he’ll also be coordinating participation in national trade shows.

“Mike’s expertise in the areas of sales and markting will definetly serve All American Homes well,â€? says Steve Kerr, president. “Mike unique skills and abilities will assist us in promoting our wide range of products and our mission—to offer the highest quality systems-built homes on the market today.â€?

All American Homes of Indiana (Decatur) promoted Ryan Scott from assistant general manager to the company’s new vice president and general manager of the Decatur facility.

“When Ryan came to us from Schult Homes, we had high expectations because of his solid management background,â€? Kerr says. “He has exceeded those expectations and has become a true asset to our Indiana operation.â€?

Active Homes On The Ropes?
Is longtime modular manufacturer Active Homes Group LLC (Marlette, MI) on the ropes? Regrouping between rounds? Or has it been knocked cold and the ref has left the ring?

Some independent builders and contractors using Active as their modular supplier allege that in the last few months Active has taken deposits for homes that were never constructed or delivered.

Phone calls to Active Homes offices or the company’s attorney Kenneth Dalto & Associates (Farmington Hills, MI) seeking comment were not returned as of press time. Independent builders in Michigan and surrounding states say they’ve been sent letters from the Attorney Dalto’s office saying Active is seeking investors to reorganize and that deposits on homes are still being accepted, which will be held in escrow.

Dozens of builders are seeking their deposits for orders that were never fulfilled.

Conard Fulkerson, an independent builder and owner of Lorcon Homes (Ortonville, MI), who has used Active for more than 10 years as his modular supplier, says he had a home buyer who needed a home and needed it fast. He and his customer were told by Active personnel that they could get to the head of the line, so to speak, if they paid for the home in full before taking delivery. This they did at the beginning of May, sending a cashier’s check overnight delivery. Fulkerson says two days later Active shut its doors.

“I’ve contacted the state police. You would think this would be an open and shut case. But with the legal system, you just never know,â€? says Fulkerson, who has switched to All American as his supplier and is doggedly trying to meet the housing needs of his client, who is out more than $50,000. “Working your way out of this kind of situation is the only thing you can do.â€?

Tom Augugliaro of Mackinac Construction (Cedarville, MI), who also used Active for years, says the conversations he’s had with other builders around the state lead him to believe that Active took deposits in excess of half a million dollars before shutting down. “We are all—or most of us–in a precarious position with regard to Active,â€? Augugliaro concludes.

Active Homes enjoyed a long and lucrative career in the modular industry, first opening its doors in 1961 and operating out of 384,000 sq.ft. factory that was once home to the Packard Motor Company. At its height, the company employed 150 and used three production lines producing modulars for apartments, condos, motels, schools and other light commercial projects, in addition to a full line of single-family homes.

In November of 2000 a Detroit developer, Investment Holdings Limited, and its managing member Ara J. Darakjian, purchased Active.

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