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Volume 7 • Issue 4 • July/August 2010
Kitchen remodels, such as the one pictured here from Advanced Kitchens and Bath of Mechanicsburg, are among the top projects for 2009-10.
4 President’s message Mid-year reflections
5 Product spotlight Beam me, Digital Canal
6 Pa. Attorney General talks registration … again More than 68,000 contractors have registered
8 Housing market recovery in Pennsylvania State faring better than many parts of the country
10 Ready for the turnaround Businesses are preparing for the improving economy
13 Member spotlight Dream Maker Homes: Teamwork helps everyone
Member Insider Taking your affiliation to your customer. . . . . . . . . . . . . . . . . . . . A On the hill. . . . . . . . . . . . . . . . . . . . . . . . . . . B
Cover designed by Laura Kauffman Pyne
Keystone Builder
12 Kitchen, bath remodels still popular
Associate Vice President Ron Agulnick, HBA of Chester/Deleware Secretary Warren Peter, Indiana-Armstrong BA Treasurer Joseph Harcum, Wayne County BA Immediate Past President Gene Kreitzer, Lebanon County BA Executive Vice President Doug Meshaw Editor Laura Kauffman Pyne
PrintComm Staff Publisher Kevin Naughton Assistant Editor/Publication Director H.J. Hormel Graphic Design Jason Gabel Advertising Sales Manager Brenda Poe Advertising Sales Jeff Pinwar • 800-935-1592, ext. 118 Address correspondence to: Keystone Builder 600 North Twelfth Street Lemoyne, PA 17043 Phone: 800-692-7339 or 717-730-4380 Fax: 717-730-4396 Web: www.PaBuilders.org E-mail: lpyne@PaBuilders.org
President’s message
Vice President Ray Venema, West Branch Susquehanna BA
by Joseph Mackey • PBA President
President Joseph Mackey, Pocono BA
Mid-year reflections
S
ummer is well underway, and we’ve passed the halfway point for 2010. As such, I think this is a great time to reflect on the past and to focus on what’s ahead.
Economy Most of us have not only heard about the hard times our state and country have been going through, but we’ve experienced them first hand. Whether it’s a slow time for business, or we’re struggling just to get by, we understand what economic hardship really is. The good news? Relief is on the way. It may not be a fast process, but it’s coming. This issue of Keystone Builder focuses on where Pennsylvania stands in relation to the rest of the country and on where we go from here. Need some advice to get through? We’ve tried to include some suggestions.
Sincere thanks I, along with the rest of the Pennsylvania Builders Association staff would like to extend our gratitude for your membership and continued contributions to what our organization stands for. With times being what they are, I believe that membership in a professional organization is more important than ever. Your commitment is invaluable, and again, I say thanks. PBA remains committed to our members and to being here as a resource for builders and associates statewide. As the rest of 2010 flies by, take the time to enjoy the rest of your summer. I look forward to seeing many of you at our summer board meeting and at functions statewide. s
Advertising does not imply acceptance or endorsement of the products contained in the publication. Publishing and advertising sales services provided by:
2929 Davison Rd. • Flint, MI 48506 Phone: 800-935-1592 • www.printcomm.com An Exclusive Publication of the PBA Keystone Builder magazine is published six times a year by the Pennsylvania Builders Association®, Editorial Offices, 600 North Twelfth Street, Lemoyne, PA 17043. With the exception of official association announcements, the statements of fact and opinion that are made herein are the responsibility of the authors alone and do not reflect an opinion or philosophy of the officers or the membership of the PBA. Materials may not be reproduced without written permission from the PBA headquarters. POSTMASTER: Send address changes to Pennsylvania Builders Association, 600 North Twelfth Street, Lemoyne, PA 17043. SUBSCRIPTIONS: Subscriptions available through membership to the Pennsylvania Builders Association.
4
I Keystone Builder • July/August 2010
Where’s Joe?
