Rally Planned at State House in Support of Business License Reform

Your Home Builders Association will participate in a rally in support of Business License Reform at the South Carolina State House on May 6.  The rally is scheduled to coincide with a public hearing on business license reform legislation that was recently introduced.  The rally will feature the release of results of an in-depth study of business license practices of municipalities and counties in South Carolina.

The rally will begin at 1 p.m. at the State House.  The public hearing is scheduled for 2:30 p.m. in the Blatt Building.  The House Ways and Means Committee will hold the hearing.

Please contact Michael Dey if you are able to travel to Columbia for the rally and hearing.

45th Annual Bird Supper- April 14th

The Bird Supper is April 14th, don't miss out on your opportunity to speak with our elected officials about what is most important to you and our industry. 

 Since 1970, HBASC members and South Carolina’s legislators have been attending the Bird Supper. It’s the longest standing event on the South Carolina legislative calendar. Join us on Tuesday, April 14, 2015 as we gather with our legislators over a delicious dinner of fried quail, grits, green beans, biscuits, and other fine Southern cuisine. 

Tuesday, April 14 2015 6:30 p.m. Seawells Columbia, S.C. Builder’s PAC Cocktail reception prior to Bird Supper for Hammer donors. 

Tickets available through your local HBA office. 

Tickets are $35.00 per person.

The Bird Supper is considered the best attended legislative event year after year, so don't miss out make sure that you have registered by Tuesday, April 7th.

More Stringent Wood Heater Requirements on the Way

The Environmental Protection Agency (EPA) has finalized a new standard that sets more stringent emissions requirements for wood-burning stoves. For the first time, the standard also covers hydronic heaters, indoor wood-fired forced-air furnaces and single burn-rate woodstoves.

Proposed emissions standards for masonry heaters were not included in the final rule. It is also important to note that the standard does not apply to devices already installed and in house, nor does it cover fireplaces, fire pits, pizza ovens, barbecues or chimineas.

EPA expects to see a notable drop in emissions once the rule is fully in place. Fine particle and volatile organic compound (VOC) emissions should go down by about 70% while carbon monoxide emissions are estimated to be 62% lower.

To allow manufacturers sufficient time to transition to the new standards and comply with emissions testing requirements, EPA is requiring work practice standards beginning on Feb. 3 and phasing in the new emission limits over five years.

The exact timing of and Step 1 emission limits vary by furnace type and size. However, all heaters must meet the Step 2 emissions limits within five years after the final rule is published, or 2020.

This is the first time EPA has revised the clean air standard for residential wood heaters since it was first adopted in 1988. EPA has more information about controlling air pollution from residential wood heaters.

How the President's Proposed Budget Affects Home Builders

President Obama on Feb. 2 unveiled a nearly $4 trillion fiscal 2016 budget proposal that includes $650 billion in tax increases to pay for infrastructure and tax breaks geared toward middle class households. The administration is also proposing to eliminate sequestration and increase non-defense and defense discretionary spending. To pay for this, the White House is proposing $1.8 trillion in tax hikes and other offsets and savings, including $400 billion in healthcare expenditure reductions.



We have heard the pundits discuss the proposal, mostly in terms of the political impact.  But how does the President's proposal affect Home Builders?

HUD

• Proposes $49.3 billion in funding, an 8.7% increase over the fiscal 2015 approved appropriation.
• Increases funding for the HOME program from $900 million in fiscal 2015 to $1.06 billion.
• Decreases Community Development Block Grant funding from $3.07 billion to $2.88 billion.
• Restores approximately 67,000 Housing Choice Vouchers lost in 2013 due to sequestration.
• Supports a shift of Section 8 Project-Based Rental Assistance funding from a fiscal to a calendar year basis.
• Estimates that FHA’s Mutual Mortgage Insurance Fund, which supports FHA single-family programs, will grow by $14 billion over the next two years.
• Describes the recent decrease in the annual mortgage insurance premium for FHA-insured single-family loans from 135 to 85 basis points, which the administration estimates will allow an additional 250,000 low- and moderate-income borrowers to become home owners.
• Business and Individual Tax Provisions
• Limits the amount of capital gain deferred under section 1031 from the exchange of real property to $1 million (indexed for inflation) per taxpayer per taxable year.
• Characterizes carried interest as ordinary income.
• Recommends extending the exclusion from income for cancellation of certain home mortgage debt until the end of 2017.
• Limits the value of certain tax expenditures to 28% of exclusions and deductions that would otherwise reduce taxable income in the 33%, 35% or 39.6% tax brackets.
• Increases the highest long-term capital gains and qualified dividend tax rate from 20% to 24.2%. The 3.8% net investment income tax would continue to apply. The maximum total capital gains and dividend tax rate including net investment income tax would thus rise to 28%.
• Imposes a new minimum tax, called the Fair Share Tax (FST), on high-income taxpayers. The tentative FST would equal 30% of AGI less a credit for charitable contributions.
• Recommends increasing the estate, generation-skipping transfer (GST) tax, and gift tax top tax rate to 45% with an exclusion amount of $3.5 million for estate and GST taxes, and $1 million for gift taxes. There would be no indexing for inflation.
• Requires a contractor receiving payments of $600 or more in a calendar year from a particular business to furnish to the business (on Form W-9) the contractor’s certified taxpayer identification number (TIN). A business would be required to verify the contractor’s TIN with the IRS.
• Repeals Section 530 of the Revenue Act of 1978, which provides an explicit safe harbor for employers when classifying workers as employees or independent contractors.

