Weekly Update: November 2, 2017

   The Business Record held an interesting power breakfast last week regarding “The March to 1 Million” – talking about the issues and challenges as the population of the Des Moines metro approaches the one million mark.  Panelists included Gene Meyer (Greater Des Moines Partnership), Angela Connolly (Polk County Supervisor), Liesl Eathington (Iowa State Economist), Elisabeth Buck (United Way of Central Iowa), and Zachary Mannheimer (McClure Engineering Company).  HBA of Greater DM Executive Officer Dan Knoup and HBAI Executive Officer Jay Iverson were also in attendance.

Fighting for the Home Ownership Tax Incentives

Our Federation continues to decry the House of Representatives’ rejection of a homeownership tax credit that would include both mortgage interest and property taxes to benefit up to 37 million additional home owners, and has served notice that we plan to deploy all necessary resources to ensure that the middle-class tax benefits of homeownership are part of this week’s planned release of a tax reform package.

Our message is being heard loud and clear, with front-page stories in national media outlets.

“The National Association of Home Builders know how to demolish things, and on Saturday they decided to take on a new project – the House Republican tax bill,” said the Washington Post.The House plan to double the standard deduction, end personal exemptions and repeal the deduction for state and local taxes “is a bad bill for the housing sector,” NAHB CEO Jerry Howard told Fox Business.  “All the resources we were going to put into supporting are now going to go into opposing the plan,” Howard told Politico.

The House is set to release its proposal Wednesday. NAHB will continue to keep members informed of its progress. “We will not rest until Congress guarantees us that homeownership will remain as a centerpiece of our tax policy,” said NAHB chair Granger MacDonald.

Note from Granger MacDonald

Here is a note from NAHB Chairman Granger MacDonald:  I want to update you on recent developments regarding tax reform.  NAHB’s focus on tax reform has been to ensure that housing remains a central component to the next generation tax code.  We have been concerned that the plan under development would marginalize the existing homeownership tax incentives by sharply reducing the number of taxpayers who itemize.  Because only taxpayers who itemize can claim the mortgage interest and property tax deductions, the Republican tax plan would have negated the benefits of the homeownership tax incentives for millions of middle-class American homeowners.

That is not an acceptable outcome.  In response, the NAHB Executive Board granted NAHB flexibility to explore other means to deliver the homeownership tax incentives, and we proposed to the House and Senate a broad homeownership tax credit that would include both mortgage interest and property taxes.  The benefit of this approach is up to 37 million additional homeowners, who do not currently itemize, could benefit from a homeownership tax incentive, and current itemizing homeowners would continue to see a meaningful tax benefit.

We negotiated with the House of Representatives in good faith, and we were given assurances that a robust, broadly claimed homeownership tax credit would be part of their tax reform package that is scheduled to be released on November 1.  Unfortunately, the Speaker of the House personally contacted NAHB CEO Jerry Howard this weekend to inform him that our tax credit proposal would not be part of the bill.

Instead, we expect the House to release a bill where only a small number of largely higher-income homeowners continue to itemize and claim a deduction for their home, while millions of middle-class homeowners completely lose their housing tax incentives.  As a result, NAHB will strongly and aggressively oppose the House tax reform bill.

We will not rest until Congress guarantees us that homeownership will remain as a centerpiece of our tax policy.

Key Vote:  Support for H.R. 2936 – The Resilient National Forests Act of 2017

A letter was sent on your behalf to Speaker Ryan and Minority Leader Pelosiin support of H.R. 2936 The Resilient National Forests Act of 2017.  This will modernize the U.S. forest management system by encouraging better multi-use forest management practices for national forests.  Most importantly to our members, it will increase the supply of federal timber products.

Protect Your Business:  Construction Contracts & Law Live Online 

If your home building or remodeling business is too small to hire full-time legal staff, you may also be finding it difficult to devote the time needed to get a grip on the legal documents that are part and parcel of a business no matter what the size.  You’re not alone. That’s why NAHB offers Construction Contracts & Law Live Online, taught in live webinar format over three consecutive Tuesdays, Nov. 7, 14 and 21.

This course provides a step-by-step explanation of how contracts sustain positive customer and supplier relations, provide for resolution of disputes and minimize the risk of litigation.

