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©2009 Marvin Windows and Doors. All rights reserved. ®Registered trademark of Marvin Windows and Doors.
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Volume 6 • Issue 2 • March/April 2009
Summerset at Frick Park reflects New Urbanism and green living
4 President’s Column
14 In a crisis
PBA membership pays dividends
Experts explain what to do when journalists and customers come calling
7 Making 2009 a year of change Members shift business strategies to adapt to economy
8 Home improvement contractor law means changes for many businesses this year
17 Member spotlight Folino Homes: Green savings
18 Final word Seven ways to grow in a tough economy
Registration law takes effect on July 1
11 Blueroof gets smart Technology and innovation combine in housing for the elderly
Member Insider Member briefs . . . . . . . . . . . . . . . . . . . . . . We asked. The attorney general answered.. . . . . . . . . . . . . . . . . . . Common member questions . . . . . . . . . Premier Partner recognition. . . . . . . . . .
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Cover designed by Chris Anderson
Keystone Builder
12 Housing arises from slag heap in Pittsburgh
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Keystone Builder cover designed by James Robinson
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Associate Vice President Jim Miller, Lancaster County BIA Secretary Ray Venema, West Branch Susquehanna BA Treasurer Joe Harcum, Wayne County BA Immediate Past President Ray Fertig, York BA Executive Vice President Doug Meshaw Editor Eric C. Wise Associate Editor Chris Anderson
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 Keri Gustafson • 800-935-1592, ext. 133 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: ewise@pabuilders.org 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.
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President’s message
Vice President Joseph Mackey, Pocono Builders Association
By Gene Kreitzer • PBA President
President Gene Kreitzer, Lebanon County BA
PBA membership pays dividends People in our industry sometimes ask me about how Pennsylvania Builders Association member benefits can be worth the cost of dues. The quickest answer is simple: Members collectively saved more than $41,000 in annual PA One Call fees last year. Members who took advantage of the PBA Member Rebate Program received average individual refunds of $816 in the last year. Not all the benefits of membership are paid out in the way of checks. The Builders Association of Metro Harrisburg and PBA challenged unfair permit fees in Halifax Township, Dauphin County. The township is permitted under state law to charge a reasonable fee to cover the administrative cost of issuing a permit. New homeowners paid $25 for the first $1,000 and $3 for each additional $1,000. A homeowner’s choices in design and décor may affect the final cost of his home, but they don’t change the administrative cost of the paperwork. PBA objects because Pennsylvania law specifies fees must be tied to true administrative costs, which don’t change with project costs. Township officials now say they will review the fees, which PBA calls an unjust tax. Like the “administrative paperwork,” the cost of completing inspections does not change with a project’s cost. This is why the construction industry and PBA fought similar attempts to generate revenues through inspection fees based on building costs. The actual cost of inspecting a new home’s bathroom plumbing doesn’t change when the bathroom features more elaborate fixtures. It’s unfortunate that municipal leaders try to hide illegal taxes in administrative or inspection fees. Based on the U.S. Census Bureau’s building permits and construction estimates for 2007, Halifax Township would have collected $2,500 for simply filling out paperwork for nine new-home permits. Charging owners of new homes with these hidden taxes ($500 on a home under $200,000) is unfair – and, illegal. While the Halifax Township issue has not completely played out, we are confident the township will have to repay what it collected in unfair taxes. Another of our lobbying efforts is putting money back in members’ pockets this year as well: the new home improvement contractor law. Under the new law, nearly all municipal licensing and registration fees are eliminated. As we explain in further detail in this issue, home improvement contractors will pay $50 every two years for the statewide registration. Paying one fee is a massive improvement over paying a fee every year in each municipality where you work that collected these fees. Some of these local fees were $200 to $250 annually – so the new law cuts your cost by 90 percent, even if you work in only one borough. As borough, township and city leaders became aware of this change, some were forced to address it during their 2009 budget discussions. News reports indicated officials were estimating that boroughs including Newtown, West Pittston and Exeter would lose $25,000 to $35,000 a year when municipal licensing/registration was eliminated. So in those boroughs, members will keep much of that money this year. Next year, they will keep all of it because statewide licensing lasts two years. We may never know exactly how much members will save because they aren’t paying exorbitant licensing or registration fees (often several times) that were used to help a municipality meet its budget. It’s safe to say members are saving hundreds of thousands of dollars. In conclusion, keep in mind that PBA pays dividends to its members in many ways, including the direct savings of PA One Call and the PBA Member Rebate Program. But your association is also working to keep your business costs down, which pays much greater dividends. s
I Keystone Builder • March/April 2009
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Making 2009 a year of change by M.H. Morrison ith challenges in the housing market and economy, Pennsylvania Builders Association members are shifting business strategies to adapt in a changing environment.
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Susquehanna Builders: Advertising and more Ray Venema of Susquehanna Builders in Montoursville said he has changed his business in a number of ways with better sales in 2008 than in 2007, and entering 2009 with strong numbers. One of his strategies for staying in the black has been advertising. The company ran regional television commercials, supplemented with other advertising including the Yellow Pages and press releases. In 2009, Venema’s intent is to spend money in areas that have always produced results, including trade shows, the Yellow Pages, and more online marketing and advertising. To save money, he has found himself shopping smarter for everything, including health insurance, liability insurance and other general overhead expenses. “Before, I didn’t shop as carefully,” he said. “We’re just trying to be creative.” While the company has continued to rely on “very consistent trades people,” he is asking them, as well as the suppliers, to help with costs. Venema is also asking suppliers to extend credit to match the cash flow on the project more closely. Venema said that he is looking at increasing the geographic region his company encompasses. Further, he has expanded business by taking on a log-home franchise, which he sees as another way to keep the sales numbers up. Lastly, his company is buying single-family residences that need modifications, a flip of sorts. He is looking for specialty projects, such as a converted 1910 schoolhouse, and “flipping” them because they have unique features that attract specialty buyers who will pay a premium.
