REMODELER AWARDS OF EXCELLENCE
MID-ATLANTIC
Vol. 54 Issue 1 January/February 2012 www.homebuilders.org
Excellence in
REMODELING HBAM Remodelers Announce 2011 Award Winners
Providing Insulation Solutions SPRAY-ON • BLOW-IN • BATTS • ROLLS • MINI ROLLS • LOOSE FILL
Installing insulation is a pretty important job for builders large and small. There is usually a small window of time in the builder's schedule to insulate. And the builder needs to trust that the insulation products are high performing and installed right the first time. Myers products and installation crews are key to its growth in this business. The team collectively has over 100 years of insulation installation experience. “Myers crews are Myers employees, who were hired based on their experience in the insulation field", states department manager Neil Lamparter. "We include one additional step in our installed insulation process. The team always follows up with our customers when the job is complete. We know that our customers don’t want call-backs and this step allows us to address any questions immediately” adds Lamparter. In addition to second to none customer service, you can count on Neil and his team for: • Competitive pricing • Reliable & proven products • Accommodating scheduling • On-site meetings
• All necessary measurement • Guaranteed quotes • Project guarantees
Want to find out more or get an insulation estimate? Contact Department Manager, Neil Lamparter at 717.814.4454 or neil.lamparter@jhmson.com. Aberdeen, MD 20 S. Philadelphia Blvd. 443-327-7933
Camp Hill 3442 Simpson Ferry Rd. 717-737-0471
Chambersburg 1090 S. Main St. 717-263-9151
Dallastown 217 E. Maple St. 717-244-4077
Hanover 108 Ram Dr. 717-632-0217
York 2200 Monroe St. 717-792-2500
January/February 2012 Vol. 54 Issue 1
MID-ATLANTIC ON THE COVER Sparks Rd. Kitchen, Greenleaf Remodeling PHOTO BY alangilbertphotography.com BELOW Johnson Residence, Timberlake Building and Renovation
PUBLISHER John Kortecamp
EDITOR Kristin Josephson Hogle, Editor communications@homebuilders.org
ADVERTISING Chris Baughan, Advertising Sales Manager 410-265-7400, ext. 121 chris@homebuilders.org
DESIGN Heather Winkel, Art Director Kristina Hopkins, Graphic Designer Network Design Group ndg@networkmediapartners.com
HBAM LEGAL COUNSEL Linowes and Blocher
MID-ATLANTIC BUILDER
Excellence in Remodeling
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Recoup Your Building Costs
31 32 34
HBAM Remodelers Announce 2011 Award Winners. Learn more about how to gain tax savings from your building and remolding projects by taking advantage of a concept called cost segregation.
Plan Maryland for Dummies
Plan Maryland is a effort to coordinate state agencies and local governments to control future growth and development.
Expiring Housing Tax and Finance Law
Among the tax extender items are a number of housing and construction policies. Find out if your bottom line is on the line.
NAHB International Builders’ Show Wraps Up in Orlando
Fed Chairman Ben Bernanke tells attendees that efforts to address the many interlocking factors holding back the housing market will pay dividends in the long run.
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Flawed Appraisals
40
The New American Home 2012
2
Also
44 Green Building Corners Maryland Community Builders’ Foundation BRAC
55 56
Departments 4 6 8 48 50 52
Publisher’s Message President’s Message Events New Members Stats and Facts Government Affairs
Postmaster: Send address changes to Home Builders Association of Maryland, Inc., 7127 Ambassador Road, Suite 150 Baltimore, MD 21244.
ECO BOX Mid-Atlantic Builder text and cover pages are printed on SFI certified Anthem Matte using soy ink.
• The Sustainable Forestry Initiative® program promotes sustainable forest management.
Pages 27-30 Pull-Out Section MID-ATLANTIC
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is a publication of HBAM Member Services, Inc., a subsidiary of the Home Builders Association of Maryland, Inc., 7127 Ambassador Road, Suite 150, Baltimore, MD 21244 410-265-7400, www.homebuilders.org.
Remodeler A supplement to Mid-Atlantic Builder
Too often, due to faulty appraisal practices, brand new homes get compared to undervalued, distressed properties. This home is a real-world laboratory demonstrating concepts, materials, designs and construction techniques that can be replicated in housing built in any place and for any price range. MID-ATLANTIC BUILDER JANUARY/FEBRUARY 2012
HBAM Remodelers Council Award of Excellence LangKuhn, LLC, Placid Court Residence Whole House – $750K - $1M
www.homebuilders.org
See security & peace of mind in a new light Design assistance, installation, service and maintenance are a snap with BGE Outdoor Lighting.
See security and peace of mind in a new light.
BGE Private Area Lighting Program
See our lighting and pole options. Ask for a copy of our brochure.
Lots of choices — without lots of hassle! BGE Outdoor Lighting is the area’s leading provider of outdoor lighting service — and the smart choice for your residential or commercial outdoor lighting needs. With design assistance, installation, service and maintenance, BGE’s Private Area Lighting Program offers the complete package. For more information or to schedule an appointment with a BGE Private Area Lighting account representative, please call 410-470-9446 or visit www.bge.com/outdoorlighting.
2012 HBAM LEADERSHIP Photo Credit Stuart Zolotorow
EXECUTIVE COMMITTEE Rod Hart President
Scott Armiger President Elect
publisher’smessage
Russell Dickens First Vice President
Jonas Jacobson Associate Vice President
Cynthia McAuliffe Secretary
Let’s Hear it for the American Consumer There were several periods during the past year when it began to look as though we were beginning to see sustainable improvement in the building industry. Consumer confidence
and spending, sales and prices, starts and permits all showed signs of improvement and taken together it appeared as though a modest but meaningful momentum was beginning to build. And then… thud! Japan’s tsunami, congressional theatrics over the federal budget, Greece and the Euro meltdown threat combined with Moody’s lowering of U.S. credit worthiness; each in its turn, succeeded in taking the “air out of the balloon.” As we all painfully learned, there was to be no “lift off” in 2011. So here we are early in 2012 and guess what? Things are again looking up. We all gave ourselves a year end gift by spending more during the holidays than anyone had projected. As of today, the stock market is nearing 1300, unemployment is down to 8.3 percent and interest rates remain at historic lows and the Fed says it will hold them there through 2013. Yes, Southern Europe is still a mess, foreclosures continue to be a real concern and it’s an election year, so we can all expect more of the same from our elected “leaders” all of which could bring the hammer down on us again this year. But… I have tremendous faith in the American consumer who is definitely tired of being on the sidelines.
Since buying a small home two years ago on the “Sun Coast” in Florida (4 miles from the beach), I have become an interested observer in Florida’s real estate market. If it could be taken as a barometer for overall economic activity and consumer behavior (no one is suggesting that it should be), then things might truly be moving in the right direction. Construction and sales are quite brisk and the future looks very promising thanks to us “Boomers.” We are only seeing the effect of the first tier of that generation to reach retirement. In a survey of soon to be retirees regarding their retirement plans, an amazing 54 percent who intend to relocate in retirement said the current economic climate would not affect their decision to do so. That’s the kind of thinking that made America great (and I’m only kidding a little bit here) and that’s the kind of attitude that will ultimately get us out of this malaise. Simply said, “We’ve had enough and we’re not going to take it anymore!” Here’s to the American consumer and here’s to our return to prosperity.
John Kortecamp HBAM Executive Vice President
Lisa Junker Treasurer
Robert Goodier Immediate Past President
CHAPTER PRESIDENTS Robb Aumiller Baltimore County Evan Gilligan Anne Arundel County Paul Mueller Carroll County Russ Robertson Baltimore City Jeremy Rutter Howard County Dan Whitehurst Upper Chesapeake
COUNCIL PRESIDENTS David Murphy Land Development Council
Cindy Plackmeyer Sales and Marketing Council
Joseph Smith, CGR, CAPS, CGP HBAM Remodelers
William Zahler Maryland Residential Green Building Council
BOARD OF DIRECTORS Steven Gilman Scott Barhight Tom Baum Steve Breeden Mike Breen Ron Carstens Patrick Costello Sean Davis Brenda Desjardins Tim Ellis, LEED AP, CPE, CGR, CGP Chickie Grayson
Joe Gregory Cindy Huntzberry Steve James Sandy Marenberg James Mathias Michael McCann Tim Morris Dan Murtaugh Jeff Ott Steve Rubin Jake Ruppert Kevin Sapp
ALTERNATE DIRECTORS Lou Baker Jay Hergenroeder Joe Hikel Tim Hudson Jim Hunter
Theresa Leatherbury Tim Naughton Leslie Rosenthal Matthew Wineman
EX OFFICIO MEMBERS Frank Hertsch Jack Orrick 4
MID-ATLANTIC BUILDER JANUARY/FEBRUARY 2012
Howard Perlow Chris Rachuba www.homebuilders.org
Visit www.homebuilders.org for an on-line listing of Mid-Atlantic Builder Photo Credit Studio Z
advertisers with hotlinks. There, you can also view MAB archives and find information on upcoming events and current industry issues.
president’smessage An Exciting Year of Opportunity for our Association! To all the fellow members of the Homebuilders Association of Maryland, it is my pleasure to serve as the President for 2012. On behalf of the rest of
the membership, I would like to thank last year’s President, Bob Goodier, for his outstanding leadership and continual contributions to our industry. Speaking of our industry, everyone is asking is each other…“is this the year”? Is this the year when we see a significant increase to each of our businesses? We’ve been waiting for several long years now. So, while there are encouraging signs, most of us have adjusted our mindsets and business plans to “what we have today is our market”. We still have to remind ourselves our local market is favorable, compared to many others. 2012 will be an important year for HBAM. • The Maryland Center for Housing will open later this year. You have the chance now, to be a part of the future home of our home building association. Look for more updates on this exciting project and opportunities to participate in this issue of Mid-Atlantic Builder. • Legislative issues affecting our industry will be challenging all of us daily. We need to ensure our voice is heard and we give ourselves the best opportunity for a fair outcome. This is a shared effort for all of us...and therefore we need support from everyone. • It’s our loss that John Kortecamp is retiring after 16 years of leading our association. His contributions as our Executive Vice President have been immeasurable. However, John is not resting on his laurels. He has very ambitious plans for the year! 6
MID-ATLANTIC BUILDER JANUARY/FEBRUARY 2012
Is this the year when we see a significant increase to each of our businesses? • We need more members! We have many companies that are involved in our industry that are still not members. In our own businesses, we continually make decisions relative to cost vs. benefit. Well, joining HBAM is an easy decision. I’m asking all of you to make recruiting a priority for 2012. Felicia Fleming, Director of Membership, will be reaching out to you to get your commitment for helping us bring in new members. Mark your calendars and make arrangements for our events this year. Builder Mart on March 21st is a must attend event. Have you registered as an exhibitor? Have you purchased your ticket to attend? This year an education element has been added so you can come to learn, network and close some deals. I’ll see you there. Let’s make this a prosperous year for our association!
DIRECTORY OF ADVERTISERS Appliance Distributers Unlimited 5 BGE Outdoor Lighting 3 Builders Mutual Insurance 21 California Closets 55 GE Contract Sales 30 John H. Myers & Son 1 Mid Atlantic Propane & Gas Inside Front Cover Southern Pacific Supply 7 Saratoga Insurance Inside Back Cover Versatex Trimboards Back Cover Walbrook Mill & Lumber 42 For advertising opportunities please contact Chris Baughan at chris@homebuilders.org or 410-265-7400, ext. 121 DID YOU KNOW? “Magazine readers pay attention to magazine ads. They don’t avoid the advertising as they do with other media.” Source: BIGResearch Simultaneous Media Usage Study
Rod Hart 2012 HBAM President
www.homebuilders.org
Events
CALL 410-265-7400 for information on registration for our events or visit www.homebuilders.org.