Energy Tax Provisions

• Calls for extending and updating the current 179D deduction for energy-efficient commercial buildings, including multifamily buildings.
• Recommends extending the Section 45L tax credit for energy efficient new homes.

Low Income Housing Tax Credit Proposals

• Allows states, based on a formula, to convert up to 18% of their private activity bond volume cap into 9% credits.
• Allows LIHTC projects to serve individuals earning up to 80% of area median income (AMI) as long as the average income of all tenants remains no more than 60% of AMI.
• Opposes fixing the 9% credit rate. Instead, recommends a new way to calculate the floating rate for both the present value applicable percentage and the 30% present value applicable percentage, but only with respect to allocated LIHTCs. Under the proposal, the discount rate to be used would be the average of the mid-term and long-term applicable federal rates for the relevant month, plus 200 basis points.
• Adds the preservation of federally assisted affordable housing as an eleventh selection criterion that qualified allocation plans must include.
• Allows HUD to designate as a qualified census tract (QCT) any census tract that meets the current statutory criteria of a poverty rate of at least 25% or 50% or more of households with an income less than 60% of AMI. That is, the proposal would remove the current limit under which the aggregate population in census tracts designated as QCTs cannot exceed 20% of the metropolitan area’s population.
• Occupational Safety and Health Administration
• Provides a 7% increase over the 2015 enacted level to $592 million.
• Requests 40 new OSHA staff to support the investigations (i.e., inspections) resulting from the new injury reporting requirements, which require employers to report work-related hospitalizations, amputations and losses of an eye.

Labor/Immigration

• Emphasizes the need to strengthen worker misclassification programs, including new penalties for recordkeeping violations and a focus on “high-risk” and “fissured” industries, such as construction. The budget seeks $10 million to strengthen worker misclassification programs at the state level.
• Calls on Congress to act on comprehensive immigration reform this year. The administration supports the Senate approach taken in 2013, which includes the limitation of a workable visa plan for the construction industry.
• Includes $2 billion for the Paid Leave Partnership Initiative to assist up to five states that wish to launch paid leave programs. Participating states would be eligible to receive funds for the initial set-up and half of the benefit costs of the program for three years. The budget also includes a $35 million State Paid Leave Fund to provide technical assistance and support to states that are still building the infrastructure they need to launch such programs in the future.

It is important to note that no Executive Budget is ever enacted “as is” by Congress and this budget may not be enacted at all because Republicans control both the House and the Senate. Given the size, cost, complexities and major policy overhauls that this blueprint entails, the battle ahead is likely to be contentious as lawmakers on both sides of the aisle debate its merits on an array of fronts — from social spending to energy policy to taxes.

Your HBA will remain deeply engaged as the budget process moves forward, fighting to strip out any provisions that will harm housing and promoting elements that will help small businesses and the housing sector.

S.C. House introduces Business License Reform Legislation

Representative Rick Quinn (R), of Richland County, along with Reps. Merrill, Rivers, and Atwater, and 20 other co-sponsors, introduced H.3490 earlier this week. This bill is a top legislative priority for your Home Builders Association.  The purpose of the bill is to lower the paperwork and tax burden that local government places on businesses.

As introduced, this legislation would create a centralized collection system under the SC Department of Revenue, and bring South Carolina into the 21st century by allowing online payment of these fees. Additionally, the bill would change the payment structure from its current form. Businesses would be required to pay the business license fee only in the jurisdiction where the company's state income tax return is address, and the fee is capped at $100 per business. This would be a huge relief to businesses operating in multiple jurisdictions while also improving the ease of compliance.

Your Home Builders Association is currently working with the National Federation of Independent Business as well as other groups to push for this legislation. Our group is working on a study to demonstrate just how cumbersome and onerous this problem is for our members. It is our hope that this information will illustrate to the General Assembly the significance of this problem and the need for reform.

This is where you come in. If you have experienced difficulties with business license fees in your area, please feel free to send them to Matt Niehaus a mniehaus@hbaofsc.com. If you have any questions about this, or any other issue, please feel free to contact Matt.  You also can call him at 803-771-7408.