A review of your president’s activities June 3 Panel discussion for the Urban Land Institute June 7 PaCAH Executive Committee conference call June 8 Golf tournament for the Pocono Builders Association June 11 Gala for the Lancaster Parade of Homes June 13 Joe’s birthday! June 16 Joe’s daughter, Sarah, graduates from high school. June 19 Camping and boating vacation in Virginia *Meetings with various parties regarding PBA’s health care have occupied a large percentage of his time.
Product spotlight
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July/August 2010 • Keystone Builder
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Questions & Answers
More than 68,000 contractors across the state have registered under the first year of the Home Improvement Consumer Protection law.
Pa. Attorney General talks registration ‌ again
W
ith the Home Improvement Consumer Protection Act nearing its one year anniversary, Keystone Builder magazine went back to Attorney Gen. Tom Corbett to see how the new law was working for members and their customers.
before the law took effect, we started working with the media, local officials, home improvement retailers, and builders groups, like yours, to reach as many people regarding this important new law. We also made sure that educational materials were available in locations frequently visited by contractors, such as local code and permit offices and hardware stores.
Q A
Has the registration process gone smoothly, both online and via mail? Yes. Shortly after the governor signed the Home Improvement Consumer Protection Act into law, my office developed the registration materials and established the process for contractors to register. We kicked off the registration program in late March and by the time the law took effect on July 1, 2009, we had successfully registered tens of thousands of contractors.
Q
What is your office doing to oversee the industry to make sure all home improvement contractors are registered? We continue to attend home builder events and expos to distribute registration materials and information about the law to contractors. We also have a dedicated hotline and e-mail account that contractors can use to report businesses they believe How many home improvement Pa. Attorney Gen. Tom Corbett are not registered. The number is (717) contractors are currently regis772-2425. E-mail can be sent to hic@attortered, and do they continue to register? Does this number neygeneral.gov. We follow up on every lead that we receive and if we match or exceed what you expected? find a contractor who is not registered, we will take action. More than 68,000 contractors have registered so far, which is
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Q A Q A
on par with our estimates.
How is your office reaching out to home improvement contractors to ensure they know about the registration requirement? My office conducted an extensive outreach campaign last year aimed at alerting contractors and consumers about the registration requirement and the other provisions of the new law. Months 6
I Keystone Builder • July/August 2010
Q A
How many home improvement contractors have been prosecuted so far for violating the registration law? First, let me note that the majority of the industry has taken the steps necessary to comply with the new law. For years, reputable contractors in our state have had to compete with fly-by-night businesses, and now we have a law that levels the playing field and will help to weed out the bad guys.
As you noted, the law provides my office and local law enforcement with new tools to pursue contractors who don’t play by the rules. So far, we have issued more than 950 notices to contractors about various compliance issues. Many of these cases are still under investigation. We’ve already filed civil enforcement actions against contractors in several regions of the state based on these efforts. I anticipate these numbers will increase as we continue to review consumers’ complaints and information collected during our investigations.
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Q A
What’s been your biggest surprise so far in the process? The new home improvement program was the largest consumer initiative for my office since Pennsylvania’s Do Not Call law was adopted. The new law required us to develop and implement a statewide registration system in a fairly short period of time. Still, I did not want contractors to get bogged down in a new government bureaucracy, so our goal was to create a user-friendly system that included a way for contractors to register online. I was pleasantly surprised that so many contractors took advantage of the online form on our website, www.attorneygeneral.gov, to register.
Q
When we spoke last year, you said that the law was silent on whether general contractors responsible to verify that all mechanical, drywall, painting and other subcontractors are legally registered in Pennsylvania? Has this changed? The law has not changed in this area. As I mentioned last year, if I were a contractor, I would want to know if my subcontractors were complying with the law, especially since the law requires contractors to provide their subcontractors’ contact information in their contracts. Registrations can be checked through the contractor registration search page on our website. The information is also available by calling 1-888-520-6680.
A
Q
When we spoke last year, you said that the law was silent on whether an escalation clause can be used in home improvement contracts. Has this changed or been further clarified? The provisions governing required and prohibited contract clauses have not changed. Information on these provisions, along with answers to other frequently asked questions, can be found on our website.