Builder Mart 2012 March 21st, 2012 | 11 am – 6 pm | Maryland State Fairgrounds
Builder Mart is the home building industries largest one day trade show in the region. With over 400 exhibits and 5,000 attendees there is something for everyone. In its 42 year, the show is fresh and new and it still features the key reasons people come back year after year. Builder Mart is proud to be featuring over 8 education and information sessions, an improved all you can eat and drink bull and oyster roast and networking with industry VIP’s. Don’t miss Builder Mart 2012! For more information and to get your tickets visit www.buildermart.org.
Event/Education Schedule
3:30 – 4:30
9:00 – 11:00
The Sales and Marketing Council presents: Marketing for the Small Builder
SMC and Marketing Council presents Ravens Coach John Harbaugh – brought to you by Bob Lucido Team RE/MAX Advantage Realty SOUTH HALL - 1 HOUR SESSIONS 11:30 – 12:30
The Sales and Marketing Council Presents: Your Guide to Social Media with Dennis O’Neil of O’Neil Interactive
NORTH HALL - 90 MINUTE SESSIONS 11:30 – 1:00
HBAM Remodelers Present: A Primer on Window Flashing 1:30 – 3:00
The Land Development Council Presents: A case study on new stormwater management rules
MAX Awards Thursday May 17th Martins West
The MAX program is sponsored by the Sales and Marketing Council of HBAM and recognizes local home builders who provide buyers with excellence in design, livability and value. The program also recognizes excellence in sales and marketing across the home building industry. Even if you are not a home builder, if your company has done some exceptional marketing in 2011 there is a category for you to enter. For a complete list of categories and entry information please visit www. homebuilders.org/page/max/. The event is black tie optional; features a 90 minute open bar cocktail reception and a seated dinner during the awards program.
12:30 – 1:30
Legislative Update with Maggie Witherup from Gordon Feinblatt, LLC. 1:30 – 2:30
The Sales and Marketing Council presents: A Discussion with Building Icon Jim Ryan, founder of Ryland Homes
1:00 – 3:00
The Maryland Residential Green Building Council Presents: Test your knowledge of the 2012 International Energy Conservation Code
2:30 – 3:30
HBAM Remodelers Present: An Update on OSHA Regulations
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MID-ATLANTIC BUILDER JANUARY/FEBRUARY 2012
www.homebuilders.org
The Industry’s Largest One Day Trade Show
WWW.BUILDERMART.ORG • March 21, 2012 • 11 am-6 pm Maryland State Fairgrounds • 2200 York Road, Timonium, MD 21093
DON’T MISS THE ALL NEW BUILDER MART 2012 HURRY! EARLY BIRD TICKET PRICING ENDS 2/1/12
Home Building
• The Sales & Marketing Council Presents Baltimore Ravens’ Head Coach John Harbaugh
from Start…
• A Discussion with Building Icon Jim Ryan - Founder Ryland Homes
…to Finish. All in One Day, All in One Place!
• Network with Top Building Professionals • Top Decision Makers From The Finance, Real Estate and Building Industries and More • 5,000 Attendees and 400 Exhibitors • All New Education and Information Sessions* • The Legendary All-You-Can-Eat Bull and Oyster Roast • All-You-Can-Drink in our Beer Garden
FEATURED MORNING SPEAKER
RAVENS HEAD COACH JOHN HARBAUGH
Be Relentless And Win! SMC
SALESCAMP
Presented By
Your home sold. Guaranteed.
For more information contact: Carey Swift, Director of Events and Tradeshows Home Builders Association of Maryland 410-265-7400 Ext. 118 Carey@HomeBuilders.org
* Visit our website for more information
Advantage Realty
WWW.BUILDERMART.ORG
AWARD OF EXCELLENCE Interior Remodel – $100,000 - $200,000 Owings Home Services Harbor Court Project
Excellence in
REMODELING HBAM Remodelers Announce 2011 Award Winners 10
MID-ATLANTIC BUILDER JANUARY/FEBRUARY 2012
www.homebuilders.org
T
he HBAM Remodelers announced the winners of the annual Remodeling Award of Excellence competition on November 10th at the BWI Westin. This program, in its 21st year, serves to recognize excellence in remodeling design and craftsmanship, to create a greater public interest in the remodeling industry and to recognize outstanding contributions by individuals and companies in the remodeling industry.
An evaluation team that consisted of remodeling contractors from around the Baltimore Metropolitan area rated all entries. The criteria used to judge the entries included: quality of construction, degree of difficulty, value and cost effectiveness, unique and creative design approach and sensitivity to existing structure. An individual award was presented for Remodelers Associate of the Year. It went to Cheryl Crowther of Thos. Somerville Co. for being an active supporter of the HBAM Remodelers, serving on their Board and committees and for championing the council programs and events. www.homebuilders.org
JANUARY/FEBRUARY 2012 MID-ATLANTIC BUILDER
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SILVER Other – $50,000 - $150,000 James Contracting, Inc. Heymann Project
AWARD OF EXCELLENCE Accessible Living Award Greenleaf Remodeling Canton Cove Master Bath
SILVER Whole House – $750,000 - $1,000,000 Purple Cherry Architects Mill Creek Residence
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AWARD OF EXCELLENCE Outdoor Living – $50,000 - $100,000 Plumb Construction Company, Inc. O’Brien Renovations MID-ATLANTIC BUILDER JANUARY/FEBRUARY 2012
www.homebuilders.org
SILVER Interior Remodel – $100,000 - $200,000 Timberlake Building and Renovation Johnson Residence
AWARD OF EXCELLENCE Other – $250,000 - $350,000 Lynch Construction, LLC Ashgrown Way Project
AWARD OF EXCELLENCE Historic Restoration Azola & Associates Bosley Hall www.homebuilders.org
JANUARY/FEBRUARY 2012 MID-ATLANTIC BUILDER
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AWARD OF EXCELLENCE Kitchen Remodel – $50,000 - $100,000 Owings Home Services Mallenbrook Project
SILVER Outdoor Living – Under $50,000 T.W. Ellis, LLC Wasson Project
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MID-ATLANTIC BUILDER JANUARY/FEBRUARY 2012
www.homebuilders.org
SILVER Outdoor Living – $50,000 - $100,000 James Contracting, Inc. Miller Project
SILVER Whole House – $100,000 - $500,000 Starcom Design Build Herbert Renovation
AWARD OF EXCELLENCE Exterior Remodel – $50,000 - $100,000 James Contracting, Inc. Ramsburg Project
www.homebuilders.org
JANUARY/FEBRUARY 2012 MID-ATLANTIC BUILDER
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AWARD OF EXCELLENCE Whole House – Under $100,000 Signature Companies Gregory Residence
SILVER Outdoor Living – Under $50,000 T.W. Ellis, LLC Lynn Project
AWARD OF EXCELLENCE Outdoor Living – $50,000 - $100,000 bluehouse architecture Monkton Screened-in porch
AWARD OF EXCELLENCE Other – $50,000 - $150,000 Starcom Design Build Preston Renovation
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MID-ATLANTIC BUILDER JANUARY/FEBRUARY 2012
www.homebuilders.org
AWARD OF EXCELLENCE Whole House – $750,000 - $1,000,000 LangKuhn, LLC Placid Court Residence
SILVER Kitchen Remodel – $50,000 - $100,000 Delbert Adams Construction Group Chefs Kitchen www.homebuilders.org
JANUARY/FEBRUARY 2012 MID-ATLANTIC BUILDER
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AWARD OF EXCELLENCE Kitchen Remodel – $150,000 - $200,000 JFK Construction Services Glusman Kitchen Remodel
SILVER Bathroom Remodel Wood Builders Collaborative Stillridge Retreat
AWARD OF EXCELLENCE Exterior Remodel – $250,000 - $300,000 Owing Home Services Greencroft Project 18
MID-ATLANTIC BUILDER JANUARY/FEBRUARY 2012
www.homebuilders.org
SILVER Interior Remodel – Under $100,000 Robert Kutner Associates, Inc. Blumberg Residence Basement
SILVER Interior Remodel – Under $100,000 Lampost Remodeling Butler Basement
AWARD OF EXCELLENCE Specialty Details Fick Bros Roofing & Exterior Remodeling, Inc. Corbin & Smit Residences
AWARD OF EXCELLENCE Bathroom Remodel Lampost Remodeling Conklin Master Bath
SILVER Whole House – $100,000 - $500,000 Owings Brothers Contracting Severna Park Project
www.homebuilders.org
JANUARY/FEBRUARY 2012 MID-ATLANTIC BUILDER
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PHOTO BY alangilbertphotography.com
SILVER Kitchen Remodel – $150,000 - $200,000 Greenleaf Remodeling Sparks Rd. Kitchen
SILVER Other – $250,000 - $350,000 LangKuhn, LLC Residence in Crownsville
AWARD OF EXCELLENCE Outdoor Living – Under $50,000 Delbert Adams Construction Group Remodeled Outdoor Living Space 20
MID-ATLANTIC BUILDER JANUARY/FEBRUARY 2012
www.homebuilders.org
WE TAKE THE LOAD , OFF. IT S THAT SIMPLE.
For thousands of years, simple machines like the pulley have helped civilizations build structures that would have otherwise been impossible. And since 1984, Builders Mutual has been dedicated to helping builders ease the burden of choosing and managing insurance. We offer straightforward tools like risk management and Builders University to help protect your bottom line. If you’re in construction, the insurance choice is simple.
Ask your agent about us. Or read more at buildersmutual.com.
Recoup Your Building Costs Using the IRS depreciation rules to your advantage
BY DAVID A. LANDMAN, CPA, CFE
D
espite the economy, commercial construction is taking place. And while Congress has significantly expanded the tax depreciation deduction, countless business owners as well as their tax practitioners are simply unaware of the significant tax savings that can be utilized from their building or remolding projects. This involves a fantastic concept called “cost segregation.�
For background information, the cost of property such as buildings, improvements, furniture, equipment and automobiles, are generally required be depreciated over IRS pre-determined years based on the type of property and their IRS defined useful lives. Non-residential buildings and improvements are required to be depreciated over 39 years while residential buildings such as apartment complexes are depreciated over 27 ½ years. Other depreciable assets are expensed over a number of years ranging from five to fifteen. In addition, despite these requirements, for most tangible business property besides buildings, improvements and automobiles, the 2011 law allows for a $500,000 special write-off known in tax jargon as “Section 179”, if the tangible property is placed in service sometime during the year, as long as the writeoff does not create a net loss for your company. This write-off is only allowed if your total depreciable property placed in service is less than $2 million. To make life more exciting, if you don’t qualify for “Section 179,” the 2011 tax code now allows businesses to take a 100 percent bonus write-off of the cost of new (not used) property that is usually required to be depreciated over 20 years or less. Therefore, for example, if you were to invest $150,000 in new furniture and equipment, you would be allowed to write off the entire cost of this property. If the company would be in the 35 percent tax bracket, it would save itself as much as $52,500 in taxes which could be used to recoup 35 percent of the cost of the fixtures. This bonus depreciation may, by law, create a loss to the company, which can then (in certain cases) be carried back to the last two years to claim refunds for taxes previously paid. In contrast, since the cost of buildings are not subject to “Section 179” or bonus depreciation, many tax practitioners take the entire cost of buildings and write them off over 39 or 27 ½ years! This is where “cost segregation” comes in. What these tax practitioners do not know, is that the tax courts have long decided that many specific components of a building can be considered for income tax purposes to be tangible property instead of the building. The upshot of this is that these components would be eligible for the Section 179 write-off, bonus depreciation or depreciation over a shorter period of five to fifteen years, which translates to huge tax savings. Typically, the more specialized the building, the more components there will be that can qualify for the accelerated write off. As such, specialized wiring for telephones, computers and machinery; plumbing used for equipment; or air conditioning installed for protection of computers may be classified as tangible property, to name a few examples. While the IRS had acquiesced to the tax courts, the IRS is still closely scrutinizing these cost segregations. The IRS contends that “cost segregations may not be based on taxpayers’ estimates or assumptions that have no supporting records” and therefore the IRS will be looking for significant basis in which to deem part of a building as tangible property. Typically, this means detailed statements from engineers and architects. For those companies who plan to construct, or have already constructed a building or have done renovation work, be sure to speak with a cost segregation expert. The key to cost segregation www.homebuilders.org
Cost Segregation Included in Current Building Project Cost of building (completed before September 8, 2010) No Cost Segregation Done
Cost Segregation Done
Nonstructural components
$0
$400,000
Remainder of building (structural portion)
$1,500,000
$1,100,00
Total cost of the building
$1,500,000
$1,500,000
Estimated depreciation expense for year completed
$38,462
$638,851
Tax savings realized based on 35% rate
$13,462
$223,598
Cost of building (completed after September 8, 2010) No Cost Cost Segregation Done Segregation Done Nonstructural components
$0
$500,000
Remainder of building (structural portion)
$1,500,000
$1,000,000
Total cost of the building
$1,500,000
$1,500,000
Estimated depreciation expense for year completed
$38,462
$1,012,821
Tax savings realized based on 35% rate
$13,462
$354,487
is to make sure it will pass IRS scrutiny (which the IRS may not do for a couple years after it is done) and a cost segregation expert should be well versed in the many details of what the IRS does and does not allow to be segregated – even down to the length of wiring – as well as their permitted allocable costs. There are some firms, which utilize trained engineers that do cost segregation studies in which they examine the structure as well as review the blueprints of the building and improvements. Based on this analysis, they will make a professional determination as to the portion of the building that can be deemed to be tangible property. Once done, your building will hardly be recognizable on paper and will look like more like a warehouse inventory report than a building cost summary. Many businesses have recouped hundreds of thousands of dollars due to these studies and the savings were more than the cost of the studies themselves. If you constructed a building prior to 2011, a cost segregation study will still be useful, since you can amend the prior three years’ tax returns to recoup the additional depreciation expense and claim a refund. When done properly, cost segregations could boost your bottom line. Now talk to your tax advisor and take advantage of the law! ■ The above article is intended for informational purposes only. Please consult with a tax advisor to see how the above applies to your situation.
