Nation's Building News Online: September 20, 2004Print All Articles Text Version |
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Builders Can Cast an Early Vote at Special Web SiteToday’s state voting laws are more flexible than ever, and in an effort to increase voter participation, more than half of the states in the country have simplified their voter registration process and softened their regulations on absentee or early voting. To help ensure that the housing industry gets out the vote in the November elections, NAHB has partnered with HelpingAmericansVote.org to provide an online service dedicated to making voter participation and registration easier. Members, and their families, employees and friends can simply go to http://HomeBuilders.HelpingAmericansVote.org and follow the steps to register to vote or get a ballot to vote early or as an absentee. Members and associations can also use this site to conduct an electronic voter registration drive — eliminating the costly pay-stub voter registration drives of the past. “We’re committed to giving home builders a strong voice in choosing their elected officials this November,” said NAHB President Bobby Rayburn. “This Web site offers our members the tools they need to make the voting process as easy and uncomplicated as possible.” NAHB members and association staff can click here for promotional materials that will enable them to share this valuable service and hold voter registration drives. A variety of public interest groups — including the National Association of Realtors®, the National Rifle Association, the National Restaurant Association, and the U.S. Chamber of Commerce — and major corporations — including Boeing, DaimlerChrysler, Charles Schwab and others — are using similar versions of these online election tools to encourage their employees and customers to vote. Following are some facts about the current election process in the states:
For an Aug. 25 Washington Post story on early voting and the online registration service, click here. (A free sign-in is required to access this site.) For more information on Home Builders Helping Americans Vote or for help linking this Web site to your own Web page, e-mail Marie Zenner at NAHB or call her at 800 368-5242 x8279. Building News Coast To CoastIn Storm Path: Coastal BoomDespite the emergence of the most advanced hurricane warning and evacuation system in history, rapid population expansion has prevented coastal areas from taking steps to minimize damage. Losses from Hurricane Camille — a Category 5 storm that decimated Pass Christian, MS, in 1969 and still ranks as the most powerful storm ever to hit the contiguous United States — were significantly less than those incurred during Hurricanes Andrew in 1992 and Charley in 2004. "People are more inclined to move to the most disaster-prone areas of the country — Florida, Texas and California," observes Insurance Information Institute Chief Economist Bob Hartwig. "Those states that have the greatest appeal for quality of life also happen to be the most dangerous to live in." Stephen Leatherman, director of the Florida International University's Hurricane Research Center, notes that tropical storms in the current era also are capable of causing billions of dollars in damage. Following the $15.5 billion in losses resulting from Hurricane Andrew, officials in South Florida enacted tougher building codes to ensure that new structures would survive 145-mile-per-hour winds associated with Category 4 hurricanes. Experts will leverage this unusually active hurricane season to push for uniform building codes, buried power lines and tax breaks for home owners who install storm shutters in response to the recent wave of storms. Home Builders Construct GainsThe supply of homes continues to fall short of demand, helping the home building sector to thrive despite concerns over rising interest rates. Proof of the industry's staying power comes as Meritage Homes outperformed its financial projections for the third quarter. Also buoyed by a 5.46-point gain in trading to $77.18, the company released a 20% profit forecast for next year. Other residential builders, including Standard Pacific and Pulte Homes, also gained momentum during the quarter. Home Buyers Rank Pulte No. 1 in First Power National SurveyThe country's biggest residential builder also is tops in terms of customer satisfaction, according to a poll conducted by J.D. Power and Associates. Bloomfield Hills, MI-based Pulte Homes headed the overall national rankings and also came out on top in 14 of the 25 U.S. housing markets, including first-time participant Metro Detroit, where J.D. Power conducted its research. Pulte President and CEO Richard J. Dugas said the company is striving to boost its share of the residential construction market from 3.5% today to as much as 20% by 2024 and to make Pulte a household name. The firm's selection as the very first recipient of J.D. Power's Platinum Award for customer service could very well help the builder in its goals. Winning the honor, according to Dugas, "puts us closer to being on par with the automakers in terms of customer service and name recognition." Pulte was followed in the national rankings by Centex Homes. The Not-So-Humble GarageAccording to Southern California's Construction Industry Research Board Director Ben Bartolotto, soaring residential prices have prompted home owners to expand their living spaces into the garage. Home owners increasingly are transforming their garages into exercise rooms, media rooms, art studios, master or guest bedrooms and offices, among other things. "People want more breadth of utility for their homes," remarks California-based Realtor® Carole Schiffer. Though professional architects or contractors are not required for conversions, Schiffer says projects that comply with local building codes easily boost property values by upwards of 10%. "Garage: Reinventing the Place We Park" author Kira Obolensky calls the garage "the id of the domestic setting." In fact, many experts acknowledge the feelings of exploration and creativity associated with detached garages. Barriers to Latino Home BuyingThe homeownership rate among Latinos lags considerably behind that of the nation as a whole —just 47% versus 68%. Recent focus groups held by the Congressional Hispanic Caucus Institute in 11 cities reveal a number of obstacles that keep Latinos out of the housing market — including high prices, low incomes, the complexity of the home buying process and the inability to save for a downpayment when much of their money is sent to relatives outside of the United States. Industry insiders say Latinos often mistakenly believe they cannot purchase homes without perfect credit or legal citizenship; and many do not realize that lenders now offer low-interest-rate loans, downpayment help and mortgages for borrowers with several co-signers. According to the Congressional Hispanic Caucus Institute, bilingual loan officers and a secondary market for the sale and purchase of loans whose borrowers lack Social Security numbers are also necessary. Results of Truss Fire Tests Rattle Design AssumptionsUnrestrained floor assemblies performed better under standard fire conditions than restrained assemblies during recent laboratory tests conducted as part of a $16 million investigation into building and fire safety at the World Trade Center. The results of the tests on trussed floor assemblies built to resemble those used in the WTC towers surprised building code consultants and experts, since the prevailing assumption is that unrestrained assemblies require more fireproofing than restrained ones. Both types of assemblies, however, performed relatively well during the tests, carrying loads for between one and two hours after deflecting under high temperatures. S. Shyam Sunder, lead investigator for the National Institute of Standards & Technology, which sponsored the tests conducted by Underwriters Laboratories Inc., warned that the results have some limitations in their application to the conditions of the WTC towers on Sept. 11, 2001. "These tests alone cannot be used to determine the actual performance of the floor systems in the [towers'] collapse," Sunder told investigators during the final test on Aug. 25. Plots and Ploys: Going GreenThe growth of green building continues to be stymied by steep construction costs, a lack of awareness about its benefits and a lengthy payback period, according to a survey of more than 700 building owners, developers, architects, engineers