Weekly Update: April 27, 2017

   We had a great time at the 30th Annual Fort Dodge HBA steak fry last week.  They served over 400 steaks!  It’s a very well attended event.  2017 HBAI President Tim Ruth (on left), Associate National Director Mike Farr (second from left), and HBAI Executive Officer Jay Iverson joined the group for the evening’s festivities.  There will be a housing boom there as 2,000 new jobs come to the area.
 
2017 HBA Iowa Legislative Recap

The 2017 Iowa Legislative session closed Saturday, April 22 after an all-night marathon.  Big issues like water quality, cannabis, and budget issues were still being worked on as they tried to find common ground before calling the session’s end.  Early in the session, lawmakers shortened the session by ten days to save some money and the per diem ended April 18.

Everyone had hoped for a smooth and easy session with Republicans controlling the House, Senate, and Governor’s office – such was not the case and much lower than expected revenues further complicated things.  Overall it was a monumental undertaking – with issues like abortion, tax relief, mental health and education funding, collective bargaining, medical marijuana, etc.

It was a great session for members of the Home Builders Association of Iowa and other construction association groups, real estate professionals, and workforce development planning coalitions.  Iowa’s 15-year Statute of Repose (the longest in the Country) was finally reduced after a seven-year battle.  Commercial applications will now have an eight year SoR and residential is now at ten years.  This will hopefully open up the insurance marketplace for our members, saving significant premiums with the lower exposure.

The Iowa Association of Realtor’s were victorious in their number one issue that was fought for the past four sessions – a first time homebuyer savings account.  Similar to Iowa’s 529 plan for education, it will allow individuals to put away $2,000 and couples $4,000 annually into an interest bearing savings account to be used for a down payment on a single family home.

Another great victory was one of Master Builder’s top priorities – a prohibition on government-mandated Project Labor Agreements.  This will be helpful for a number of HBAI members as well.

Water quality funding ended up in a stalemate between the House and Senate, so nothing was done for this session.  It will be back next year for sure.

The HBAI Legislative Committee registered in favor of 31 bills (or variations); opposed eight; and marked undecided on 18 others.  We successfully fought off a number of harmful bills, which always have the possibility of resurfacing.  It was the most successful legislative session in many, many years.  There were many pro-business, regulatory relief, and tax victories.  We will continue to adding to this list – the environment is ripe for taking this state to the next level with many more economic development incentives.  It’s all about the economy – when it’s strong, our members can’t help but be successful.

It was a great session and the level of coalition building and support from like-minded groups was exceptional.  Our members were exceptional – answering the call multiple times to contact their legislators with information that helped push our pro-construction agenda forward.  Thanks to everyone who helped make it possible.

 

Fight with Canada a Big Deal – Lumber Increases Average $3,600 More

This issue is not new, quite interesting, and unfortunately a big deal for our industry.  It has been going on for over 30 years and the trade agreement that has governed Canadian imports of softwood lumber since 2006 effectively expired at the end of 2016.  We’ve talked about it in several newsletter editions and prices are climbing.  About 30 percent of the softwood lumber used in residential construction comes from Canada.

We expect to see an increase in the cost of American-produced softwood lumber as well – just part of the market dynamics and it has happened before.  Because of the uncertainty surrounding a new trade pact, we’ve already seen a 22% spike in lumber prices since the beginning of the year. These price hikes have negative repercussions for millions of Americans. It takes about 15,000 board feet to build a typical single-family home and the lumber price increase in the first quarter of this year has added almost $3,600 to the price of a new home.

We would urge the U.S. and Canada to work cooperatively to achieve a long-term, stable solution in lumber trade that provides for a consistent and fairly priced supply of lumber.  We also need to increase domestic production by seeking higher targets for timber sales from publicly-owned lands and open up additional federal forest lands for logging in an environmentally sustainable manner.

The U.S. Department of Commerce this week announced countervailing duties of up to 24 percent to be imposed on shipments of softwood lumber from Canada, retroactive to 90 days. This action was taken at the behest of the U.S. Lumber Coalition, an alliance of domestic softwood lumber producers.