Read the media coverage of the legislation by clicking here.

U.S. House Approves Tax Extenders Bill

By a wide bipartisan of 378-46 margin, the U.S. House last night approved H.R. 5771, the Tax Increase Prevention Act, which will renew scores of temporary tax provisions known as “tax extenders” that are set to expire this year.  Severa are of interest to the housing community. The one-year retroactive renewal is through 2014 and dates back to January 1.

NAHB is disappointed that a longer-term deal was not reached, but the political situation and the calendar have forced Congress into a one-year deal everyone hoped to avoid.

Just one week ago, Congress was headed to a bipartisan, bicameral deal which would have extended all of the expired provisions for two years through 2015. The agreement also would have made a handful of extenders, like the research and development tax credit, permanent.

Just hours after word of the agreement leaked out, the White House scuttled the deal by announcing the President would veto any bill that contained these permanent provisions.

In a letter to the House prior to the bill’s passage, your Home Builders Association urged lawmakers to support the legislation. We also expressed concern that these short-term tax bills create difficulties for our members by denying builders the certainty needed to finance complex projects and called on Congress to act quickly on a longer-term deal in early 2015

Key provisions in the tax extenders package for 2014 (retroactive to January 1) include:

• Section 45L Tax Credit for Energy Efficient New Homes. Provides builders a $2,000 tax credit for exceeding energy standards by 50 percent. The base energy code is the 2006 International Energy Conservation Code plus supplements. Section 45L is expected to save home builders $267 million in taxes for 2014 construction activity.
• Fixed Credit Rate for 9 percent Low Income Housing Tax Credit projects. The bill will renew the 9 percent fixed rate, but only for 2014 allocations.
• Section 25C Tax Credit for Qualified Energy Efficiency Improvements. This is a credit worth up to $500 (subject to a $500 lifetime cap), with lower caps for certain products like windows, for consumers to install qualified energy efficient upgrades. Remodelers often leverage 25C tax credits when working with clients. Section 25C is expected to save home owners who remodel $832 million in taxes for 2014 improvements.
• Section 179D Energy Efficient Commercial Buildings Deduction. Provides a deduction up to $1.80 per square foot for commercial buildings, including multifamily buildings built under the commercial code, that exceed specific energy efficiency minimums. The proposal also would change the baseline for the efficiency standards to the ASHRAE/IESNA 90.1-2007 standards.
• Section 163 Deduction for Private Mortgage Insurance. Allows taxpayers, subject to an income cap, to deduct premiums paid for private mortgage insurance. The deduction for PMI is expected to save home owners $919 million for tax year 2014.
• Bonus Depreciation. Extends the 50 percent bonus depreciation.
• Section 179 Expensing. Increases the maximum expensing amount to $500,000 for qualified property on up to $2 million in property placed in service.
• Short-sale mortgage debt forgiveness. The provision would extend through 2014 the exclusion from gross income of a discharge of qualified principal residence indebtedness due to a short sale.

The Senate is expected to take up and pass H.R. 5771 next week.

Your membership saved you $26,600 so far in 2014*

* estimated savings per licensed builder

The 2014 session of the South Carolina General Assembly has come to an end and once again your Home Builders Association was hard at work protecting your interests.  Your Home Builders Association worked on 150 different pieces of legislation to promote and protect the vital work of home builders and residential developers in South Carolina.

Here is what we accomplished:

1. Successfully opposed mandated residential fire sprinklers (again): $181 million in annual savings to home builders and their customers
2. Passed a one-year extension to the Multiple Lot Property Tax Discount: $1.9 million in annual savings
3. Successfully defeated a proposal to sunset the residential solar tax credit: $780,000 in annual savings

In addition, your Home Builders Association engaged in several other legislation initiatives including health insurance, unemployment insurance, tax credits, septic tank regulations, stormwater regulations, and building codes, resulting in a total annual savings to our members of $320 million--just in 2014!

Your Home Builders Association influences government at all levels.  Our goal is to protect affordable housing and to stop needless regulation that adds costs to new housing.  If you know of an individual or business in the home building industry who is not a member of the Home Builders Association, make sure they know what the Home Builders Association is doing for them every day, and ask them to become a member.

Don't text while driving

UPDATE: Governor Nikki Haley sign the texting ban bill into law today, June 10, 2014.

The South Carolina General Assembly has approved legislation that will make it illegal, throughout the state of South Carolina, to text while driving.  The legislation makes it permissible to text while idling at a traffic light.  It also prohibits drivers with learners or restricted licenses from using a mobile phone while driving.

One key provision of the legislation, which still requires the approval of the Governor, is that it preempts any local ordinances.  Effective April 1, 2014, the City of Greenville enacted a very restrictive ordinance prohibiting the use of any mobile device while driving or idling.  If approved by the Governor, this and other local ordinance will be nullified.

