Weekly Update: February 9, 2017

HBA Iowa Judical Meeting

   There was a Senate Judicial subcommittee meeting set for this morning regarding SSB1010, but it was cancelled.  We took advantage of our great crew though and met with subcommittee Chair Senator Julian Garrett (R) District 13.  He had a bunch of tough questions, but it turned into an opportunity.  Thanks a bunch to those individuals who helped us out (left to right) Larry Heisler (Reynolds & Reynolds Insurance); Dan Knoup (DM HBA executive officer); Rachel Flint (VP at Hubbell Homes); Edward Origer (VP at McAninch Corp); David Adelman (Hubbell lobbyist); Senator Garrett; and HBAI 2nd Vice President Scott Webster (Premier Homes Quad Cities).  Not pictured are Iowa Association of Realtors Government Relations Director Jen Kingland and HBAI Executive Officer Jay Iverson.

It’s Time Now for Repose Reduction on Senate Side

We’ve been asking you for the past few weeks to contact your representatives in the Iowa House regarding HF3, reducing the state Statute-of-Repose from a mind boggling 15 years to eight.  Now it’s time to begin working on the Senate version SSB1010.  It’s in the Senate Judiciary Committee and we met for the first time earlier this morning.

If you are a constituent in any of these districts, your message will go a very long ways.  Here is the list of Senate Judiciary Committee members:

Republicans

Chairman Brad Zaun, Urbandale, Grimes, Johnston District 20

Dan Dawson, Council Bluffs, District 8

Jeff Edler, Marshalltown, Tama, Toledo, District 36

Julian Garrett, Winterset, Indianola, Des Moines District 13

Charles Schneider, Waukee, Clive, West Des Moines, Windsor Heights, District 22

Jason Schultz, IDA, Monona, Crawford, Harrison, Shelby counties District 9

Tom Shipley, Pottawattamie, Cass, Adams, Union counties District 11

Amy Sinclair, Jasper, Marion, Lucas, Clarke, Decatur, Wayne counties District 14

Democrats

Rich Taylor, Washington, Henry, Lee counties District 42

Tony Bisignano, Des Moines District 17

Nate Boulton, Des Moines, Pleasant Hill District 16

Kevin Kinney, Johnson, Keokuk counties District 39

Janet Petersen, Des Moines, District 18

The message is the same as it was for the House.  If you can add a personal story or way to express that this affects you directly, that would be better than copying and pasting the following talking points.  These are here to help you add to the argument:

Address them as “Senator (last name)”

  • Nationally 93% of all claims happen by month 96 and over 99% by 120 months.
  • Reducing the statute-of-repose will spur more development and support more jobs.
  • Surrounding states (MN, WI, SD, NE, IL, MO, KS) all have ten years of less.  We are at a disadvantage when competing with border cities.
  • From a small business standpoint, we believe that our members could see a 20% reduction in insurance premiums due to a competitive environment.  Nearly 70% of the insurance companies stopped offering builders risk insurance products during the recession and as a result of our 15 year Repose.
  • A large insurance company is called 2/10 Warranty group – two year limitations and ten years repose is the national standard.  They once had a five year extension, but it failed miserably.
  • It will help with housing affordability
  • Support HF3 as it is written, covering all real property.
  • Iowa is out of the mainstream for construction litigation claims.  We have a 15 year statute of repose for improvements to real property (i.e. buildings, highways, bridges, etc.), which is the longest in the nation.  Just compare us to neighboring states – all are at ten years or less, plus many other states have recently reduced theirs to as low as four.
  • Most claims occur within the first three years.  The reduction will have very little impact on the consumer.
  • Cases are difficult to manage at the end of that 15 years – people die, companies are sold or closed, documents are lost, memories fade, etc.
  • These laws encourage timely resolution of disputes and promote justice by disposing of old claims and shifting liability to those in control of the property.
  • Without these laws construction professionals could be liable for their work indefinitely.
  • A shorter statute of repose would be a significant benefit to construction professionals in Iowa. An eight-year statute of repose perhaps strikes a better balance between the need for the law to afford a redress for an injury and the need to limit liability for construction professionals after a certain amount of time has passed.
  • A reduction in the repose period would not impact construction project owners’ ability to assert breach of contract, breach of warranty, fraud or any other claims.
  • Studies have shown that bad building practices and deficiencies can reasonably be discovered within 5 years.  Certainly there are instances in which it takes longer, but the question remains as to what is a fair and reasonable timeline.  15 years in not fair and reasonable.