You’ll also learn about contracts specifically recommended for builders and remodelers: sales agreements, construction contracts, remodeling contracts, warranties and subcontractor agreements, including mandatory and optional provisions.  The course will also help you:

  • Identify additional resources related to construction law
  • Explain how contracts sustain positive customer and supplier relations, provide for resolution of disputes and minimize the risk of litigation
  • Earn continuing education credits if you hold an NAHB designation

Oakwood Homes in Denver Offers Free Homebuilding Academy

Here is an interesting twist – a Denver company donates $1k for each of the homes it sells (1,356 this year) to their Foundation, which is designed to bring students into the trades.  The students are some of the first to enroll in an eight-week “boot camp” at the Colorado Homebuilding Academy, a nonprofit organization that opened this year. The course is free, founded and funded by Oakwood Homes, a Denver-based homebuilder.  Check out the article here.

“Every single year the labor situation has basically gotten worse,” said Patrick Hamill, CEO of Oakwood. “People retire, and there’s nobody to replace them, and as an industry, ultimately we’ve just done a lousy job marketing our opportunities to young people.”

So Oakwood, which is owned by Berkshire Hathaway, started a foundation to fund the academy and donates $1,000 for every house it closes. This year, Oakwood expects to close on 1,356 homes. In its first year, the program will run 11 boot camps, training approximately 200 workers. Next year, company officials hope to double that.

“Trade associations are involved, other homebuilders are involved, because we all know if we don’t do this, we’re not going to have a labor force to meet the needs of our industry,” said Hamill.

   Here is an interesting graphic – the push pins represent the students, schools, and participants in attendance at the Skilled Trades dinner with Mike Rowe in September.  Well represented across the state!

New OSHA AppointmentPresident Trump has appointed Scott A. Mugno of Pennsylvania to head up the U.S. Occupational Safety and Health Administration (OSHA) as assistant secretary of Labor, Occupational Safety and Health.Mugno comes from the private sector as the vice president for safety, sustainability and vehicle maintenance at FedEx Ground in Pittsburgh, Pa. and he previously served as the managing director for FedEx Express Corporate Safety, Health and Fire Protection in Memphis, Tenn.His responsibilities in both those positions included developing, promoting and facilitating the safety and health program and culture and he was twice awarded FedEx’s highest honor, the FedEx Five Star Award, for his safety leadership at FedEx Express.”OSHA has needed leadership in place to be able to address issues of high importance to home builders and remodelers, such as providing compliance assistance for the silica rule.” said Robert Matuga, assistant vice president for labor, safety and health at NAHB. “NAHB and the members of our Construction Safety and Health Committee look forward to working closely with the assistant secretary to continue improving workplace safety in the home building industry.”

Early Pricing for the Builders’ Show Ends Nov. 10

Get a great deal on IBS registration when you register early. From now until Nov. 10, you can save significantly on full IBS registration, which gives you access to 140+ education sessions and all the exhibit floors. Another option-the expo pass-includes an all-access pass to the exhibit floors.

Plumbing Diverticulitis…

Weekly Update: October 26, 2017

   The HBA of Des Moines had a networking after hours at Taco Hangover last week – it was really well attended.  Having a great time eating, drinking, and socializing is always in order.

IBS Deadlines, Cheap Flights, Iowa Hotel Block Ends Monday

The 2018 International Builders’ Show® (IBS)will be here before we know it.  You might check on flights soon – HBAI EO Jay Iverson just booked his for $123 round trip with a direct flight on Allegiant out of Des Moines.  The Iowa room block at the Marriott Springhill Suites closes next Monday, October 30. You can find more information here regarding hotel and travel to Orlando.  The early bird registration closes November 10.  As of today, there are about 230 Iowans registered.

Silica and You

Full implementation of the new silica rule began last Monday, October 23, and the Occupational Safety and Health Administration (OSHA) has now issued additional “interim” enforcement guidance for regional OSHA administrators. A final compliance directive is under review and not yet released.  Earlier this month, we spoke with home building safety compliance specialist Dan Johnson for advice on complyingwith the new standard, which has far-reaching effects on the worksite.  NAHB has also issued a Silica in Construction Toolkit that contains information from manufacturers on tools and accessories intended to be used to meet the silica dust exposure restrictions.

Understanding OSHA Enforcement

Regional OSHA administrators will use newly issued interim guidance released Oct. 19 to enforce the silica rule, and so can be helpful for home builders so that you know what the inspectors are charged to look for and enforce in detail.

The memorandum provides inspection and citation guidance for Compliance Safety and Health Officers, and it includes flow charts to assist compliance officers with evaluating employers’ control methods.  If you review the interim guidance, you’ll see there are specific directives pertaining to the following:
  • Respiratory Protection
  • Housekeeping Practices
  • Written Exposure Control Plan, or ECP
  • Medical Surveillance
  • Communication of Hazards
Builders operating in OSHA state plans will need to check with their local administrators for further information on the silica standard in their states.  HBAI has received several phone calls about it and will continue to share information and guidance on complying with the silica rule as it becomes available.

