Builders Outlook March 2011

www.elpasobuilders.com

Builders Outlook Issue 3 2011

Building El Paso’s tomorrow today

Home building industry faces substantial change National and local issues take toll on builders Oil jumps to record high

PRSRT STD U.S. POSTAGE PAID EL PASO TX PERMIT NO. 429

The U.S. economy has taken another hit with the increase in oil prices mostly affected by turmoil in the Middle East and rising use from India and China. Various sources indicate that while rising unrest in Libya, Egypt and Tunisia worry sensitive oil prices there appears to have been little or no problems with the oil fields or delivery systems associated with them. Egypt’s oil export to the U.S. is less than 3% but the United States depends on nearly 50% of its daily consumption on imports from the Middle East, South America and other foreign countries. Production within the U.S. itself is still stagnant in most parts of the country but recent finds of large deposits of oil in the west could increase drilling if the government allows it. Montana, Colorado, Idaho and other parts of the West are where the newest oil finds have been made. The oil is trapped however, under many of the nation’s scenic federally protected parks and seismic sensitive areas. Oil has also been flowing from the gulf once again as the recent BP cleanup continues.

City bond requirements cause major problem

Housing rebound affected The rise in oil comes at a bad time for the economy as a whole but is particularly cruel to homebuilders trying to come out of a devastating two years. Products associated with oil include roofing, insulation, and plumbing materials.

Add the ever increasing cost of gasoline to the mounting costs and homebuilding is once again attacked. El Paso has traditionally had one of the highest gasoline prices in the state even though one of the regions largest refineries sits in the center of the city. Articles in the El Paso Times the week of March 4 indicate that Western Refining suffered significant damage during the recent freeze that engulfed the city. The company was quoted as saying that it suffered 14 days of lost production and that repairs would be done quickly. Western was also the subject of concern recently when outlying areas like Deming, New Mexico, were unable to get full loads of gasoline delivered to them. The company once again said that it was due to repairs and upgrades rather than a shortage of crude.

In Washington, as in cities across the United States, housing remains the one item that hasn’t rebounded in the traditional method seen in recessions of the past. Compounding the problem are some of the regulations that have been imposed by the Federal Reserve on local banks and lenders. Credit scores and

increased down payment are two very important factors in getting new homes to consumers. During recent meetings in Austin by the Texas Association of Builders, members lamented the failure of the Fed to push for more construction loans and assistance to consumers. (See related stories in this issue). Increasingly economist are concerned that housing hasn’t bounced back, but they also state that now is the best time to buy even as housing values continue to fall in some parts of the country. Qualified buyers are getting record low interest rates on good values. Builders are hopeful that the Fed takes control of AD&C in order to restore sensibility to housing construction.

Local builders are hopeful that conditions continue to improve and that regulators and regulations dictated by the City of El Paso and other governmental agencies do not hinder that improvement. “We have a serious issue with the new bond for permits, and we are working with the City to seek an amicable solution to the problem,” said EPAB President Greg Bowling.

The requirement for a surety bond rose from $10,000 to $50,000 January 1. The surety bond industry, as well as contractors, was taken by surprise at the new requirements for the bond and the affect it is having on the trades.

“We have seen a decrease in the number of small businesses that can afford this new bond and it is adversely affecting their ability to stay in business,” said Bowling.

Efforts to work on the bond are ongoing but any correction or amendment to the already passed ordinance will have to go before the City Council. That could take months as the process is slow and cumbersome. “We just can’t undo something like this overnight, but you have my promise that we will look into the unintended consequence of the ordinance and try to correct them,” said Deputy City Manager David Almonte after a recent meeting with the EPAB.

-By Ray Adauto, EPAB

2 MARCH 2011

Builders Outlook

3

Builders Outlook

President’s Message Greg Bowling President, El Paso Association of Builders

Rally Day has come and gone, and hopefully we’ve helped set the stage for a productive and builder friendly 2011 legislative session at the state capitol. El Paso was well represented with over 20 of our members in attendance. We met with all of El Paso’s State Representatives and our State Senator. We were very well received and together we helped make sure our interests were heard on proposed legislation on County Development Authority, Property Rights, Freedom of Contract, Building Codes, Property Taxes

and Appraisals, and even proposed Immigration laws. I’d like to extend a special thank you to everyone that traveled all the way to Austin to attend. Everyone who went had a good time, but more importantly we had a very productive day with our elected officials. A few members in attendance that have been going to Rally Day for years told me that this was probably the best and most productive Rally Day they had ever been to. Once again I’d like to thank the staff for their work on this and to Ray for setting up the meetings with the officials. My brother Randy, along with Doug Borrett, myself and Ray stayed for the TAB winter meetings. Lots of topics of discussion but one that really was on the table have to do with a piece of legislation that would make home builders responsible for verifying all employees on a jobsite and face potential criminal penalties for it. We will continue to fight that and so many other items on the agenda at the 82nd legislature.

As of February 27 there were over 7000 proposals roaming the halls in Austin hoping to get on track for a vote. Our

lobbyists are on the scene and looking out for your interests.

On the local front many builders have been hit hard by the City’s increase of the bonding requirement to pull a permit from $10,000 to $50,000 this year. I and other EPAB representatives have had a few meetings with the City about this. It seems that not only is the increased bond amount an area of concern for many builders but there is also concern about the language and intention of this increase, as well as the fact that the bond accumulates every year for 3 years. With the help of the guys from JDW Insurance we have had some preliminary meetings on this and are currently discussing some possible language changes to the ordinance or request on changes in the amount of the bond. We hope to have another meeting with the City of El Paso on this soon to present our proposed changes.