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Q
Have the outcomes from the enactment and enforcement of Act 132 (Home Improvement Consumer Protection Act) met the expectations of those who drafted the legislation? Are there any plans for updates, expansions, etc., of the current law? I can’t speak for the members of the legislature who were involved in these efforts. My office has received a great deal of positive feedback from consumers who have been victims of home improvement fraud and from contractors who have had to compete with disreputable contractors over the years. Home improvement contractors who have had to pay large sums on the local level every year for municipal licenses and registrations also seem pleased that the statewide registration has preempted these annual fees. If we see areas for change or improvement in the law, we will certainly make recommendations to the General Assembly and if your members have any thoughts on the law, they can also contact their local House and Senate members. s
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Housing market recovery in Pennsylvania T he United States is emerging from the most severe economic downturn since the Great Depression of the 1930s. The financial crisis that led to the recession was the result of the bursting of a speculative bubble in housing, inflated by low cost and easy access to credit, coupled with an over-leveraged and under-regulated financial sector. A shadow banking system composed of non-bank financial companies, not subject to traditional bank regulation, including credit card companies, auto manufacturing finance subsidiaries and mortgage lending companies, contributed to the explosion in credit and fed the demand for asset-backed securities, in particular mortgage-backed securities. When rising mortgage defaults undermined the value of the MBS, the bubble began to lose air; the financial system stumbled badly; and the economy sank. As the overall economy recovers from the excesses that led to historic distress in the financial sector, housing markets are recovering from similar problems. But as we sort through the difficulties and begin the recovery, it is important to recognize that different areas of the country will recover at different paces, based on varying levels of impairment from the housing boom. This article compares Pennsylvania housing markets during the boom to other parts of the country in terms of housing market fundamentals—the level of production, house price appreciation and mortgage foreclosures—to examine how Pennsylvania will emerge from the downturn.
Single-family housing starts Nationally, single-family housing production rose substantially during the housing boom, reaching a peak in 2005 at 29 percent higher than the average level of production from 2000 to 2003. 8
I Keystone Builder • July/August 2010
House price to income ratio for United States, Pennsylvania and California
Single-family housing starts United States, Pennsylvania and Florida
In Pennsylvania, peak production was 13 percent higher than these pre-boom levels. This puts Pennsylvania safely in the bottom fifth of states in terms of the inventory problems that other states must work through on the way to housing recovery. The top fifth of over-built states had peak levels of production more than 50 percent higher than their pre-boom averages. Florida is a prominent member of this group, the fourth most over-built state, with production 64 percent above pre-boom levels.
House prices in Pennsylvania rose by just over 50 percent during the boom, increasing the house price to income ratio to 3.5, roughly 30 percent above the long-term average level, but less than the almost 50 percent national ratio peak and well below the 90 percent increase in California. House prices in Pennsylvania have retreated from their peak, and the house price to income ratio has declined to 2.9. This level is sufficiently close to the prior long-term average suggesting that house
prices in Pennsylvania have returned to normal, with a low probability of further significant declines. In fact, the latest available price data indicates prices have increased in the second half of 2009. It is also worth noting that mortgage interest rates are lower recently v than in the 1980s and 1990s and that this lower interest rate environment could support higher house prices and price to income ratios. Continued on page 11
House price appreciation The rate of house price appreciation during the boom and subsequent price declines are important factors affecting housing’s recovery. In general, house prices cannot grow significantly faster than income and be sustainable. Therefore, a basic measure of house price sustainability is a comparison of house prices to household income. A surge in house prices that pushes too far above local incomes creates an affordability problem. This problem will most likely be addressed through a combination of two outcomes: either a decline in prices that restores the price to income ratio or reduced demand for owner-occupied housing until incomes grow enough to restore the balance. Nationally, house prices have grown steadily since the 1980s through the early part of this decade. This growth was roughly in line with the growth in income. Over this period, the average house price to income ratio fluctuated between 3.0 and 3.5, with an average rate of 3.2. House prices began to rise steeply during the housing boom, increasing nationally at an average rate over 10 percent per year, but household income growth did not match this rate. Consequently, the house price to income ratio swelled, reaching a peak of 4.7 in the fourth quarter of 2005. Since then, house prices have declined at different rates from different peaks throughout the country. Nationally, after three years of considerably reduced demand for new houses and a declining homeownership rate, a 26 percent fall in house prices has restored the house price to income ratio to more normal levels. House price appreciation in Pennsylvania has been moderate compared to some other parts of the country with the result that movements in the price to income ratio have not been as extreme. Since the 1980s through the early part of this decade, the average house price to income ratio in Pennsylvania was 2.6.