   HBAI President Tim Ruth, Executive Officer Jay Iverson, and past President Mike Farr spoke to over 70 members of the Dubuque HBA Tuesday evening.  It was a great meeting and we enjoyed getting together with the organization, which is not a part of our Federation.  We conveyed a myriad of reasons why they should be a part of our group.  A special shout out to long-time HBAI member Mark Gudenkauf (Mark Gudenkauf Construction in Dubuque) for sharing his reasons for belonging.

HBAI Legislative Committee February 3 Declarations

SF156Minimum Wage – This bill increases the state minimum hourly wage to $8.75 as of July 1, 2017, $9.75 as of January 1, 2018, and $10.75 as of January 1, 2019.  Monitor

SSB1009 & HF134Residential Occupancy – An Act relating to the authority of cities to regulate and restrict the occupancy of residential rental property.  This bill relates to the authority of cities to regulate and restrict the occupancy of residential rental property. The bill provides that a city shall not, after January 1, 2018, adopt or enforce any regulation or restriction related to the occupancy of residential rental property based upon the familial or nonfamilial relationships of the occupantsMonitor

SSB1013Updating IRS Code ReferencesDecoupling From Certain bonus depreciation – updating the Code references to the Internal Revenue Code and decoupling from certain federal bonus depreciation provisions, and including effective date and retroactive applicability provisions. For

SSB1014 Updating IRS Code ReferencesDecoupling From Certain bonus depreciation – Similar to SSB1013.  Monitor

SSB1026Economic Development Authority Powers including Apprenticeship Training Programs – This bill relates to the powers and programs of the economic development authority, including apprentice eligibility for purposes of calculating financial assistance awards under the apprenticeship training program.  Undecided.

SSB1034Water Quality/Wastewater Tax – This bill relates to water quality by modifying an existing wastewater treatment program, establishing new water quality programs, providing for appropriations from the rebuild Iowa infrastructure fund and making other appropriations, and creating a water service excise tax and related sales tax exemption.  Monitor

SSB1035 & HSB65Workforce Housing Tax Incentives – This bill relates to the workforce housing tax incentives program by increasing the maximum dollar amount that may be allocated to the program, by requiring that a certain dollar value of tax credits be allocated to housing projects in small cities, and by increasing the percentage for computing tax credits for such housing projects. The bill raises the annual allowable tax credits allocation under the program from $20 million to $30 million, but maintains the economic development authority’s (authority) $170 million aggregate tax credit limit. The bill requires the authority to allocate at least $10 million in tax credits to housing projects in small cities and to administer such reserved allocations separately.  Monitor

HF121Employee leave for time off and vacation leave – The bill provides that if an employee is suspended or terminated, upon request the employer must pay all earned wages, now including paid time off, by the next regular payday.  This bill provides employee leave by providing for time off and vacation leave. The bill relates to payments for accrued vacation time and for accrued paid time off for all employees who are terminated or suspended. Current law requires an employer to pay accrued vacation pay to a terminated or suspended employee only if the employer has a policy, procedure, or contract that requires the employer to do so. The bill defines “paid time off” as a benefit allowing an employee to take time off from work with pay without regard to the reason the employee chooses to take the time off. “Paid time off” is also added to the definition of “wages”.  Monitor

HF122Geothermal Tax Credit – This bill creates a geothermal tax credit available against the corporate income tax equal to 10 percent of the expenditures made by a taxpayer for qualified geothermal energy system property if depreciation or amortization is allowable to the taxpayer under the Internal Revenue Code with respect to the property, and if the property is installed on or in connection with a structure located in Iowa.  Monitor