Tepes Construction: The rental strategy “This recession is the worst that I can remember,” said Lou Tepes of Tepes Construction in Northampton, who grew up in the building business and has been through a number of up and down cycles in the housing market. On the bright side, each recession has offered a lesson. He said his company has stayed small and lean, and it operates within its means, which translates into keeping an eye on his inventory of land, new homes, projects and everything else. He said that one of his long-standing strategies is building and maintaining rental units. He also is collecting an inventory of rentals for “retirement.” He started the practice in the 1980s, and adds rental properties when there’s a recession. “When times are bad, you have to learn to create work for yourself,” he said. For 2009, he is building additional units on property he already owns.
Tepes has diversified further by purchasing an old department store warehouse in downtown Northampton, which is in the midst of a renaissance. He plans to transform it into office and rental units. At the same time, he is not ignoring homebuilding. The company is now working on the infrastructure for an 86-unit development. “There is light at the end of the tunnel,” he said. “You build and they will come and buy – those days are done for awhile.”
The Moser Group: Joint ventures Ed Moser, president, The Moser Group, Chalfont, says he wonders how a business can not change with the current economy. He said that parts of his market are slow, particularly singlefamily homes in the $500,000 range. However, in the under $300,000 price category, he settled 40 homes last year. “I can’t say business is bad,” he said, especially considering that in his best years he usually sold 20 homes. “It was the right product at the right price at the right time.” He doesn’t see the company changing what they’re doing now, however they are not going to open a development that had been planned because of the price range of the homes. Instead, the company is going to do development fill-ins on single lots that the company acquired over the years. He’s also gotten creative on two projects by forming a joint venture with property owners. “They are in the risk with us to get the numbers that they want” on their land, he said, and this strategy has allowed Moser to expand a little in this market. Moser’s success despite the economy meant that he’s hired two employees, and he is anticipating needing to hire another one or two in the spring. He said he now has more candidates seeking jobs due to the economy. “We are in the Bucks-Montgomery BA and everybody is out there working together. We do still compete,” he said, but if someone calls to ask why a project is selling, he’ll talk to them about what he’s doing. “If we can stay optimistic and try our best, we’ll all get through this,” he said. s March/April 2009 • Keystone Builder
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Just the FAQs:
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See pages B and C of Member insider for answers to questions about the new law. Even more details: For more information about the home improvement contractor law, visit the PBA Member Registration Resource Center on the PBA Web site at PaBuilders.org.
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Home improvement contractor law means changes for many businesses this year by M.H. Morrison he debates are over. Registration of Pennsylvania contractors has been signed into law and home improvement businesses of all types will be required to submit their paperwork by July 1. The home improvement contractor law was signed by the governor in November 2008. Officially called the Home Improvement Consumer Protection Act (or Act 132 of 2008), this law was a victory for Pennsylvania Builders Association’s defensive priorities, because it provides consumer protection without overburdening the home improvement industry. In the past, PBA had opposed any type of contractor registrations, but with the compromises that the association was able to reach, this legislation was considered acceptable, since it voided most local licensing requirements and included no guarantee fund that would have required good contractors to pay for scam artists.
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You must register if … Act 132 is new legislation that requires home improvement contractors to register with the state. An extensive definition was written into the law, but for practical purposes almost any construction activity in, outside or on a residential property or home (driveway or garage) is covered under the law. Any company that does more than $5,000 annually in such home improvements would have to register, which means that every company that does this work is affected, said Lou Biacchi, director of governmental affairs at Pennsylvania Builders Association. The only businesses exempt from registration are new home builders, commercial contractors and home improvement retailers with a net worth of more than $50 million.
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While some of the fine print is still being worked out by the attorney general’s office, there are a number of provisions that are clear.
Getting registered First, only home improvement contractors will be required to register by July 1. (See the accompanying “You must register” information box.) At press time, PBA officials were working with the state Office of the Attorney General to make sure that when the registration is implemented, it “will function efficiently and effectively,” said Lou Biacchi, director of governmental affairs at PBA. He added that PBA is also collaborating with the attorney general to create a registration application that is understandable, so that applications are not rejected just because they were filled out incorrectly. The registration form will be released in early March. One item that has not and will not change by July 1 is the fee: $50 for a two-year registration. Registering can be completed via mail or online, but the AG office is also interested in providing on-site registration opportunities at builders association meetings.
New act, new contracts An advantage for PBA members is the new model contracts that are being created to meet the registration law. A contract will be required for any project for which the total price of all work agreed upon between the contractor and owner is more than $500. Biacchi said that to gain the most from this member benefit, he would suggest using the new document and its accompanying instruction sheets. Or builders can use the PBA model contract to amend their current one, then take that new contract to a lawyer for review. He said that the final option for creating a new contract would be to sit down with a lawyer and start from scratch.