OSHA urges employers to prevent texting while driving
In OSHA’s April 15, 2014, issue of “Quick Takes,” its twice-monthly e-newsletter, it took the opportunity to remind employers that they have a responsibility to protect their workers by prohibiting texting while driving. Companies are in violation of the Occupational Safety and Health Act if, by policy or practice, they require texting while driving, or create incentives that encourage or condone it, or they structure work so that texting is a practical necessity for workers to carry out their job.

For additional information on how to develop a company policy to minimize potential employer liability resulting from employee cell phone use while driving, see Home Builders Association’s Distracted Driving Guidance.

Government Affairs Committee Meets with Congressman Trey Gowdy

On May 12th the Government Affairs Committee and Board of Directors met with Congressman Trey Gowdy to discuss GSE reform, immigration reform and labor shortages, the mortgage interest deduction in tax reform, a proposed time extension to review the EPA's expansion of the Clear Water Act, and refining patent laws concerning patents on common construction techniques. HBA members met with the Congressman at a new model home at Verdae, in Greenville by LS Homes.   "We appreciate the opportunity to meet with Congressman Gowdy and for the valuable discussion he engaged in with everyone concerning these issues that affect home building, construction, and home buying," Mike Freeman, Home Builders Association President, said. Thank you to Congressman Gowdy for spending time with us and LS Homes for hosting us!

Your HBA opposes proposed tax accounting rule

Your Home Builders Association has taken a position in opposition to a proposed tax accounting rule change, proposed in the U.S. Senate, that would negatively impact home builders whose contracts extend across two tax years.  Read the full report and description of the rule, present and proposed, at Eye on Housing by clicking here.

Your HBA Membership Makes A Difference

In 2013, your Home Builders Association worked diligently to advance the issues most important to our members. Your HBA was actively engaged with more than seventy bills to promote and protect the vital work of home builders and developers across South Carolina. Our efforts included: building codes, tax credits for abandoned buildings, insurance reform, extension of permits, storm water regulations and much more.

Our efforts have saved the home building industry more than $515 million in 2013 alone.  For every $1 invested in HBA dues, members received a $37 return!

Your HBA influences government on all levels. Our goal is to protect affordable housing and to stop needless regulatory costs, which ultimately trickles down and effects everyone who works in the home.

If you know of someone who makes their living in the construction industry, but is not a member, ask them why. Keep our industry strong and ask that they join the Home Builders Association today to make sure they have a job tomorrow!

Did You Know? Housing Finance

Did you know that 91.2 percent of all new mortgages are backed by Federal government programs like Fannie Mae and Freddie Mac?  And now that our government has replaced private enterprise in the mortgage finance business, Congress wants to end the program.

You can help by telling Congress to take a more gradual approach to housing finance reform.  Click here to answer your HBA's call to action on housing finance reform.

NAHB: Tax code rewrite threatens homeownership, rental housing, and home building

The U.S. Senate is considering revamping the tax code which could eliminate some or all housing tax incentives. The Senate Finance Committee recently announced it will consider comprehensive tax reform and initiate proceedings with a blank slate: no exemptions, deductions, or credits.

According to NAHB, this could harm the bottom line of all residential construction businesses, depress home values, impose a tax increase on home owners, and cause massive layoffs in housing and other industries

Many of the tax reform proposals have suggested eliminating or reducing the mortgage interest deduction, the Low Income Housing Tax Credit, the capital gains exclusion for home sales and the deduction of property taxes, among others.

NAHB has issued a Call-To-Action to HBA members asking them to contact their Senators and tell them to preserve housing tax incentives like the mortgage interest deduction and low income housing tax credit.  To act and contact your Senators, click here.

Governor Approves H.3774, Provides Relief to Home Builders

On July 20, Governor Nikki Haley signed into law H.3774, referred to as the “Permit Extension Bill.” Due to the recent economic downturn, many builders are experiencing financial restrictions that make it difficult to complete projects as originally scheduled. Recognizing that many public and private sector projects could be abandoned due to challenging permit renewal processes, the HBASC pushed for passage of H.3774 to provide relief to builders across South Carolina.

H.3774, modeled after a similar bill from the 2010 session, extends the expiration date of certain permits to prevent the abandonment of projects which have already received appropriate approval. These permits would include erosion and sedimentation control plans, land disturbance permits, stormwater management plans, water or wastewater permits, NPDES permits, water quality certification, air quality permits, OCRM permits, and City/County approval of sketch plans, preliminary plats, subdivision plats, site specific development plan, and a building permit. Any of these permits which are current and valid as of December 31, 2012 would continue to be valid until December 31, 2016.

The HBASC would like to give a special thanks to Representative Dwight Loftis for sponsoring this legislation. A full version of the legislation can be found on the Statehouse website (link for website: http://www.scstatehouse.gov/sess120_2013-2014/bills/3774.htm).