HF123Geothermal Tax Credit – This bill creates a geothermal tax credit available against the franchise tax equal to 10 percent of the expenditures made by a taxpayer for qualified geothermal energy system property if depreciation or amortization is allowable to the taxpayer under the Internal Revenue Code with respect to the property, and if the property is installed on or in connection with a structure located in Iowa.  Monitor

HF131Housing Assistance from Veterans Trust Fund – This bill provides that moneys in the veteran’s trust fund may be expended, upon a majority vote of the state commission of veteran’s affairs, for housing assistance for the benefit of veterans and the spouses and dependents of veterans.  This bill provides that moneys in the veterans trust fund may be expended, upon a majority vote of the state commission of veterans affairs, for housing assistance for the benefit of veterans and the spouses and dependents of veterans.  For

HF135Power of Attorney with Respect to Real Property – This bill provides that, unless a power of attorney otherwise provides and subject to certain restrictions contained in Code section 633B.201, an agent that has been granted general authority with respect to real property is authorized to relinquish any and all of the principal’s rights of dower, homestead, and elective share.  Monitor

HF158Common Interest Communities – The bill provides that it is the public policy of the state that the management and affairs of common interest communities be conducted openly and that the new Code chapter is to be construed to provide open access to the management of the common interest community for the unit owners.  This is really long and in-depth.  Against

HSB60City and County Development Rights – Under the bill, a city or county may, by ordinance or amendment, establish development rights arising from estates in land as a part of the political subdivision’s zoning regulations. Such development rights are declared to be severable and separately conveyable from the estate in fee simple from which the development rights are derived. Monitor

HSB62Mechanics’ Liens and Public Construction Liens – Under current law, when a mechanic’s lien is for material furnished or labor performed in the construction, repair, or equipment of any railroad, canal, viaduct, or other similar improvement, the lien does not attach to an easement or right-of-way. The bill provides that such a mechanic’s lien does attach to an easement or right-of-way.  Undecided

Scholarship Deadline

The HBAI Education Corporation annually awards scholarships to students entering the building trades.  If you know of a student, the deadline to apply is March 31.  Follow this link for more information and the application.

School Age Children Per Home Averages

Across the United States, builders are often charged impact fees by local governments to help pay for infrastructure associated with children in new residential developments entering the public education system. Therefore, builders have an interest in ensuring that the number of school age children in new developments is accurately estimated. Local governments also benefit from this data because it can help better reconcile education costs.

Using data from the US Census Bureau’s American Community Survey (2015), the National Association of Home Builders (NAHB) tabulated the average number of school age children (defined as children between the ages of 5 and 18) in housing units. The tabulations also include breakdowns by different types of residential units, such as single-family detached and multifamily. It also includes breakdowns by household characteristics such as mobility and tenure.

The most prominent finding from the report is that, on average, there is less than one school age child per housing unit in the US: approximately 41 children per 100 housing units (all occupied units and vacant units). Other important findings from the analysis include the following:

  • Owner-occupied units have fewer children than renter-occupied units: 45.6 children per 100 owner-occupied units compared to 49.6 children per 100 renter-occupied units.
  • For most residential types, there are fewer children among households moving into new construction compared to those moving into existing units. In newly constructed single-family attached units there is an average of only 30.2 children per 100 units, compared to 45.2 per 100 existing units. In newly constructed multifamily developments, there is an average of 21.9 children per 100 units, compared to 26.3 per 100 existing units (as seen in Figure 3).

Figure 3: Average Number of Children in New and Existing Construction by Residential Development Type

  • Multifamily units with 1 bedroom or less have the least amount of children compared to multifamily units with more bedrooms: 7.7 children per 100 one bedroom multifamily units, compared to 71.6 children per 100 three or more bedroom multifamily units.
  • A regional breakdown shows that, on average, many states in the Northeast region, including Vermont, Maine, and New Hampshire, have the fewest number of children living in housing units.

For the complete report, including detailed tabulations of the average number of school age children in the US and by state, please click here: NAHB 2017 February Special Study.

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