JANUARY/FEBRUARY 2012 MID-ATLANTIC BUILDER
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Don’t Miss These 2011 Changes and Overlooked Deductions Key tax changes for 2011:
Overlooked business tax deductions:
Payroll Tax Reduction. As this article went to press, Congress was still haggling over whether to extend the payroll tax deduction through 2012. So far, the social security tax withholding from employee’s pay checks is 5.65 percent instead of the normal 7.65 percent. The employer matching will probably not change from 7.65 percent. Please check with your tax advisor to see what the congressional outcome is for 2012.
Business Bad Debts. If your business is on the “accrual basis” of accounting, be sure to review your customer accounts receivable listing to determine which balances can be written off. You will need to keep records that show you attempted to collect the debt.
Tax Return Due Date. Since April 15th is a Sunday and April 16th is Emancipation Day in the District of Columbia, the tax return filing deadline for individuals will be April 17, 2012. Standard Mileage rate. The 2011 rate for business use of your vehicle is 51 cents per mile for travel through June 30, 2011 and 55 ½ cents per mile for travel after June 30, 2011. Roth IRAs. If you converted or rolled over a Roth IRA in 2010 and did not elect to report the taxable amount on your 2010 return, you generally must report half of it on your 2011 return and the rest on your 2012 return.
OVERLOOKED PERSONAL TAX DEDUCTIONS: Volunteer Expenses. If you volunteer for a qualified charity, you may deduct 14 cents per mile for using your vehicle to drive on behalf of the organization. However, the miles driven from home to and from the charity does not get included. Mortgage Points. Points that you pay in connection with a new home purchase may be deducted as interest expense in the year you received the loan. If you pay points with a mortgage refinancing, you may deduct the points evenly over the life of the loan. When you sell the home, whatever points have not been deducted may be written off. Energy Credit. If you installed energy-efficient improvements in your home, you may be eligible for a credit against your taxes if they meet specific energy standards. If eligible, the maximum credit is $500.There are a number of eligible items, so be sure to check with your tax advisor. Some more common examples are exterior windows, skylights and doors as well as hot water boilers and furnaces.
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MID-ATLANTIC BUILDER JANUARY/FEBRUARY 2012
Sport Utility Vehicles (SUVs). SUVs that have a gross vehicle weight over 6,000 pounds are not subject to the luxury automobile rules and therefore are allowed the 100 percent bonus write-off if purchased new and placed into service during 2011. Manufacturing & Production Deduction. If your company is involved in construction, engineering, architectural or manufacturing, you are probably eligible for this special deduction. The rules and qualifications require a separate article, so be sure to consult with your tax advisor to see if you are eligible and to make sure that he or she is taking this deduction. Research and Development credit. The Research and Development Tax Credit is a government-sponsored benefit that provides cash incentives for companies conducting R&D in the U.S. This credit is a little more broad-based than it sounds and you may be surprised that you qualify for this credit. Be sure to ask your tax advisor if your business activities warrant the credit. ■
David Landman, CPA is senior manager with Gorfine, Schiller & Gardyn, P.A. in Owings Mills, Maryland. As part of the real estate / construction group, he provides cost segregation studies and assists owners in minimizing risks as well as tax, audit and accounting services. He may be reached at 410-517-6823 or by e-mail at dlandman@gsg-cpa.com.
Maryland Center for Housing Donors THANK YOU to the following companies for their generous financial support. Bob Ward Cornerstone Homes Elm Street Development Forty West Goodier Baker Builders Goodier Builders Lennar
MRA NVR Powers Homes Rachuba Residential Title Security Development
THANK YOU to the following companies for their contributions of labor, materials and professional services. Lead Donor: STEWART GREENEBAUM Azek 84 Lumber Bopat Electric California Closets Carroll Insulation Charles A. Klein CMW Co., Inc. Colonial Electric Delbert Adams Construction Design House Kitchens Dow Building Supply Fast Signs of Dundalk Fireside Hearth & Home Fretz Companies Gaines & Company Glen-Gery Brick Gray and Son Gutschick, Little & Weber
Harkins Hillis-Carnes Interior Concepts L&L Supply Leisure Specialties Modern Foundations Moen O’Neil Interactive Out of Sight Home Theater Patterson Enterprises Residential Title Richmond American Homes Rosenberg, Greenberg & Martin Shannon Comer Architects Shelter Systems Sherwin Williams Siegel, Rutherford, Bradstock & Ridgway, Inc. T.W. Ellis
Mid-Atlantic
Remodeler A supplement to Mid-Atlantic Builder
HBAM Remodelers Council Award of Excellence LangKuhn, LLC, Placid Court Residence Whole House – $750K - $1M
MID-ATLANTIC
Remodeler
A supplement to Mid-Atlantic Builder
2012 HBAM REMODELERS Joe Smith President
BOARD OF DIRECTORS Nicole Bliss Guy Caiazzo Taylor Classen Cheryl Crowther Tim Ellis Steve Gilman Danny Kalmus Doug Kelly Donald Lynch, Jr. Ryan McGinn Chris Moline
Bob Myers Michael Owings Jennifer Purdy Bill Rauser Joe Smith Kaitlyn Sutherland Gregory Wall Bob Weickgenannt Howard Warfield
PAST PRESIDENTS Bill Rauser John Martindale Dave Chmura Michael Owings
Donald F. Lynch, Jr. Guy Caiazzo Taylor Classen
2012 SPONSORS Members do business with members Presenting Members
ChesapeakeHome Magazine
KC Company/Pella Windows
John H. Myers & Son
before&after LangKuhn, LLC Placid Court Residence The challenge: accommodating empty nesters living a contemporary lifestyle in a colonial setting. The solution: an intersection of preservation and innovation. The couple desired a modern open floor plan with an abundance of natural light while maintaining the traditional curb appeal. Converting the 28 year old structure added to the challenge but also provided the excitement for such an undertaking. The addition and renovations provided more space for personalizing the interior and connecting to the exterior. The focus on cooking, entertaining and enjoying leisure time was expressed spatially, in the material selection, and in the adaptation of the site. The client’s desires are showcased in a spacious and open kitchen with views to the other rooms and a well manicured rear yard. Accents of wood and stone are a back drop to sophisticated kitchen cabinets and a beautiful collection of contemporary furniture. Large expanses of windows along the back of the house blur the line between the indoors and outdoors. The upper levels are comprised of a master suite, guest bedrooms and baths and a painting studio. Materials, spatial quality and furnishings echo the client’s lifestyle and exquisite taste. ■
Susquehanna Bank
Saratoga Insurance
T.W. Perry
April
July
October
CAPS Designation Courses
Call for entries for the Remodeling Award of Excellence
General Membership Meeting
June
Contact Felicia Fleming at 410-265-7400, ext. 115 about 2011 Sponsorship Opportunities
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events General Membership Meeting
MID-ATLANTIC REMODELER A Supplement to Mid-Atlantic Builder JANUARY/FEBRUARY 2012
September CAPS Designation Courses
November Remodeling Award of Excellence Ceremony www.homebuilders.org
president’smessage
Impact Your Circle of Influence As we look back at a challenging 2011 and work our plan for what appears to be another survival year with some positive signs, I would like to say thank you to our past president Taylor Classen, fellow board members, all of our sponsors and the hard working HBAM staff that make all of this possible. Without the
combined effort of all we could not make the impact or difference that that the HBAM Remodelers makes. Recently a client asked me why I agreed to be president of the HBAM Remodelers and what benefit I receive from it, when my business should be my focus. I paused for a moment and after informing him I missed a meeting and was voted next president, I described my reasons. I believe I initially joined just to be part of something within my industry and to further educate myself. Today, I can reflect and identify many reasons to be involved, not the least of which is that HBAM and NAHB represent our interests both locally and nationally in this over regulated environment in which we operate. Many good personal and business relationships have been developed and I have learned many valuable insights from my fellow board and committee members. This can be looked at as part of your circle of influence. I believe I do have a duty overall to give back to an industry that has allowed me to provide for my family for many years. Education and further awareness of the professionalism of our members is an ongoing goal as our industry still suffers from a reputation similar to used car sales because of
a few bad apples. Perhaps you can reflect and ask yourself what keeps you involved and then take that information and convince a worthy potential new member to join our great council. Get involved in a committee as this is the best way to make good personal contacts and affect change. Our association is working to protect us but we need to continue the battle against over regulation, unfair taxes and new mandates such as the controversial healthcare bill, the EPA lead rules and the list goes on. You now have OHSA searching for revenue and coming after residential construction with a focus on fall protection. These regulations disproportionally affect the small business which are the economic power that fuels America. According to a study published last year by the Small Business Administration, firms with less than 20 employees spend 36 percent more per employee than larger companies. Government needs to get out of the way and let us do what we do best, create home owners dreams, grow our business and create jobs. Have a prosperous year. Thanks,
Why join HBAM Remodelers? Member Benefits HBAM Remodelers offers many benefits to its members. Remodelers benefit from a variety of educational, mentoring and networking opportunities. In addition, the HBAM Remodeler’s serves to improve the quality of the industry and its members through these programs. By promoting certification programs to consumers, members of the council are sought after for their strong professional and ethical principles.
News & Information National: Members of the Council receive a free subscription to Professional Remodeler magazine. Each issue focuses on practical business insights from the country’s leading remodelers. Members also receive NAHB Renews, a monthly e-newsletter about national news that affects our industry. Regional: Members of the Council receive a free subscription to ChesapeakeHome Magazine and are offered special advertising opportunities designed to help them reach upscale homeowners. Local: The council is featured in each issue of HomeFront, HBAM’s monthly enewsletter to promote its members, programs and events. Mid-Atlantic Remodeler is included in each issue of Mid-Atlantic Builder magazine.