NAHB is also exploring the idea of leveraging our members’ buying power in the market. Staff is beginning to examine the feasibility of creating a national buying co-operative that uses our federation structure as the supply chain. State and local HBAs could opt in to such a co-operative.

Acceptable Abodes  

The March housing data numbers were good. While starts were down 6.8% compared to February’s outstanding weather-induced number, starts were up 9.2% compared to March 2016. Moreover, starts are up 8.1% year-to-date and were up about 8% each month this year compared to last. Single-family starts are up almost 6% YTD; multifamily starts, a surprisingly strong 15% versus a weak 16Q1. Starts should rise 6% this year. Solid.  Elliot F. Eisenberg, Ph.D

Member Advantage Discounts

Your 3-in-1 membership includes an exclusive program from the National Association of Home Builders (NAHB) called Member Advantage. This offers you ways to reduce expenses, increase efficiency, and maximize profits through discounts on products and services with leading, national companies. To learn more about these discounts and how to access the savings go to NAHB Member Discounts. Click here for an overview of all discounts.

Weekly Update: April 20, 2017

 

The Iowa City Area Development Group brought together stakeholders to discuss worker shortages in the construction industry last week.  It was an excellent dialogue and panelists included Bryan May from BirdDog HR, IC HBA President Andy Martin of Martin Construction, Micah Loveless from Master Builders of Iowa, and Joe Greathouse of Kirkwood Community College.

First-Time Homebuyer Savings Account Heads to Governor’s Desk

The Iowa Association of Realtors has worked tirelessly for several years to pass a first time homebuyer savings account (SF505 and lots of variations in between).  It passed the House Tuesday evening 87-11.  HBAI was supportive of the bill and attended subcommittee hearings on the issue.  There was a fiscal impact that potentially could have killed it again.

After it’s signed by Governor Branstad, an individual (on or after January 1, 2018) may open an interest-bearing savings account for the purpose of financing the purchase of a single-family residence in Iowa.  It’s $2,000 per year for an individual or $4,000 for married taxpayers.  There is a ten year cap, so you can only do $20k/$40k.  A great job and a big thanks to everyone who helped get this passed.

Water Quality Rule Making – We Need Your Input on GP 1, 2 and 3

Please see the overview and instructions below for the details on this water quality rule making proposal to reissue 3 NPDES general permits for certain storm water discharges for another five years.  Check out the folllowing documents:

  1. The draft General Permit #1 for storm water discharges associated w/industrial activity in tracked changes
  2. The draft General Permit #2 for storm water discharges associated w/construction activity in tracked changes
  3. The draft General Permit #3 for storm water discharges associated w/industrial activity for asphalt plants, concrete batch plants, rock crushing plants, and construction sand and gravel facilities in tracked changes
  4. A 2-page summary of the proposed changes to the permits
  5. The draft Notice of Intended Action
  6. The draft Fiscal Impact Statementdated 1/24/2017
  7. DNR Responses to comments at 9/29/2016 Stakeholder Meeting

What and why?

This rule proposal is intended to reissue 3 general permits for the storm water discharges identified above for another 5 years.  These 3 permits are set to expire in October 2017.  Under state rules in Iowa Administrative Code, reissuance of NPDES general permits must occur through the rule making process consistent with the Administrative Procedures Act (APA).   The current permits are proposed to be updated consistent with newer federal requirements and other minor clarifications identified through stakeholder outreach.

Outreach

Over the last year the DNR has reached out to individual stakeholders and held an open stakeholder meeting on September 29, 2016 on this proposal.  The key issues discussed at the meeting were documented and responses provided (See attached DNR Responses to Comments Received at 9/29/16 Stakeholder Meeting).

Please let us know if you’re comfortable with this proposal beginning the formal rulemaking process.  We know this may be a lot of information to absorb and process so we’re hoping to hear from you by April 28th.  Also, we will be happy to meet and walk through this with you, if needed.