I Keystone Builder • March/April 2009
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Learning the new law
Advertising the number
PBA is conducting presentations at local builders association meetings across the state to explain what’s going on and what a business’ responsibility is under the new law. Also, the presentations will discuss how business practices may or may not have to change beginning July 1, to be in compliance with the new law. This initiative is part of the comprehensive education program PBA has planned. Biacchi said he encourages members to not only come to meetings at the local association but also visit the PBA Member Registration Resource Center on the PBA web site at PaBuilders.org. It is important for builders and contractors to understand the components of the law, so that a violation is unlikely to occur, Biacchi said. To help consumers with the law, the AG office has agreed to participate in local homebuilders shows across the state.
Every contractor will receive a registration number, and this number is required to be displayed on official papers, contracts, bids, proposals and all advertising (radio, TV, Internet and business cards, for example). However, specialty advertising products, such as coffee cups, pencils or notepads, are exempted. This registration number is what consumers will use when they call the AG office about a contractor. At this time, there is no regulation on the placement or the size of the number. “From our perspective, contractor registration brings better business practices to the industry,” Biacchi said. “It provides written contracts that protect the contractor and consumer.” The other intent is to reduce the number of fraudulent and incompetent contractors. “That should be good for members and honest contractors by getting rid of unfair competition.” s
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To locate an agent in your area, visit www.bldrs.com or call 1-888-892-5853. KSBM_0903.indd 10
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MemberInsider March/April 2009
Member briefs
PBA saves members $41,250 in PA One Call fees
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ast year, 825 members took advantage of Pennsylvania Builders Association’s PA One Call benefit, saving each of them $50 for a total of $41,250. Under state law, anyone beginning a project with mechanical excavation must use the PA One Call service to locate buried utilities. The $50 fee for this service (paid once each year) is covered by your PBA membership. To learn about how to get your PA One Call benefit, contact PBA at 717-730-4380 today.
Incentive-based option for stormwater control proposed A recent proposal from the state Department of Environmental Protection takes an incentive-based approach to managing storm-water runoff and controlling erosion and sediment. It does not include a mandatory statewide buffer requirement along creeks and streams. The proposal would allow applicants to continue using the existing permitting process, but under the new option proposed by the department, called a “permit-by-rule,” an applicant would be assumed to have qualified for a permit if a set of specific conditions are met. If the “permit-by-rule” approach is chosen by an applicant; however, among the conditions that would have to be met would be installation of at least a 100-foot buffer and having filed plans sealed by a state-licensed engineer or geologist. A PBA member task force is reviewing and formulating a response to the department’s proposal. For more information or to join the task force, contact Grant Gulibon at 717-730-4380, ext. 3013, or at ggulibon@ PaBuilders.org.
Bay Foundation files lawsuit against EPA The Chesapeake Bay Foundation has filed a lawsuit against the U.S. Environmental Protection Agency concerning the cleanup of the Chesapeake Bay. The foundation, along with several former elected officials, watermen’s groups and other activists, claim that the EPA has failed to fulfill its responsibility to clean up the bay under the Chesapeake Bay Agreements and various laws. The lawsuit asks for further cuts in pollution from sewage plants, power plants and storm sewers, and for better programs to fund cleanup measures on farms.
The 2010 deadline for bay cleanup contained in the most recent multi-state agreement will not be met, and EPA is currently developing a total maximum daily load, which is the maximum amount of a given pollutant that a water body can receive and still meet water quality standards, for the bay watershed. The TMDL is scheduled to be completed by December 2010. For more information, contact Grant Gulibon at 717-7304380, ext. 3013, or at ggulibon@PaBuilders.org.
Enter progressive projects in the 10,000 Friends awards PBA members are invited to show off smart growth achievements by entering the 2009 Commonwealth Design Awards, sponsored by 10,000 Friends of Pennsylvania. Urban infill, historic preservation and rehabilitation, adaptive reuse, brownfield redevelopment, revitalization plans, traditional neighborhood development and farmland preservation are examples of smart growth projects that may be entered. The fee for each entry is $125. All entries must be received by April 3. Members may also nominate an individual as a “Friend of Pennsylvania” for extraordinary leadership and achievements in smart growth. Find out more at www.10000friends.org or by calling 1-866-985-3201.
Mortgage market grows Down Under Incentives and low interest rates prompted first-time Australian homebuyers during the second half of 2008. According to recent coverage from The Age, a Melbourne newspaper, first-time buyers accounted for more than one-fourth of mortgages in December, as first time buyers’ share of the market grew for six months. To encourage home sales, the government doubled the first-time buyers grant to about $9,300 and tripled the grant to about $14,000 for those buying newly built homes. (Both grant amounts have been converted to U.S. currency.) In addition to the grants, lower rates have encouraged buyers. The Australian Reserve Bank lowered the rate four points in September to 3.25 percent, its lowest rate in 45 years. These encouraging results from Australia suggest that the remedies proposed by National Association of Home Builders and “Fix Housing First” will help improve the U.S. economy. Member Insider • Keystone Builder
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Questions & Answers We asked. The attorney general answered.