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July/August 2010 • Keystone Builder
I9
Ready for the turnaround Businesses are preparing for the improving economy by M.H. Morrison ationally, confidence in the market for newly built, single-family homes rose earlier this year, which could be attributed to low interest rates and very attractive home prices, according to the National Association of Home Builders. “As a result, builders are slightly more optimistic that the housing recovery is finally beginning to take root,” said NAHB Chairman Bob Jones in a press release. Members of the Pennsylvania Builders Association are seeing the same trend locally but pointed out that this downturn and recovery are different from anything they’ve seen in their decades of experience. “What worked in previous downturns will not work in this one. We had to think smarter to survive,” said Ray Venema, president of Susquehanna Builders Inc., Montoursville, Lycoming County. He has been in business since 1999 and part of the industry for 30 years. For his company, that has meant switching the focus from new home building to remodeling. “It helped us weather the storm … remodeling has been consistent and growing.” Larry Yanover, owner of Yanover Construction, York, made a similar switch in his business’ focus. “We won’t forget about remodeling” as the economy picks up, he said. “It turned into a nice niche.”
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Ray Venema of Susquehanna Builders has been focusing on energy-conservation in his projects.
Surviving and thriving Now is a great time to do more business with existing customers and increase the “share of wallet” or “share of spend,” according to W. Kenneth Yancey Jr., CEO of SCORE, a nonprofit dedicated to educating entrepreneurs and helping small business start, grow and succeed. “If you’re a builder buying a lot of different products and services is there a compatible or complementary service that you can add to your product so you get a share of your customer’s spend within the space you’re already operating?” he suggested For example, a contractor who had focused solely on bathrooms may consider doing tile work in other areas of the home. Yanover said it didn’t take much for his company to change gears and stay busy even during the downturn. He added that it helped that they knew the local market. “Not to toot our own horn, but we didn’t overgrow [during the good economy]. We could adapt,” he said. 10
I Keystone Builder • July/August 2010
In the case of Susquehanna Builders, Venema said that the company found a profitable position by concentrating on energy conservation in both new home and remodeling projects. This niche was based on what his customers wanted. He said that they had been asking for energy efficient choices like geo-thermal heating/cooling systems. He also highlights his insulation package by comparing the energy efficiency of his homes against the code requirements—he’s about 30 percent better than the code. With this comparison, he takes the time to make his customers aware of the code changes. He said that sharing that knowledge has helped his company by improving his customer relations.
Moving forward Over the last two years, Venema has been fine tuning his marketing and advertising strategies, concentrating on home shows and Yellow Pages. However, as he plans for the future, he has noted that customers under 50 are more likely to go to the online Yellow Pages. This led him to begin slowly decreasing the amount he spends on advertising in the printed telephone book while increasing his advertising in the online version. Because this downturn and recovery are different, Venema said he is in no rush to invest in capital equipment. He remains very aggressive on limiting spending. As businesses prepare to take advantage of the improving economy, Yancey said that it is imperative to determine what type of capital investment may be required and whether this can be done out of existing cash flows. In his experience at SCORE, many business owners do not do a good job of estimating costs, so he said that now may be the time to consider a mentor. “The important thing is to reach outside to the people with experience and who will ask you the hard questions and will help you with analysis.” Mentors can be found within PBA and the locals or even through organizations like SCORE.
