January 20, 2009

HBAG News

Joint Senate/House Economic Development Committee Meeting
by Suzanne Williams, HBAG Vice President, Government Affairs

On Thursday, January 15, the Joint Senate and House Economic Development Committee, made up of Senate and House members, had its first meeting for the 2009 Session. The 2 committees will be working together to try and come up with legislation to assist in the recovery of the state's housing crisis. Along with certain tax relief issues discussed, the committee will also be looking at simplifying regulations and reducing costs to builders associated with these regulations.

Deron Hicks and Kurt Cannon testify before the Joint Economic

The Joint Committee heard testimony from HBAG President, Kurt Cannon as well as HBAG General Counsel, Deron Hicks. The two chairmen appointed three subcommittees each to study these issues and to come up with specific proposals to assist the industry as the session moves forward. The following are the subcommittees, the specific chairmen of the committees, and the issues they will be addressing.

HBAG will update you as to which members are appointed to the subcommittees and will be encouraging your participation in contacting your legislator to ask for his/her support as the session continues.

Legislatures Considers Ways to Jump-start Home Building

By KEVIN DUFFY
The Atlanta Journal-Constitution

Georgia lawmakers are considering tax breaks for home builders, developers and home buyers in an effort to help the housing market recover.

One idea is to not tax, or tax at a reduced rate, vacant houses and lots.

Under another proposal, a home buyer's taxable income might be reduced. The amount has not been determined, but lawmakers are looking at a range of $2,500 to $5,000.

A third approach would be to simplify home building regulations and thus reduce builder costs.

The Joint Economic Development Committee, made up of House and Senate members, will be exploring all three approaches. In its first meeting of the new session Thursday, the committee briefly heard testimony from home building and homes sales representatives, and formed subcommittees to study tax breaks and regulation reform.

"We're in a real mess," said Rep. Ron Stephens (R-Savannah), the committee co-chairman.

The committee's mantra is "recover Georgia first," the other co-chairman, Sen. Chip Pearson (R-Dawsonville), said.

"Some state has to recover first," Pearson said. "We want it to be this state." Home-sale closings in metro Atlanta were down 44 percent during the third quarter of 2008 and housing starts fell 67 percent, according to Metrostudy, the real estate research company.

The 22 counties Metrostudy tracks also have about 148,000 vacant lots - a 117-month supply. Some housing experts say the market is in a depression. "Builders are not asking for a bailout. We're just asking for the ability of people to buy homes," said Kurt Cannon, president of the Home Builders Association of Georgia.

Cannon said a home builders study showed that 196,000 construction-related jobs were lost from the end of 2006 to October 2008. That translates into $11 billion in lost payroll, and $2.8 billion in lost taxes and fees, he said.

Deron Hicks, lawyer for the home builders association, urged lawmakers to look at reducing impact fees, which are charged to pay for expanded infrastructure and services. Impact fees for road construction should be eliminated, he said.

Hicks said local governments use state regulations as a starting point for adding more regulations, increasing costs and the time spent on projects. The state should require more uniformity, he said.

Senator Isakson Introduces Legislation to Stimulate the Housing Market,
Expand Tax Credit for Homebuyers

Would Eliminate Requirement That Tax Credit Be Repaid

WASHINGTON - Drawing on more than three decades of experience in the real estate industry, U.S. Senator Johnny Isakson, R-GA., today introduced legislation to jump-start housing demand and to boost the economy by expanding the homebuyer tax credit passed by Congress last year.

"Unfortunately, home prices and property values continue to decline across the country as foreclosures flood the market. Americans are hesitant to buy homes and existing home inventory is nearing an all-time high," Isakson said. "Our economic crisis started with housing, and our economy will continue to suffer unless we do something now to immediately fix this problem. We must create targeted incentives that will encourage Americans to buy homes again."

Last year, Isakson introduced legislation to specifically target those homes that were causing the unprecedented increase in housing inventory by offering tax credits to individuals purchasing a foreclosed home or a home where foreclosure is pending. In April 2008, the Senate passed legislation to stimulate the nation's declining housing market that included Isakson's proposal.

However, the final version of the legislation that was signed into law only included a tax credit for first-time homebuyers that must be repaid over a 15-year period. The legislation introduced by Isakson today would expand that tax credit to include all purchasers and would eliminate the current requirement that it be repaid. Repayment of the tax credit would only be required if the home is sold within three years.