Welcome Our New Members Joe Smith HBAM Remodelers President
James Anders Testament Construction Group, Inc. Louis Dattoli Dattoli Design and Development Inc. Susan Adelman Dorman’s Lighting & Design Allison Heyman Dorman’s Lighting & Design Michael Brown American Builder Services Ready to Join? www.mdremodelers.org The fee is $65.00 per year. For additional information on the HBAM Remodelers Council, contact Felicia Fleming at felicia@homebuilders.org or 410-265-7400, ext. 115.
www.homebuilders.org
JANUARY/FEBRUARY 2012 MID-ATLANTIC REMODELER A Supplement to Mid-Atlantic Builder
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: s e i m m u D r o f d n a l y r a M n a l P Y L L A E R U O Y WHAT W O N K O T D E E N BY MICHAEL HARRISON
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lan Maryland is a statewide effort to coordinate state agencies and local governments to control future growth and development. By classifying all land in the state into various state-defined Planning Areas, Plan Maryland will ultimately change future growth and development patterns by authorizing government agencies to direct state and local programs, policies and resources into preferred Planning Areas and away from areas not desired by planners for growth.
Beginning in the spring of 2012, county and municipal governments will map and classify their land into 1 of 5 Planning Areas and into 1 of 5 Planning Areas for Preservation/ Conservation, based on “Planning Area Guidelines” currently being drafted by the Maryland Department of Planning. The 5 Planning Area Places are as follows: 1. Targeted Growth and Revitalization Areas – a.k.a. “really smartsmart growth areas”. 2. Established Community Areas in Priority Funding Areas – a.k.a. existing smart growth areas. 3. Future Growth Areas – undeveloped lots in priority funding areas. 4. Large Lot Development Areas – areas on well and septic. 5. Rural Resource Areas – land conservation and preservation areas not meant for growth. The 5 Planning Areas for Preservation/ Conservation are as follows: 1. Priority Preservation Areas for Agriculture 2. Natural Resource Areas 3. Water Resource Areas 4. Historic and Cultural Areas 5. Climate Change Impact Areas
The 5 Planning Areas for Preservation/ Conservation are not limited to the Rural Resource Areas and can be designated anywhere, by either state, county or municipal governments. www.homebuilders.org
In addition, any state agency can propose a Preservation/Conservation area without the consent of the local government. According to Plan Maryland, “While local government support is strongly encouraged, a State proposed Preservation/ Conservation Planning Area that does not have local government support through its capital and non-capital plans, programs and procedures, may still warrant being identified as a Preservation/ Conservation Planning Area.” By December 2012, local governments will submit their Planning Area Places to MDP who will accept or modify any or all of the designated areas. Once accepted, these Planning Areas can only be re-assessed during the local comprehensive plan process or through interim comprehensive plan amendments. Any proposed changes must be collaboratively re-classified. While counties are designating Planning Areas, state agencies will be reviewing their own laws and regulations and collectively developing “Implementation Strategies” that will guide how the state will direct capital to support the goals of Plan Maryland. These implementation strategies will go into effect in January 2013, as soon as local lands are classified into Planning Areas and Plan Maryland will be in effect. ■ Michael Harrison is the Director of HBAM Government Affairs and can be reached at 410-265-7400 or michael@homebuilders.org.
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EXPIRING HOUSING TAX AND FINANCE LAW:
What’s on the 2012 Policy Agenda 32
MID-ATLANTIC BUILDER JANUARY/FEBRUARY 2012
www.homebuilders.org
D
ue to heated budget debates during the second half of last year, Congress failed to approve a 2011 “tax extenders” bill, legislation that typically extends certain business and individual tax rules that expire every year or two.
This development sets up a policy fight in 2012 during which advocates will seek a retroactive extension of now-expired tax rules. However, this is not the first time this has happened. In late 2010, Congress approved a retroactive extenders bill for tax rules that expired at the end of 2009. Nonetheless, today’s budget and political situation is much different, making the prospects for the extenders debate more uncertain. Among the tax extender items are a number of housing and construction policies. These include the following rules that expired at the end of 2011: • The section 25C tax credit for energy-efficient remodeling In its weakened 2011 form, this tax credit offered homeowners an up to $500 benefit for improving an existing home with qualified energy-efficient property, such as windows, doors, HVAC equipment and insulation. • The section 45L tax credit for new energy-efficient homes This tax credit is equal to $2,000 per home for builders of for-sale or for-lease housing units that achieve a 50 percent reduction in heating and cooling consumption relative to the 2004 supplement of the 2003 IECC. • The deduction for mortgage insurance payments (private mortgage insurance, as well as FHA, RHA and VA)
The deduction treats mortgage insurance payments as mortgage interest for the purpose of the MID, but only for taxpayers with adjusted gross income (AGI) no higher than $110,000 (phase-out begins at $100,000 AGI). • The section 198 brownfield expensing rule This provision allows immediate write-off of qualified clean-up costs related to development of certain previously occupied sites. Another rule that expired at the end of 2011 and that affects both individuals and businesses (business organized as pass-thru entities, such as S Corporations and LLCs) is the increase in the Alternative Minimum Tax (AMT) exemption amount (the socalled “AMT patch”). The AMT patch expired at the end of 2011 and if not extended for tax year 2012, more than 20 million taxpayers, many of them small business owners, will face higher tax bills due to the use of the pre-2001 exemption amounts. Being captured by the AMT can complicate other tax rules as well. For example, absent the AMT patch, home builders cannot claim the 45L tax credit, if organized as a pass-thru entity and homeowners who pay AMT cannot claim the 25C credit.
www.homebuilders.org
The list of expiring tax provisions for 2011 is just a taste of what’s to come. At the end of 2012, the Bush-era tax cuts, including the top 35 percent rate, the bottom 10 percent rate, the 15 percent preferred rates on capital gains and dividends, the repeal of the Pease limitation on itemized deductions and the current 35 percent estate tax regime, among other rules, will all expire. For housing policy, at the end of 2012, the current tax exemption on phantom income arising from cancelled/forgiven principal residence mortgage debt expires. Absent this exemption, established in 2008’s Housing and Economic Recovery Act and supported by the housing industry, distressed homeowners facing foreclosure or deed-in-lieu of foreclosure situations could find IRS tax bills waiting due to written off mortgage amounts. Among other effects, expiration of this tax rule would also further hinder mortgage workout and mitigation programs. For the multifamily affordable housing industry, at the end of 2013, the fixed 9 percent rate for Low-Income Housing Tax Credit expires. If this rule, also established in 2008, were to expire, the applicable credit rate for the 9 percent credits would fall to less than 8 percent, reducing equity available for investment in affordable housing. Due to advocacy efforts of NAHB and its allies in the affordable housing sector, legislation was recently introduced in the House and Senate that would make permanent the 9 percent rate. And at the end of 2013, the section 179D deduction for energy-efficient remodeling of commercial and multifamily properties expires. Further down the road, the section 25D 30 percent tax credit for home installation of solar panels, geothermal heat pumps and other qualified power producing property, expires at the end of 2016. Finally, on the housing finance side of the ledger, at the end of 2013, the retained higher loan limits for FHA-backed mortgages ends. This measure was approved by the Congress in November. It re-established FHA’s national ceiling for mortgages to $729,750 from the $625,500 to which it had fallen. It also restored the formula for determining local FHA loan ceilings to 125 percent of the area median home price from the 115 percent it fell to on October 1st. The retention of the higher limits and the 125 percent multiplier positively affected homeowners in 620 counties nationwide. And of course, all of this occurs within an environment in which the future of federal backstop for mortgages and the mortgage interest deduction are under intense debate. ■
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Record Numbers Attend IBS 2012 Tight Credit Conditions Impeding Housing and Economic Recovery, Fed Chairman Tells Home Builders at IBS
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MID-ATLANTIC BUILDER JANUARY/FEBRUARY 2012
www.homebuilders.org
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estraints on credit for home buyers and home builders alike continue to impede the housing and economic recovery, Federal Reserve Chairman Ben Bernanke said in an address to the National Association of Home Builders Board of Directors in Orlando during the International Builders’ Show.
“Banks remain reluctant to make loans, both to mortgage borrowers and home builders,” said Bernanke, who noted that current credit conditions are too tight for the financial system, for the construction industry and the economy. The Fed chairman said that his message to regulators is for them to take a balanced approach and to approve loans for those who meet sound underwriting standards. “Do not turn away creditworthy borrowers, and that includes home builders,” he said. “Chairman Bernanke understands that today’s tight credit conditions are preventing qualified buyers from obtaining home loans and builders from getting financing for the construction of viable new home building projects – and that this is harming the housing market as well as the overall economy,” said Barry Rutenberg, the newly elected chairman of the National Association of Home Builders and a home builder from Gainesville, FL. Noting that many local markets have an overhang of empty and foreclosed homes, the current harsh lending environment, and that the weak housing market is impairing the financial health of home owners, Bernanke said that the “state of the housing market has been a key impediment to a faster recovery.” “For these reasons, and because the troubled housing market depresses construction activity and employment, we need to continue to develop and implement policies that will help the housing sector get back on its feet,” the Fed chairman said. “No single solution will be sufficient. But sustained efforts to address the many interlocking factors holding back the housing market will pay dividends in the long run.” He also added that the Fannie Mae and Freddie Mac limits on investor loans are counterproductive in the current economic climate and that policy should be to encourage more loans to help ease the inventory of distressed properties. Bernanke’s remarks on the need to take more aggressive action to support a housing recovery confirms what the nation’s home builders have been saying for some time and reiterates similar themes in a Jan. 4 white paper provided to Congress, in which the Federal Reserve noted that “restoring the health of the housing market is a necessary part of a broader strategy for economic recovery.” Fixing the nation’s housing woes is taking on a sense of increasing urgency in Washington. In unveiling a new plan, President Obama cited the important role that housing plays in the economy.
www.homebuilders.org
February 8-12, 2012 - Orlando, FL The International Builders’ Show® is the largest annual building industry tradeshow in the country. It’s THE place to see and discuss the hottest products on the market and network with your friends and allies. On top of that, IBS offers more than 175 education sessions taught by industry experts.
“A lack of building demand has kept hundreds of thousands of construction workers idle,” said Obama. “Everybody involved in the home building business – folks who make windows, folks who make carpets – they’ve all been impacted. The challenge is massive in size and scope, because we’ve got a multi-trillion dollar housing industry.” The President reiterated the high value that Americans place on homeownership and the need to help home owners while commenting on the mortgage settlement agreement reached between the states and five major banks. “We can’t wait to get things done and to provide relief to America’s home owners,” Obama said. “We need to keep doing everything we can to help home owners and our economy.” “You work and you save your entire life to buy a home,” Obama added. “That’s where you raise your family, that’s where your kids’ memories are formed. That’s your stake, your claim on the American Dream.” With the proper policies in place, housing can serve as an engine of job growth, said Rutenberg, who noted that building 100 homes creates more than 300 full-time jobs and generates $8.9 million in federal, state and local revenues to fund local schools and strengthen communities across the nation. “In this key election year, the voters are calling on the Administration and Congress to take actions to restore the health of the housing industry in order to create jobs, increase household wealth and keep the economy on an upward trajectory,” he added. ■
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Home Builders Association of Maryland Events at IBS www.homebuilders.org/page/IBS/ HBAM’s events in Orlando were free to our members and 100% sponsored BY our members. Thank you to the following companies for their support. Platinum
Academy Mortgage Corp. Clark Turner Signature Homes LLC Development Design Consultants, Inc. Jonas Jacobson, Neil Schechter & Bill Shaughnessy/Gordon Feinblatt LLC K.C. Company/Pella Windows & Doors Kaine Homes Lakeside Title Company Morris & Ritchie Associates, Inc. Professional Warranty Service Corporation Residential Title & Escrow Co. Shelter Systems Limited SunTrust Mortgage, Inc.