Focus on customer service Yanover said that customer service is always the key to success even when the economic recovery has come. Customer service includes educating consumers about the new construction code and local permitting processes. “We do a lot of continuing education and taking classes through the local and being involved with the state” he said. “You have to be on the cutting edge of what’s changing, so you can help customers through the whole process.” He also believes home prices will stay more in line with where the average consumer needs them to be. This “price check” will last long after the recovery. “The industry has changed,” Yanover concluded. s
Housing Market Recovery Continued from page 9
Foreclosures House price stability will be a critical factor affecting housing recovery, not only because price stability is necessary to entice buyers back into the market but also because declining house prices have replaced subprime mortgages as the driving force in the foreclosure crisis. Areas that experienced the biggest price run-ups are now suffering the largest price declines, leaving many buyers with homes worth less than the outstanding mortgage debt and forcing homeowners into foreclosure. Given the moderate pace of house prices in Pennsylvania, both up and down, the foreclosure problem is much smaller than in most other states. The foreclosure rate on prime mortgages in Pennsylvania has been very low, reaching a peak of 0.5 percent in June 2009. This rate was less than half the national average, and Pennsylvania was one of the best performing states in terms of foreclosures in the fourth quarter of 2009.
Foreclosures started on prime loans by state, fourth quarter of 2009
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The recovery This historic housing bust has reduced production to such lows that full recovery for most areas will be a multi-year process, but Pennsylvania’s overall housing market conditions are sound. Production during the boom was above pre-boom levels but moderate compared to other areas. House price appreciation and subsequent declines have also been moderate, resulting in current house price levels that should be sustainable. This relatively stable house price environment has helped to keep mortgage foreclosure rates in Pennsylvania among the lowest in the country. Based on these fundamentals, the National Association of Home Builders expects single-family housing starts in Pennsylvania to show strong growth, a 24 percent increase in 2010, and a further 46 percent improvement in 2011, reaching 29,000 units by the fourth quarter of 2011, a level that is roughly 80 percent of pre-boom production. This article was prepared by Peter Grist and Robert Denk, senior economists at the National Association of Home Builders in Washington, D.C. s
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Kitchen, bath remodels still popular Northeast region’s remodeling numbers picking up
Bathroom remodels top customer’s project list in 2010 at Advanced Kitchens and Bath, which recently received a first place award for its design work from the National Kitchen & Bath Association (NKBA).
Advanced Kitchens and Bath of Mechanicsburg created a Colonial color scheme with vintage finishes on the cabinets in a kitchen project that also included recycled flooring. The company noted that kitchen remodels were one of the most popular projects in 2009.
by M.H. Morrison he most popular remodels, in general, are still bathrooms and kitchens, according to one of the Pennsylvania Builder Association’s members. Roy McClain, vice president of Advanced Kitchens and Baths Inc. of Mechanicsburg, said that last year kitchen remodels were the top projects with baths being more popular this year.
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What’s hot The National Kitchen & Bath Association compiled a list of the most popular choices for residential kitchens in 2010. Traditional styles still have the top slot with contemporary designs holding second place. McClain said that he has found locally that homeowners are remodeling sooner. He said that three or four years after someone moves into a new home, it is not unusual for his company to do a remodel. In those cases, the homeowner is usually upgrading the original products. In his recent experience, McClain said that across the board, seniors are redoing baths instead of moving out. “They’re upgrading their present home. Five years ago, they would have gone to a senior community.” 12
I Keystone Builder • July/August 2010
Remodel value In its latest annual cost vs. value report from Remodeling magazine, it was calculated that the average cost recouped (the value retained at resale) for a remodeling project is about 63.8 percent. That percentage is the lowest in the magazine’s seven years of calculations. Remodeling also reported that homeowners will get more “bang for the buck” with a basement or attic upgrade over adding a wing to the house. The other high return on investment projects included a deck addition and conservatively priced replacement siding, entry doors and windows.
