The HBA is In Good Hands in 2009-2010

If you attended the HBA Christmas Party last week, you had an opportunity to hear in detail my list of "thank yous" to all of those members and volunteers who helped me so much throughout my tenure as HBA President. I won't repeat them all here but I do want to simply say it has been a privilege serving the members of this organization in this capacity. I'm very proud of what we've accomplished and I know that we are extremely well situated for success in 2009 with our new president, Rusty MacLachlan, at the helm.

I've been at a number of leadership meetings in the last week with Rusty and many of our incoming committee chairmen and board members. Rusty has an incredible grasp of both the challenges and opportunities our industry faces at the local, state and national levels. Trust me when I say, he has very detailed plans and the strategic focus necessary to help our industry come through the next two years even stronger. Please engage in HBA activities and events as much as possible in the coming year and make certain you take every opportunity to communicate your ideas to the volunteer leadership and staff. They want to know what you need from your association.

Finally, I want to wish everyone a very Merry Christmas and a Happy New Year. I am already enjoying the holiday - including my uniquely decorated tree (see photo at right) which features my new string of "Bass" lights. This is one good looking tree -- reminds me that fishing season is just around the corner.

Sincerely,

Kevin Clingan

Now, Officially,

PAST President

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State Program Will Leverage Federal Tax Credit to Provide Downpayment Assistance

On Wednesday, November 19, 2008 the Missouri Housing Task Force, on which I serve, held their third meeting in Jefferson City at the State Capitol Building. The Task Force received public testimony from the Missouri Housing Development Commission, National Association of Home Builders, Federal Reserve Bank of St. Louis and the Missouri Real Estate Appraisers Commission.

Missouri Housing Development Commission Executive Director Pete Ramsel discussed a new program within the state agency entitled “Tax Credit Advance Loan Program” that aims at leveraging the $7,500 federal tax credit to provide down payment assistance. According to Ramsel, the new program would enable first-time homebuyers in need of closing cost and down payment assistance to borrow funds on a short-term basis in anticipation of the federal income tax credit from the recently authorized tax credit by the federal government. Without this temporary loan many homeowners cannot buy a house and benefit from this tax credit incentive for first time homebuyers. The MHDC quickly worked to create this program at the request of the Task Force as concerns were noted at the last meeting that there was no way to monetize the federal credit. MHDC Commissioners approved the program at their most recent meeting and they hope to have it operation by the beginning of '09.

National Association of Home Builders Senior Economist Elliot Eisenberg testified on the cost of regulation on the housing industry and Missouri economy. Eisenberg noted that in 2007 the home construction industry accounted for 4% of the gross state product. The home building industry generated $8.4 billion in economic activity through 21,500 new construction permits. In addition, Eisenberg noted that for every 100 homes constructed a community receives $10.6 million in local income and generates $1.3 million in local tax revenues. Eisenberg stated that overregulation often prices potential new homeowners out of the market, which in turn further slows a depressed economy.

Federal Reserve Bank of St. Louis Assistant Vice President William Emmons discussed the issues facing the mortgage lending industry and the severity of the current economic situation. Emmons noted that the current crisis is major, but he does not believe we are heading into a recession.

Emmons blames Wall Street manipulation of the marketplace, failure by the federal government to properly regulate lenders, homebuyer financial illiteracy, high pressure mortgage brokers and irresponsible lenders for the mortgage crisis. Emmons discussed how the credit-default swap occurred and the drastic implications it brought on the mortgage lending industry. Emmons expects the federal government to continuing prosecuting lenders, brokers, realtors, builders, appraisers and borrows for several years to come.

Emmons stated that too many consumers did not save enough money and had no buffer for a financial disaster and were unprepared when the economy slowed. Emmons stated that the Federal Reserve is aware of cases were lenders subjected themselves to a 100% loan to value ratio, which is unacceptable.

Emmons stated that the key to recovery will be Missouri’s ability to find sources of growth through jobs such as manufacturing. The Federal Reserve believes Missouri banks’ credit quality has declined, but overall they are safe and sound. Emmons concluded by stating that Missouri’s new home construction industry has collapsed and he does not see it recovering anytime soon.

MHDC Executive Director Pete Ramsel asked Emmons if Fannie Mae and Freddie Mac will recover and be back in business for the purchase of tax free bonds and low income housing tax credits. Emmons stated that he expects Fannie Mae and Freddie Mac to return to the market soon, but under a substantially different business model.

Missouri Real Estate Appraisers Commission provided an update on their recent dealings with an increased amount of complaints against licensed real estate appraisers. The Commission noted they have received a record number of complaints in 2008 and that a majority of the complaints are being submitted by the mortgage lending industry. Discussion took place among members regarding multiple appraisals for one property and the potential of lenders to shop from several appraisers for their preferred property valuation. Task Force Member David Griege of Paramount Mortgage quickly dispelled this possible scenario and stated that lenders always reserve the right for multiple opinions on property appraisals. Further, central Missouri Appraiser Ann Nunn Jones stated that licensed appraisers all have different ways of appraising property and it is seldom that two appraisers will come to agreement on an exact amount and that property valuations can be higher or lower for countless reasons.

Kevin Clingan

HBA President

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A Real Education

With a little over a month left as president, staff asked if I would reflect back and comment on all that has happened, and what I have gotten out of the last two years.

I have been privileged to serve on many HBA and community committees/task forces during my tenure. At the September Board Meeting, I told our board that future HBA presidents have something to look forward to: the chance to listen and observe our civic and business leaders of Springfield. I have soaked it all in and it has been like attending two years of college, tuition free.
I have long had a fascination with people who are really at the top of their profession. When the Ben Hogan Golf Tour came to Highland Springs, I had to go. I had never played golf and likely never will. I simply wanted to see someone performing near the top of the sport. I wondered, how many rounds of golf and hours of coaching did take to get that good? The rounds of top-level golf originated from the practices and the coaching and all the little bits and pieces learned from various people along the way.

