Builders Magazine Jan/Feb 2011 by Builders Magazine

ALSO IN THIS ISSUE:

BANN-ER Awards: A Salute to An Industryâ&#x20AC;&#x2122;s Resilience BANN Gears Up For Challenging Legislative Session

Builders M A G A Z I N E contents The

president’smessage

JANUARY-FEBRUARY 2011

by Joe Lopez, President, Builders Association of Northern Nevada

Features 2

President’s Message

by Joe Lopez, President, Builders Association of Northern Nevada

Cover: The Sun Shines On Northern Nevada’s Hamilton Solar

BANN-ER Awards: A Salute to An Industry’s Resilience

As I See It:

It’s my distinct honor to pen this, my final message as the 2010 President of the

by Michael F. Dillon, Jr., Executive Director Builders Association of Northern Nevada

Northern Nevada Builder Elected NAHB Chairman of the Board

GIVING BACk: 2010: A “Giving” Year for the Builders Association Charity by Bobbie Merrigan, Executive Director, Builders Association Charity

BANN Gears Up For Challenging Legislative Session by Greg Peek, Chairman Legislative Committee Builders Association Northern Nevada

Advances Made Toward a Strong Home Building Market; Still More Challenges in 2011 by Jess Traver, Director of Government Affairs, Builders Association of Northern Nevada

Ferguson Enterprises Emphasizes Customer Satisfaction

Tax Relief Bill Includes More Positives Than Negatives for Builders

L/P Insurance Services: Building Upon A Strong Record of Service

Offering Legal Services Benefits Businesses and Employers

Departments 10

NAHB Update: NAHB Finds Small Builders are the Mainstay of Nation’s Housing Industry

18 Local Statistics

Builders Association of Northern Nevada. By the time you actually read this, your association will have installed its 2011 Officers and Directors. I can truly say it’s been a privilege I won’t soon forget. Writing this missive to all of you is the final chapter of every BANN president since the creation of The Builders Magazine more than a decade and a half ago. It’s traditionally been an opportunity to recall successes and to issue thanks and accolades. I would be remiss if I didn’t do the same. Associations such as ours are no accident—we’ve been extremely lucky to enjoy the guidance of an unparalleled Board of Directors…a group of men and women who take their job seriously. Who know that their decisions will influence the course of our industry for years to come. I thank each and every one of them for their service and their dedication. Once your Board has determined policy, its usually left to the staff to implement their decisions. Your BANN staff has many years of experience, and is instrumental in creating an environment in which committees are able to function, where innovation thrives, and where all are made to feel welcome and needed. I know that my job as President was made easier because of their talents. Committees and their chairmen are the nuts and bolts of BANN. Whether literally or figuratively, a “roll up the sleeves and get it done” mentality has resulted in successes during an unprecedented and challenging year. Their accomplishments are too numerous to mention—but you know of their continued support and hard work by the fact that many potential problems were headed off by their actions. BANN’s Executive Committee, comprised of Vice President Curtis Rowe— soon to be your 2011 President—Secretary/Treasurer Bill Thomas, Associate Vice President Pat Riley, and Immediate Past President Pam Parenti, spent untold hours on association business, considering how BANN is to be managed and making recommendations to the Board. All of the hard work has paid off, though, as your association continues its role of advocacy for your businesses, for our citizens, and for our industry. I offer my congratulations and best wishes to Curtis and his administration. He has the knowledge, the willingness, and the desire to move BANN to the next level. He’s going to do great things. Thanks to each and every one of you reading this message today. It’s been my privilege to be a part of the history of the finest construction trade association in Nevada.