Remodeling gaining The National Association of Homebuilders said in April that the decline in remodeling activity may be reaching an end, according to the NAHB Remodeling Market Index. The RMI measures remodeler perceptions of market demand for current and future residential remodeling projects. Any number below 50 indicates that more remodelers say market conditions are getting worse than reporting improving conditions. The RMI has been running below 50 since the final quarter of 2005, but the first quarter 2010 is the best showing since the first quarter of 2006. For the Northeast the remodeling market improved to 45.8 from 27.7 in the fourth quarter of 2009. Across the country, “the remodeling market may soon reach its bottom and begin to grow in the coming months,” said NAHB Chief Economist David Crowe. “However, professional remodelers are still operating in a highly competitive marketplace and dealing with consumers who are uncertain about the future.” s
MemberInsider July/August 2010
Taking your affiliation to your customer
Membership in PBA counts with the general public by M.H. Morrison ustomers take note when a business is a member of a professional organization, and it may help them make the decision on where to take their business. Brian L. Durbin, partner of Durbin Companies, Altoona, said that memberships in the Pennsylvania Builders Association and local builders association, among other affiliations, are credentials that help “qualify that you know what you are doing.” He said that being a member of a professional organization also shows that you are “active in advancing your profession and career.” Doug Meshaw, CEO/executive vice president of PBA, agreed and added that consumers “like knowing that somebody is part of a professional group … there is an organization to go to if they have problems.” Additionally for consumers, Durbin said that a PBA membership is an assurance of “who and what you are willing to do. You’re in it for the long haul. You’re in it for a business. It’s not a side business.” He said that working with other local and regional groups is another way to be recognized by consumers as a part of a community and as a professional. For PBA members, reminding consumers of their affiliations and commitments to the industry should include, at a minimum, using logos for PBA, the local BA and National Association of Home Builder on all marketing materials. Meshaw said that he sees the logo as particularly helpful when there is a long list of contractors, showing the professional affiliation gives those builders a bit more credibility. When a member is out bidding a project, Meshaw has suggested leaving a copy of PBA’s brochure on choosing a contractor (which can be downloaded from the “Consumers” tab at the PBA website, www.PaBuilders.org). This piece of communication shows the potential customer that the member is committed to meeting and exceeding the highest standards. The PBA logo and guidelines for its use can be found at www.PaBuilders.org under the “Education and Resources” tab.
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Members can click on the “PBA logo and logo usage guidelines” under the “Education and Resources” tab at www.PaBuilders.org to download various PBA logos for use in promotional materials.
Member Insider • Keystone Builder
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Election wrap up by Elizabeth Bishop he Pennsylvania Builders Association has strong interest in the results of the primary election held on May 18. In a brief overview of the race, out of the 19 candidates running for Congress, five had primary opposition. Of the 25 Pennsylvania state Senate candidates, only two faced opposition. Twenty-six of the 203 state House candidates had primary opposition. There were several races that PBA closely followed. The special election for the 12th Congressional seat was a national focus. As a result, millions of dollars were contributed by both Democrats and Republicans. The Southeastern Pennsylvania districts are registered 2-to-1 in favor of Democrats but do vote conservatively. These conservative roots allowed Sen. McCain to win the 12th Congressional District during his 2008 presidential campaign. As a result of the special election, Mark Critz, D-Cambria, will finish out the remainder of the late Congressman John Murtha’s term and will face Tim Burns, R-Washington, in November for a full term for the 12th Congressional seat. In the gubernatorial primary, Dan Onorato, D-Allegheny, won the Democratic primary, while Tom Corbett, R-Allegheny, won decisively against Sam Rohrer. They will face each other in November. After a close race in the Democratic primary for the lieutenant governor position, Jonathan Saidel, DPhiladelphia, conceded to Scott Conklin, D-Centre, a former PBA member, prior to a recount taking place. In the U.S. senatorial race, five-term incumbent Arlen Specter, D-Philadelphia, lost to Congressman Joe Sestak, D-Delaware, by 54 to 45 percent of the votes. On the Republican side, Pat Toomey, R-Lehigh, crushed opponent Peg Luksik, R-Cambria, 81.5 percent to 18.5 percent. Sestak and Toomey are expected to have an intense race this fall. The primaries for Congress had an interesting outcome in District 11. Paul Kanjorski, D-Luzerne, defeated two challengers in the Democratic primary. This could set up a major battle in the fall against Lou Barletta, R-Luzerne, who has run against Kanjorski unsuccessfully in the past. There were several interesting races for the Pennsylvania state Senate. In the 12th District, there was an open seat due to the retirement of Sen. Raphael Musto, D-Luzerne. In the Democratic primary Rep. John Yudichak decisively beat Wilkes-Barre Mayor Tom Leighton. Since this is considered to be a Democratic district, Yudichak is expected to beat Republican challenger