2012 IECC will not be adopted in South Carolina

In a victory for HBA members, the South Carolina energy code has been locked in legislatively with the 2009 International Energy Conservation Code.  The 2012 IECC will not be adopted in South Carolina this year as it will be in many other states.

"This is a significant victory for our members and an example of the excellent work our government affairs team is doing for us in Columbia," Rick Quinn, President of the HBA of Greenville, said.  "Our members will save significantly on construction costs while still building a highly efficient house that is compliant with the 2009 IECC."

NAHB: LEGAL immigration is part of the solution

You may have received communication from NAHB in recent days in which NAHB asks for your help in supporting comprehensive immigration reform.

NAHB's objective is to address the immigration problem that has resulted in millions of illegal immigrants in our country while denying home builders, as well as many other businesses, sufficient access to immigrant workers with status to work legally in our country.

Many unscrupulous contractors flaunt the law and hire illegal immigrants to work on their projects, giving them an unfair competitive advantage until they are ultimately caught.  This has resulted in millions of illegal immigrants in our country, and Congress' reaction has been to limit legal immigration.  Ultimately, the problem is not solved and people continue to pour into our country illegally.

NAHB's objective is to level the playing field and make the necessary number of immigrant laborers legally available to home builders.  By doing so, the unscrupulous contractors will lose their advantage.  In addition, comprehensive reform will take away the incentive they have to violate the law by allowing them to meet their labor needs legally.

NAHB's communication has made the following points to our members of Congress:

• Labor shortages are harming home builders, hurting consumers and slowing the housing recovery.
• Home builders are experiencing delays in completing homes, and in some cases have had to cancel projects due to a shortage of workers.
• These delays and production bottlenecks are increasing the cost of building a home, which in turn is raising costs for home buyers.
• To fix our labor shortages, Congress must create a program that would allow more immigrants to legally enter the construction workforce when home builders can’t find American workers to fill the jobs that are needed.

To read NAHB's complete talking points, click here.

The objective is simple: recognize that home builders need to hire immigrant laborers from time-to-time, just like many other industries.  Sometimes immigrant labor has a specialized skill not readily available from domestic labor.  Sometimes home builders just need more people.  Either way, immigration policy should recognize this need and accommodate it.

If you agree, contact your member of Congress and tell him or her to support comprehensive immigration reform.

NAHB: Encouraging Signs for Housing as Gridlock Persists in Washington

As the housing industry slowly climbs back on the road to normal following the worst downturn since the Great Depression, NAHB is working to keep housing and homeownership a top national priority during an election season marked by political gridlock in Washington, according to participants in a July 12 NAHB webinar on the mid-year outlook for housing and the 2012 elections.

Part of NAHB’s broad strategy to highlight the importance of housing is to hold a series of homeownership rallies in key battleground states between now and the November elections. NAHB CEO Jerry Howard cited the success of a Rally for Homeownership held on July 11 in Tampa, Fla. (see bullet above) that was sponsored by NAHB, the Tampa Bay Builders Association and the Florida Home Builders Association.

“The rally drew more than 600 people, including concerned citizens, elected officials and business leaders, and highlighted the importance of homeownership,” said Howard.

The next Rally for Homeownership will take place in Detroit on July 20 and subsequent rallies will be held this fall in Kansas City, Mo.; Milwaukee, Wis.; Columbus, Ohio; Richmond, Va.; and Las Vegas.

Each rally location was selected because it is a battleground presidential state or a state with a key Senate race.

By conducting homeownership rallies in these strategic states, Howard said the goal is to ensure that presidential and congressional candidates on both sides of the political aisle understand the importance of housing and homeownership and to remind them that there can be no economic recovery without a housing recovery.

In addition, NAHB has been taking this message directly to the presidential candidates. Over the past few months, NAHB has met several times with the policy staff of President Obama and the Romney campaign.

Further, NAHB will have a significant presence at the both the Democratic and Republican conventions later this summer.

Political “Silly Season”

As NAHB works to keep housing in the forefront, NAHB Chief Lobbyist Jim Tobin said there is a very polarized environment on Capitol Hill, calling this the political “silly season.”

He acknowledged that little is expected to get done in Congress between now and the November elections, as lawmakers will go on break for the summer recess in three weeks, which will be extended longer this year due to the political conventions. When Congress resumes in mid-September, the chamber is expected to adjourn in early October to focus on the elections.

Meanwhile, NAHB continues to work with lawmakers in both chambers to end the dearth of credit for the construction of new homes.

Tobin noted that H.R. 1755 in the House has more than 100 co-sponsors and Senate companion bill S. 2078 now has four co-sponsors.

