10 Months, and Tax Panel Has Zero to Show
With the release of proposals by the President’s Advisory Panel on Federal Tax Reform, political columnist Robert Novak contends that the President and the Republicans have squandered an opportunity to reshape how Americans are taxed. For one thing, the plan omits “the innovative, daring plan of Sen. Jim DeMint of South Carolina for an 8.5% retail sales tax and an 8.5% business transfer tax on companies,” even though a sales tax option is something that President Bush has said should be seriously considered. Further, it leaves the top tax rates too high and repeals the deductibility of state and local taxes, ends tax-free health insurance supplied by employers and caps home mortgage deductions. “While largely leaving alone the Revenue Code’s maze, the panel rips into three of the most popular tax benefits,” Novak says. (www.suntimes.com) Chicago Sun-Times (11/3/05); Robert Novak
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Wilma Squeezes Labor, Supplies
Ken Simonson, chief economist for the Associated General Contractors of America, issued a report at the end of last month warning that the effects of Hurricanes Katrina, Rita and Wilma have not yet been felt to their full extent. The labor market, which is already tight in South Florida, could become even tighter, according to T.J. Nutter, chief operating officer for John Cannon Homes. “The labor market is so tight that if one person leaves, it makes an impact,” Nutter said. Just after Wilma, Medallion Homes lost one worker who was lured by higher wages to repair work in Naples, Fla. “The guy with the wife and the kids here won’t jump ship and run, but you’ll lose people,” said Dave Wick, a Medallion Homes employee and president of the Home Builders Association of Manatee County. But Stan Sabuk, vice president of Skyline Builders Group, said that he expects tradesmen in his growing area to remain. “You don’t want to lose your clients. If you fly to another region for exponential profits, you may find you’ve been replaced by a competitor when you return.” Nutter reports skyrocketing demand for roof tiles in Naples. (www.bradenton.com)
Manatee-Bradenton-Sarasota Herald Today (10/27/05); Melissa Followell
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Stringent Energy-Efficiency Rules Put Heat on Builders
Stringent new energy-efficiency rules that took effect on Oct. 1 in California will increase the cost of an average new home by about $1,800 but will yield a 15% improvement in energy use that Mike Hodgson, chairman of the California Building Industry Association’s Energy Committee and president of ConSol, one of the largest HVAC firms in the region, says will help the state remain in its lead role in energy conservation. The regulations require the installation of more efficient space heating and cooling systems in new residential and commercial structures. Other changes under Title 24 of the state energy code include: requirements for more efficient fluorescent lighting with dimmers or sensors; higher standards for water heaters; installation of highly reflective “cool roofs” and rooftop skylights in some commercial buildings; new mandates for portable school classrooms; new criteria for indoor and outdoor signage; and the state’s first-ever requirement for outside lighting. Overall, the state expects the energy-efficiency savings to cut peak use by 180 megawatts annually. (www.bizjournals.com)
Sacramento Business Journal (10/21/05); Michael Pulley
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Something Ventured: Silicon Valley Is Losing Its Luster
The San Francisco Bay Area, which has received about a third of all venture capital invested in the U.S. for the last five years, could suffer from a diffusion of its technological creativity because, according to the Silicon Valley Leadership Group, it has the worst quality of life of the country’s eight major technology clusters in terms of housing costs, traffic and education. Raleigh, N.C., which receives less than 5% as much venture capital as Silicon Valley, ranks first. In a survey by the group, 114 chief executives in the valley said that the cost of housing is a daunting obstacle for starting up new companies in the area. According to NAHB, the median home price for the San Jose area was $630,000 in this year’s second quarter. For the peninsula that includes San Francisco and choice addresses like Menlo Park and Foster City, the median home price was $750,000, the most expensive metro area in the country. (www.venturewire.com)
VentureWire (11/2/05); Alex Halperin
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Blueprint for Buying — or Renting: Timing for a Market in Turmoil
The real worry today for households in New York and other high-priced housing markets isn’t that you’ll get stuck in a rental for the rest of your life, but that you’ll buy at the peak, watch prices slide and be stuck in the property for years, waiting for them to recover. The Federal Deposit Insurance Corporation has identified 21 cities that have experienced housing busts over the past quarter of a century, including cities in Texas, Louisiana and Oklahoma in the mid-1980s and the Northeast and California in the early 1990s. For those who already own a home, have built up equity and live in a hot market, now may be a good time to rent. For example, in San Francisco, one of the most expensive for-sale markets in the country, rents have fallen 19% since 2001, to $1,300. For that amount, a renter can obtain a one-bedroom apartment on Nob Hill, with hardwood floors, a built-in china cabinet and a courtyard with a gazebo and built-in barbecue grill. Buying a similar place costs about $530,000, or about $2,366 a month at a 5.34% interest rate over 30 years, assuming a 20% downpayment of $106,000. (www.realestatejournal.com)
Wall Street Journal Online (10/31/05); June Fletcher
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Despite Naysayers, Downtown Residential Development Takes Shape
Ralph Falbo’s company broke ground on an 82-unit, 18-story condominium project last month in downtown Pittsburgh, the first new residential tower to appear there in decades. According to the Downtown Living Initiative, there are more than 1,400 residential units under development in and around the city’s greater downtown area, where residential occupancy rates have been well over 90%. So far, after about six months of sales, Falbo reports that between 30 and 35 of his condos have been sold, a faster pace than was expected for units that will range in price between $275,000 and $1.5 million. “Overall, I think that (residential) is the key to saving downtown,” said John Petrolia, the owner of an eight-story, 35,000-square-foot building he is considering converting into between 18 and 24 moderately priced for-sale or rental housing units. “It’s one fast way of getting people down there. Can we market these apartments at a price that will make it profitable?” It’s kind of hard to set the market right now.” (www.bizjournals.com)
Pittsburgh Business Times (10.31.05); Tim Schooley
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