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Stephen Urban, a Luzerne County commissioner, in the fall. In 22nd Senate District, Democrat John Blake— former deputy secretary of the Department of Community and Economic Development for the Rendell administration beat five other candidates, including Rep. Jim Wansacz. This was an open seat due to the retirement of Sen. Robert Mellow, D-Lackawana, who endorsed Blake during the primary. Blake will face Republican Frank Scavo in November. In another open Senate seat in the 46th District, due to the retirement of Sen. Barry Stout, D-Washington, both Timothy Solobay, D-Washington, and Kris Vanderman, R-Beaver, ran unopposed. Solobay is a major proponent of the mandatory residential sprinkler requirements. Vanderman is a long-time PBA member and legal counsel to the Washington County Builders Association. There were several races featuring incumbents for the state House. Long-time incumbent Rep. Joseph Preston, D-Allegheny, won the 24th District. He is the House Consumer Affairs chair. Rep. Paul Costa, D-Allegheny, retained his seat in the 34th District. Former House Speaker Bill DeWeese, D-Greene, won the 50th District in a close race. He faces a variety of charges brought against him during the Bonusgate Capitol corruption investigation. In the 93rd District, Rep. Ron Miller, R-York, faced a close primary. He has been a longtime supporter of PBA. Rep. Rick Arnold, R-Luzerne, was unopposed in the Republican primary for the 119th. He is a homebuilder and member of PBA. He will face Democrat Gerald Mullary in the general election. Former House Speaker John Perzel, R-Philadelphia, won in the 172nd, even with charges pending against him as a result of Bonusgate. A major sponsor in our efforts to extend expiring permits, Rep. Michael O’Brien, D-Philadelphia, won his primary in the 175th. Rep. Babette Josephs, D-Philadelphia, who was instrumental in moving our data quality legislation, won her primary in the 182nd District. There were changes in the state House, too. In the 131st District, incumbent Rep. Karen Beyer, R-Lehigh, lost to Justin Simmons, a 23-year-old who interned with Sen. Bob Mensch, R-Montgomery. Overall, the results from the May primary will lead to fascinating races in the fall. PBA encourages you to get involved, register to vote, get to know the candidates and contribute to PaCAH, your home builder political action committee.
Member spotlight
Dream Maker Homes Teamwork helps everyone
by T.W. Burger avid McGuire was 28 years old when he helped somebody build a mobile home park. Then he got into putting in modular homes, and then graduated to stick-built homes. It just sort of happened, he said. Now, at 50, McGuire can’t think of anything else he would rather do. Not that it’s been easy these past couple of years. There are plenty of speed bumps out there. “Besides the sluggish economy and competition, you have to be sure you’re doing a good job. The better work you do, the more chance you have to get work,” McGuire said. “I don’t advertise, believe it or not. I’m not even in the phone book. Everything is by referral.” Once, early in the life of Dream Maker Homes, a customer, an employee of the local electric utility, wanted a home built. He and his wife had five kids and lived in a single-wide trailer. “They had very little money. We put a house up for them and made, basically, nothing on it,” he said. “We just felt it was the right thing to do, even though we made no money on it,” McGuire said. “But five employees of that company bought houses from us after that. And it was all by word of mouth.” Last winter, McGuire’s family and business both suffered a blow when his truck caught on fire in the family garage on Jan. 21. The resulting fire took out the entire house. “That house was my office and my model home,” he said. “We lost everything … things from when I was a kid, records, everything. So we had to take time off to build our own home, and that slowed us down a good bit.” McGuire said his house, built about 13 years ago, had been constructed before firewalls and other safety measures. Even if the house had had only the former, the fire would likely have not spread into the main part of the house. “There’s a lot to learn, with all the new requirements,” he said. “That’s the good and the bad. We don’t agree with all of them. Even though we had that fire, I don’t think sprinkler systems should be a requirement but an option. They add at a minimum between $6,000 and $12,000 to the cost of the average home.” For the work on his house, he relied on many of the same subcontractors he counts on to put up the homes he sells. If he has learned anything by belonging to his state and local builders’ associations, it’s that everybody is in the same boat. “Even though we’re all competitors, we have learned about teamwork. We get together and talk about the new rules and regulations.