“We are currently waiting to attach H.R. 1755 to a larger legislative vehicle to show regulators that there is no national housing market and that housing markets are local,” said Tobin. Many markets are on the mend, and builders need access to construction loans to meet demand and to help local economies grow, he added.

Among other legislative priorities for NAHB:

• Housing finance reform. NAHB earlier this year unveiled a white paper that provides a comprehensive framework for housing finance reform. Tobin said the plan -- which seeks to overhaul the housing finance system to ensure that housing credit is available and affordable in the future and is delivered through a competitive, efficient, safe and stable system – has received positive feedback across the political spectrum.
• Tax reform. While NAHB expects Congress to tackle this issue next year, the association has been busy developing excellent economic research detailing the importance of housing tax incentives, including the mortgage interest deduction and the Low Income Housing Tax Credit.
• Regulatory oversight. NAHB continues to work with regulatory oversight agencies to reduce the costly and burdensome regulations that are hampering the housing recovery. In addition, NAHB is urging lawmakers to co-sponsor House bill H.R. 5911 and Senate bill S. 2148, legislation that would make much-needed improvements to the EPA’s Lead: Repair, Renovation and Painting Rule. The legislation would help home owners and remodelers to better comply with the costly work practices and record keeping requirements of the rule without compromising safety standards.
• Other critical issues. These include reforming the home appraisal system, removing the 20% downpayment requirement from the qualified residential mortgage, determining the definition of the new qualified mortgage rule as required under the Dodd-Frank legislation, finding innovative ways to get foreclosed homes off the market and improving housing to stimulate job growth and the economy.

While Congress may be paralyzed on larger issues, at NAHB’s urging, lawmakers pulled together recently to pass a five-year reauthorization of the National Flood Insurance Program. Tobin noted that NAHB played a key role in helping to shepherd the bill through Congress and deleting a key provision that would have caused home owners living behind levees and dams to pay much higher insurance premiums.

A Busy “Lame Duck” Session

With Congress essentially deadlocked through the Nov. 6 elections, Tobin said that the post-election “lame duck” session will be the most “jam-packed we have seen in a long time.”

In a relatively short time frame following the November elections and before the new Congress is sworn in, lawmakers are expected to grapple with several major issues. These include extending the 2001/2003 tax cuts, the mandatory spending cuts that were part of the sequestration process as a result of last year’s debt ceiling deal, and the need to once again raise the debt ceiling in order to allow the U.S. government to continue to pay its bills without the risk of default.

NAHB will be urging lawmakers to extend the 2001/2003 tax cuts for all taxpayers and to avoid any spending cuts required through last year’s sequestration deal that would harm housing. Sequestration requires lawmakers to come up with $109 billion in spending cuts divided evenly between defense and discretionary spending programs in 2013.

Both Howard and Tobin said the race for the White House is too close to call and, while far from a certainty, they believe the House will stay in Republican control and the Democrats will maintain power in the Senate.

“No matter which candidate wins, or which party is in power in the House and Senate, NAHB has a long history of working in a bipartisan manner to push housing issues forward,” said Tobin.

Slow but Steady Growth

On the economic front, NAHB Chief Economist David Crowe expects that gross domestic product will rise 2% this year and 2.5% in 2013, which should lay the groundwork for improving housing markets.

One of the reasons why there is a slow housing recovery is “because we are not adding many jobs,” said Crowe.

He noted that for the first time in recent memory, there has been better news on the housing front than the overall economic front.

Since last September, housing permits, total housing starts, single-family housing production and new-home sales have all been rising.

“The Federal Housing Finance Agency home price index has had some gradual increase for some time,” Crowe added, “and Case-Shiller, which has been the most negative of all home price indexes, has begun to show some increase.”

Meanwhile the NAHB/Wells Fargo Housing Market Index, which measures builder confidence in the single-family market, has doubled since September and NAHB’s First American Improving Markets Index has gone from 12 in September to 84 in July.

“Eighty-four markets are over 20% of all marketplaces,” said Crowe. “This recovery is happening, it’s just happening in different places and tends to be occurring in smaller markets.”

Tight mortgage lending restrictions continue to hamper the single-family market, Crowe added. He noted that for most mortgages that are closing today, buyers have an average FICO score of 760, versus a score of 710 for loans closed earlier in the decade.

“Today, buyers with FICO scores of 730 are denied home loans,” Crowe said.

Single-family home starts are projected to climb to 519,000 units this year, up nearly 20% from 2011. NAHB is forecasting single-family housing starts will post a healthy 28.7% gain in 2013 to 668,000 units.

Multifamily production is expected to rise 25.9% in 2012, reaching the 224,000-unit level and post a more modest 6.1% gain in 2013, increasing to 238,000 units.

Residential remodeling of owner-occupied properties is operating at a healthy clip and is now back to where it was before the housing downturn, Crowe added.