Gov. Reynolds receives national Stand Up for STEM award

Gov. Kim Reynolds received the national Stand Up for STEM award Tuesday at the Million Women Mentors Summit & Awards in Washington, D.C. This is the first time the award has been presented at the national level.

The Stand Up for STEM award recognizes individuals who go above and beyond to include girls and women in conversations about STEM. Award presenters cited Gov. Reynolds’ ability to make a difference to the STEM movement in the United States through her deep commitment, enthusiasm and expertise.

STEM-related employment is projected to increase 16 percent from 2010 to 2020, totaling more than 8.5 million jobs. More than 75% of STEM workers are male. About 25% are female-even though women fill close to half of all jobs in the U.S. economy.

Female high school students are significantly less likely than their male counterparts to pursue a college major or career in STEM. Only 15 percent of female high school students will head down a STEM career path, as opposed to 44 percent of male high school students.

“We have to change that mindset,” Gov. Reynolds said. “Girls and young women need to understand the vast opportunities that await them in STEM-related careers. We must join together to inspire, nurture and engage America’s girls and young women to passionately pursue STEM careers.”

Multi-Employer Worksites

Did you know that just because you’re exempt from most Recordkeeping requirements if your company employed ten or fewer employees during the last calendar year doesn’t mean that you’re exempt from OSHA regulations? You’re not! This is commonly misunderstood by contracted construction companies and their host employer. Citations are generally issued to the “Exposing Employer”, or the employer that knowingly exposed employees to a hazard, and/or “Creating Employer”, or the employer that created the hazard itself. The “Controlling Employer” has supervision the other employer categories. Do you fall in to either of these categories?

In December 2015 at an apartment complex construction site in Lincoln Nebraska, the U.S. Department of Labor’s Occupational Safety and Health Administration found construction contractors jeopardizing the safety and health of workers. The agency’s inspection resulted in citations for five companies working at the three-building apartment complex totaling over $115,000. The Controlling Employer was fined in addition to the subcontractors.

HBAI and local HBA’s may be partnering with the Iowa Illinois Safety Council to provide training opportunities to lessen your exposure, keep you out of trouble, and provide a safe environment for your employees and subcontractors.  Stay tuned…

New Home Contracts Up

Contracts for new home sales expanded by 18.9% in September to a 667,000 seasonally adjusted annual rate, according to estimates from the joint data release of HUD and the Census Bureau. The solid reading in September returns new home sales to the positive growth trend it has been on for several years. This expansion is supported by ongoing job growth and improving household formations, as well as tight existing home inventory.

Despite some volatility in the month-to-month sales figures, September marks the fifth month in 2017 at an annual sales pace of more than 600,000. New home sales through September are running 8.6% higher than this time in 2016, in line with NAHB’s forecast.

Inventory held steady in September at 279,000 homes for sale. The current months’ supply stands at a healthy level of 5. Given tight existing inventory, more new homes are required to meet housing demand.

The most recent data also indicate a growing share of homes not-yet-started in builder inventory. For example, on a year-over-year basis, homes under construction in inventory have increased by 15% over the last year. Completed, ready-to-occupy homes (there are only 62,000) are up only 5% since September 2016. In contrast, homes not-yet-started listed in inventory have increased 24%. Sales of homes not-started construction have also been rising, increasing to a 236,000 seasonally adjusted annual rate in September. These factors are consistent with positive housing demand.

Pricing increased in September. Median new home sales price (price of the home in the middle of the distribution) rose to $319,700. Average home price jumped to $385,200. Managing rising construction costs in the months ahead will be a key challenge for housing affordability, as input costs increase.

Regionally, there was sales growth in all regions. On a year-to-date basis, home sales are up 28% in the Northeast, up 12% in the West, 6% higher in the South, and up 4% in the Midwest compared to this time in 2016.

Rick Parrino SBCA Hall of Fame Honors

Rick Parrino of Plum Building Systems was just elected into the Structural Building Components Association Hall of Fame.  A very well deserved honor and HBAI is proud to have Rick and Plum as a member.  HBAI works very well together with the SBCA, especially on legislative and legal issues.

Total Taxes 

In 2015, the top 1% of individual filers, those with AGIs (adjusted gross incomes) of at least $480,930, earned 20.65% of total AGI and paid 39.04% of all federal income taxes. The top 5% had AGIs of $195,778 and paid 59.58% of total income taxes and the top 10%, with AGIs of more than $138,030, paid 70.59% of taxes and earned 47.36% of all AGI. These numbers exclude payroll taxes.