20 Classified/Services Guide 2

THE BUILDERS MAGAZINE / JANUARY-FEBRUARY 2011

Joe Lopez

Tanamera Development

•• BANN-ER Awards: • •• A Salute to An Industry’s Resilience • W hen times are tough, what do you do? Why, you throw a party that won’t soon be forgotten! And that’s definitely what the Builders Association of Northern Nevada did for its members and those who attended the 14th Annual BANN-ER Award celebration, hosted on November 13th at the Atlantis Casino Resort. Knowing that the industry was craving a reason to celebrate—the increase in entries over the previous year was a testimony to that—BANN’s Sales and Marketing Council threw a celebration to remember. Attended by nearly 350 industry professionals, the ebullient crowd had plenty of reasons for enthusiasm, and was buoyed by the excitement exhibited by the evening’s winners. In addition to traditional entry categories such as Best Custom Home, Best Interior Design, and Best Marketing Professional, a number of new categories generated a great deal of excitement, including Best Use of Green Building Products, Best Interior Landscaping, and Best “On the Boards” Project. While winners and great food took center stage for awhile, the “stars” of the evening proved to be from outside of the building industry altogether. Back by popular demand, the David Martin House Party Band rocked the night away, engaging the audience in guitar competitions, in backup vocals, and in a line-dance on stage. All in all, an absolutely amazing night—one that won’t soon be forgotten. If you weren’t there this year, don’t worry…the 2011 event will soon be upon us. When you hear the call (for entries), respond. When you get your invitation (to attend), RSVP. You won’t want to miss it twice!

THE BUILDERS MAGAZINE / JANUARY-FEBRUARY 2011

Life’s tough. Business these days—particularly ours—can be even tougher.

As I See It

by Michael F. Dillon, Jr., Executive Director Builders Association of Northern Nevada

We’ve all heard it said that what doesn’t kill you strengthens you, and if this is the case, we’ll soon be stronger than ever. However, survival today isn’t so much a matter of endurance; while that’s important, of course, I believe that “smarts” will be what carries us through to the next level. We all need to face the fact that while our industry in Nevada may have slowed, the technology and science of building is gaining speed daily. New products are being developed and utilized, and more efficient ways of building our homes and commercial structures makes news daily. Recognizing this, the Builders Association of Northern Nevada, in conjunction with the University of Nevada and the Nevada Renewable Energy and Energy Efficiency Authority (REEEA), has embarked on an ambitious program of training the industry on the provisions of the 2009 International Energy Conservation Code (IECC). This important code will soon be adopted statewide, and in order to successfully navigate this new mandate, not only industry professionals but local governments, inspectors, plan checkers and even energy raters must be trained on its provisions.

Thanks to grant monies obtained by REEEA and the State of Nevada, this training will be offered free of charge at numerous locations throughout the state, and will cover residential and commercial construction under the 2009 IECC, lighting, plan review, and a number of other important topics. This training will be conducted by nationally recognized experts in the field of energy efficient construction, and is designed to provide the knowledge that will allow Nevada’s construction industry to comply with Department of Energy requirements. An ambitious statewide “gap” analysis will provide information on what local jurisdictions will require in order to implement the provisions of the new codes. The Builders Association of Northern Nevada will continue to bring to its members and the industry, educational opportunities in furtherance of its 501(c)(6) non-profit exemption. During 2011, you can all expect to see training offered in a wide variety of disciplines designed to enhance your company’s profitability, to increase your competitiveness, and to open new doors of opportunity as you navigate these troubled waters. For more information on upcoming training programs, give the BANN office a call or visit our website at www.thebuilders. com