A full replay of the webinar is available here.

HBASC: Legislative Report (and several wins at the wire)

By Julian Barton, Government Affairs Director
Home Builders Association of South Carolina

On Thursday, the General Assembly completed its two week mini-session (Sine Die II). For the second year in a row, the General Assembly has taken an extra month to complete its work, and for a second year in a row the state budget has not been completed until the last week of June. This year the General Assembly did not complete the state budget until June 28, so there was not enough time for Governor Haley to review the budget and issue her vetoes. As a result, the General Assembly will have to come back (Sine Die III) at some point after July 1 to consider the Governor’s vetoes. What has historically been a five-month legislative session is now turning into a six month plus session!

While the state budget (2012-13) of $6.7 billion was late in passing due to a Senate versus House fight over how to structure tax cuts, it did contain some important provisions for the home building industry:

1. Tax Cut for Small Business – Income tax rates for small businesses (LLC, S corporations, & sole proprietorships) would be reduced from 5% to 3% resulting in a $20 million annual savings and $60 million over three years. 
2. Dredge Charleston Harbor - Allocated $300 million to cover federal funds that may not be appropriated by Congress and the state’s funding portion to deepen the Charleston port by 5 feet to accommodate larger ships. This sends a strong signal that South Carolina is serious about expanding it harbor’s capabilities! 
3. Funding for Public Schools – The new budget added $153 million to public school funding, which raised the per-student allocation by $132 to $2,012. Good schools are important to the home building industry. 
4. Economic Development – Add $25 million to the Department of Commerce budget to attract new businesses to South Carolina and in turn grow our economy. A growing economy is good for the home building industry! 

Key Issues for Builders
Unemployment Insurance – Premium Relief Set: In 2010 and 2011 the General Assembly passed legislation to reform the state’s unemployment insurance law. The General Assembly did a number of things, like cutting the weeks on unemployment, to make the fund less expensive moving forward. In addition, the repayment of almost $1 billion in federal loans for the bankrupt Unemployed Insurance Fund began. Late in the session, the General Assembly decided to use state money to ease the sticker shock of higher UI premiums.

This year General Assembly also considered a request for the state to again subsidize the UI Fund with state appropriations. UI premiums will be lower in 2012, but the federal repayment will push them slightly higher. Both the SC House and the SC Senate inserted $77 million in their budgets to again subsidize unemployment insurance premiums.

Update: This week the General Assembly included $77 million for premium relief in the 2012-13 state’s budget. This will help hold unemployment insurance premiums near the level we paid last year.

State Immigration Law – Impacted by US Supreme Court Decision: Last week the U.S Supreme Court handed down its decision on the Arizona state immigration law. Much of the law, but not all, was struck down. Much of the South Carolina immigration law was based on the Arizona law. The South Carolina law is now before the U.S. Circuit Court. Many will remember that LLR last year had to suspend some provisions of the law because South Carolina’s current law (passed in 2009 & updated in 2011) had provisions in it that the U.S. Supreme Court had ruled unconstitutional. We would anticipate more suspensions of the SC law when the U.S. Circuit Court hands down its decision. However, it is best to continue to abide by state law until we get direction from the federal courts.

The state law now requires mandatory e-verify screening of new employees, but an employer who was inspected and didn’t have his employees e-verified would have 72 hours to bring them into compliance. LLR has assisted the employer in the e-verify process. Employers were required to implement the new rules on January 1, 2012. However, the 6 month phase in period ends this month. Going forward LLR will no longer be required by law to help business owners verify their new employees by e-verify. Copper Bill – Governor Signs: Thieves and drug addicts in search of quick cash have been causing millions of dollars worth of damage ripping out copper from plumbing and air-conditioning units at homes and businesses. Last year a bill (H. 3660) was passed to stop the scourge of copper and metal theft in the state. The bill set up a permit system for people who want to sell copper to recyclers. Permits were issued by the local sheriff's office. The good news is that the new law has significantly reduced copper theft, the bad news is that it has caused some implementation issues. Late in the session compromise language was added to the auto recyclers bill (S. 1031).

Update: The copper bill (S. 1031) was signed into law early in June by Governor Haley. The bill cleans up a number of implementation issues. Under the bill passed, the ability to pay cash for aluminum cans was maintained, and the home builder’s new exemption was added to the law.

State Housing Authority - Receives New Member: On the last day of the session to consider appointments, the Governor’s latest appointee to the State Housing Authority Board, Mary Sieck was approved by the SC Senate. Her confirmation was unanimously approved, and she was appointed to a fill an unexpired term. Mary is from Lake Wylie, has a realtor’s license, works with an employee search company, and is married to Curtis Sieck - a builder in York County. She is an excellent addition to the SC State Housing Authority board.