and consultants. Nonetheless, most respondents expect to be involved in more green projects over the next three years, found the poll — which Bayer Consulting conducted in July for Turner Construction. About 40% of respondents have not worked on green building projects, but those who have estimate that the approach tends to cost 20% more than traditional construction. The report describes green building as projects that "use design and construction practices to significantly reduce or eliminate negative effects on the environment and occupants." Class B Office Space Eyed for Residential ConversionsIn Boston, more and more owners of Class B office buildings are touting their properties as the ideal investment for developers looking for residential conversion opportunities. A glut of office space and a need for more places to live in the city have created an environment where office landlords can divest a vacant property and developers can profit by converting the former workspaces into prime rental apartments and for-sale condominiums. Spaulding & Slye Colliers' Jeffrey Swartz observes, "It's a definite trend, especially the smaller to medium-size rehabilitations." Meredith & Grew Vice President Leigh Freudenheim cautions, however, that not all Class B office properties are appropriate for conversion to living space. He explains that such projects do involve a certain amount of risk on the part of developers. The payoff, though, comes in the $500- to $1,000-per-square-foot value for residential units in a city like Boston. That compares to current office rents in the mid- to high-$20s per square foot. Feng Shui Inspiring SalesMany home sellers are using feng shui to improve the flow of energy through their abodes and to attract buyers. This ancient Chinese art involves the strategic placement of various objects and the removal of excess belongings. "Sell Your Home Faster With Feng Shui" author and real estate broker Holly Ziegler says buyers are drawn to properties that have good feng shui, which is "about feelings and how you feel in a space." Though the National Association of Realtors® does not monitor the number of agents who belong to the feng shui movement, the group reports that classes are held at meetings across the country. In addition to attracting buyers, feng shui helps sellers enhance the appearance of their homes without costly renovations. Special Financing Is Available for Energy-Efficient HomesHomes that are deemed energy-efficient by a professional energy rater qualify for special mortgages that allow buyers to purchase more costly homes as they put the money they save on their utility bills toward their monthly payments. Lenders even offer loans that include the costs of energy-efficient upgrades. According to the Environmental Protection Agency, the number of buyers eligible for home financing would rise by 7% if their properties were rated for an energy-efficient loan. Research also reveals that residential values jump $20 for every $1 shaved off annual energy bills. Those interested in energy-efficient financing should consult the Residential Energy Services Network of lenders, real estate agents, builders and other real-estate professionals, which lists such programs on its Web site. The Federal Housing Administration and the U.S. Department of Veterans Affairs, among others, offer energy-efficient mortgages; and Fannie Mae and Freddie Mac have agreed to purchase such loans from a multitude of lenders. Fixed-Rate Mortgages Allowing Millions More to Become Home OwnersRick Davis, president of the Homeownership Alliance, attributes the United States' current all-time high homeownership rate of 68% to the 30-year, fixed-rate mortgage option, which he says "provides long-term financial security to home owners." The alliance, a coalition of trade and housing industry organizations and consumer advocacy groups, has spent the last two years commissioning studies and releasing documents supporting the tradition of 30-year, fixed-rate mortgage financing in the United States. According to the group, this product gives owners the stability of knowing what the size of their monthly payments will be for up to 30 years while also giving them the option of refinancing without paying significant penalties or administrative fees. James Schilling, professor of real estate and urban land economics at the University of Wisconsin-Madison, notes that the refinancing option also contributes to the larger economy by allowing U.S. home owners to spend and invest the extra money they save when they refinance at a lower interest rate. For the Love of HomeU.S. home owners have been devoting a great deal of energy and money to improving their property, boosting remodeling outlays to a record annual pace of $128.5 billion during this year's second quarter. While upgrades can boost property value, a new Wells Fargo survey reveals that most home owners remodel not to boost resale value but to make their residence more attractive and comfortable for themselves. "Creating a comfortable and secure environment at home is becoming more of a priority for consumers," explains Wells Fargo Home Mortgage's Cara Heiden. "Whether it's a home buyer purchasing a newly constructed or existing property or home owners investing in a property they have owned for several years, we are seeing more people center their lives around their home." The Web-based poll of more than 1,300 households indicates that 51% of those surveyed made interior decorating improvements in the past year, or plan to do so in the coming year; 39% have already upgraded their landscaping or intend to; 38% have completed or are planning mandatory maintenance work; and 29% have done or expect to do some exterior decorating. Development Projects Rise, Thanks to Fed Program BoostThe American Seniors Housing Association recently completed a joint study with the National Investment Center for the Seniors Housing & Care Industries that identified 32,184 units of market-rate housing now in various stages of development at 219 properties nationwide. The tally marks a 12% gain over last year but is still less than 50% of what was constructed during the boom year of 1999. GMAC Commercial Mortgage Corp. executive John Fogarty remarked, "The kind of building you saw five or six years ago has gone away because access to capital [for development] is difficult and there is still equity chasing transactions." At the same time, affordable seniors housing projects are continuing to receive a major influx of funding from state and federal government initiatives, including $1.8 billion in HUD mortgages for senior-care facilities as well as various Fannie Mae and Freddie Mac efforts. Setting Up Your Own Wi-Fi Hot SpotMobile workers now have access to portable devices that establish temporary Wi-Fi hot spots via high-speed Internet connections. Some of the products currently available include the Netgear Travel Router, D-Link Pocket Router and SMC Networks Inc.'s EZ Link Wireless Traveler's Kit, which range in price from $50-$84. However, portable routers have a range of just 20-25 feet, while a standard Wi-Fi kit boasts a range of 160 feet or more. King of the Road — The Mobile SMBSmall businesses with mobile workers have access to scores of wireless devices, so they should determine how much power they need and make a list of must-have features to narrow down their choices. Given that they must also think about security and network integration, small businesses without IT workers on staff would be wise to hire a professional who can help them select the technology that best meet their needs. "While great for productivity, mobile/wireless software is not yet as easy to set up and use as 'plug-and-play' desktop software," remarks iAnywhere Solutions Senior Product Manager Martyn Mallick about the importance of a knowledgeable integrator partner. Companies that plan to expand their operations sometime in the future should opt for flexibility, focusing on devices that can be integrated with databases and other backend systems. NCHI Members Mark 40 Years of Progress in America’s HousingThis is the second in a series of three articles recognizing the National Council of the Housing Industry’s 40th anniversary and the myriad contributions of its product manufacturers and suppliers. Looking back 40 years, a then-and-now comparison of the goods and services provided by the manufacturers and supplies of the National Council of the Housing Industry provides a scatter-shot view of