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GIVING BACk

by Bobbie Merrigan, Executive Director, Builders Association Charity

2010: A “Giving” Year for the Builders Association Charity

“The measure of a man is not in the wealth he accumulates; it’s in what he has succeeded in sharing with others.” If this dictum is true, then our industry is wealthy indeed, as giving in 2010 exceeded our wildest expectations. Whether by donating a pint of much needed blood during one of the Charity’s blood drives, or by participating in the “Builders Giving BACk” golf tournament, or by adopting a family or donating a toy during our Holiday Toy Drive, the generosity…the spirit of “giving”…was never more apparent than was that exhibited during the year just past. No doubt it was challenging, but the BAC Board of Trustees always knew that the industry would pull through when called on. The Be Wine Valentine fundraiser resulted in a record turnout and an unprecedented number of silent auction gifts and bids. A truly memorable event! Proving that dreams do indeed become reality, generous builders, subcontractors and suppliers banded together to build every child’s dream—a true fairy-tale castle designed to fulfill the fantasies of young and old alike. Auctioned off in June, this “dream home’, accompanied by a colorful playhouse donated by the students of the Academy for Career Education, resulted in revenues that enabled BAC to continue to serve the underserved. The Builders Association of Northern Nevada and the Builders Association Charity, recognizing the difficult fundraising climate, held a joint golf tournament rather than competing for limited dollars by hosting separate events. Honoring industry leader Ray Pezonella, the tourney, held at D’Andrea Golf Club was an unparalleled success. Fall hunting enthusiasts—or those who love shooting in general—supported the Charity’s Fall Sporting Clays fundraiser by turning out a record number of teams, resulting in revenues that exeeded budget, for the highly anticipated annual event. Many in the industry (as well as their friends and coworkers) supported the Charity’s goal of 370 units of blood, raised during the year’s Blood Drives. Hosted every six weeks in the BANN Board Room, dozens of donors gave the gift of life to those in need. Lunch and homemade baked goods were provided at each event, thanks to the generosity of our Blood Drive sponsors—making it not so much of a chore as a pleasure. Last but certainly not least, generous companies made our final event of the year a rousing success—the Adopt-A-Family program brought holiday cheer to more than twenty families, providing gifts of toys, clothing, and other needed items to those who are not as fortunate as most. Our sincere thanks to our donors…our participants…our sponsors…our volunteers…to everyone who made sure that the Builders Association Charity’s call for assistance did not go unanswered. You heard us when we called—we succeed because of you.

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update

NAHB Finds Small Builders are the Mainstay of Nation’s Housing Industry Small home builders are the mainstay of the nation’s housing industry, including a sizable number of self-employed mom-and-pop operations, according to a new study by economists at the National Association of Home Builders. “Small businesses have always been the predominant force in housing and they lend this industry its economic vitality,” said Bob Jones, NAHB chairman and a builder from Bloomfield Hills, Mich. “We are seeing market conditions returning to normal in many parts of the country after a long, hard downturn, and these companies have the agility to move quickly and start leading the economy forward,” Jones said. “But first they need access to financing to build, which remains scarce during this critical phase of the recovery.” Jones also pointed out that in markets that are not yet feeling the effects of economic recovery—Florida, Michigan, Nevada, and California—the availability of construction financing will be of critical importance when they do. The study notes that the small builders and tradesmen who produce the majority of the nation’s new homes “compete in a fierce marketplace that challenges their economic survival. A much higher share of small businesses both enter and fail in the residential construction industry when compared to all U.S. firms,” according to the report. “The residential construction industry is very dynamic, and a large number of firms enter the industry each year and a large number exit each year,” the report says. “With few barriers of entry, start-up builders can launch their business with a single new home.” Most home builders and remodelers are small businesses, 10

“further facilitating movement into the industry when opportunities improve, and exiting either because of business failure or life-cycle decisions.” The report concludes that housing remains the domain of small businesses and looks at the Census Bureau’s Economic Census, which provides information on the size of businesses in various industries. Conducted every five years, the most recent census is based on business activity that occurred in 2007. Final tables for the construction industry were published in mid-October 2010. Among the report’s findings: Slightly more than 65 percent of all home building establishments had annual receipts below $1 million. Almost 31 percent generated between $1 million and $10 million; and 4.1 percent had more than $10 million. In 2007, 41,483 new single-family general contractors (who build on the owner’s land) did less than $1 million in business, about a 70 percent share of the 59,679 businesses in this group. Although multifamily general contractors tend to be somewhat larger, 42 percent of them also recorded less than $1 million in yearly sales or receipts. About 60 percent of the 35,378 “operative builders” (who own the land upon which they build) did less than $1 million in business. Eighty-four percent of 73,888 residential remodelers and 61 percent of 6,462 land developers saw less than $1 million. Some 25 percent of $89.3 billion in total construction value delivered by single-family general contractors in 2007 was subcontracted out. Subcontracting amounted to half of $34.6 billion worth of construction among multifamily general