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ennsylvania Builders Association knows how important the home improvement contractor law is to our members and that there are questions about how the new law will affect individual businesses. So we took your questions to Attorney Gen. Tom Corbett, whose office will be in charge of enforcing the new legislation. For additional information, see “Common member questions” on page C of the Member Insider in this issue and visit the Registration Resource Center at PaBuilders.org. The attorney general began the question and answer session with the following comments: “Last year, Pennsylvania’s General Assembly adopted the Home Improvement Consumer Protection Act (Act 132 of 2008) to protect consumers from unscrupulous contractors and provide new protections for consumers who hire home improvement contractors. For years, reputable contractors had to compete with fly-bynight contractors whose substandard work generated thousands of complaints with my office every year. This new law will level the playing field for the industry by requiring everyone performing home improvements to register with the Office of Attorney General and afford basic protections to their customers. My office worked closely with the building community during the passage of Act 132, and I look forward to working with you during its implementation and beyond.” Q: I operate one business using different names to market different types of projects. Do I need to register more than once? A: The Home Improvement Consumer Protection Act requires contractors and home improvement businesses to register with the Office of Attorney General. Although a separate registration is not required for each name used by a contractor or business, each of those
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names must be disclosed when you register. Also, remember that fictitious or assumed names need to be registered with Pennsylvania’s Department of State. Q: This new registration law was supposed to eliminate nearly all municipal registration costs, but my local officials are telling me I must pay a fee and register because some projects will require township services for building code inspections. Must I still register locally and pay these fees? A: Municipalities are permitted to continue enforcing their own insurance requirements, however Section 12 of the act prohibits local licensing or registration of contractors with the exception of certain trades in very limited circumstances. I strongly encourage all local government offices to consult with their solicitors about any other fee, license, or registration that may be in conflict with Act 132. Q: City government requires a mercantile license for all businesses that “operate” within city limits, including contractors performing work for city residents or those with offices in the city. Do I still have to buy one of these licenses, or is this exempted? A: The law does not affect local authority to administer rules or ordinances that are general in nature and apply equally to all businesses. Q: I don’t have any vehicles specially painted with the name of my business because it’s so small. Does the new law require me to get lettering for my truck with the name of my business and my state registration number? A: Act 132 does not mandate any special advertising, however, if contractors or businesses do promote themselves through signs or other ads, they must
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r w th la th include their registration numbers in those advertisements. Contractors must also include their registration number in the contracts, estimates and proposals they use. Q: Are general contractors responsible to verify that all mechanical, drywall, painting and other subcontractors are legally registered in Pennsylvania? A: Act 132 is silent on this issue. However, home improvement contractors must advise consumers of the subcontractors that they know will be working on the project at the time the contract is signed. They must also give the consumer contact information for these subcontractors. Note that any subcontractor which is a “home improvement contractor,” as defined by Act 132, must be registered with the Office of Attorney General. Q: If I operate in a city with a technical licensing requirement that is not exempted by this law, am I required to also register with the state? A: Yes. You must register with the Office of Attorney General if you are a “home improvement contractor” as defined by Act 132, regardless of whether you are also required to be licensed by a local government. Q: Most of my work falls under the category of commercial building renovations. Am I required to register under this law?
I Keystone Builder • Member Insider
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A: Commercial work and new home construction are both excluded under the law so those who do this work exclusively would not need to register. Keep in mind, though, that once the law takes effect, you will not be permitted to perform residential home improvements until you are registered; so if your work involves a combination of commercial and residential projects, you must register to continue working on private residences. Q: If new homebuilders complete repairs under a third-party warranty with a cumulative value of more than the $5,000 threshold under this law, are they required to register for this “home improvement” work? A: As noted above, those exclusively engaged in new home construction and commercial building activity are not required to register. The response would depend, in part, upon the terms of the warranty contract itself, the parties to the contract and the work being done. To the extent contractors are performing home improvements, as defined under the law, they will need to register. Q: I understand changes are needed in the contracts signed with consumers. Do I need to change the contract I use with my subcontractors? A: The contract requirements of Act 132 apply to contracts entered between contractors and their customers. The law does not address commercial contracts entered into between contractors and other businesses or their subcontractors. It will require – and prohibit – certain contract provisions in consumer contracts for projects of $500 or more beginning July 1. Q: My current contract includes an escalation clause to protect my business if lumber or other materials costs increase significantly before the project is completed. Can I use an escalation clause under the new law? A: Act 132 is silent on this issue. The law does allow for contracts to be amended with the written agreement and acknowledgement of the consumer.
Common member questions
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n this article, Pennsylvania Builders Association answers some of the most common questions from members about the home improvement contract law. Visit the Registration Resource Center at PaBuilders.org for more questions and answers. Q: When does the new law go into effect? A: The law was passed by the legislature and signed by the governor in November 2008, but it doesn’t go into effect until July 1, 2009. This was done to give the state attorney general’s office time to prepare the home improvement contractor registration process and for contractors to prepare for the change as well. Q: As a home improvement contractor in Pennsylvania, what are the major changes this law will bring for my business? A: Some of the major changes include: You will have to register with the state by July 1, 2009 and then renew your registration every two years. You will have to display your registration number on all promotional materials, your contracts and other items. You will need to carry certain minimum levels of liability insurance covering personal injury and property damage. There are certain elements that will be required in your contracts that you may not currently have. There will be a limit on the amount of a deposit for home improvement work. Municipal registration of home improvement contractors will be repealed in most locations in Pennsylvania and will be replaced by a single, state registration process. There will be penalties for not meeting the requirements of the home improvement contractor registration law. Q: What state office oversees the home improvement contractor registration process? A: The state attorney general’s Bureau of Consumer Protection. The phone number is: 717-787-9707. The web site for the Pennsylvania attorney general’s office is www. attorneygeneral.gov. Q: Who must register? A: Any person who owns and operates a home improvement business or performs home improvements and their total cash value of home improvements in the previous taxable year is $5,000 or more must register. Q: What does the law state about deposits collected for a home improvement project? A: For a home improvement contract in which the total price is more than $1,000, a contractor shall not receive a deposit in excess of one-third of the home improvement contract price. The deposit rule allows for special order items, in which case the limit is one-third of the contract price plus the cost of special-order materials. Special-order materials are not stock items. They must be specially ordered from the factory or distributor. Special-order materials are produced or processed for the contractor for a specific home improvement contract. Plus, they are not returnable by the contractor for a refund or credit and have no usefulness for other home improvement contracts, because they were specially ordered for a specific home improvement contract. Visit the PBA Member Registration Resource Center at PaBuilders.org for more questions and answers.