That’s sort of how I feel at this point. During my presidential tenure, I have been fortunate enough to talk with Mr. Hammons about economics and Springfield’s past. I have listened to author/entrepreneur Jack Stack talk about motivating employees and what he looks for when hiring someone. I have learned just what a tough job our city leaders have and felt the weight of the challenges ahead.

There is one thing I do know for sure. Whether you agree or not, I believe our civic and business leaders all share a devotion to Springfield. If there is one thing I have come to fully understand over all the time spent with these devoted folks is this: Our future success hinges on a healthy business climate and the perception that Springfield will continue to be a great place to live, work and raise a family.

The ground work is being done. We have new leadership in place and more on the way. I have been fortunate to ride along. If I could share anything with you as a result of this experience, it would be a sense of optimism for our region and a vote of confidence in our future. There is far more good than bad, but often we only hear the negative.

Most of what I know about the business of home building came from my father, with bits and pieces from others along the way. One of the more valuable things I learned came from Ralph Manley. Fortunately, he taught me 25 years ago that people react better when you are positive rather than negative. Never show disappointment while dealing with a customer, it will only hurt you in the long run.

I really would like to thank all of our members, civic leaders, the CU folks and business leaders for the education.

Kevin Clingan

HBA President

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More Carrot, Less Stick

One of our members recently called and asked the staff to do some research regarding whether Congress would likely renew the energy tax credits related to energy efficient construction. Most of the residential tax credits (windows, doors, roofs, insulation, HVAC and non-solar water heaters) expired at the end of 2007 and could be reported on the April 2008 tax return. The tax credit for solar water heaters and solar panels remains in effect through the end of 2008.

As potential clients are considering building, knowing that energy efficient tax credits for newly constructed homes would likely be available could certainly serve as an incentive to build a new home and to do so in way that makes the home perform more efficiently. Tax credits for home improvements could certainly help the existing housing stock improve as well.
We hear so many public policy makers talking about the high cost of energy and how we have to change our habits and reduce the carbon footprint, etc. It would seem like these tax credits would be a win-win. Guess that’s not how they perceive it in Washington. In fact, the NAHB staff has been working diligently to follow the issue and attempt to make certain that renewal of the tax credits, including those applicable to new homes (Section 45L), was included in any energy bill that might seem to have a chance of passage this year. The last version of the extenders legislation did not include the new homes tax credit.

Apparently there is a political fight over whether the extension of these tax credits should be “paid for” (i.e., offset from somewhere else in the economy). House Democrats say the legislation must be revenue neutral. Senate Republicans have said there is no reason to “pay for” extending existing law so they will not agree to any extension under those conditions.

Also set to expire at the end of this year are the renewable energy tax breaks. See the following excerpt from an article in Sept. 1 issue of the Springfield News-Leader (Renewable Energy Tax Breaks To Expire Dec. 31, Jim Abrams, The Associated Press):
“Congress is putting the short-term future of renewable energy companies in jeopardy even as the presidential candidates and most lawmakers hail windmills, solar panels and biofuels as long-term solutions to high gasoline prices and global warming.”

Without the $500 million in investment and production tax credits, solar and wind power companies say the will not only cancel expansion plans but probably downsize. The market demand at this point is still not enough to make them cost-competitive.

The one thing I know is that what we’ve been saying all along – let the market dictate and when possible, use more carrot (and less stick) to encourage green building – is the only viable way to proceed in terms of public policy decision-making. A prescriptive approach to green building, using mandates in our current economy, would be disastrous. Looks like that is also probably true for renewables/alternative sources of energy production. Consider this final excerpt from the News-Leader article cited above:
“Schott Solar has visions of quadrupling its operation in Albuquerque, N.M., to reach 1,500 jobs and $500 million in investment. But the investment tax credit, company spokesman Brian Lynch said, is what makes solar power cost-competitive. Without it, expansion plans must be reconsidered. "We don't want to build a giant factory that the market doesn't need or want," he said.”

Kevin Clingan

HBA President

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CBBT Participation Can Earn More Home Show Points

One thing I know for certain about our staff, board and committee members, there is a consistent pursuit to grow and promote our association.

Matt Morrow, John Harp, Sam Bradley and myself sat down a few weeks ago to kick around an idea Sam had involving additional Home Show points for those who contribute to the Coalition for Building a Better Tomorrow. Ultimately, we submitted the idea to the Home Show Committee and the end result was three ways for members to gain points for CBBT support/participation:

1. Entry level Coalition for Building a Better Tomorrow (CBBT) donation of $100 or more.
2. Participating in the CBBT Sporting Clays Tournament (if entry level donation has previously been made).
3. Sponsoring the CBBT Sporting Clays Tournament (if entry level donation has previously been made).

The Sporting Clay Tournament offers a perfect opportunity to support your industry’s political action committee. If you aren’t familiar with the CBBT, I hope you will take some time to learn more about this organization that works to elect decision and policy makers who will hold the line on the unnecessary regulation and fees which drive up the cost of housing. Plus, the tournament is fun. We have just about every level of experience represented at this event--from experienced clay shooters to those who haven’t ever picked up a gun before. Regardless of your level of experience, you’ll have a great time and you might even win something!

Because the tournament has grown so much, we are now offering two flights - morning and afternoon. Each will have an awards ceremony. I hope many of you will participate in the tournament or support it as a sponsor. In the mean time, our members will continue tweaking the “mousetrap” and making it better.

Kevin Clingan

HBA President

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