THE BUILDERS MAGAZINE / JANUARY-FEBRUARY 2011

contractors, 22 percent of $180.1 billion for operative builders and 23 percent of the $52.1 billion for residential remodelers. These results are consistent with findings from NAHB’s monthly Builder Economic Council survey. Among the single-family builders responding, 40 percent said they subcontracted 100 percent of their work and another 39 percent subcontracted 76 percent to 99 percent of the work. The same builders used 24 specialty trade contractors in the process of building the average single-family home. Seventy-four percent of a total of 477,950 specialty trade contractors rang up less than $1 million in business in 2007. Under U.S. Small Business Administration standards, at least 96 percent of residential builders and remodelers were small (defined as doing no more than $33.5 million in annual business). Also considered small were 94 percent of land developer (less than $7.0 million) and 98 percent of specialty trade contractor (less than $14 million) establishments. Most of the home building and trade contractor establishments were far below the SBA ceilings. Looking beyond the Economic Census, which only counts establishments with employees on the payroll, NAHB estimates that the ratio of the income of usually small, self-employed independent contractors to wages and salaries generated in the construction industry is one to four. This is compared to a ratio of one to 10 in some other industries, such as manufacturing. “Tax reform has been of particular importance to these small builders,” pointed out Jones. “Tens of thousands of construction workers nationwide are currently seeking employment in their field, or are underemployed. It’s the smaller builders who will be looking to ramp up when a sustained recovery occurs. They’ll be seeking the services of subcontractors, who will also need to hire additional employees to service the demand. It’s coming—and you can believe our industry will be ready to respond.” (For more information on what the National Association of Home Builders— NAHB—is doing to assist in an industry recovery, contact NAHB at 800-368-5242 or visit the NAHB website at www.nahb. org)

by Greg Peek, Chairman Legislative Committee Builders Association of Northern Nevada

BANN Gears Up For Challenging Legislative Session W hen the 76th Regular Session of the Nevada Legislature convenes on February

7th, 2011, it will face an up to $2.7 billion biennial budget shortfall, depending on whose numbers you use. It’s been reported that we have the largest budget gap relative to the size of our economy and population of any state. By nearly every measure, our state is in serious economic trouble. Some heated debate and some very tough choices are on the horizon. Throw in the fact that nearly half of our lawmakers are freshman and we have the makings for one of the most interesting, yet painful legislatures of modern time. But, there is hope—there is high hope that our leaders will seize this opportunity to re-invent government. Guided by the central question, “What should be the role of government in our lives?” I am hopeful our Governor and legislative leaders will come together to reduce the size, scope and cost of government, restructure our revenue (tax) system to make it more fair and stable, and to (finally) figure out how to truly diversify our economy. Job creation through attracting new businesses and developing new economic sectors and industry is critical. Our leaders must work

to keep Nevada at the top of the “Best Places to Do Business” list. Our home building industry plays a central role in our economic recovery. Not only are we a near-perfect economic barometer—when jobs disappear and our population shrinks, people no longer buy homes—home builders arguably create more jobs and more economic benefit than nearly any other industry. When we build a home, we employ local workers, engage local subcontractors, and pay permit fees and state, county and city tax every step of the way. When we sell new homes, the buyer needs insurance, furniture, landscaping and many other services, all of which employ local workers and add to the economy. In turn, those that provide those services need a place to live, and the economic cycle continues. A continuing threat to the home building industry is Nevada’s construction defect law. Our industry is one of the only industries (if not the only industry) in the entire United States that award automatic attorney’s fees. In other words, the lawyers get paid first and gets paid regardless of whether there’s a defect and/or whether that defect is repaired. Nevada law has proven to be flawed and unworkable, and often

does more harm than good. The law has resulted in many contractors being denied the opportunity to fix the issue (if there is one); the insurance company settles, the attorneys and their expert out of state witnesses take half, and the homeowner gets half, which generally doesn’t fix anything. When the homeowner goes to sell their house, they find out they have to disclose all the “defects” and their house value gets lowered. Correcting Nevada’s flawed construction defect law is the number one priority for the Builders Association of Northern Nevada. During the 2009 legislature, legislation fixing construction defect passed the senate, but wasn’t even granted a hearing in the assembly. BANN has been working as part of the Coalition for Fairness in Construction to educate the public and legislators about the flawed law and the negative impact it has on our economy. The Coalition has identified four main legislative priorities: elimination of automatic attorney’s fees, reducing the ten-year statue of repose, creating a common-sense definition of defect, and creating a realistic framework in which responsible contractors can fix true problems. By all accounts, this will be Continued on page 20 Visit: www.BuildersMagazine.com