Member Insider • Keystone Builder
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PBA Premier Partners the PBa Premier Partners program is energized by an elite group of businesses taking a leadership role promoting the growth of Pennsylvania’s housing industry. Premier Partners provide non-dues revenues that help expand PBa’s services to members. Next time you’re bidding a project, please keep our Premier Partners in mind. Gold level sponsor Wells Fargo Home mortgage By utilizing our extended rate lock products, we offer builder partners the opportunity to eliminate market risk, easing buyer concerns and allowing us to sell more homes more profitably. Contact Mark Mellas at 570-499-3204 for more information. Silver level sponsors ProBuild ProBuild is dedicated to the building industry. ProBuild has been, and will always be, on the cutting edge of new products and services, as well as providing technical and building industry knowledge. Our involvement at the national, state and local builders association is extremely important to ProBuild. For more information, please contact Michael Kurpiel, market development manager, at 800-883-8800, ext 665.
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First NatioNal BaNk First National Bank is the Premier Partner for both business and personal banking needs. We are dedicated to serving the financial needs of the communities in which we serve and have an expanded network of more than 215 banking offices and 240 ATMs across 35 counties. For more information, visit a local branch, call 800-5555455 or visit www.fnb-online.com. ilevel By WeyerHaeuser iLevel is Weyerhaeuser’s integrated residential framing business resulting in a seamless, unified solution for residential builders through dealers – offering a coordinated network of support for all structural framing materials. By combining Weyerhaeuser’s high-quality products and services from well-known brands like Trus Joist and Structurwood, with its distribution and technology capabilities, iLevel efficiently supplies customers with all the necessary components for building the residential structural frame, and solving builder and customer needs around that frame. To learn about the iLevel line of residential framing products, design software tools, technical support and extensive distribution network, visit www.iLevel.com or call 800-678-8787 for a structural frame specialist or dealer near you. Bronze level sponsors PeNNsylvaNia HousiNg FiNaNce ageNcy Do you have potential customers say they’d love to do business with you but they don’t have the extra money? Learn about Pennsylvania Housing Finance Agency’s homeownership programs and their Renovate and Repair home repair program. resideNtial WarraNty comPaNy llc By providing an RWC-insured warranty on your new or remodeled homes, you distinguish your company from the competition. Only highly qualified, financially sound, ethical builders become RWC members. RWC’s warranty also provides the benefit of an effective dispute process including free mediation and binding arbitration, if necessary. RWC offers a variety of warranty choices including their exclusive Customized State Warranty providing structural coverage from day of closing at a low, flat rate for homes priced up to $1 million.
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A in fo ti th companies that want targeted exposure to Pennsylvania’s homebuilders need to become PBa Premier Partners. these association sponsors get invaluable face time with our members – time to build relationships and talk business. take, for instance, PBa’s summer fundraiser for its political action committee. last summer’s event had a fun las vegas theme, and, with their complimentary admission, our Premier Partners got the chance to mingle all evening long with more than 150 PBa members. For instance, chris kulp of Wells Fargo Home mortgage (top) tried his hand at black jack while socializing with PBa members. lori Fetterhoff of residential Warranty company llc, another Premier Partner, (above, left), larry yacovelli (above, middle) and mark mellas (above, right), both of Wells Fargo Home mortgage, won prize drawings and took home nice gifts. PBa’s Premier Partner program demonstrates that you can mix business with pleasure, benefiting both your company and the housing industry.
For more information on the PBA Premier Partners program, please contact Bill Lapitsky at PBA at 800-692-7339, ext. 3030, or via e-mail at blapitsky@PaBuilders.org. More information is also available online at www.PaBuilders.org.
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The Blueroof Model Cottage in McKeesport allows researchers to analyze new technology that can help seniors remain independent.
Blueroof gets smart Technology and innovation combine in housing for the elderly
by M.H. Morrison hen seniors in McKeesport were asked what they wanted in a home, not surprisingly their top answer was security, but No. 2 was unexpected – a front porch. These two wants have been addressed by Blueroof Technologies, a nonprofit company building “smart” houses in Allegheny County. Created in 2002 by John Bertoty, a retired McKeesport Area High School principal, and Robert Walters, an engineering professor with Penn State Greater Allegheny, Blueroof is focused on developing state-of-the-art, or “smart,” living facilities to keep seniors safer, healthier and living independently in their homes for as long as possible. The two men wanted their projects to create jobs that would keep local high school and college graduates in the region. The smart features utilize information technology, sensors, and computer hardware and software that can be placed in new construction or retrofitted into homes or even apartments. For security, the technology includes cameras at the front door and a voice that announces when a door is left open. Other options to provide support for staying in the home include monitors that can be set to ensure that someone is taking medications or has eaten. If there is a problem, the monitoring system will alert the appropriate caregiver. The equipment can keep seniors connected in the way front porches worked in older neighborhoods. Web cams, Bertoty said, can be installed for the seniors to see and speak with family and friends. The sophistication level of the technology makes it adaptable and automatic so that it is seamless to the users. Bertoty said that it is like a “benevolent” caretaker.