Gold
Carroll Land Services, Inc./TA CLSI CB Flooring, LLC Colbert Matz Rosenfelt, Inc. Delbert Adams Goodier Baker Homes K. Hovnanian Homes The McHenry Companies Orchard Development Corporation Powers Homes Rachuba Group Rosenberg, Martin, Greenberg, LLP Stone Marketing Resources Steuart-Kret Homes Sturbridge Homes
Silver
Baldwin Homes, Inc. BankAnnapolis Bob Lucido Team LLC Remax Advantage Realty Dan Ryan Builders Forty West Builders, Inc. Goodier Builders, Inc. Harborview Land Development Services, LLC Marenberg Enterprises New Home Development Strategies Sandy Spring Bank Security Development Group Wells Fargo Home Mortgage Whiteford, Taylor & Preston LLP Williamsburg Group LLC Zahler Construction & Development LLC
SAVE THE DATE International Builders’ Show 2013 January 22-24 | Las Vegas, Nevada Plan now to attend and sponsor the HBAM events.
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MID-ATLANTIC BUILDER JANUARY/FEBRUARY 2012
www.homebuilders.org
2012 Calendar of Events HBAM is your direct connection to builders, remodelers and industry professionals. MAR 21 - BUILDER MART www.buildermart.org MAR 21 - SMC Spring SalesCamp APR - Howard and Carroll County Happy Hour MAY 17 - 2011 MAX Awards (held in 2012) MAY- Baltimore City PAC Crab Feast JUN 28 - Baltimore County PAC Crab Feast JUN - Orioles Game and Bullpen Party AUG - Harford County PAC Crab Feast OCT – Green Key Connections OCT – Maryland Center for Housing Ribbon Cutting NOV - Remodelers Awards of Excellence NOV - Icon Awards DEC - 2013 Real Estate and Construction Forecast Conference DEC - Baltimore City and County Holiday Happy Hour DEC - Anne Arundel County Holiday Happy Hour
Mark your calendars for the best networking events in the industy. www.homebuilders.org • 410-265-7400
Flawed Appraisals: Killing Home Sales, Hampering Housing Recovery
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MID-ATLANTIC BUILDER JANUARY/FEBRUARY 2012
www.homebuilders.org
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ne out of three builders are reporting losing signed sales contracts during the preceding six months because appraisals on their homes are less than the contract sales price, according to a recent nationwide survey conducted by the National Association of Home Builders. “The inappropriate use of distressed and foreclosed sales as comparables in determining new home values is needlessly driving down home prices, killing home sales, causing more workers to lose their jobs and delaying a housing and economic recovery,” said NAHB Chairman Bob Nielsen. Too often, due to faulty appraisal practices, brand new homes with sparkling appliances and interior upgrades get compared to a distressed property that has been sitting vacant and in disrepair. The result, in many cases has been that the new house winds up getting appraised at less than the cost of construction. That is precisely what is occurring in today’s marketplace, according to the NAHB survey, where a full 60 percent of respondents reported they were experiencing appraisals coming in below their contract sales price. Of those reporting that they had encountered this problem, 53 percent said the appraisal amount was actually less than the cost of building the home. “This is not only unfair and unreasonable, but it perpetuates the cycle of declining home values, drives more home owners underwater, harms local economic activity and acts as an obstacle to the recovery of the housing market,” said Nielsen. These appraisal practices are a major contributing factor to the current acquisition, development and construction lending crisis that has choked off credit for home builders and threatens to prolong the current housing downturn. Falling appraised values for land and subdivisions under development have led some financial institutions to stop lending to developers and builders, to demand additional equity and even to call performing loans. Since Sept. 2009, NAHB has held four appraisal summits in Washington with representatives of federal banking regulators, the appraisal industry, the housing finance industry, the real estate and housing sectors and others to find solutions that will allow appraisers to develop realistic valuations based on sales that are truly comparable. The need to give top priority to addressing the complexity of property valuations in distressed markets and impediments to the flow of appropriate information on homes between appraisers and interested parties was discussed during the most recent summit, which occurred on Oct. 19, 2011.
www.homebuilders.org
This is not only unfair and unreasonable, but it perpetuates the cycle of declining home values, drives more home owners underwater, harms local economic activity and acts as an obstacle to the recovery of the housing market. “Major reforms in appraisal practices and oversight are needed to ensure that appraisals accurately reflect true market values and don’t contribute to price volatility or harm aspiring home owners and move-up buyers,” said Nielsen. “We will continue to work with all stakeholders in this debate to find solutions.” With the decline in home prices appearing to have ended or be coming to an end in most parts of the country, resolving the appraisal and credit crunch issues remain a top priority. New-home construction stands ready to serve as an engine for economic recovery. Building 100 single-family homes creates more than 300 full-time jobs and provides $8.9 million in federal, state and local tax revenues. “Resolving inappropriate appraisal practices and restoring the flow of credit to home builders will not only help to put America back to work, it will provide badly needed tax revenues that is essential for local governments to support schools, police and firefighters in communities across the land,” said Nielsen. ■
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Photo Courtesy of Timberlake Cabinetry
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MID-ATLANTIC BUILDER JANUARY/FEBRUARY 2012
www.homebuilders.org
The New American Home 2012 is
Leaner, Greener, Smarter Than Its Predecessors
Created as a reinterpretation of the classic white box-style design of the ‘60s and ‘70s made popular by such architects as Le Corbusier and Richard Meier, The New American Home 2012 will be greener, smarter - and smaller - than TNAHs of the past. “At 4,181 square feet, it is smaller than previous TNAHs,” said architect and builder Phil Kean of Phil Kean Designs in Winter Park, FL. “It will be displayed as a two-bedroom floor plan that will appeal to empty nesters and will have four additional rooms that can be converted to bedrooms if desired.” In addition, the home will incorporate the latest advances in home technologies, green building and energy efficiency. “This home will not just be a ‘smart house,’ it will be brilliant,” Kean said. With an integrated technology package designed and installed by Architectural Electronics in Winter Park, the home will feature structured wiring and control systems that provide the home owner with a high-end experience at a reasonable price. Builders and industry professionals touring the home during IBS will learn how to provide a custom technology package at a price and value attractive to their clients, he said. Architectural Electronics is an active member of the Custom Electronic Design and Installation Association, a partner and founding sponsor in the NAHB Home Technology Alliance (HTA), which brings together housing industry professionals to create the optimal home experience powered by technology. Architectural Electronics’ founder, Peter Shipp, serves on the HTA’s board of directors.
www.homebuilders.org
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Kean designed TNAH 2012 to take maximum advantage of Florida’s friendly climate. When completed, movable glass wall panels and motorized screens will provide a seamless traffic flow from the indoor to outdoor spaces. He also designed the 2012 show home to achieve “Emerald Status” under the National Green Building Standard. Kean said he is hoping to achieve additional green certifications for the home, including the USGBC LEED for Homes certification; the Florida Green Building Coalition’s Platinum certification; U.S. Department of Energy’s Energy Star; the Florida Yards and Neighborhoods designation; the Florida Water Star designation; the Energy Home Advantage Program; and the DOE’s Builders Challenge. Green technologies being used include LOGIX insulated concrete forms with an R-value of R27, the Lennox Solar HVAC system, LED interior and exterior lightingand solar screens. Now in its 29th year, TNAH serves as a real-world laboratory demonstrating concepts, materials, designs and construction techniques that can be replicated - in whole or in part - in housing built in any place and for any price range. Kean, as architect and builder of the home, is leading an extensive team of industry professionals. A list of team members can be found on the TNAH website which also features videos of the production process.
The home is being built on an infill site in an older neighborhood close to downtown Winter Park. Amenities within walking distance include shops, restaurants and a public library. One of NAHB’s most successful and visible programs, The New American Home is produced and presented by the NAHB Leading Suppliers Council and Builder magazine. TNAH is built to showcase the NAHB Leading Suppliers’ products. ■
Take a look www.homebuilders.org
Redesigned to meet the needs of builders, remodelers, subcontractors, suppliers and home owners. Easy to navigate, both consumers and industry professionals can instantly gain access to membership lists, statistical information, government affairs updates, event calendars and more. You’ll be able to register for events online, update your membership information, pay dues and more.
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MID-ATLANTIC BUILDER JANUARY/FEBRUARY 2012
www.homebuilders.org
2012 DIRECTORY UPDATES The following listings are updates to the 2012 Buyers’ Guide
BUILDER
SMALL VOLUME Goodier Builders, Inc.
www.goodier.com Robert Goodier 10705 Charter Drive Suite 350 Columbia, MD 21044 Phone: 410-997-7501 Builder/developer of single family homes in Howard, Baltimore and surrounding Counties. Currently developing several $1,000,000+ communities in western Howard County.
Hencken & Gaines, Inc. Sally Costello 10616 Beaver Dam Rd. Cockeysville, MD 21030 Phone: 410-771-0060
Kaine Homes
Brooke Kaine P.O. Box 519 Huntingtown, MD 20639 Phone: 301-855-1330
James Keelty & Co., Inc www.keelty.com Steve James 1925 Old Valley Road Stevenson MD, 21153 Phone: 410-252-8600
Korey Homes, LLC
www.koreyhomes.com Korey Smith 217 East Jarrettsville Road Suite 1 Forest Hill, MD 21050 Phone: 410-879-1170 Korey Homes, a locally based dedicated team of professionals with decades of custom home experience. We build in Harford, Baltimore, Cecil and Southern Pennsylvania.
Maggio Construction Co. Inc.
www.maggioconstructionco.com Frank Maggio P.O. Box 1210 Millersville, MD 21108 Phone: 410-849-2800 Specializing in firewalls, drywall and remodeling for residential and commercial projects in the Delmarva Region for 25 different builders and has for over 29 years.
Morris & Ritchie Associates, Inc.
www.mragta.com Frank Hertsch 3445-A Box Hill Corporate Center Drive Abingdon, MD 21009 Phone: 410-515-9000 Planning, architecture and engineering services provided in MD, DE, PA, NJ and VA. Offices are located in: Laurel, Towson and Abingdon, MD; and New Castle and Georgetown, DE.
Nu-Homes, Inc.
www.nu-homesinc.com Harry Bowie 10630 Little Patuxent Parkway Suite 146 Columbia, MD 21044 Phone: 410-730-2100 Home Builder
OPaL, LLC
www.opaldc.com Sean Ruppert 4388 Lottsford Vista Road Lanham, MD 20706 Phone: 301-577-3887
REMODELER
SUPPLIER
Richstone Homes & Remodeling www.RichstoneCorp.com Richard S. Livingston 10800 Baronet Road Owings Mills, MD 21117-3002 Phone: 410-581-9809
LUMBER & MILLWORK Weyerhaeuser
www.weyerhaeuser.com Craig McDonald 7700 Rolling Mill Road Baltimore,MD21224 Phone: 410-282-1734
PROFESSIONAL SERVICES INSURANCE
SUBCONTRACTOR INSULATION & DRYWALL Bill Werking Drywall, Inc.
Moran Insurance
www.moraninsurance.com Marc Dorman 696 Ritchie Highway Severna Park,MD 21146 Phone: 410-544-3422
PROFESSIONAL SERVICES
www.billwerkingdrywall.com Bill Werking 3005 Hooper Road New Windsor, MD 21775 Phone: 410-840-0356 With over 35 years experience our goals are quality workmanship, prompt personal service at a competitive price. MHIC licensed.
LEGAL
Linowes and Blocher LLP
www.linowes-law.com Jack Orrick 7200 Wisconsin Ave Suite800 Bethesda,MD 20814 Phone: 301-654-0504 A full-service real estate and business law firm founded in 1956 with offices in Anne Arundel and Montgomery Counties.
PLEASE INSERT THESE UPDATES INTO YOUR GUIDE FOR ACCURACY.
Who’s Who
Instant access to will the members who help you get the job done, on time and on budget.