applied and not exceedingly expensive. > Recognition of and appreciation for local governments’ delay in the adoption of new and costly codes until a reasonable time after industry recovery. > Building upon our success in 2009 in opposing efforts to use water planning to trigger negative growth and possible economical collapse in Truckee Meadows. In 2010, we supported the Western Regional Water Commission and Regional Planning Agency in amending local law in relation to planning processes which supports growth and preserves our water resources past 2050. > Support of the merger of Truckee Meadows Water Authority and Washoe County Water Resources, including the promotion of TMWA and WCWR providing water rights through acquisition and regional conservation plans designed to use our resources efficiently. > Opposition to the creation of a “super agency” called the Truckee River Flood Project. We support projects to prevent flooding, but there needs to be a clear cost/benefit to the community. Cost estimates for this project continue to escalate, from $117 million in 1998 to today’s estimate of up to $1.6 billon, done without a vote of the people. We need jobs in the community but at the same time we should not bankrupt the economy. > Successfully working with the State Fire Marshall and local Fire Departments to delay adoption of the 2009 fire code and amendments.

Although discussion will continue on the installation of fire sprinklers in new homes, builders will have time to present their comments in future workshops for the adoption of the 2012 codes. > Resolving to curtail the continuing drain on Nevada’s contractors and our economy by unwarranted construction defect claims. The industry faces crisis as providers of general liability and construction liability leave the state. NRS Chapter 40 must be changed to include the right to repair (remedy/fix/cure) before going to court and right to be released from liability. We will support meaningful tort reform on frivolous defect lawsuits to include caps on damages. Homeowners must be provided the assurance the defect will be fixed and the contractor the ability to perform the fix.

The question that must be asked in 2010 is, “Do our leaders recognize the new economic landscape in Northern Nevada?” Our citizens seem to be much more attuned to the obvious relationship between the housing industry and economic prosperity. Scoffing at the benefits of housing and growth is no longer debatable. Despite the state of the economy and recognition of growth’s role in strengthening it, there is still reluctance to embrace more sensible postures toward recovery. I am optimistic that the challenges of 2011 will lead to a stronger housing market and economy. The future of the home building industry is bright and will eventually rebound. Our future market will depend on a voice from the Builders Association of Northern Nevada—to be part of that voice you must be involved. BANN was created to listen to our members’ message. Your input is vital to the future of the home building market.

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BANN Affinity

M A G A Z I N E

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Legal Services. Affordable legal assistance for business owners and their employees. Call (775) 338-2791 for more information.

Medical Insurance. Offered through Hometown Health, association members can save money through the power of our group—more than 10,000 strong! For more information, visit www.hometownhealth.com or call (775) 982-3100.

24 Years of Building–1985-2009 Cafeteria / Section 125 Plans. The Builders has partnered with JD Benefit Services to offer significant discounts for our members on Section 125 Tax Savings Plans and Supplemental Benefit Plans. Call (775) 337-1175 for more information. Warranty Program. 2-10 Home Buyers Warranty provides a variety of solutions for home builders through an insurance-backed 10 year structural warranty that helps define the builder’s legal liability. Contact Patricia Raymer at (916) 3656192 for more information.

Serving the Reno/Sparks Area for 24 years

localstatistics

BUILDING PERMITS Multifamily Units

Reno Single Family Multifamily Sparks Single Family Multifamily

2010 #Units/Valuation

2009 #Units/Valuation

328/$68,892,719 134/$13,564,763 84/$17,571,430 0/$ -0-

2008 #Units/Valuation

251/$49,711,164 235/$30,340,855

Washoe County (Unincorporated) Single Family 29/$24,265,529 Multifamily 0/$ -0Combined Total Single Family 386/$98,768,837 Multifamily 134/$13,564,763

Residential Permit Valuation

In $Millions

#Units Permitted

Single Family Construction

JANUARY 1 – NOVEMBER 30

111/$19,237,456 10/$ 5,743,720

66/$22,430,072 0/$ -0-

428/$91,378,692 245/$36,084,575

617/$124,888,353 54/$ 86,795,000

115/$ 20,825,129 37/$ 28,496,285

143/$ 42,808,321 0/$ -0875/$188,521,803 91/$115,291,285 Visit: www.BuildersMagazine.com