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With the help of local officials, Walters and Bertoty formed the McKeesport Independence Zone, where they plan to build 15 to 20 smart cottages that will be green certified. The goal is for them to be completed by 2011. The model cottage, the first of those planned for the McKIZ, was completed in July 2005. It is being used to demonstrate and test the features that Blueroof Technologies is advocating. The model is not inhabited full time but for part of the day by seniors or those with physical or mental limitations. These individuals’ hands-on experiences are helping to shape the amenities offered as well as the research being conducted. In 2008, the model cottage became the Smart Research Cottage when Blueroof began a collaboration with researchers at the Quality of Life Technology Center, run by Carnegie Mellon University and the University of Pittsburgh. QoLT, which is a National Science Foundation Engineering Research Center, is using this home and the entire zone to test devices designed to support independent living with opportunities for student researchers. In addition to technology within the cottage, Bertoty explained they are looking at creating a community that supports independent living, such as crosswalks adapted for slower pedestrians. Other projects from Blueroof include fully accessible modules that can be added to an existing home and retrofits for high-rise communities. The company has also built about a dozen homes with the smart technology, ranging in cost from $125,000 to $500,000. “We are changing how we do things fundamentally,” Bertoty said. “We’re kind of ahead of the curve.” s March/April 2009 • Keystone Builder
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Housing arises from slag heap in Pittsburgh
Summerset at Frick Park reflects New Urbanism and green living by M.H. Morrison aming a 20-story mountain of slag didn’t daunt Summerset Land Development Associates and the Pittsburgh Urban Redevelopment Authority, who saw potential in the brownfield hillside near Squirrel Hill, a historic neighborhood just five miles from the city’s center. Summerset at Frick Park, the resulting $250 million private-public development on 238 acres, is expected to be completed by 2011 with a total of 700 units from single-family homes to apartments. The redevelopment authority bought the land from a private entity in 1995 for $3.8 million. They attracted SLDA, a group of investors, developers and builders, and gave them exclusive rights to create a master plan for the property. This group is led by Pittsburgh-based The Rubinoff Company. This managing partner had previous experience transforming a complicated environmental site into a residential and office park community. The general partners, which also had experience working with a variety of residential real estate projects, include Montgomery & Rust, Pennrose Properties & Ralph A. Falbo, and EQA Landmark Communities.
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A Village home is under construction next to an end-unit townhouse at Summerset at Frick Park. The neighborhood strives to re-create the look and feel of close-knit, old-fashioned city neighborhoods.
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One of the biggest challenges, said Craig Dunham, principal with The Rubinoff Company, has been the length of the process. It took five years to reclaim the land and sell the first lots. The unique nature of the site led the state Department of Environmental Protection to create new regulations.
Also, Dunham said that the speed of the development has been controlled, in part, by the pace of public investment in the project. For example, $60 million in public subsidies was used for site preparation, including grading the 600,000 cubic yards of slag and topping it with more than 122,000 tons of topsoil.
Urban planners and developers recognized the potential in this site near Pittsburgh where the steel industry dumped industrial waste material during 50 years of steelmaking.
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The project is in the second of three phases. Phase 2 includes 300 units with the first group of lots released in 2007. About 60 percent of these lots were sold by January 2009. The developers are completing the Phase 2A design and infrastructure. Environmental analysis for Phase 3 has also begun. Part of the next phase will be 40,000 square feet of retail and office space that will provide the neighborhood with shopping and services. These spaces match the overall New Urbanism plan for the property, which strives to re-create the look and feel of close-knit, old-fashioned city neighborhoods. Within this framework, the group used a traditional neighborhood development including mixed uses, walkable streets, a variety of housing types, front porches, no cul-de-sacs and multiple community parks. The company has a broad range of products and introduces new offerings in the development to keep things “fresh.” The majority of the units are priced from $300,000 to $625,000. “We self-market the community,” Dunham said. SLDA works to communicate first with potential buyers about
Window installation is underway on an Estate home at Summerset at Frick Park. Homes are built to be at least 30 percent more energy efficient than typical new homes constructed in the Pittsburgh area.
what the neighborhood offers, then the house is discussed. The project was green before green was on everyone’s minds, Dunham said. For Summerset, this has translated into homes with a higher level of energy efficiency from top-of-the-line heating and cooling systems and high-performance windows with low-E glass. Every unit built is at least 30 percent more energy efficient than a typical new home constructed in the area. Another plus for the site is its proximity to Frick Park, one of Pittsburgh’s
most historic parks. The developers are working to clean up Nine Mile Run, the Monongahela River tributary running through the development acreage, which will include a trail that will become part of a 100-acre addition to Frick Park. “The strong sales we’re experiencing are proof that a new, traditional neighborhood with high quality construction appeals to homebuyers. And the simple fact that this beautiful neighborhood is located on a former brownfield site makes it even more intriguing and rewarding,” Dunham said. s
Learn & Earn More Green Atlantic Builders Convention - April 22-24, 2009
Atlantic City Convention Center • Atlantic City, New Jersey
See and be seen at the largest industry trade show in the Northeast. Featuring:
• Green exhibitors, sessions and certification courses
• Extensive marketing and networking opportunities
• Live green demonstrations
• Educational sessions and industry certification courses
• Green techniques, principles and products you can use right away • 700+ exhibitor booths including green vendors
• Renowned state and national speakers • Daily prize giveaways and more!