LOOKING TO THE FUTURE
2O12 DIRECTORY + BUYERS’ GUIDE
COMING
IN 2012
R FOR MARYL AND CENTE ND BREAKING HOUSING GROU
HOME BUILDERS ASSOCIATION OF MARYLAND
WWW.HOMEBUILDERS.ORG
www.homebuilders.org
JANUARY/FEBRUARY 2012 MID-ATLANTIC BUILDER
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green building BUILDING HOMES – BUILDING SUCCESS
Turning saw dust into “magic dust” BY H. ALAN MOONEY, P.E. President, Criterium Engineers
Define the budget you are building to; a Ford is less expensive than a BMW. If homes in your area are typically built $200 to $500 per square foot, does the home for your customer fall in that range?
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o continue with my series of exploring your signature as a builder; it’s your brand, it’s what you stand forand it’s how people remember YOU. It’s not just a house, it’s a house by…
John Smith – A Builder you can Trust For this series, I outlined the key elements that I believe should be part of your signature as a builder. They are: Responsive service – you should genuinely care about your customers. They are making one of the biggest decisions of their life to buy a home from you. And they are typically not very knowledgeable about construction. They need to know that you care about them. And they will typically pay more for that comfort. Fundamental Construction Quality – not claims that “I build a great house” but proof! Show them the construction details that are your standard. Explain the materials you useand why. Tell them about how you train your crew and how you choose your subs. Follow through and follow up – you will have problems; not everything is perfect. Your customers are people too; they know that mistakes get made. What is important is to have an aggressive policy in place to follow up on issues and correct them quickly and carefully. And then follow up with your customer to be sure they are satisfied. Manage expectations – timber frame residential construction is not a perfect process. There will be cracks, distortion, irregularities and inconsistencies. A buyer orientation program to help the average homebuyer understand what to expect from their new home will reduce complaints and increase your credibility.
MID-ATLANTIC BUILDER JANUARY/FEBRUARY 2012
Responsive Service – I know, that’s the same as #1, but it can’t be overemphasized. And if the message comes from the President/Owner of the company, that’s even better. Remember, in the end, it’s about how people feel about you and your homes. That’s your signatureand no one can take that away, or duplicate it. It is uniquely you and your company. Let’s look at MANAGING EXPECTATIONS in more detail. Your goal should be to meet or exceed your customer’s expectations; that’s true in any business. However, if you, your Realtor or society in general has created UNFULLFILLABLE EXPECTATIONS in the mind of your customer, you will be fighting a losing battle. First, it’s worth noting that the quality of many of the products we buy; electronics, automobiles, cameras, cell phones, etc. have improved greatly in the last decade or two. The number of times any of us has to take a product back for warranty repairs has dropped dramatically. The result is a shift in perspective for most consumers; perfection is expected much more than it once was. Meanwhile, the process of building a home hasn’t changed much. Electrical devices may be better, some plumbing components have improved and our HVAC systems may be a bit more energy efficient but, fundamentally, not much has changed. In fact, as I talk to many builders around the country, one could argue that home construction has declined in quality, mostly because the skills of the folks putting our homes together has declined. Water intrusion is still a problem and that’s a function of careful installation much more than it is about the materials chosen.
www.homebuilders.org
In fact, we can’t build a perfect house! I have written several essays on that subject. If you’re interested, you can find them on our website at http://criteriumhomeinspection.com/your-home. The main reasons are: • We build outside, in the weather • We build mostly with organic materials such as wood, that change as temperature and moisture changes • We build on the ground, Mother Earth, which changes, with moisture, consolidation, etc. • We build our homes by hand; it is not an automated process, like manufacturing a car. And people make mistakes and are not consistent, even the best of us. • And, of course, budgets and sale price will affect the quality of the home you can build. But, does your customer understand that? Given these challenges, how can you manage expectations? Here are a few thoughts.
First, what is the reality of most residential construction? • Concrete cracks • Framing shrinks and warps • Drywall cracks • Air flow through ducts can be noisy • Trusses “lift” • Temperature may not be uniform throughout the house • Homes are not square, level and plumb • Soil settles • Drainage flows the wrong way Most of this is normal, minor and tolerable for most home buyers IF they know what to expect. How can you manage expections? If you sell your homes through Realtors, make sure they understand what is common in residential construction. Ideally, the agent should have owned a new home themselvesand worked with the builder as a customer. Be sure to review all sales material and sales scripts to be sure he or she is not creating unfulfillable expectations.
VISIT BUILDERMART.ORG TO REGISTER
www.homebuilders.org
JANUARY/FEBRUARY 2012 MID-ATLANTIC BUILDER
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Define the standard you are building to; a Toyota is different than a Mercedes. Here are some commonly used guidelines: • ECONOMY Mass produced from stock plans. Material and workmanship satisfy minimum building codes requirements. Low cost construction dominates distinctive features. • AVERAGE Simple design and built from standard designer plans. Materials and workmanship are average but often exceed minimum building code requirements. Often there are special features that provide distinctive characteristics for the home. • CUSTOM Usually built from designers’ plans that were modified to give the building a distinction of design. Materials and workmanship are generally above average with attention to construction details. Construction normally exceeds building code requirements. • LUXURY Built from an architect’s plan. The building is unique in design and workmanship with many special features and usually exceeds all building code requirements. Define the budget you are building to; a Ford is less expensive than a BMW. If homes in your area are typically built $200 to $500 per square foot, does the home for your customer fall in that range? Establish a buyer orientation program. Some builders require buyers to attend sessions that are a day or more long to review how the house works and what to expect of its performance. At a minimum, provide a written summary of what to expect, of what is typical, to give to your buyer, with pictures of typical cracks, etc. You should spend as much time as is needed to review that document with the buyer and have them sign to confirm they received it. A lot of disputes I have been party to between buyers and builders start with unfulfillable expectations and/or general ignorance about what to expect from a new home. Even “seasoned” home owners are often remarkably unrealistic when they buy a new home. While your primary goal should be to build the best home you can for the budget you are
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working with, you can’t build a perfect home and being proactive about that with your customer will save you some problems later. It will also add to your credibility and reputation since it reflects your integrity as a craftsmen. Defining your signature so buyers speak well of you is about being proactive to confirm each customer is satisfied. It takes some time but it will pay off well. Word of mouth is the most powerful advertising you can have, especially in today’s Internet connected world. Developing your signature isn’t simple, but it works! There are builders I know who spend virtually nothing on advertising. Their customers hear of them through reputation and word of mouth. And those same builders are usually able to charge a bit more for their homes. They realize they are a builder selling a service not just a home. For them saw dust has become “magic dust.”
John Smith – A Builder you can Trust As you read my columns, if you have questions, please feel free to send me an e-mail (hamoooney@criterium-engineers.com), I will try to respond in a future issue or respond to you directly. Working together, my goal is to help explore new and better ways for you to build homes that you can be proud of and that will turn your customers into some of your best sales people! ■ Criterium Engineers has specialized in residential construction for more than 50 years, with more than 60 offices in more than 30 states. We have evaluated more than 750,000 buildings. H. Alan Mooney, P.E, President of Criterium Engineers, is a licensed, Professional Engineer in 8 states, with more than 35 years experience. Please visit www.criterium-engineers.com and www.criterium-quality.com.
www.homebuilders.org
Benefits of Membership Legislative Advocacy Public Relations and Information Education EVENTS Events and Conferences ANNUAL
& CONFERENCES
HBAM OFFERS A VARIETY OF EVENTS AND PROGRAMS EACH YEAR THAT PROVIDE BOTH BUSINESS AND SOCIAL FORUMS TO INCREASE YOUR INDUSTRY CONTACTS.
Builder Mart Key Connections MAX Maryland Awards of Excellence International Builders’ Show Celebrity Chef Night and Auction HBAM Remodelers Awards of Excellence The Maryland Housing Conference The Maryland Real Estate and Construction Forecast Conference ICON Awards Land Development Council Community Development Awards
Contact Felicia Fleming at 410-265-7400, ext. 115 for more information.
Do Business With Your Fellow HBAM Members. “Building Your Business Through Association” is our philosophy. HBAM members believe that they should support those who support the building industry. NETWORK with other companies in the building industry to gain new contacts as well as strengthen your current ones at the Celebrity Chef Night and Auction, sporting events, chapter and council meetings and more. KEEP UP-TO-DATE about pertinent legislative and regulatory issues on a local, state and national level. INCREASE YOUR KNOWLEDGE of the building industry through our educational programs and seminars. TARGET YOUR MARKET with cost effective advertising in any of HBAM’s publications and receive a spreadsheet of HBAM members. STAY INFORMED with HBAM’s publications. You will receive Mid-Atlantic Builder, BNN, HomeFront Online and the Buyers’ Guide. ADD CREDIBILITY for your company in the building industry as well as with the general public by being associated with one of the largest building associations in the country. WWW.HOMEBUILDERS.ORG is designed to serve both consumers and those in the building industry. You can access the latest legislative news, find out about member benefits, profile your company in the online directory or register for an event. Consumers can visit the HBAM home page to find you and other builders or suppliers in their area.
HBAM Welcomes New Members ASSOCIATES
Capital Carpets, Inc.
Greenskeeper Environmental
MAAX, Inc.
Melissa Myers 23125 Tuckahoe Spring Drive Denton, MD 21629 Phone: 410-774-6119 Professional Services - Cleaning Sponsor: Taylor Classen, Delbert Adams Construction Group,
Brian Givens 9097 Comprint Court Gaithersburg, MD 20877 Phone: 301-948-6724 www.capitalcarpetcarellc.com Subcontractor - Flooring
Chris Moline 13030 Forest Drive Bowie, MD 20715 Phone: 301-404-5462 http://www.Maax.com Supplier - Plumbing Products & Fixtures
Clark Concrete Construction
Jeff Schwartz 17701 New Hampshire Ave Ashton, MD 20861 Phone: 301-774-8201 Subcontractor - Landscaping & Lawn Care Sponsor: Jeremy Rutter, Rutter Project Management, Rutter Project Management
A Clean Slate LLC
Terry Beard 8161 Penn Randall Place Upper Marlboro, MD 20772 Phone: 301-735-1735 Subcontractor - Landscaping & Lawn Care
Mike Clark 2197 Baltimore Blvd. Finksburg, MD 21048 Phone: 410-984-6790 Subcontractor - Foundations & Concrete Sponsor: Robert Goodier, Goodier Builders, Inc.
Blazeguard Fire Protection Services, Inc.
Council, Baradel, Kosmerl & Nolan, P.A.
Beard’s Landscape Company
shannon William Mills 10-C Wise Pursuit way sykesville, MD 21784 Phone: 410-549-6313 www.zeguardinc.com Subcontractor - Safety & Fire Protection Sprinklers
Joe Devlin 125 West Street 4th floor Annapolis, MD 21404 Phone: www.cbknlaw.com Professional Services - Legal
Blue Stream Services, Inc.
Creative Touch Interiors
Gary Skovron 2298 Jim Kohler Road Eldersburg, MD 21784 Phone: 410-795-0068 Subcontractor - Plumbing Sponsor: Robert Goodier, Goodier Builders, Inc.