BANN

Committees & Councils Safety and Training Committee Charged with developing programs that benefit members’ businesses and the need to emphasize a safe working environment, this committee also provides resources for training programs and regulatory compliance. Meets: Bi-monthly, 2nd Thursday at 7:00 am Staff Liaison: Jess Traver jesst@thebuilders.com Energy & Conservation/Built Green Nevada Addresses the growing interest in green building and water conservation. Monitors and reviews other similar programs created and adopted in other states, particularly those with similar climate zones. Meets: 1st Monday of each month at 12 pm Staff Liaison: Jess Traver jesst@thebuilders.com Chair: Robb Wong, Guidenby Codes/Infrastructure & Planning Monitors and oversees technical aspects of home construction. Reviews local land use, infrastructure and planning issues impacting development and construction. Monitors all 3 local building jurisdictions in Washoe

Legislative Session Continued from page 11

heavy lifting for our industry. But, through a concerted education campaign and an appeal to basic fairness, we are optimistic. Besides the Nevada budget and construction defect, we’ll be working on other issues, such as: OSHA 10 & 30 regulatory requirements, energy efficiency and audits, tentative map extensions, transportation, water resource planning, affordable housing and education, just to name a few. As the chair of BANN’s legislative committee, I urge you to get involved. We literally need all hands-on-deck. With the decimation of our industry and with the explosion of regulation, there are fewer people in our industry to do more work. We need everyone to stay informed and to advocate for a better economic climate. The 2011 legislative session will indeed be historical. I have high hope that it will be historical for the right reasons. (For information on how you can get involved and informed regarding our industry’s legislative efforts, or to sign up for Legislative Committee meeting notices, contact the Builders Association of Northern Nevada at 775-329-4611)

County, as well as other agencies that impact the industry (TMWA, TRPA, RTC, Health Department). Meets: 2nd Monday of each month at 12 pm Staff Liaison: Jess Traver jesst@thebuilders.com Chair: John Krmpotic, KLS Planning Legislative Committee Keeps abreast of issues at state and federal levels that affect the construction industry. Reviews and takes action on bill drafts that affect our industry. Interviews candidates for public office at local and state levels. Meets: Tuesdays at 7:30 am or as called by Chair Staff Liaison: Jess Traver jesst@thebuilders.com Chair: Greg Peek, ERGS Membership Committee Works to recruit new members, retain current members, and develop member benefit programs. Events include Membership Drive, and General Membership Meetings. Meets: 1st Wednesday of each month at 12:00 pm Staff Liaison: Patty Ferguson patty@thebuilders.com Chair: Michael Ellis, Reno Truss Spike Club Recognizes and rewards association members who recruit new members. Members achieve Spike status by

recruiting 6 new members to the association. Spike Club members act as official ambassadors to new association members. Meets: 1st Wednesday of each month at 12:00 pm Staff Liaison: Patty Ferguson patty@thebuilders.com Chair: Ray Pezonella, Pezonella Associates Public Relations/Sales & Marketing Council Provides a forum for the exchange of ideas and educational opportunities for sales and marketing professionals. Considers public relations campaigns and industry promotional opportunities. Major events include Forecast and Beyond and the annual BANN-ER Awards. Meets: 1st Thursday of each month at 8:00 am Staff Liaison: Missy Hinton missy@thebuilders.com Chair: Rachelle Goodness, The Builders Magazine Remodelers Council A new addition to the association, the council is an organization of remodelers and industry associates dedicated to the promotion of excellence and professionalism through education, certification and service to the community. Meets: Third Monday of each month at 12 pm Staff liaison: Jess Traver, jesst@thebuilders.com Chair: Tony Abreu, ASA Construction

Classified Services/Guide BLUEPRINTING

INSURANCE & BONDING

Planning for Life’s uncertainties

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20 THE BUILDERS MAGAZINE / JANUARY-FEBRUARY 2011

$60 PER COL. INCH Call 775.355.9288