Visit www.abconvention.com today to exhibit or register! For more information call 609-587-5577.
R ejuvenate the Dream...E mbrace the Opportunity See You at ABC! March/April 2009 • Keystone Builder
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Experts explain what to do when journalists and customers come calling by M.H. Morrison t happened to Florida contractors, and something similar could happen in Pennsylvania. A batch of sulfurcontaining drywall became a construction crisis in late 2008 as homeowners complained of ruined piping, costly repairs and health problems. As reported in various news outlets in Florida and on the Web, during 2006 builders and subcontractors were using drywall manufactured in China. The reason for using the imported drywall is being attributed to a shortage of the product because of the housing boom. As homeowners began to report repeated problems with air conditioning systems as well as a sulfur-like smell, it came to light that the drywall was the culprit, offgassing sulfur that mixed with moisture to create a chemical that damaged copper piping and played havoc with HVAC and other systems. Homes in Arizona and California later developed similar problems from Chinese drywall. Lawyers have become involved along with governmental agencies. Most contractors and builders would agree the situation is a nightmare. While Pennsylvania Builders Association members may not worry about Chinese drywall, there are plenty of other potentials for a crisis from endangered species at a development to installing what is later determined to be a defective product. Experts suggest that before there is a problem companies should create a crisis communication plan or response that includes who will say what and when. These plans are unique to each business and can be created in house or by hiring a consultant (contact your local builders association for a list of communication/ public relations specialists).
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Step by step While each crisis has its own sets of challenges, Robert Saline, APR, fellow PRSA, President/CEO PR Works, Harrisburg, had five steps for responding before, during and after a crisis, including creating a communications plan. Step 1 In your crisis communication planning, be realistic because something bad will happen, Saline said, and know it may or may not be in your control. After accepting that something “bad” will happen, Saline said you should determine who will speak – and it should be the owner or president of the company. “The media doesn’t like speaking to the second in charge or those who don’t know what’s going on.” The person speaking should have short, easy to understand key messages. (Think of something that would work as a headline for the “story” you are telling.) Step 2 Anticipate what could go wrong. Saline’s recommendation is to take half a day with the company’s leadership and make a realistic list of what can go wrong and add this information to a crisis plan. Then anticipate the questions that would be asked about potential issues or problems, such as defective products, environmental issues, endangered species at a job site or detrimental financial news. Saline said that the media like facts and numbers, so by anticipating questions, you can have those available in your plan. The media and customers want honesty. The answers that are created must be truthful. Step 3 Determine answers to the following three questions before and during the crisis. It is a good idea to write down the answers, so you have them readily available. What went wrong? Saline said to give the answer as “factually as possible, and if you need to apologize or need to do contrition – do it.” He said that if a human life is involved, then you need to express sympathy and understanding first and foremost. What are you doing to fix it? Again, he said “just be honest.” Using problem Chinese drywall as an example, a builder might say that he did order some of this drywall and it’s been determined where it is in the supply chain and that it has been pulled from the shelves. What are you doing to prevent it from happening again? Saline said that this answer should outline whatever changes the situation demands, even if they are tough. “It’s all about protecting the reputation of the builder,” Saline said. Step 4 When a crisis occurs, implement your communication plan. For the specific event, the key messages will need to be recrafted. Saline said it is easier to edit than to start from scratch. Step 5 He said that you must “monitor, monitor, monitor.” This means checking the response to your messages. By reading articles and watching the press coverage of a story, you can get the sense of the life of the story, and may be able to anticipate any follow up stories or questions that a reporter will come to you with. This rule also refers to keeping an eye on the industry to anticipate potential problems.
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By having this process laid out before a business is in the midst of a crisis, it is less likely that any one will make communication missteps. Regardless of the crisis plan specifics, the first responsibility is to communicate directly with those most affected. In the case of PBA members that is probably homeowners. Hopefully, this group is well defined and the company can reach them, said Phyllis V. Larsen, APR, senior lecturer in college of journalism and mass communications, University of Nebraska-Lincoln. In communicating effectively with this audience, the company is serving its customer’s interest, thus preserving its reputation. “You need to do the right thing� in addressing the crisis, problem or issue, Larsen said. And, the business should make sure that people know they’re doing the right thing. “Reputation is the single most valuable asset of business. Without reputation, there is no business,� she said. The general rule of thumb for these communications, whether through the media or in a letter, is that the CEO or company president should give the first comments or statements. This statement should communicate that the company is aware of the problem, the company is concerned and the company is working to solve the problem, Larsen said. After the initial statement, someone else can talk to the public and news media, she added. She emphasized that in all contact with the press or individual homeowners, the builder, contractor or developer must tell the truth. April Hutcheson with LaTorre Communications in Harrisburg said that whoever is presenting the communication should be trained to do so. To her it’s a worthwhile investment because little things like eye contact or body language could drown out the message that is being conveyed with words. She, like the others, said that in the midst of a crisis, mistakes can happen but knowing those pitfalls in advance can be helpful. Hutcheson said that telling the press that you have no comment or being hostile to the media or customers is a mistake. Larsen said that to her, the biggest errors include ignoring the problem and
thinking that it will go away; waiting too long to communicate to the most important audiences; not telling the truth; not having the CEO or president involved in earliest stages of communication; and not having a plan and/or not having thought about it. Robert Saline, APR, fellow PRSA, president/CEO PR Works, Harrisburg, added that not following the story in the news is a planning opportunity missed. By reading and watching the story, the business can anticipate if there will be follow up questions, and can then prepare answers.