cultural changes in the American landscape and giant strides in its housing. In 1964, 10 years after the debut of the TV dinner, families were still gathering in the kitchen, but fondue was hip; Tang was making a splash; and consumers embraced the blender as the essential tool for mixing cocktails and preparing healthy drinks — the smoothie was born. The ideal kitchen was decked out — just like the Whirlpool model — in avocado green, with purple seat covers and paisley accents, and a mere 20% of homes had a food waste disposer like an In-Sink-Erator. Forty years later, kitchen design is clean and sparse, with stainless steel appliances and oversized islands leading the trend. And, approximately 50% of U.S. households now are equipped with a disposal that, according to In-Sink-Erator, can handle chicken bones. In 1964, the National Kitchen and Bath Association (NKBA) turned one, having been incorporated the year before as the American Institute of Kitchen Dealers, a small group of kitchen specialists. Today, NKBA serves more than 30,000 members, underscoring the importance of kitchens and baths in modern homes. The typical kitchen in 1964 was isolated from the rest of the home and largely the domain of the stay-at-home mom. Today, with dual working parents and children loaded up with after school activities, mealtime is often the only time families are together, and the kitchen has expanded to accommodate multiple activities — cooking, homework and bill paying — and opened up to the family room so parents can keep an eye on the youngsters. According to American Woodmark, a leading manufacturer of kitchen cabinets, the family hub-styled open kitchen has become even more popular since the events of 9-11. Forty years ago, hailed as “the miracle laminate of the Space Age,” Formica was igniting excitement in the American kitchen. The Formica kitchen in 1964’s Formica World's Fair House in New York showcased such futuristic features as “the double stainless steel sink with built-in disposer, the dish sprayer and the built-in dishwasher,” and the manufacturer predicted they would become quite popular. With global headquarters in Cincinnati, Formica Corporation has seen its predictions come true. Today, it is a leading manufacturer of high-pressure laminate, solid surfacing, laminate flooring and other decorative surfacing products. The company employs more than 4,000 workers at operations in North America, Europe and Asia. California Car Culture Forty years ago, color TV was making its way into American homes, and an estimated 850,000 “war baby” freshmen entered college, many of them bunking in emergency living quarters set up in lounges, hotels and trailer camps. At the same time, the first Ford Mustangs were sitting in the driveways and garages of the few lucky buyers who were able to score one right off the assembly line. The demand for bigger garages is rooted in the 1960s, when rising numbers of women were joining the workforce and the ranks of the nation’s commuters and teenagers were given access to car keys in unprecedented numbers as the California car culture spread across the country. Attached to these garages and driveways were homes that embodied the new modernism, and would continue to do so for a decade — the split-level ranch. Perhaps not today’s most popular house plan, in the 1960s builders across the nation were embracing open-plan interior design, and many property developers used it for their new homes, especially for combining living and dining rooms. In 1964, many homes were single story and no bigger than 1,500 square feet, and nobody had even heard of a super bath. Today’s homes, by comparison, are bigger than ever on average at a time when households are becoming smaller. Flexible space for home offices, gyms and state-of-the-art media rooms is in heavy demand and prospective buyers are shopping for homes in which they can make a personal statement. Innovative Construction Techniques But floor plans and amenities are not the only characteristics distinguishing homes built today from those that were built four decades ago. Construction elements have also undergone radical changes, and NCHI members have been in the forefront of developing products and techniques that focus attention on energy-efficiency, streamlining and sustainability. One of the new applications of the latest technology on residential construction — insulated concrete forms (ICFs) — has grown from 3% to 15%-20% of the market over the past 10 years, according to the Portland Cement Association (PCA). Today, ICFs are increasingly being used for above-grade exterior walls, enhancing the energy efficiency and durability of housing in the process. In conjunction with several allied industries, PCA partnered with NAHB in the mid-1960s to sponsor Concrete Industries Horizon Homes. In addition to exterior walls, the program showcased cladding and decorative concrete applications. Forty years later, PCA was a sponsor of The New American Home (TNAH) 2004 in Las Vegas, a prototype for using concrete for most of a home’s structural elements, including the envelope, flooring, decking and exterior finish. Research and Development Simpson Strong-Tie was the first hanger/connector manufacturer to obtain published code listings for its products. By 1964, it had developed a core of some 50 code-listed hangers and connectors, including the HD5 Holdown, the first connector specifically created to address seismic issues. Many of today’s universally recognized generic products — such as hurricane ties, post caps, purlin anchors and welded holdowns — were developed in Simpson Strong-Tie laboratories. On Nov. 29, 1963, a research and development team at Noveon subjected a piece of PVC pipe to more than 10 times the amount of water pressure in a typical American home. The pipe sample — which would become the forerunner of today’s FlowGuard Gold CPVC plumbing system — remained under 791 pounds of pressure for nearly 40 years before failing just last year. In addition to long-term pressure testing, Noveon’s state-of-the-art, multi-million-dollar pipe testing laboratory has the ability to conduct tests on impact resistance, crush resistance, high-pressure burst, pressure cycling and thermal cycling. Windows and Roofs Popular flat roof lines in 1964 in single-story construction used such materials as slate, tile, metal and wood. Today, asphalt has become a widely used roofing material, according to the Asphalt Roofing Manufacturers Association, thanks to innovations in style, texture and color, providing builders and home owners with more options than ever before. Today’s roof windows and skylights offer features and consumer benefits that were unimaginable when VELUX, a leading specialty glass product company, emerged. Skylights featuring durable glass with energy efficient Low-E coatings, argon gas-filled double-pane construction and special glazing techniques have replaced inefficient, unsightly plastic bubble skylights. Modern roof windows, skylights and sun tunnels offer home owners and commercial property owners better use of space; energy savings; attractive, functional and versatile window treatment options; and the health benefits from natural light and ventilation In 1964, Marvin Windows had 307 employees; today, its workforce has grown to 4,500. A family-owned business founded in 1912, Marvin was originally a lumber and cedar company; it entered the window and door-frame manufacturing business to fill idle capacity during the quieter winter months. Today, Marvin offers 11,000 different standard window sizes and shapes. For Andersen Windows, another window manufacturer, its Perma-Shield® Cladding System was big news in the mid-1960s. The patented, tough vinyl exterior for wood windows was low-maintenance, and coupled with the company’s insulating glass, eliminated the need for storm windows. In 1964, the company introduced patio doors, and their windows were featured in the Formica World’s Fair House. Andersen survived two major floods, one in 1965 and the other in 1969. (Floods devastated Formica’s Cincinnati-based plant in 1939.) In 1961, Builders’ Showcase, a local TV show produced by Andersen, Northern States Power (now Xcel Energy) and U.S. Gypsum Corporation, was featuring three homes a week, along with their builders and the Andersen products going into them. Today, that news beat has been taken over by HGTV, DIY, the Style Network and others, who feature nearly every conceivable aspect of home building, design, decorating and landscaping.