Brown Craig Turner Scot Foster 100 North Charles Street 18th Floor Baltimore, MD 21201 Phone: 410-837-2727 www.bctarchitects.com Professional Services - Architecture & Drafting
Builders Window and Door, Inc. Steven Davis 4527 Metropolitan Court Frederick, MD 21704 Phone: 301-874-8102 www.builderswindowanddoor.com Supplier - Doors, Windows & Glass Block
Cabinet Discounters, Inc. John Mikk, Jr. 9500 Berger Road Columbia, MD 21046 Phone: 301-621-8062 Supplier - Cabinets & Countertops Sponsor: Tim Morris, Williamsburg Group, LLC, Williamsburg Group LLC
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Tony Hampshire 1000 Hampton Park Blvd Capitol Heights, MD 21037 Phone: 240-882-4095 Sponsor: Rod Hart, Dan Ryan Builders,
Crown Title Corporation David Thurston 1 Sanford Ave. Catonsville, MD 21228 Phone: 410-719-0200 www.crowntitle.com Professional Services - Titles & Settlement Sponsor: Dan Murtaugh, Sandy Spring Bank,
CST Products, LLC Ray DuFresne 345 Route 130 Pedrickton, NJ 08067 Phone: 856-299-5339 www.cstpavers.com
Embrace Home Loans David Ratti 8600 Lasalle Road Suite 335 Towson, MD 21286 Phone: 800-333-3004 Professional Services - Banking & Mortgage
FBR & Co. Steve Stelmach 1001 19th St. N Arlington, VA 22209 Phone: 703-312-1848 Professional Services - Financial Services
MID-ATLANTIC BUILDER JANUARY/FEBRUARY 2012
Gross, Medelsohn & Associates Bill Reading 36 S. Charles Street-18th floor Baltimore, MD 21201 Phone: 410-900-1385 www.gma-cpa.com Professional Services - Accounting
Hargrove, Inc. Chuck Taylor One Hargrove Dr Lanham, MD 20706 Phone: 301-306-9000 www.hargroveinc.com Professional Services Event Managment/Facility Sponsor: Jerry Hoover
Hatfield’s Equipment And Dedication Services, Inc. Kenneth Hatfield P.O. Box 519 Annapolis Junction, MD 20701 Phone: 301-490-4289 hatfieldsservices.com Subcontractor - Waste Management & Disposal
Kandel, Klitenic, Kotz & Betten, LLP Alan Betten 502 Washington Ave. Suite 610 Towson, MD 21204 Phone: 410-339-7100 Professional Services - Legal
Level Land Inc. J. Zack Brendel P.O. Box 100 Lisbon, MD 21765 Phone: 410-489-5206 www,levellandinc.com Subcontractor - Landscaping & Lawn Care
LTC Financial Partners Micheal Markowitz 5387 Dunteachin Drive Ellicott City, MD 21043 Phone: 410-455-0680 Professional Services - Insurance Sponsor: Martin P. Azola, Azola Building Services LLC
Masters, Inc. Rob Brock 7891 Beechcraft Ave Gaithersburg, MD 20879-1545 Phone: 301-674-1084 Subcontractor - HVAC
National Control Services, Inc. Jack Wilson 1035 Bemfield Blvd. Suite G Millersville, MD 21108 Phone: 410-923-9862
National Lumber Mary Morford 4901 Pulaski Highway Baltimore, MD 21244 Phone: 410-675-4740 www.nationallumber.biz Supplier - Lumber & Millwork Sponsor: Joseph Smith, CGR, CAPS, CGP, Owings Home Services
New Homes Guide Cindy Nairn 1919 Gallows Road Suite 200 Vienna, VA 22182 Phone: 703-994-3259 www.newhomesguide.com Professional Services - Advertising & Marketing Sponsor: Cindy Plackmeyer, Steuart-Kert Homes,
Parksite Jerry Bolt 2950 Dundalk Ave Baltimore, MD 21222 Phone: 443-376-0980 http://www.parksite.com Supplier - Lumber & Millwork
Patton, Harris Rust & Associates, a Pennoni Company Scott Wolford 8818 Centre Park Drive #200 Columbia, MD 21045 Phone: 410-997-8900 www.phra.com Professional Services - Engineering & Technical
www.homebuilders.org
Print O Stat, Inc.
Solitaire Masonry Co.
Jen Dangro 1011 W. Market Street York, PA 17404 Phone: 717-324-9650 Professional Services - Office Equipment
Timothy A. Hawes 4700 Belle Grove Rd Suite 10 Baltimore, MD 21225 Phone: 410-636-6888 solmasonry Subcontractor - Foundations & Concrete Sponsor: Robert Goodier, Goodier Builders, Inc.
Print O Stat, Inc. Jen Dangro 1011 W. Market Street York, PA 17404 Phone: 717-324-9650 Professional Services - Consulting & Customer Svc.
Solitaire Masonry Co.
Cheryl Flynn 7607 Poplar Hill Lane Clinton, MD 20735 Phone: 301-868-7083 Subcontractor - Other
Timothy A. Hawes 4700 Belle Grove Rd Suite 10 Baltimore, MD 21225 Phone: 410-636-6888 solmasonry Subcontractor - Masonry & Concrete Sponsor: Robert Goodier, Goodier Builders, Inc.
RF Truett Sustainable Building LLC
Stewart Title Company
Rick Truett 2170 Springdale Road Pasadena, MD 21122 Phone: 443-949-4455 www.rftruett.com Subcontractor - General Contractors
Morgan C. Gilligan 409 Washington Ave. Suite 920 Towson, MD 21204 Phone: 410-296-5380 Professional Services - Titles & Settlement
Savage Stone, LLC
TD Bank
Bob Sharbaugh 8420 Washington Blvd Jessup, MD 20794 Phone: 410-792-3753 Subcontractor - Stone, Marble & Granite Sponsor: Jay D Hergenroeder, Gray & Son, Inc.,
Kevin Michno 4061 Powder Mill Rd. Suite 420 Calverton, MD 20705 Phone: 301-289-3515 www.TD.com Professional Services - Banking & Mortgage
Set2xsell
Ultimate Framing
Earl Robinson 8840 Columbia Parkway Suite 120 Columbia, MD 21045 Phone: 410-979-7740 www.set2xsell.com Professional Services Advertising & Marketing Sponsor: Cindy Plackmeyer, Steuart-Kert Homes,
Charles Crow 3050 Deep Valley Drive Westminster, MD 21157 Phone: 410-876-9204 Subcontractor - Other Sponsor: Ryan McGinn, Saratoga Insurance Brokers, Inc.
R & F Metals
Sign Central, Inc. Steven Strauss 7500 Energy Court Curtis Bay, MD 21226 Phone: 410-360-3777 www.signcent.com Sponsor: Pat Scherer, Pat Scherer & Associates,
www.homebuilders.org
BUILDERS
REMODELERS
Ron Snyder 10 E. Baltimore Street #1501 Baltimore, MD 21202 Phone: 571-334-2067 www.atapcoproperties.com Developer Sponsor: Eliot Powell, Whitehall Development, LLC,
Michael Esposito 2706 Stanley Drive Baldwin, MD 21013 Phone: 410-299-3163 Remodeler - Specialty
Atapco Properties
Alltrade Enterprises, LLC
Bill Werking Drywall, Inc.
Penza Bailey Architects Jeffrey Penza 401 Woodbourne Ave. Baltimore, MD 21212 Phone: 410-435-6677 www.penzabailey.com Professional Services - Architecture & Drafting
Turpin Wachter Associates, Inc. & TW Associate Services Residential Division
Bill Werking 3005 Hooper Road New Windsor, MD 21775 Phone: 410-840-0356 www.billwerkingdrywall.com Subcontractor - Insulation & Drywall
Doug Pruett Construction Co, Inc. Douglas Pruett 7 Old Solomons Isl. Rd. Suite 201 Annapolis, MD 21401 Phone: 410-224-4057 Remodeler
Henry W. Kacher 8 E. Pennsylvania Ave. Towson, MD 21286 Phone: 410-296-8220 www.twabuilders.com Builder - Custom
Patio Enclosures
Turpin Wachter Associates, Inc. & TW Associate Services Residential Division
Testament Construction Group, LLC
Henry W. Kacher 8 E. Pennsylvania Ave. Towson, MD 21286 Phone: 410-296-8220 www.twabuilders.com Remodeler
Jeff Tice 224 8th Ave. Glen Burnie, MD 21061 Phone: 410-760-1919 Remodeler - Exteriors
James Anders 1514 Burke Road Baltimore, MD 21220 Phone: 410-941-0181 Remodeler
Walbrook Mill & Lumber Co., Inc. Elliot Zulver 2636 W. North Ave. Baltimore, MD 21216 Phone: 410-462-2200 Supplier - Lumber & Millwork
Willoughby Plumbing Services, Inc. Christopher Willoughby 6203 Patrick Drive Ellicott City, MD 21784 Phone: 410-781-7051 Subcontractor - Plumbing
JANUARY/FEBRUARY 2012 MID-ATLANTIC BUILDER
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stats&facts By the Numbers
642
Looking Back on 2011 BY BROOKE BURNS
Total number of single family home foreclosure sales for 2011 (through November), down from 2,522 in 2010.
20.1%
From 2005 to 2011, the average sale price of resold single family homes has decreased by 20.1%.
32,616
Total number of attached homes resold in 2005. Through November, 6,929 attached homes sold in 2011.
12.6%
From 2005 to 2011, the average sale price of resold attached homes has increased by 12.6%.
$73,493 The difference in the average sale amount of new single family homes from 2005 ($555,659) and 2011 ($482,166).
The big question still stands; ‘when will the housing industry turn around?’ As we enter a new year with new hope, new concerns and new questions, we should look back a few years to see how we are trending. As the saying goes, ‘history repeats itself” so in fact we know the market will pick up again, it’s just a question of when. A huge factor in our recovery is the distressed property backlog and the impact it has had on pricing, inventory and consumer confidence. So let’s take a look… Complete 2011 numbers are not in as of date, however we have a good idea of how 2011 will turn out from the numbers we do have through November. In the graph showing sale type going back to 2005 we see that foreclosures were almost a fifth of what they were in 2010 and 2009, we also see that foreclosures in 2011 are about where they were in 2006. We can all agree 2006 was a much better year than the last 4 years have been! This is a great sign of recovery! Taking a looking at REO sales we look at these numbers to understand how many foreclosures have been absorbed back in the market and conversely how many are still out there, essentially affecting and hurting the housing market. We see this number trend and it has started to come down as well. More importantly, we saw that the two totals (foreclosure and REO’s were similar in 2010) another sign that we are weeding through this distressed inventory! New home sales were down year over year however without the final 2011 numbers (which can be heavy towards the end of the year) it is hard to say, at this point, how significant this really is. This figure will be more reflective of final totals by the end of January and will be reported in our quarterly Market Monitor in March. The overall average price of new homes was relatively unchanged year over year from 2010 to 2011. When you break pricing and closings out by property type you see that year over year attached product pricing increased while single family property decreased slightly. Closings decreased for both property types, however almost unchanged for single family (again we will have more exact numbers once December closings total are finalized). From these statistics there are few good indicators here that the recovery is in sight; most importantly distressed property is less of a factor hindering the recovery! ■ Brooke Burns is the Regional Sales Director for Hanley Wood Market Intelligence and can be reached at bburns@hanleywood.com or 202-729-3678.
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www.homebuilders.org
New Single Family and Attached Home Closings
Single Family Home Sales
Attached
5,000
Single Family
FORECLOSURES
2005: 493 2006: 502 2007: 990 2008: 1,473 2009: 2,127 2010: 2,522 2011: 642
4,000
3,000
2,000 1,000
2005
2006
2007
2008
2009
2010
2011 REO SALES
Single Family Home Sale Prices
$700,000
REO
Resale
New Sale
$600,000 $500,000 $400,000 $300,000 $200,000 $100,000 $0
2005
2006
2007
2008
2009
2010
2005: 265 2006: 173 2007: 277 2008: 1,023 2009: 1,821 2010: 2,454 2011: 1,694
2011
Attached Home Sale Prices
RESALES
REO
$400,000 $350,000
Resale
New Sale 2005: 27,429 2006: 22,309 2007: 16,981 2008: 11,709 2009: 11,123 2010: 10,299 2011: 9,625
$300,000 $250,000 $200,000 $150,000 $100,000 $50,000 $0
www.homebuilders.org
2005
2006
2007
2008
2009
2010
2011 JANUARY/FEBRUARY 2012 MID-ATLANTIC BUILDER
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governmentaffairs
Signs, Signs, Everywhere Are Signs BY JEFF TOSI
A
s most know by now, the 2011 Maryland General Assembly passed House Bill 289, which allows Maryland’s State Highway Administration or local governments to pick up and destroy any illegally erected sign within State highway rights-of-way, including directional signs that guide motorists to new residential development model homes. In addition, the law allows the entity that picks up the signs to assess and collect a fine of $25 per sign. The law required a 3-month warning period, making the fines effective on January 1, 2012.