T.W. Burger, a seasoned reporter with The Patriot-News, Harrisburg, agreed with the experts assessments. He said that the worst thing a contractor could do is ignore the media. “Nothing makes reporters or the rest of the public more suspicious than for a business – or government entity, for that matter – to haul up the ladders and go into siege mentality just when the public’s eye is on them.� No material in this article is meant to address the legal obligations a business may or may not have during a crisis. s
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March/April 2009 • Keystone Builder
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Member spotlight
Folino Homes: Green $avings by Tess Wittler arco Folino spent his youth watching his father’s construction company, and when he was old enough, he spent eight years working side-byside with his dad – learning the intricacies of the industry. Two years ago he decided to form his Berks County building business, Folino Homes. What makes Folino’s vision so interesting is his approach. In the last year, he has moved into the green building niche by earning his National Association of Home Builders Certified Green Building Professional designation and now builds Energy Star and NAHB Green Building certified homes. But that alone isn’t what makes his vision noteworthy. It is the affordable price range in which he’s able to accomplish this. “Most Energy Star and NAHB Green Building certified homes in the area are priced at $300,000 or more,” said Folino. “I recently finished a home that is certified gold and priced at $266,900.” What makes it even more exciting is the savings the buyers of his homes should see. “Homebuyers should save around $100 per month in operational costs with these homes.” Another interesting facet of Folino’s business is his “quick delivery homes.” He builds the shell of a spec home and keeps the interior bare, allowing the future homeowner to make personalized selections. “Oftentimes, customers only have a month or two to move out of their existing home. By choosing one of our quick delivery homes, they can still build the home the way they want it, yet benefit from the quick turn-around we can provide.” Folino currently has two developments under construction with a third, Greenwich Village, in the planning phase. “If approved as planned, this development will be a village concept with over 130 units where townhomes and single-family homes are intertwined.” Folino’s vision also
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Folino Homes constructs NAHB Green Building certified homes in the affordable price range. A recently finished gold-certified home was priced at $266,900.
includes a town square that is surrounded by first-floor commercial properties with residences above. The green niche is just one of two plans Folino has underway for 2009. The other includes one of his team members, Andrea Mortimer, who will complete her certificate in interior design this summer. Not only will Mortimer assist customers through the selection process – picking flooring, cabinets and fixtures – to make their home their own, but she will also consult with customers to help them with their other interior design needs – like furniture placement, window treatments and wall coverings. “It’s about offering customers what they want. And when the new home market picks up again, we’ll be positioned to provide the personalized touches to make their house a home,” explained Folino. s
Business quick facts: Folino Homes • Years in Business: 2 years • C ounties of operation: Berks, Schuylkill, Lehigh counties • Local association: HBA of Berks County Marco Folino • Association involvement: Education committee • A wards won: 2008 Parade of Homes Division I – Best of Show Runner-Up; Division III – Best Interior, Best Kitchen & Best of Show • Web site: www.FolinoHomes.com March/April 2009 • Keystone Builder
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Final word
Seven ways to grow in a tough economy Try some of these ideas to grow through – rather than simply endure – the recession 1. Keep a pipeline perspective, not a shallow stance. Even healthy businesses can go through a tough cycle. Extend mercy to clients who are not paying on time. Be willing to work with them, more than anything. Be willing to communicate with them and work through the problem. Understand a client’s long-term potential, rather than their current situation. Be careful not to lose a client now who may keep you running in the future. 2. Networking as personal branding. Joining a committee at your local home builders association is a great way to advertise yourself and your business to other building industry professionals. Introduce yourself to local media contacts. Get involved in your community. 3. Examine current relationships. Be sure to monitor your pricing as well as the pricing you are getting from your suppliers and vendors. Don’t hesitate to negotiate. Businesses do not want to lose good clients. Be willing to work with your customers as well. 4. Knowledge is the key to success. If your company’s skill sets are not immersed in the financial realm, don’t be afraid to talk to your business banker about how you can better manage your finances. Many banks, such as First National Bank, will even set up a workshop where you can learn more about how to manage your
business finances. Work with your business banker to make the most out of your business accounts. 5. Keep cash flowing by opening a line of credit. A line of credit is desirable for any business, particularly in the building realm, when cash flow isn’t always abundant. By being responsible, opening a line of credit will help you build good credit, manage your cash and keep on top of your finances. 6. Timing is everything. If you need to talk business with a client or vendor, be sure to communicate during business hours. Networking events are not the time to discuss overdue invoices or price increases. Utilize the networking event for networking and wait until the next day, during normal business hours, to discuss specific business topics with your business associates. 7. Meet your obligations. Be sure to pay on time, if possible. If you can’t pay on time, pay what you can and tell your suppliers when they can expect the balance. Treat your clients the way you’d like your suppliers to treat you. Extend them the same understanding you would like to receive if you were having trouble making your payments. This article was provided by First National Bank, a silver-level PBA Premier Partner. s
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I Keystone Builder • March/April 2009
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