New Single-Family Home Characteristics
Mid-1960s 2003 Homes Completed (thousands) 970 1,386 One Story 72% 47% Two Stories or More 18% 52% Split Level 10% 1% Central Air 25% 88% 2.5 Bathrooms 19% 56% 4+ Bedrooms 24% 88% 1+ Fireplace 44% 59% 2+ Car Garage 48% 85% Average Square Feet 1,470 2,302 Average Value of Lot 18.3% 23.5% As Share of Sales Price Average Sales Price $20,500 $246,000 Value of Construction (billions) $31 $476 Remodeling Expenditure (billions) $11 $177 Total Number of Households (thousands) 56,149 109,297 (2002) Housing SnapshotIn what is becoming a familiar up and down pattern within a fairly narrow band reflecting the most recent indications of economic activity, mortgage interest rates profited last week from good news on the inflation front, with some decline in the cost of both 30-year and 15-year financing. Adjustable mortgage interest rates were up slightly. The Commerce Department reported that the Consumer Price Index was up a scant 0.1% in August, following a decline of 0.1% in July. So far this year, inflation has been running at a rate of 3.7%, compared with an inflation rate of 1.9% in 2003. While the economy appears to be continuing to gain momentum following a slowdown this summer from rising energy prices, the Commerce Department reported that retail sales were off in August, primarily because of softness in automobile sales. Oil prices were up over $45 a barrel as the new business week commenced. The lumber industry last week offered largely favorable news on prices. The cost of framing lumber was down $27 to $431 per 1,000 board feet, up from $375 a year earlier, according to Random Lengths. The price of 15/32-inch 3-ply sheathing remained unchanged at $445 per 1,000 square feet, and oriented strand board was down $22 to $390. Mortgage Interest Rates30 Year Fixed Rate: 5.75\% Housing Starts: Jul. 2004Total: 1.978 million\% New Home Sales: Jul. 2004 *1.134 million Existing Home Sales: Jul. 2004 *6.72 million * Seasonally Adjusted Annual Rate Please Take the Time to Help Us Solve the GLI CrisisFellow builders, it’s time for action. It’s time for us to fill out our general liability insurance (GLI) surveys and send in our consent letters. It’s time for each of us to do our part to help solve the home building industry’s GLI crisis. Recent surveys show that GLI is our members’ number one concern. It’s easy to see why. GLI premiums have risen 10-fold in some areas. Many policies have so many exclusions that the coverage is ineffective. And in some states, it’s almost impossible to get any GLI coverage at all. NAHB members have made it clear that they want the federation to do something to solve this GLI problem. In response, NAHB has entered into a strategic partnership with Marsh, the insurance and consulting firm, to gather loss information about the residential construction industry, to analyze that data to better understand the industry’s risk management needs and to use that analysis to develop new, cost-effective GLI products. Last month NAHB and Marsh sent an eight-page mail piece to 55,000 builder, remodeler and trade contractor members. The mailer included a survey, a model consent letter giving insurance carriers permission to share a builder’s loss information with Marsh, and information about NAHB’s GLI initiative. If you didn’t receive the mailing, you can find the survey, model consent letter and other information at www.nahb.org/gli. It seems to me that anyone who recognizes that our industry is experiencing a GLI crisis ought to take half an hour to fill out the survey and send in the consent letter. If you need help with the survey, ask your insurance agent for assistance. You can find additional information about this initiative at www.nahb.org/gli. If you want to speak to someone at NAHB, please contact Clayton Traylor at 800-368-5242 x8490 or Brett Diggs at x8453. If you need a copy of the survey and the model consent letter, you can find them on NAHB’s web site or you can call Blake Smith at x8583. If GLI costs are eating into your profits, then please participate in this effort. If you’re “flying solo” — doing business without any GLI coverage — then please participate in this effort. If you’re worried about how much your premiums will rise the next time you have to renew your coverage, then please participate in this effort. Please don’t put this off. For many builders, we’re talking about thousands of dollars per year. We’re talking about the stability of your business. We’re talking about the long-term strength of our industry. Take an hour and make a difference for your business and the home building industry. It’s time for action. Letter to the Editor: Bowing to NAFTAWhile one may applaud from an economic standpoint the decision to bow to NAFTA (Sept. 12, "U.S. Bows to NAFTA Panel Ruling on Canadian Lumber Duties"), I am grieved by the erosion of U.S. sovereignty this decision indicates. I am not in favor of NAFTA dictating the tariff policies of this or any other country. Nor do I consider "free trade" to be of greater value than self-government. We are trading away our freedoms, fought for and preserved by our forefathers through their shed blood, for temporary economic advantages. Rather than appeal to an international body that does not answer to the people, we ought to hold our representatives' feet to the fire if the tariff is unjust. Philip R. Johnson Fallen Law Enforcement Officers Commemorated at Nebraska Housing DevelopmentIn a tribute to seven local law enforcement officers, Nebraska Governor Mike Johanns and Lincoln, NE, Mayor Coleen Seng joined on Sept. 10 with family members, friends, law enforcement officers, local home builders and other housing partners during a street naming dedication and plaque presentation ceremony to honor those who have lost their lives in the line of duty. The mix of affordable and market-rate single-family homes was made possible through a unique partnership among Nebraska Housing Resource (NHR), the City of Lincoln, Fannie Mae, the Nebraska Department of Roads, Neighborhoods, Inc., the Nebraska Investment Finance Authority, local banks and other housing partners. Old Mill Village is being developed by NHR, a nonprofit created in 1999 by members of the Home Builders Association of Lincoln. NHR uses a mix of public and private financing from several housing partners, including the Nebraska Affordable Housing Trust Fund, U.S. Department of Housing and Urban Development, local banks and mortgage companies, to create more "workforce housing" — homes priced for, and located where, wage-earning families need them. Fannie Mae will purchase many of the eligible loans on homes in the development from its lender partners. The streets in Old Mill Village are named after Captain Charles E. Hall, Officer Richard E. Leyden, Detective Lt. Frank H. Soukup, Detective Lt. Paul B. Whitehead, Motorcycle Officer George E. Welter, Sheriff's Sergeant Franklin Furrer and Deputy Sheriff Craig D. Dodge. “From beginning to end, the dedication was a very emotional ceremony,” said Jim Christo, president of the Home Builders Association of Lincoln and president of Christo Design Build. “I’m very proud to be a part of an organization that is doing everything it can to build affordable homes for our hometown heroes.” Since its creation in 1999, NHR has worked closely with the City of Lincoln to identify parcels of land suitable for development of housing that is affordable for working families, said Bob Peterson, NHR’s executive director and general counsel. For more information on NAHB’s efforts on behalf of workforce housing, e-mail Blake Smith or call him at 800-368-5242 x8583.OSHA Gearing Up for Random Home Building Site Inspections in Arkansas and Other StatesIn a departure from its usual practice of focusing its resources on commercial projects and inspecting residential construction sites mainly when there are complaints, OSHA (the Occupational Safety and Health Administration) said that it will be stepping up its random visits to home building sites in Arkansas and a number of other states before the end of this year. In a Sept. 1 story appearing on Today’s THV Television, Bryon Earls, president of the Home Builders Association of Greater Little Rock, said that his members are already responding to OSHA’s new program to improve the safety of residential construction sites, and he has been making a special effort to educate those in the industry about their responsibilities. “A few months ago, if you would have gone out to a residential site, you wouldn’t have seen anyone wearing hard hats,” Earls said. But now, “you may see changes in signs posted at job sites that say, ‘warning, no trespassing;’ ‘authorized personnel only;’ or ‘hard hat area.’” Other safety precautions that are increasingly being taken include the use of hard hats and harnesses to protect workers from falling off roofs. Of the forthcoming OSHA effort aimed at home builders, Earls told the Little Rock television audience that, “The important thing is it will help job sites and cause them to be safer; we want our job sites to be safe.” Home builders who ignore OSHA safety requirements could face hefty fines, Earls warned. As for the added costs of purchasing new equipment to improve the safety of residential construction sites, Earls said that most of the expense will probably be passed on to the home buyer. “If it’s done by the book, it’s going to cost more to build a house because it’s going to take a little longer to do it,” he added. From October of last year through the beginning of September, there were 23-construction-related deaths in Arkansas, compared to 27 during the previous year, the station reported. For more information, e-mail George Middleton at NAHB, or call him at 800-368-5242 x8590. Certification of Crane Operators a Concern in Revised OSHA Construction StandardA revised crane and derrick construction standard from OSHA (Occupational Safety and Health Administration) continues to make its way through the rulemaking process, and at the negotiating table NAHB has voiced its concern over some of the provisions. The standard covers a wide range of cranes weighing over 2,000 pounds, but exempts some equipment such as forklifts, backhoes, excavators and concrete pumps. Key provisions in the proposal, which was approved in July by OSHA’s Crane and Derrick Rulemaking Committee (CDAC), include:
The standard also addresses safety devices, operational aids, signals, specific types of equipment (such as derricks and tower cranes), inspections, wire rope, prototype design and testing, crushing and overhead hazards, fall protection and equipment modification. NAHB has dissented on the new, more stringent provision in the CDAC proposal on crane operator certification because it would not allow employers to “self qualify” their own crane operators and current employer crane safety programs that are suitable and adequate would not meet the requirement. NAHB's concerns will be noted in OSHA’s preamble to the notice of proposed rulemaking. A draft of the standard will be submitted to the assistant secretary of labor for occupational safety and health, and it will be reviewed by small business entities and submitted for public comments during the coming year. For more information, e-mail Rob Matuga at NAHB, or call him at 800-368-5342 x8507. Creating Job Folders Kept My Business StraightI began my construction and remodeling career in 1972 while I was in the service. Some of the best advice about operating a business came from a fellow soldier. Bill was well educated and had a lot of horse sense. I told him I was thinking of starting a building and remodeling business after I finished my hitch and started telling him about all the tools and equipment I would need. Bill interrupted me and said, “You’re very good with your hands, now focus on how to run a business.” I never forgot that. I’m like most remodelers and builders. I like to jump into a job and nail away. But remodelers and builders need to do more than that. We need to keep in mind that each of us runs a business. If we don’t consider our companies as businesses, all we really are doing is creating jobs for ourselves. Organization Is Key I have spent years organizing my business, and it is still a work in progress. But through the years, I learned a few things by trial and error — mostly error — that I would like to share with you. One of the problems I struggled with again and again was trying to keep all of the information about a job in some order. Finally, I developed a job folder system to organize my work. I simply began making separate job folders for each customer and for myself. The system probably saved my business. Here’s How My System Works For each new job, pick up two multi-pocket folders; one for your client and one for you. The folders I use are vinyl with five pockets each to better separate different parts of each job. Then mark the tabs and insert the materials for the job. I separate my material into the following sections:
It is amazing how something so simple can keep your head together. My job folder keeps all of the information at one location so I never have to scramble looking for a note I wrote about a job — and it’s easy to grab on the way out the door. Barry Dennis, of Barry Dennis General Contractor in York, PA, is a residential general contractor and member of the York County Builders Association (YCBA) and Remodelors™ Council. Dennis currently serves as the vice-chair of the Remodelors™ Council and sits on the board of directors for the YCBA. Dennis founded his company in 1976 and specializes in full service remodeling. He was trained by USCG and Navy schools for construction, with two years on-the-job training for new home construction. For more information, e-mail Dennis.