Just so we are perfectly clear about this, putting a directional sign within a State highway right-of-way was illegal before the law passed and it is still illegal now. The bill only provided an additional enforcement mechanism. We believe there are two problems with this legislation. First, it allows local governments’ carte blanche authorization to enter State property and enforce this law. In other words, the law doesn’t grant SHA any authority to not allow local governments to enforce. This places the State in an awkward position should it decide to relax enforcement and also brings up questions about liability should a local government employee get injured. Second, why now? We’re in the midst of the “Great Recession” and most economists acknowledge that housing will get the country out of this mess. Why did the State decide it needed to do this now? In mid-October, two HBAM member companies, HBAM government affairs and the Maryland State Builders Association (MSBA) met with State officials. At that meeting, we expressed how the continued recession has had a severely negative impact on the home building industry and home builders small and large have come to rely on this form of advertisement. In fact, we estimate that between 60%-85% of foot traffic in model homes is directly attributable to temporary directional signs. Smaller builders are especially impacted by this
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law because they simply do not have the financial resources to take out full page newspaper ads, pay for billboards on interstate highways, or a few hours of air time on TV each Saturday morning. Following up from that meeting, HBAM and MSBA presented the State with a draft policy that would allow signs on the weekends (modeled after current Howard County law) and, noting that winter months are especially difficult for new home sales, we also requested a sixmonth delay in enforcing the fines. The State denied both requests.
Despite being rebuffed on both requests, we aren’t giving up. We are working on alternatives and hope to come to a resolution before the close of the 2012 General Assembly session. ■ Jeff Tosi is the HBAM Director of Government Affairs and he can be reached at 410-2657400, ext. 101 or jeff@homebuilders.org.
www.homebuilders.org
Maryland Community Builders’ Foundation Join us on April 28th as we come together to change lives. We need your help.
The Maryland Community Builders’ Foundation, the charitable arm of the Home Builders Association of Maryland, was formed to promote shelter related activities for those less fortunate throughout the Baltimore region. The Foundation focuses on ‘sticks and bricks’ projects that provide shelter or shelter improvements for needy families. Our strategy is to provide shelterrelated charitable services in the region by calling upon HBAM members for donations of labor, materials and funds. Won’t you help us help our communities? Visit our website today. It’s easy to get involved: • Donate Time and/or Materials • Request Assistance • Share Your Projects with Us and get PR • View our Latest Projects
Don’t stand on the sidelines—Get involved today www.buildingindustriesfoundation.org
governmentaffairs Baltimore County to Implement a New 4 Month Development Process The Baltimore County Department of Permits, Approvals and Inspections is finalizing a new development process that includes a 45 day county review, a 45 day period to submit revised plans and finally, a 30 day revised plan review by the county. Once implemented in late February, all plans submitted as part of Phase II of the Baltimore County development process shall adhere to the following process. All plans will need to be submitted through PAI in person and every submittal shall be accompanied by a Basic Information Slip that includes information about the project and valid email addresses for the engineer/ surveyor/ environmental consultant, the property owner, the developer/ contract purchaser and attorney, if appropriate. Once the Basic Information Slip is submitted, appropriate agency representatives will be notified that the plan is available for pickup and PAI Development Management will assign a Project Manager. County agencies will be responsible for picking up the plans and having them reviewed in 45 days. At the end of 45 days, comments will be sent to PAI and everyone listed on the Basic Information Slip. If 45 days goes by and an agency fails to submit a comment, the plan is approved. Once comments have been sent to the engineer/ surveyor/ environmental consultant, they have 45 days to evaluate the comments and submit revised plan. If the second submittal cannot be accomplished within 45 days, an extension can be requested. If an extension is not requested by the 45th day, the project is denied and must be resubmitted. Once revised plans are submitted, the County has 30 days to complete the second review. If 30 days goes by and an agency fails to submit a comment on the revised plans, the plan is approved. If the revised plan is approved, the review is complete. If the approved plan requires a mylar for signature, an additional 15 day review time will be assigned to the mylar
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as it circulates. If the revised plan is not approved at the end of the 30 day period, the plan is denied. If the plan is denied and has outstanding issues or comments after the two reviews, the Project Manager is responsible for working with the agencies involved and the engineer, owner and developer to identify and resolve the issues. If you have questions about Baltimore County’s new development process, please contact HBAM Government Affairs at 410-265-7400.
Harford County Delays Implementation of Sprinklers until July 1, 2012 In early January, the Harford County Council voted to delay the implementation of a requirement for residential sprinkler systems in all one- and twofamily homes until July 1, 2012. The requirement was originally set to take effect on January 1, 2012. The bill was part of a larger effort to bring the County in compliance with the 2012 I-Codes, including a mandate from the State of Maryland to adopt of the 2012 International Energy Conservation Code. The 2012 IECC mandates a 30 percent increase in energy efficiency (compared with the 2006 IECC) for new residential and commercial buildings. The decision represents the largest, one-step efficiency increase in the history of the national model energy code. Residential Changes
• The elimination of a former duplication of model energy codes between the IECC and the International Residential Code, streamlining the process into a singular, efficient path to residential compliance.
Anne Arundel County Considers, Dismisses Stormwater Fee Legislation In anticipation of nearly $2 billion backlog in necessary stormwater-related system upgrades and mitigation projects, Councilman Chris Trumbauer of the Anne Arundel County Council introduced legislation in late 2011 that would impose a new fee on all households and commercial buildings. Commonly referred to as a “stormwater utility fee,” the bill would imposed a $35 annual fee on single-family residential properties, a $25 annual fee for townhomes and multifamily properties, and fee for commercial properties based on the amount of impervious surface; it would have generated an estimated $12-$15 million annually to aide the County in its effort to comply with the United States Environmental Protection Agency’s Chesapeake Bay Total Maximum Daily Load requirements. A similar bill was introduced in 2007 and failed. HBAM supported the 2007 county legislation and has supported similar legislation at the State level. HBAM supported the effort again, but in the end this bill received a similar fate as its 2007 brethren. ■
• A mandatory air infiltration test in all homes to ensure building envelope efficiency. • A requirement that ducts be tested to a tighter duct leakage standard. • An increase in stringency for insulation and glazing efficiency requirements. • A set of options to solve the problem of “stranding”–and therefore wasting–heated water: keeping pipes “short and skinny,” or insulating them to avoid waste.
www.homebuilders.org
foundation We need you on April 28th The Home Builders Association of Maryland’s nonprofit Foundation, the Maryland Community Builders Foundation is once again teaming up with Rebuilding Together Howard County, the nonprofit volunteer organization dedicated to helping elderly and/or disabled low-income homeowners and families with children through home renovation and repair. On April 28th, volunteers from all over the area will join forces armed with truckloads of donated materials to repair and renovate homes so our local residents can live in warmth, safety and independence and they need your help. This year, the Foundation would like to repair not one house but two! To accomplish the goal, they need monetary donations for the house sponsorship and donations of products and labor. Although volunteers with all skills and levels of ability are needed, there is a specific need for those members in the plumping and electrical fields. The Foundation would also like to provide a general contractor for each of the houses being renovated by Rebuilding Together – 28 in all! They are lofty goals but can be achieved with the help of the HBAM membership. The home building and remodeling industry is positioned particularly well to help the cause and change the lives of those in need forever. The Foundation is asking that you please consider joining your industry peers in support of this great cause. Can they count on you on April 28, 2012? Not only is this a great cause, it is a way to gain greater public recognition for the Maryland Community Builders’ Foundation and the home building and remodeling profession. Contact Kristin Hogle at communications@ homebuilders.org or 410-265-7400, ext. 111 or visit www.buildingindustriesfoundation.org to participate and find out more. ■
www.homebuilders.org
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BRAC If History Repeats Itself; the Best Is Yet To Come I had the opportunity to visit Lexington Park, St. Mary’s County, Maryland last month; yes on purpose. I was absolutely amazed at the change in character of the area from my last visit two years ago. Those of you that have been around for some time remember that the Naval Air Station Patuxent River (Pax River) in Lexington Park was the beneficiary of 1991, 1993 and 1995 BRAC events. Thousands of jobs were moved to Pax River from Pennsylvania, New Jersey and Northern, Virginia particularly the Crystal City area; high paying jobs, that would eventually change the economic foundation of St. Mary’s and the surrounding counties. Most interesting, are the similarities to the BRAC event that was completed in September 2011 impacting our market area, particularly at Fort Meade and Aberdeen Proving Ground. First a little history; in 1995 we heard over and over again from the Northern Virginia people that they were not moving to St. Mary’s County. No way, no how! St. Mary’s County was in the middle of nowhere. There were no restaurants, retail services, the schools were not up to par; they were just not moving! Sound familiar? And for the most part, many did not move. For several years some commuted, some bunked down in communal quarters returning home to Northern Virginia on weekends and eventually some found other jobs back at the Washington Beltway. But thousands of direct and indirect related base jobs were put in place and the expected “contractor tail” jobs followed, creating an economic boom for the region over the next decade and more. According to Bob Schaller, Director of Economic and Community Development for St. Mary’s County “The government blessed us with jobs and the investors and developers followed” with many of the results seen into 2009 and 2010. Schaller admits things happened so fast that there wasn’t time to think about
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it and there were certainly challenges, mainly transportation. “The challenge was getting people in and out.” We are pretty much hearing the same thing right now near Ft. Meade and Aberdeen Proving Ground. In fairness, Schaller notes other jurisdictions may not receive the same benefits that St. Mary’s County did at the time. Transportation funds were more readily available and economic conditions have impacted funding sources. Several reports have noted that something needs to be done to help fund these transportation issues, (www.bizjournals.com/baltimore/ news/2011/08/16/as-maryland-brac-deadline, http://odenton.patch.com/articles/ report-says-feds-should-kick-in-more-forbrac-impact) and Maryland Department of Transportation notes it learned some lessons from it experience in St. Mary’s County (www.mdot.maryland.gov/BRAC/ FAQs.html#Lessons). Schaller was quick to point out “the real challenges and opportunities would never have happened without BRAC and the impacts in many instances began years later with in-fill development. Numerous business parks were built, the level of retail rose, amenities and services increased dramatically and the overall quality of life improved for residents”. So what lessons can be learned from history? I was impressed with what I saw in the Lexington Park area. Sophisticated business parks, busy restaurants and young tech-savvy people spending money in the stores. We have to believe the impact of BRAC for builders, developers, Realtors, contractors and other related industries, in our area is far from over. Thousands of additional jobs are projected for the area. (www.baltimoresun.com/explore/ howard/news/ph-ho-cf-meade-growth).
St. Mary’s County found that if people weren’t willing to move from Northern Virginia there was plenty of local talent ready to take their place and even more willing to relocate for the high paying jobs in the defense and tech industries. How do you put your business in place to take advantage of the next ten to twelve years of projected growth that we will see? n Brenda L. Desjardins, MIRM is a seasoned veteran in the residential building industry with more than three decades of experience in new homes. She leads New Home Marketing Service and New Home Development Strategies based in Annapolis, Md. with a satellite office in Sussex County, Delaware. Ms. Desjardins is a leader in providing market research, strategic planning and opportunity assessments for single family and multi-family home builders and developers. She is active in regional building associations and is a graduate of the Johns Hopkins University Real Estate Institute with a Master of Science Degree specializing in real estate development. More recently she has become obsessed with understanding how to reach that BRAC new home buyer. She can be reached at 410-990 1050 or bldesjardins@comcast.net.
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