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We have formed a stronger network for ourselves. We came to trust each other,” he said. “We recommend one another, and we learn from each other. In fact, I’m working with one of my competitors to put up a house for another fire victim. It’s good. We help each other out. There have been some ‘creative differences,’ but we’ve worked together for years. We know what to expect from each other.” Like many home-building firms, Dream Maker Homes is no huge conglomerate. The company at its core consists of McGuire, his wife, Tracy, and four or five subcontractors “that we use constantly,” he said. “A lot of my subcontractors are members of the builders association themselves. Whether driveway, excavations or pools, we try to use members. We try to give each other work.” In more than two decades building houses, he’s seen a few things. “There was a pastor from Perry County who retired and moved with his wife. They came to me with plans to their existing house. They wanted their old house duplicated because they loved it. We had to have stuff custom made. They were very particular. I had some switches that were five or six inches off and I had to move them. In the end, though, they were real happy with it. Their daughter walked in and said ‘this is weird…you moved their house up here.’” Once, he said, he had to move a hole. “We excavated a basement, 55 feet by 32 feet. The next day, we had five feet of water in it. We had hit a spring. The homeowner was not too happy about it, but we had to dig a new hole somewhere else,” he said. “That was a pretty huge surprise.” McGuire is president of the Huntingdon County Builders Association. His firm works mostly within a 50-mile radius, he said, although he has traveled twice that distance to install geothermal systems. He says belonging to the state association is an extension of the networking he finds in his local group. “We all learn from one another. There is nothing we can’t ask another member. Even when we have trouble with customers, we talk about different ways of controlling that,” he said. “I notice that the guys who come to the meetings are the guys who will work together. It’s a good thing.” s
Business quick facts: Dream Maker Homes • Areas of Operation: Mideast Pennsylvania • Association Involvement: President of the Huntingdon County Builders Association
July/August 2010 • Keystone Builder
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In the Northeast, propane tops fuel oil. a high-efficiency propane furnace costs $2,100 less to install and $100 less to operate annually than a high-efficiency fuel-oil furnace.
ProPane 101:
Do More With Home Heating by Understanding Regional Differences
29%
Price premium for fuel oil in Buffalo relative to propane.
In the Southeast, propane trumps heat pumps. a high-efficiency propane furnace costs 12% less to install and expels 24% fewer carbon dioxide emissions than an electric airsource heat pump.
13%
In the West, propane has your back. a high-efficiency air-source heat pump with propane backup recoups installation costs 40% faster than a ground-source heat pump with electric backup.
Price premium for electricity in Florida and Texas compared to the national average.
Greenhouse Gas Emissions Natural gas: 0.8
12–18
Propane: 0.9
Years
average lifespan of a home heating system in the U.S.
Electricity: 2.4 0
0.5
1.0
1.5
2.0
Metric tons CO2 equivalent per unit per year
2.5
In the Midwest, propane is smarter than geothermal. In a retrofit replacement, a groundsource heat pump pays back the homeowner in fuel-cost savings in six years. a highefficiency propane furnace does it in less than 12 months.
Looking to install the highest-performing home heating system? It depends on where you stand. Literally. an eye-opening new training course on comparative home heating will teach you how different systems perform differently depending on location. The course, which is free and earns you continuing education credits, was created using data from a recent residential heating study conducted by newport Partners. Train to build more marketable homes and earn CeU credits: Take our aIaand naHB-certified Comparative Home Heating course at buildwithpropane.com/training. Brought to you by the Pennsylvania Propane Foundation and your local propane service provider.
PA Propane Foundation 717-441-6040 www.papropane.com