The NAHB University of Housing Offers Designation Programs and Other Courses The NAHB University of Housing offers CAPS, CGR, CGB and a variety of other professional designation programs and business management courses that set builders and remodelers apart from the competition. To learn more about NAHB’s designation programs, visit www.nahb.org/designations. For a complete list of all current education offerings, click here. Ten Rules of Business OwnershipBy Richard Sharpnack, FMI Corporation Rule 1: Be very selective regarding who obtains company ownership. One of the most challenging issues contractors face in a transition is who will be an owner. The decision creates a cultural divide between owners and non-owners, and it must be made carefully, keeping the following in mind:
I suggest limiting future ownership to those who are strong candidates for an ownership transition. Rule 2: If you have minority owners as partners, recognize your fiduciary duties. When an owner of a privately-held company sells, gifts or grants some of that ownership to an employee, the majority owner is getting partners in the business. Partners, even minority partners, have certain legal rights associated with their ownership; these rights can vary from state to state. Before transferring even one share or one dollar of ownership, make sure you understand what kind of legal rights a minority owner is entitled to, and ensure that you understand your fiduciary responsibilities. One of these fiduciary responsibilities is to ensure that your compensation is appropriate compared to that of senior managers in the same positions at like companies. A like company means a company that is roughly the same size in terms of total revenue, works in similar markets, performs similar work and makes about the same profit. FMI Corporation has seen situations where a minority owner (or relative of a minority owner) has sued a majority owner for breach of this fiduciary responsibility. In some of these legal actions, the minority owners or their relatives have prevailed. Another responsibility of the majority owner is to share company financial information with minority owners. Most state laws require that all owners, even those with very small ownership interests, have access to all company financial information. This is another reason why I caution you to be very selective about who obtains ownership. Rule 3: Compensation should not be tied to ownership. One of the tenets of proper compensation, management and ownership is that an employee’s salary or wage should have nothing to do with the fact that they have company ownership. An employee’s salary or wage is based on the employee’s position and responsibilities within the organization. An employee’s performance bonus should be based on the company’s financial performance, where they work in the company and their individual performance. An employee’s compensation for ownership is based solely on the dividends or profit distributions that are allocated after the end of the fiscal year. We have seen situations where an employee’s salary, wage or bonus became inappropriately large simply because he or she owned some stock in the company. One favorite example is that of a safety manager for a small road builder in the Midwest who was receiving a salary 50% larger than safety managers at like firms because he owned one half of one percent of the company’s stock. Rule 4: Families and ownership often do not mix well. If your family members or other relatives do not work for the company, they should not be sold, gifted, granted or willed ownership of the company. We have seen too many examples where ownership of a company has passed through an estate to a family member or other relative who has no interest in being involved or is not competent to be involved in the management of a company. This situation usually leads to an unhappy ending. Associated with this situation is the fact that absentee ownership does not work well in the construction industry. The company’s employees may resent that the company is owned by a non-employee. Furthermore, the profit margins in the industry are too thin to have a non-employee owner receiving compensation or profit distributions. Competent managers will move on rather than put up with this situation. Even if a family member or other relative works for the company, this does not mean that this person will be a good candidate for ownership. We believe that owners should also be the leaders of a privately-held company. Proper estate planning can allow family members or other relatives to eventually obtain the economic benefits of your ownership, and then let the next generation of company leaders actually own the company in the future. These types of decisions are often difficult for existing owners, but our experience has shown that the company will benefit in the long run and your family members or relatives will ultimately be happier for it. Rule 5: Always have a shareholder or LLC ownership agreement signed before an employee receives even the smallest amount of ownership. We have heard many times the phrase, “We meant to get to that,” in regard to having a shareholder or LLC ownership agreement signed for new owners. The potential results of not having such an agreement in place prior to employees obtaining ownership can be catastrophic. What happens if one of the shareholders suddenly and unexpectedly dies? Alternatively, what happens if a new owner is terminated or suddenly quits? What is the value of that ownership piece? Who gets first crack at purchasing the ownership? How should payments for the ownership be structured? Will you have to deal with that former employee’s family members who do not understand the value of that ownership or the importance of keeping ownership within the company? Without a shareholder or LLC agreement signed by all owners, the answers to these questions are often settled in court. Oftentimes, a structured ownership transfer process where ownership is transferred internally may take a number of years to fully implement. When a company does not have a shareholder or LLC agreement in place to guide the disposition of ownership should the worst case scenario occur, the ownership transfer process may blow up and the process must be started again from scratch with someone else. This situation is demoralizing for the existing owner, confusing for the company employees and should be avoided at all costs. Proper ownership contingency planning, including having a shareholder or LLC agreement in place, is critical to handle these unfortunate situations. Rule 6: Ownership transfer and estate planning is not for do-it-yourselfers. Creating an ownership transfer plan, estate plan or a shareholder (LLC) agreement involves many complex issues. There are considerable tax, legal, accounting, corporate governance, management and other issues that must be identified, resolved and ultimately crafted into a document. Most business owners do not have the background or expertise necessary to understand and resolve these varied issues. Our advice is to use the best advisors possible to help you create these plans. These advisors include consultants, attorneys, accountants and insurance agents who are experienced in these specific areas. CPAs should be used to provide expert advice on tax and accounting issues. Attorneys should be used to provide expert advice on certain legal issues and to draft shareholder or LLC agreements with the next generation of owners. Experienced insurance agents should be used to help purchase the right type of life and disability insurance policies to fund an ownership contingency plan. Ownership transfer consultants should be used for expert advice on organizational and management succession issues, as well as to help the current and future owners select the best ownership transfer technique. Consultants can help to create a plan whereby the company may continue unencumbered with the next generation of leaders at the controls. Our experience has shown that it is best to start with an ownership transfer consultant to develop goals and objectives for the process and to discuss and resolve “big picture issues.” Other advisors may then be used to answer detailed questions and to draft final documents. Consultants experienced in this type of planning can be effective at coordinating the work of other advisors, thereby keeping the process on track. Using these various experts may have a higher cost on the front end; however, these costs would be considered a bargain compared to the potential litigation costs associated with a poorly crafted ownership transfer plan. Rule 7: Communicate the rights and obligations of ownership before getting an employee involved. Many employees do not understand the risks, rights and obligations associated with company ownership. The uninitiated think that ownership equates to considerable wealth but the reality is that ownership is also associated with considerable risk. We recommend that each new potential owner participate in a frank discussion about the risks, rights and obligations associated with company ownership. The following are a few topics that should be covered:
Rule 8: Start the ownership transfer and management succession planning process early. Typical employees do not have large amounts of cash lying around that can be spent buying company stock. They may have limited access to credit markets due to their personal financial situations. Because this is often the case, most ownership transfer plans involving employees use future company earnings to buy a majority owner out of the company. There are various techniques that can be utilized for this overall approach. Regardless of which type of plan is used to transfer ownership, most construction-industry companies require seven to 12 years to complete the transition process. It is imperative then that the planning process for the ownership transition begin early enough to allow the plan to be fully implemented and for the existing owner to retire at the desired age. It is also our experience that existing owners do not do a good job of attracting and developing future leaders for their company. The same time frame used to transition ownership can be used to mentor, develop and train new company leaders and to get them familiar with banking, bonding, operational and business development responsibilities. Rule 9: The most important job of an owner is to find his or her replacement. An owner must be cognizant of the issue of management succession. Management succession is an issue that rarely goes away for most companies. Thus, one of the most important functions of an owner (particularly the majority owner) is to find, train and ultimately empower his or her replacement. This is a difficult task for many owners. Not only is it hard to find high quality employees in the first place, but to train and empower a replacement is an admission of the owner’s mortality. While we would all like to think that we will live forever, actuarials tell us otherwise. Without a suitable replacement, a business continuity plan has zero chance of success. Indeed, finding suitable replacements should be a high priority for the company’s entire senior management team. There are other benefits to implementing a solid management succession plan. What is good for management succession is good for the company. In other words, finding quality employees, training them and eventually putting them in leadership positions helps to ensure that the company will achieve long-term financial success. Rule 10: Do not lose sight of business basics during the ownership transfer process. Although crafting and implementing an ownership transfer and management succession plan is a very important function of management, the number one goal of the business still needs to be making money. The ownership transfer period can be a distracting time for a company. The company is breaking in a new management team, key responsibilities are being transitioned to different employees and most of the free cash flow of the company is dedicated to the ownership transfer process. We have seen companies “drop the ball” during this transitional time. The company still needs to be profitable. In fact, if the process is using future earnings to transfer ownership, it is critical for the company to generate solid earnings over this period. It is also critical for the company to aggressively fund executive and incentive compensation plans during the transfer period to retain and to motivate those key employees who will not be involved with ownership. In these days of changing surety industry conditions, solid earnings during the ownership transfer period will go a long way to allay any concerns that the bonding company may have. Conclusion: How you handle the 10 rules will determine the success of your transition. How a company handles these 10 rules will help determine the success of its ownership transition plan. Managing this process is a daunting task and there are many forces trying to pull owners in the wrong direction. That’s why FMI highly recommends that owners seek experienced advisors to help take some of the difficulty out of the transition process. By overcoming the challenges inherent in this process, you can ensure that your company survives well into the next generation. Richard Sharpnack is a senior associate with FMI Corporation’s Investment Banking Group. FMI Corporation provides strategic planning, organizational development, market research and other business consulting services to the construction industry. For more information, e-mail Sharpnack or call him at 303-398-7219. © 2004 FMI Corporation. This article originally appeared in the Winter 2004 edition of FMI’s Mergers and Acquisitions Advisor. Used by permission of FMI Corporation. Note: This article is solely for informational purposes. The views and opinions of the author expressed herein do not necessarily state or reflect those of the National Association of Home Builders. The National Association of Home Builders and the author expressly disclaim any responsibility for any damages arising from the use, application, or reliance on any information contained in this article. The ideas presented in the article are not a substitute for considered professional advice. If specific legal advice or professional assistance is required, the reader should seek the services of a qualified professional.
Run Your Business Better and More Profitably Click www.nahb.org/biztools to access hundreds of timesaving, moneymaking and cost-cutting resources. You’ll find guidance in a concise, easy-to-read format on topics like financial management, production, sales and marketing, customer service and human resources … to name just a few. Plus, get answers to your tough questions about how to use software to improve your bottom line in the Talk About Business & IT section. The NAHB University of Housing Offers Courses on Business Management The NAHB University of Housing offers a course on business management designed to help builders improve their business and profitability. For a list of current offerings, click here. Search keywords: “Introduction to Business Management.” 'Managing Your Employees' Available at BuilderBooks.com "Managing Your Employees," available at BuilderBooks.com, is designed to help builders manage the “people paperwork” of their businesses easily and productively and covers three key areas for creating a successful HR program:
To view or purchase this publication online, click here, or call 800-223-2665 to order. The Nationals Call for Entries – Deadline Extended to Oct. 1The deadline for entries for The Nationals — The National Sales and Marketing Awards — the largest and most prestigious competition for new-home sales and marketing professionals and communities — has been extended to Friday, Oct. 1 because of the hurricanes in the Southeast. Celebrating its 24th year in 2005, The Nationals are presented by NAHB’s National Sales and Marketing Council. Held each year at the International Builders’ Show, The Nationals honors the best in architectural achievement, design, advertising and promotion, interior merchandising, Web site design and more, and is open to individual sales and marketing professionals, home builders, associates and sales and marketing councils. The Nationals features gold, silver, individual, council and regional awards in 45 categories. The Nationals winners will be showcased in national, regional and local publications. In addition, selected winners will be spotlighted in BUILDER magazine and by more than 26 publishers of New Homes Guide. Liability Protection Proposed by EPA Would Encourage Brownfield DevelopmentA proposed regulation by the U.S. Environmental Protection Agency (EPA) to encourage the redevelopment of the nation’s more than 750,000 brownfields would spell out how builders, developers and others can obtain federal liability protections for cleaning up hazardous contamination that was caused by previous owners of the property. “Liability is a major challenge for builders and developers who want to redevelop brownfield sites — abandoned property or older structures usually located in cities and inner suburbs that can be contaminated by PCBs, petroleum and other hazardous materials,” said NAHB President Bobby Rayburn. “Builders want to help these blighted areas become economically viable again, but they need the fair protections from liability that are offered in this newly proposed rule.” The EPA’s proposed rule would implement a key provision of the 2002 Small Business Liability Relief and Brownfields Revitalization Act outlining the steps needed to be named a bona fide prospective purchaser. Under this provision, before assuming ownership of property, builders and developers would need to have a qualified professional conduct a thorough investigation of the site — a process referred to as an “All Appropriate Inquiry” — and document its potential for being contaminated. Bona fide purchasers then would qualify for federal liability protection against lawsuits filed by the federal government or third parties, as long as they took appropriate care of the property. The EPA last year invited NAHB to participate in a negotiated rulemaking panel to develop this proposed rule, along with 24 other organizations, including the Real Estate Roundtable, American Society of Civil Engineers, Environmental Defense, Environmental