• Extending the eligibility period for the credit to December 31, 2009;
• Increasing the credit amount to 10 percent of the home price capped at 3.5 percent of FHA loan limits (geographically dependent) - ranging between approximately $10,000 and $22,000;
• "Monetizing" the credit so it is available at time of closing; and
• Allowing the credit to be used in conjunction with mortgages financed by state or local bonds.

Isakson has pushed hard for a non-repayable tax credit for homebuyers because he knows that it will work. In the mid-1970s, America faced a similar housing crisis when a period of easy credit and loose underwriting flooded the market with new construction. Interest rates rose, the economy slowed and America was left with a three-year supply of vacant homes. Congress responded by passing a $2,000 tax credit for anyone purchasing a new home for their principal residence. Isakson believes the results were clear and swift as home values stabilized, housing inventory dropped and the market recovered.

Isakson spent more than three decades in the real estate business, beginning his business career in 1967 when he opened the first Cobb County, Ga., office of a small, family-owned real estate business, Northside Realty. Isakson later served as president of Northside for 20 years, presiding over the company's growth into the largest independent residential real estate brokerage company in the Southeast and one of the largest in America.

Builders Testify Before Congress on Use of TARP Funds

January 13, 2009 - As Congress considers releasing the second half of the Treasury's $700 billion Troubled Asset Relief Program (TARP), the National Association of Home Builders (NAHB) today urged lawmakers to use a portion of the funds to stem the rising tide of foreclosures and increase the flow of credit for housing production. NAHB also urged passage of legislation to stimulate housing demand.

"Up to this point, the TARP program has failed to expand the flow of credit to business and consumers on competitive terms," NAHB Chairman-elect Joe Robson, a home builder from Tulsa, Okla., said in testimony before the House Financial Services Committee. "In addition the TARP program has not adequately responded to the nation's foreclosure crisis, which must be addressed to keep people in their homes, help stabilize home prices and promote recovery of the housing market and economy."

NAHB supports foreclosure prevention measures advocated by Federal Deposit Insurance Corporation Chairman Sheila Bair, which would use $24 billion of the funds Congress authorized for the TARP to provide loan guarantees to achieve greater success in foreclosure mitigation efforts. FDIC estimates that the program could help about 1.5 million home owners to avoid foreclosure.

With falling home values at the core of the current economic crisis, Robson said that foreclosure relief absent a plan to address demand for housing will not succeed in fixing the nation's housing and economic woes.

"The only way to stabilize the housing market and restore consumer confidence is to put a floor under declining home values," he said. "In conjunction with foreclosure mitigation efforts, Congress must pass temporary and targeted incentives to encourage Americans to buy homes again. This will help to stabilize home prices, prevent future foreclosures, restore consumer confidence and start creating jobs."

Specifically, Robson urged Congress to enact NAHB's proposal to boost housing demand by providing a bigger and better home buyer tax credit and offering below-market fixed-rate mortgages on home purchases, which would increase home sales by 1.1 million in 2009 and create more than 539,000 jobs.

"This two-pronged housing stimulus approach mirrors legislation passed by Congress in 1974 and 1975 to deal with the exact same problem," said Robson. It helped bring our economy out of recession back then and it can do it again."

With the nation's credit markets still frozen, banks who have received TARP monies have come under deserved criticism for not using the funds to expand credit liquidity, he said. The dramatic deterioration in credit availability has severely impacted the acquisition, development and construction (AD&C) credit market, which is fueling the downward economic spiral by further depressing home prices and increasing the number of distressed properties on the market.

"The bank regulators must improve accountability through monitoring and reporting requirements for banks receiving TARP funds," said Robson. "Builders are reporting it is much more difficult to obtain AD&C loans and those with outstanding loans are experiencing onerous new requirements or are having their loans called in. In short, many good loans are unnecessarily being turned into problem assets as a result of these actions."

NAHB is seeking an allocation from TARP explicitly targeted to AD&C lending, which would enable financial institutions to allow builders to complete viable projects.

"The goal is to avoid unnecessary and onerous equity calls by financial institutions on projects that are bankrupting many small and medium sized builders that rely exclusively on bank funding," said Robson. "If this situation is not aggressively addressed, it will unnecessarily put more real estate-related loans into default, additional pressure on the banking system and the insurance fund, and create more hardship on already stressed communities."

With production of badly needed new affordable housing units declining in the current economic climate, Robson offered several suggestions to improve the financial health of the Low Income Housing Tax Credit (LIHTC), the single most important affordable housing production program in the federal government. He urged Congress to:

- Bring individual taxpayers back into the LIHTC investment market by changing the passive loss rules established as part of the Tax Reform Act of 1986.