Young Adults and the Construction Trades

NAHB conducted a national poll of young adults ages 18 to 25 to find out how this age group feels about a career in the construction trades. The majority of young adults (74%) say they know the field in which they want to have a career.  Of these, only 3% are interested in the construction trades.

Most of the young people interested in the trades say the two most important benefits of this career choice are good pay (80%) and the attainment of useful skills (74%). Less than half cite as benefits that the work is seasonal (15%) or that it does not require a college degree (37%).

The 26% of respondents who do not yet know the career path they want to take got a follow-up question about the chance they might consider a number of fields (construction trades being one of them) using a scale from 1 to 5, where 1 meant ‘no chance no matter the pay’ and 5 meant ‘very good chance if the pay is high.’ Construction trades got an average rating of 2.1, with 63% of undecided young adults rating it 1 or 2 (no or little chance regardless of pay) and 18% a 4 or 5 (good to very good chance if pay is high).

The 63% of undecided young adults who indicated there was no or little chance they would consider a career in the trades no matter the pay were prodded about the reasons for their resoluteness. The two most common reasons are wanting a less physically-demanding job (48%) and the belief that construction work is difficult (32%).  They were then asked if there was any compensation level that might entice them to reconsider a career in the trades.  For slightly more than 20%, that number is either $75,000 or $100,000, but for the plurality (43%), there is no amount of money that could make them give the trades a second thought.

A complete research paper on this topic can be found here, including an analysis of government data on actual wages for construction occupations relevant to the home building industry.

Iowa Workforce Development to Add More Business Reps   

The Iowa Workforce Development Board will increase its number of voting members, which may help expand postsecondary education programming.  Presently, the Iowa Workforce Development Board, which facilitates grants and programs designed to help local employers, has nine seats for voting members, all of whom are appointed by the governor. The board also has 12 “ex officio,” or nonvoting, members, which include state lawmakers, higher education representatives, a labor union representative and others.

Following Gov. Terry Branstad’s approval of HF572 on Thursday, the board’s voting membership under the new structure will include 17 business members, four labor members and two representatives of community-based organizations.

If you are interested in serving, please email HBAI Executive Officer Jay Iverson or go to the state’s website where you can apply for any gubernatorial appointments.

What Does the New Statute of Repose Law Mean for Me?

On April 13, 2017, the Governor signed SF413 into law, which is a law reducing the Statute of Repose applicable to construction claims. This is great news for the Iowa construction industry.  This law will reduce Iowa’s current 15-year Statute of Repose for all claims arising out of a defective or unsafe condition of an improvement to real property to 8 years for commercial construction and 10 years for residential construction. Please note that the law has the following exceptions:

  • claims regarding nuclear power plants, interstate pipelines, and fraud/intentional misconduct claims will maintain a 15-year repose period, and
  • if the unsafe or defective condition was discovered within one year of the expiration of the new statute of repose period, then the repose period would be extended for one additional year.

When Does the New Statute of Repose Law Take Effect?

The new statute of repose law will take effect on July 1, 2017. The law does not have any retroactive effect. In addition, the law contains an express provision regarding applicability:

Sec. 2. APPLICABILITY. This Act does not apply to an improvement to real property in existence prior to the effective date of this Act or to an improvement to real property, whether construction has begun or not, that is the subject of a binding agreement as of the effective date of this Act.

This means that, if the construction project has not begun as of July 1, 2017 and if your company’s construction or design agreement has not yet been executed as of July 1, 2017, then the new, shorter statute of repose will apply to your company. Conversely, the old 15-year statute of repose applies if either the “improvement to real property” is already “in existence” as of July 1, 2017, or your company has already signed a “a binding agreement” regarding the construction project as of July 1, 2017 regardless of whether construction on the project has begun.  Please contact attorney Jodie McDougal should you have any questions regarding this law.

   Over 120 members of the Cedar Rapids Housing and Building Association and/or the Greater Iowa City HBA met together last week for a social event at the University of Iowa Community Credit Union headquarters in North Liberty.  It’s an annual event and is a great networking opportunity between the two organizations.