Bankers Association and U.S. Conference of Mayors. “This was an open and collaborative effort among competing groups in the debate over brownfields redevelopment,” said Martin Mitchell, 2003 chair of the NAHB Environmental Issues Committee (a link for NAHB members only) and a home builder from Rockville, MD, who represented the association on the panel. “In the end, we came together to support a proposed rule that will benefit the residents living near these sites, their communities and the environment.” Florida Attempting to Bring in More Roofing Contractors in Hurricane Recovery EffortsTo further help victims of Hurricanes Charley and Frances get back on their feet, Florida Governor Jeb Bush last week signed an executive order authorizing city and county governments to issue specialty roofing licenses to contractors from both inside and outside of the state without the need for additional local enacting ordinances. The need for roofers in the state increased further a few days later when Hurricane Ivan battered the Florida pandhandle. Contractors must meet several requirements to obtain a license to do this work; operating without one is a felony. In order to expand the pool of available roofers to respond to Florida’s massive rebuilding needs in the aftermath of back-to-back hurricanes, Governor Bush had issued an executive order during the previous week allowing residential, building and general contractors licensed in the state to make roof repairs. The specialty license that is now available to builders from outside Florida allows for the repair and installation of roofs made of wood shakes, asphalt or fiberglass shingles. Excluded are other types of roofing, such as tile, metal or flat roofs. Florida’s Department of Business and Professional Regulation said that the new order from the governor “provides the quickest, most efficient way for these individuals [contractors] to begin making repairs, while ensuring that consumers are still protected.” While contractors now don’t have to jump through as many bureaucratic hoops to start fixing homes, they must comply with these requirements:
To determine the workers compensation requirements that apply, contractors can click here to obtain information from the Florida Department of Financial Services, or call 850-413-1600. Contractors are advised to initially contact their insurance carrier to determine if they can provide the required insurance. The following associations may be helpful in locating insurance agents in Florida:
Consumers are being advised by the state that they should ask to see a copy of a contractor’s license for any structural additions, roofing, air conditioning, plumbing, electrical/alarm work or any job requiring a building permit. Several Steps Required in Cleaning Flood-Damaged HomesCleaning up a flood-damaged home starts with inspecting the structure from the outside to determine if it is safe and ensuring that all electric and gas services have been turned off before reentering the premises, according to consumer information provided by the Louisiana Cooperative Extension Service. After the main switch and all circuits have been disconnected, remove the covers from all outlets and fuse or multi-breaker boxes, the extension service advises, and flush them with clean water. Let them dry and then spray with contact cleaner/lubricant. Have an electrician check for grounds and other unsafe conditions before reconnecting the system. Other steps that should be taken when recovering from a flood include:
An insurance adjuster should be contacted immediately to initiate flood insurance claims, the extension service says, but cleanup and salvage efforts should begin as soon as possible. Don’t wait for the adjuster. Clean the house as much as possible so that the adjuster can see the damage, and keep damaged materials to prove losses. Pulte Homes First Nationial Builder to Win Housing Quality AwardPulte Homes — headquartered in Bloomfield Hills, MI — is the first national builder to win a gold National Housing Quality (NHQ) Award, the NAHB Research Center and Reed Business Information, publishers of Professional Builder and Professional Remodeler magazines, announced last week. Grayson Homes, LLC of Ellicott City, MD, also was a gold winner in the 2005 awards, which were announced at the Benchmark Conference in New Orleans. Modeled after the Malcolm Baldrige National Quality Award, the NHQ represents the highest recognition by the home building industry for quality achievement in construction, business management, sales, design and warranty service. It is bestowed on U.S. companies that have incorporated quality assurance and a commitment to customer satisfaction throughout their daily business practices. Other winners of this year’s awards are: Silver Award
Honorable Mention
Program participants benefit from the introspective process of preparing an application for the awards, and in feedback from a judging panel of industry experts receive insights into how their companies can improve their commitment to quality. Award winners participated in an educational session at the Benchmark Conference, focusing on best practices in areas that are critical to business, such as customer satisfaction, leadership, human resources, strategic planning, performance management, construction quality, supplier partnerships and business results. For more information on the National Housing Quality Program, click here, or send an e-mail.
Discount on Liability Insurance Offered to Builders Involved in Housing Quality ProgramHome builders involved in the NAHB Research Center's National Housing Quality certification programs can receive discounted general liability insurance from 2-10 Home Buyers Warranty®(HBW) Insurance Services, LLC, a managing general agent with underwriting authority from several insurance companies. The discounts are being offered at a time when home builders are particularly concerned about insurance availability and cost. "HBW has become very familiar with the NHQ certification requirements and the significant, positive impact successful implementation of the requirements can have on the technical quality of the home building industry," said Bruce Harrell, CEO of 2-10 Home Buyers Warranty®. The discounts offered by HBW apply to builders who successfully implement the NHQ's quality assurance requirements and complete a certification audit. HBW is also offering discounts to builders who require all or a portion of their critical classes of trade contractors to implement the NHQ's Certified Trade Contractor program and successfully complete a certification audit. The NHQ program has introduced many quality-related concepts to the home building and remodeling industry. Its activities include co-sponsorship of the National Housing Quality Award, the Certified Trade Contractor program and a pilot Certified Builder program. For more information, click here, or call 800-638-8556 x6225. Mold Concerns Prompt Product Alert for Georgia-Pacific Exterior SheathingIn a letter sent Aug. 18 to the Knoxville Association of General Contractors, Georgia-Pacific Corporation announced a product alert for DensGlass Gold. The popular gypsum exterior sheathing is used on many commercial construction projects. The product was manufactured in Georgia-Pacific's Savannah, GA, plant between April and June 14. The alert was sent out because the four-foot by eight-foot boards of gypsum sheathing could be susceptible to mold growth along the edge glue lines when exposed to extreme moisture and high temperature weather conditions, Georgia-Pacific said. The boards — similar in size to wallboard and used as an under-layer for building exteriors such as brick, stucco and stone — were shipped to Tennessee, North Carolina, South Carolina, Florida, Georgia, Alabama and Virginia. A sales manager for the company said that the problem has been corrected by using a different glue to process the sheathing. Georgia-Pacific doesn’t know how many projects may be affected, but it is advising contractors with concerns to contact its Atlanta-based headquarters. Owners of completed buildings containing the defective boards will receive letters of indemnity and warranty from the manufacturer to protect them against possible damage if the boards can't be replaced. Questions about Dens materials can be answered bya G-P gypsum representative at 866-245-1076. To read the product alert, click here. NAHB Provides Tax Credit Developer With Answers on IRS Regulations“Can we include disabled people who aren’t 55 or older in our seniors low-income community without having to count them as part of the 20% under-55 exceptions?” That’s the question that Barbara Schoor, one of NAHB’s tax-credit developer members, asked the association last month. Her company, Community Investment Strategies, did not want to find itself on the wrong side of any federal regulations. She spoke with Carmel McGuire, director of the Housing Credit Group (HCG) — a group of developers, lenders and managers of low income housing tax credit properties. McGuire didn’t find a straightforward answer in the Internal Revenue Service regulations, so she went to the source, phoning her way through the bureaucratic maze until she connected