Community Land Trust – Governor Signs Bill: A community land trust (CLT) is a non-profit community housing development organization that acquires and holds land in trust primarily for the use of affordable housing. This is done under long term real estate leases that allow it to ensure that improvements located on the property remain affordable to low income families. CLT’s help develop public– private collaborations to create opportunities for communities with limited resources to develop workforce housing. They support facilities and preserve land while promoting homeownership, historic preservation, local control and neighborhood revitalization.

Update: The bill (H. 3676) that was introduced to create community land trust enabling legislation passed the General Assembly in late May. The bill was signed into law by Governor Haley in early June.

Governor Haley signs law to reverse S.C. Supreme Court ruling that hurt home building

Home Builders scored a huge victory last week in Columbia.  Legislation (H.4654) to restore the integrity of the Pollution Control Act in the wake of the Supreme Court ruling in the Smith Land Company case received final approval in the House and Senate this week. The bill was signed into law by the Governor on Wednesday, June 6th.

Under the Smith Land Company opinion, the Supreme Court held that a permit from the S.C. Department of Health and Environmental Control was required on any discharge into the environment under the state's Pollution Control Act. Further, the Court held that a private right of action exists that would allow any citizen to sue an alleged violator under the Act. Both of these interpretations are a significant change in the implementation of the Pollution Control Act and would have posed uncertainty in the regulatory process, cause significant harm to SC's economic development efforts, and expose business and industry to environmental litigation.

A controversial move by environmentalists (from Julian Barton's Legislative Report)
Several environmental groups were a party to the compromise that resulted in the Smith Land Company bill that passed.  Just as the bill was passing the SC House, the Southern Alliance for Clean Energy, the Waccamaw River Keeper, and the SC Coastal Conservation League filed a lawsuit against Santee Cooper in violation of the compromise language in the bill.

It was clear that the environmental community once again did not live up to their word!  The 11^th hour sneak attack was not appreciated by legislators who had worked hard to craft a solution.  The environmentalists unrelenting attack on coal fired electric plants in South Carolina continues unabated.  South Carolina is moving from being energy independent to energy dependent! 

NAHB's Top 12 Actions, Number 3: a comprehensive framework for housing finance reform

Builder Review Daily continues to highlight the Top 12 actions your HBA has taken on your behalf at the Federal level.

Number 3, release of a comprehensive framework for housing finance reform and active discussions with lawmakers:

Because our members’ businesses depend upon the existence of an accessible and reliable housing finance system, NAHB has been deeply engaged in policymakers’ conversations about how best to reform the system, wind down Fannie Mae and Freddie Mac, and ensure a stable supply of credit for both home buyers and rental housing. NAHB made a major contribution to this debate with the recent release of a comprehensive framework for housing finance reform that includes our specific recommendations.

Developed through a specially appointed NAHB working group and approved by NAHB's Board of Directors in Orlando, this plan stresses that any transition away from the current housing finance system must be done in a careful and deliberate manner to avoid further disruptions to an already fragile market. It is also built upon the recognition that, as the private market assumes a greater role in the marketplace, it is vital to maintain an appropriate level of government support to preserve financial stability, promote investor confidence and ensure liquidity/stability for homeownership and rental housing. In keeping with these core directives, NAHB's plan seeks to:

• Include private, federal and state sources of housing capital.
• Offer a reasonable menu of sound mortgage products for both single-family and multifamily housing that is governed by prudent underwriting standards and adequate oversight and regulation.
• Transition Fannie Mae and Freddie Mac to a new mortgage securitization system for single-family and multifamily conventional mortgages.
• Consider the 12 regional Federal Home Loan Banks for this securitization role.
• Phase in the new system over time and allow Fannie and Freddie to remain operational until the alternative system is fully functioning.
• Provide a federal backstop to ensure that conventional 30-year home loans and adjustable rate mortgages are available at reasonable interest rates and terms.
• Structure the federal support to the conventional mortgage market through a privately funded insurance fund similar to the FDIC’s backing of the fund that insures savings deposits. This will allow the government to be the insurer of last resort in order to reduce the risk to taxpayers.
• Continue role of federal housing agencies (HUD, FHA, VA, USDA, Ginnie Mae).
• Expand the role of the Federal Home Loan Banks in the housing finance system.
• Restart a carefully regulated fully private mortgage-backed securities market through reforms to the securities ratings system to remove conflicts of interest.
• Repair other flaws that produced the housing boom and bust by closing the gaps in standards and oversight that allowed and facilitated the improper and illegal activities in financial and mortgage markets.

NAHB believes this plan will produce a sound housing finance system that provides a stable and affordable supply of credit for home buyers and rental housing. Going forward, NAHB will be working with the Administration, Congress and policy stakeholders to make this goal a reality, and we have already begun to promote our plan among lawmakers and the media. Contact: Chellie Hamecs (800-368-5242 x8425).