- Make the LIHTC a refundable tax credit to stimulate investment and ensure that existing credits are not resold in the syndication market, thus checking the decline in LIHTC prices.

- Expand the LIHTC carry back rule from one year to five years to ease the downward pressure on LIHTC by allowing credits to be claimed by investors that may not have federal tax liability in the current year.

- Allocate funds to state housing finance agencies to make up equity shortfalls in developments which have LIHTC allocations but have not generated sufficient equity for the projects to move forward.

New Stormwater Regulations Proposed by EPA

"The U.S. Environmental Protection Agency (EPA) has proposed the first national effluent (discharge) limit for stormwater runoff from construction sites. Builders would have to meet EPA's technology-based "floor" on most sites by installing and maintaining a range of erosion and sediment controls

that "are generally recognized and accepted as effective" best management practices (BMPs). Construction sites disturbing 10 or more acres of land at a time would also need to install sediment basins to treat their stormwater discharges. In addition, a strict numeric limit on the allowable level of turbidity would apply to sites of 30 acres or more that are located in rainy areas where the soil has high clay content.

NAHB is developing technical, legal and economic comments on EPA's ELG proposal. The construction and development ELG proposal and other information are online at http://www.epa.gov/waterscience/guide/construction

The new EPA proposal could significantly impact the construction and development industry. EPA needs to hear from you and your members on the importance of retaining a storm water program that is flexible, cost-efficient, understandable, and workable on the ground. The 90 day comment period for this proposed rule ends on February 26, 2009.

To read more information click here.

HUD's Neighborhood Stabilization Program

PowerPoint Presentation provided by
Chris Collier, Executive Officers West Georgia HBA

HUD's new Neighborhood Stabilization Program (www.hud.gov/nsp) provides emergency assistance to state and local governments to acquire and redevelop foreclosed properties that might otherwise become sources of abandonment and blight within their communities. The Neighborhood Stabilization Program (NSP) provides grants to every state and certain local communities to purchase foreclosed or abandoned homes and to rehabilitate, resell, or redevelop these homes in order to stabilize neighborhoods and stem the decline of house values of neighboring homes. The program is authorized under Title III of the Housing and Economic Recovery Act of 2008.

Click here to view the PowerPoint Presentation.

HBAG Superheroes Membership Drive

You Are a Recruiter!
by Kelly Lass,  HBAG Interim Executive Vice President

HBA Superheroes Membership contest Phase Two will be kicked off at the Winter Board Meeting in Atlanta. We are looking for Recruiters & E.O.'s to come to our Recruiter training Session at 3:00 PM at the Marriott Marquis. We also want YOU or your member recruiter to dress up like a Superhero for the Kick-off Reception. Yes, you read that correctly! You can dress like Superman, Spiderman, Aquaman, Wonder Woman, or whoever! You get the picture. You want to know why? We are having a contest for the best dressed Hero! Representatives from Energy Star will judge this entertaining event. We will have door prizes too! Make sure not to miss this great opportunity for a little fun!

To learn more about the HBAG Membership Drive click here

Lewis Cenker Scholarship

DEADLINE FOR 2009-2010 SCHOLARSHIP APPLICATIONS IS MARCH 1ST!
by Jan Royals, HBAG Scholarship Coordinator

Lewis Cenker Scholarship Fund is a non-profit organization created in 1977 by the Home Builders Association of Georgia to honor the late Lewis B. Cenker--an outstanding Georgian and a national industry leader. He was an Atlanta builder and lawyer who served as President of NAHB in 1974. He is the only Georgian to have served in that position to date. He was a founding member of HBAG in 1955 and served as its president in 1969. He was President of the HBA of Atlanta in 1960.

For more information about the Lewis Cenker Scholarship Fund please contact HBAG at 800-248-2453 or visit the HBAG website at www.hbag.org or email Jan Royals

Click here to download the application.

2009 HBAG Winter Meeting and Legislative Luncheon

2009 Winter Meeting
February 17 and February 18, 2009
Marriott Marquis Hotel Downtown
Atlanta, Georgia

To register for the 2009 Winter Meeting and/or purchase your tickets for the Legislative Luncheon click here

2009 Winter Meeting Agenda

Hotel Information - Click here
Atlanta MarquisAtlanta Marriott Marquis
265 Peachtree Center Avenue
Atlanta, Georgia 30303

Directions to the Atlanta Marriott Marquis - Click here