with someone at IRS who could give her a clear answer. But because the issue had a number of different nuances, Schoor continued her information search at NAHB, consulting with Felicia Watson, for a legal analysis, Andrew Holliday for his take on the regulatory side, and Jeff Inks, for insights into related cdodes and standards issues. “I would have had to pay hundreds and hundreds of dollars to lawyers for that kind of research,” says Schoor. “The ability to call and get immediate, accurate answers is one of the best — and most underused — benefits of my membership in NAHB.” (By the way, the answer from the IRS was that “the preferences for ‘elderly’ and ‘disabled’ are not mutually exclusive. A low income housing tax credit property may legally permit residency only by the elderly and disabled persons of any age, and not be in violation of the Fair Housing Act.”) Labor Department Renews Construction Skills Training Program in NashvilleA partnership in Nashville between the Home Builders Institute's Project CRAFT (Community Restitution Apprenticeship-Focused Training) and the Davidson County Drug Court (DC4), the only residential drug court in the country, was recently awarded a one-year extension by the Labor Department that will carry it through 2005. “We’re pleased that Project CRAFT will help benefit Nashville youth for another year,” said Rep. Jim Cooper (D-TN), who represents the district in which the DC4 program is based. “It’s good to know this unique demonstration project is proving a national model in helping young people restart their lives.” “I was delighted to hear of the Labor Department’s decision to give Project CRAFT/Nashville this extension,” said NAHB President Bobby Rayburn, who is a member of the Home Builders Institute Board of Trustees. “It is one more example of how we continue to work with the department to build our nation’s workforce while helping young people start new careers in the construction industry.” Rayburn helped bring Project CRAFT to his home state of Mississippi earlier this year, where it operates in partnership with the state’s Department of Human Services. The DC4 CRAFT site was visited last month by Drug Czar John P. Walters, director of National Drug Control Policy, to see how the program is turning around the lives of young drug offenders. CRAFT students at DC4 are older than students in other CRAFT programs and go through a more intense curriculum that includes mentoring and extensive case management. During the one-year extension, further research will be conducted to document the success of CRAFT through a comparison of the wages, employment and recidivism rates of its enrollees with their counterparts outside of the program. Since Project CRAFT was established in 2002 through a grant from the Department of Labor’s Youth Offender Demonstration program, 60 students have received pre-apprenticeship, construction skills training and graduated to industry jobs paying an average starting wage of $8.30 an hour. For more information on Project CRAFT, e-mail Dennis Torbett at HBI, or call him at 800-795-7955 x8908. Fiberglass Door Finish Prevents Damage From Ultraviolet LightA recent research publication from Therma-Tru reports that engineers at the company’s Advanced Technology Center in Edgerton, OH, have developed specifically formulated fiberglass skins that solve weather-related door problems. Headquartered in Maumee, OH, Therma-Tru is a member of the National Council of the Housing Industry — the Supplier 100 of NAHB. In rigorous testing in environmental chambers, Therma-Tru exposed fiberglass materials and stains to extreme temperatures and moisture exposure and found that ultraviolet rays not only damaged coatings but also penetrated the topcoat and stain into the fiberglass material. To prevent the penetration of UV rays, light blockers were incorporated into the top coat and stain system. Together, they prohibit UV rays from breaking down the finish of Therma-Tru’s complete stain system. The manufacturer says that this system is unique to the industry and can withstand weathering over a long period of time. “Therma-Tru’s patented finishing system, specifically formulated for Therma-Tru’s fiberglass doors, provides consistent performance against harsh weather conditions as well as the effects of harmful ultraviolet light and has a five-year satisfaction warranty,” the report says. The finishing system was developed to be durable and apply easily for long-lasting good looks. The finish can also be applied several weeks — or in some cases, months — after installation, the manufacturer says. Two weeks is the standard recommended finishing period for wood doors. I Wannabe a Rich Land Baron, Too!Dear Tim, It seems to me the real money in our industry is in land development, not contracting. I’ve got a small nest-egg saved and am thinking of buying some land and doing a small subdivision. Your advice? — Scott B.; Oak Harbor, WA My advice is proceed with extreme caution. If it were easy, everyone would be doing it. The fact is, very few rookie developers succeed. Indeed, even well-seasoned professionals commonly fail or reap only marginal returns. In the hundreds of subdivisions and short plats I’ve been involved with, maybe 10% made close to the money the owners thought they would going in. Here’s why: Know your costs — ALL your costs. Most land divisions fail before they ever start because costs were not defined correctly going in. I find it unbelievable how many would-be developers scratch out a few numbers on a napkin, look at their "bottom line," grin and start dumping buckets of hard-earned cash into hopeless losers. For example, I know two semi-retired gentlemen — one an attorney and the other a real estate broker — who in the early 1990s teamed up and bought several large tracts of land — sight unseen! They did no due diligence, no feasibility studies, no environmental research — nothing. Instead, they hired engineers, surveyors and wetland consultants, expecting them to magically transform their pipe dreams into reality. When costs shot through the roof, years ticked by and still they had no approved lots to sell, they blamed the consultants, jurisdictional personnel and everyone else unfortunate enough to be involved. In reality, their failures were sealed the second they took title. Land cost has to be right. Ever wonder why so many "prime" pieces of real estate languish so long on the market? It is because smart developers invest only in bargains. Many consider land their only variable cost. Infrastructure and consultant’s costs will be what they are no matter what. So if a bargain is to be had, it’s got to be on the land itself. Know your end buyer. How can you be sure there will be a buyer in the end? Will you have the right product at the right time? I know of many beautiful new lots still on the market after several years, priced below any sort of profitability threshold. Be well-funded. I can’t count the number of plats that started well enough, had the potential to make money, but fizzled and failed because the owners ran out of cash. Land division projects are front-end cash intensive. You’ve got to have the staying power to cover consultants' costs, permit fees, infrastructure construction, environmental remediation, loan interest, etc. — all before seeing a penny of income. With the loan interest meter ticking, time becomes your enemy. My rule of thumb is, however long you think it will take to get approvals, double it, at least. Beware the woodwork! Are any neighbors upset at you? You never know who’ll come out of the woodwork to noisily and ferociously oppose your project. Some are backed by well-funded watchdog groups. Even if they can’t beat you in court, dragging you through the process may be enough to sink the project. Develop only flat, dry, non-vegetated, wildlife-inhospitable, non-historic, barren lunar desert. Anything else, and you run the risk of encountering an environmentally sensitive area and being barred from your mission. Of course, I exaggerate. But the point should not be underestimated. To summarize, though handsome returns are possible, certainly do expect a large amount of time, effort, cash input, and very likely, frustration. Tim K. Garrison P.E. of ConstructionCalc.com has authored books and short courses and lectures on topics relevant to builders. Got a technical or management issue? E-mail buildersengineer@constructioncalc.com. Tim reads every one.
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Make Your Connection With www.nahb.org Make your connection to the latest housing industry news and information with www.nahb.org — the official public and members-only Web site of NAHB. Log in today to register for educational seminars, meetings and networking events; find important economic and housing data; and learn the latest developments in NAHB’s efforts to promote housing. It’s all available to you 24 hours a day at www.nahb.org. Just click the "Member Log In" button to get started. If you are a member and need information about NAHB products and services, use the NAHB Staff Contact Directory to look up the direct telephone extensions for NAHB staff experts. |
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