If any members have any questions or concerns about this please contact Ray as he will have updates as this situation changes.

Lastly I wanted to welcome the newest member of your EPAB Executive Board-

Sam Shallenberger of Western Wholesale.

Sam has agreed to serve as the Associates Council Chair for EPAB in 2011.

Unfortunately our former Associates Council Chair, Eric Lowenberg had to resign due to time commitments. So on behalf of EPAB I want to extend a special thank you to Eric for serving as Associates Council Chair over the last 14 months as well as serving the previous year as Vice Chair of the Associates Council. As all of us who’ve volunteered to serve on EPAB’s Executive Board know we can never accurately estimate the time commitment that is demanded us. At times it can be overwhelming trying to balance our volunteer commitments at EPAB and trying to earn a living at the same time.

Fortunately for us Eric has agreed to continue to serve as a member of the Associates Council and on the Adams Golf Tournament Committee where his experience is invaluable. Sam has an aggressive agenda that will require lots of help from all of the members. We’re excited and ready to move forward.

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4 MARCH 2011

Builders Outlook

Freeze 2011: Lessons from the ice storm

Perspective Ray Adauto, Executive Vice President EPAB

To say that it was cold would be a misstatement. It wasn’t just cold it was dangerous and intimidating cold. Zero degrees with the wind blowing brought temperatures down to where they’d rarely been in the desert. It was the Freeze of 2011 and those of us old enough to remember will be able to tell the grandkids that we survived Mother Nature’s display of ice and more ice. As with things that are not the norm people tend to panic and panic leads to frustration, leading to finger pointing and so on and so on. It wasn’t bad enough that the deadly cold swooshed in but it was that our normal life was disrupted, for some more than others. Lot’s of us suffered damages to our homes and businesses. The EPAB office wasn’t immune to that either. You should know that Margaret and Angie were first responders on the Thursday freeze day.

They were able to react to water pouring out from speakers and lighting in the big room and they minimized the initial damages. On Friday we couldn’t open because we had no water, no heat, and no electricity. I was here when all of the sudden I heard water pouring down, this

time in my office. It’s hard to imagine how that felt looking at the wet floors, the wet insulation and then the crash of ceiling. Water moved quickly to the bookkeeping area and onto a computer.

So much for that.

Our unsung hero in all this was Rudy Guel, the contractor who built our office.

He and his men were on call here for nearly 80 hours over those first five days.

Saturday evening, after a long day of repairs on the sprinklers, Rudy and I got a call that firemen were in the building and that we had extensive water buildup inside. As Rudy will tell you he saw the firemen inside holding axes and thought they had made their way in through the roof. Nope, as fortune would have it they found another less damaging way in. But what a sight as we looked at inches of water in the foyer, the front offices, and in the big room. That beautiful wood floor was soaked as were the walls.

Three dri-vacs from Kmart and lots of muscle from Margaret, Rudy, his brother Tony, Frank Arroyos, and Rudy’s workers captured gallons of water in those first three hours. By 10:30 we were exhausted but we’d done what we could. Now it’s up to the insurance company. We will give you updates as they come but we are open for business and using the facility. Thanks to the fast action of Rudy Guel, Frank Arroyos, our staff and Rudy’s team. I don’t want to go through that one again.

The storm left many unanswered questions and finger pointing.

Common sense should dictate the manner of resolution and solutions for the future. Be it the utilities, the emergency response or businesses including home builders and homeowners.

Needless to say homeowners all over the city managed the damages (or didn’t) depending on their knowledge of where water valves were located, electrical and gas shutoffs could be turned off. Too many of them didn’t know where or how.

About 90% of the EP fire departments time was spent turning off the main water valve for homes and businesses. The association will be producing some informational spots for distribution later this month. Some homeowners lashed out at builders and at least one tv news outlet joined them in frenzy. There have been rants and raves that builders didn’t do this or do that, mostly the result of frozen pipes that had an outside facing wall. Code, according to Alan Shubert, the City of El Paso’s Engineer and head of the Development Services, is that El Paso insulates to 20 degrees. That is the standard he said in a recent interview in the El Paso Times. Code was followed but that won’t appease homeowners who are looking to blame homebuilders.

When one builder is targeted all builders are targeted. What we are hoping for now is that the City doesn’t take this event and create another Stormwater fee and department. We are concerned that there is not a knee jerk reaction to weather phenomena, even though history tells us different. We also hope that those homeowners who experienced problems get them worked out in an amicable manner.

The storm left many unanswered questions and finger pointing. Common sense should dictate the manner of resolution and solutions for the future. Be it the utilities, the emergency response or businesses including home builders and homeowners. Doing anything less would show we can’t learn from our experiences. I’m proud that our builder members responded quickly, efficiently and with a sincere willingness to help.

When one of our own is attacked it is the entire industry that is attacked. When the ice settles I hope cooler heads prevail (no pun intended). Responsibility is a shared necessity.

Send us your comments.

E-mail to: ray@elpasobuilders.com

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Builders Outlook

MARCH 2011

Guest Perspective

Chente Quintanilla State Representative One big event that many House members look forward to is El Paso days.

Every session during the month of February, a whole lot of El Pasoans pack their bags and head on to Austin.

The plans for this visit begin very early in the preceding year. It is an effort that is spearheaded by the El Paso Greater Chamber of Commerce. Richard Dayoub may be the director of the chamber, but it is the hard work of Mica Short that has made the event a success for many

Guest Perspective

Silvestre Reyes US Congress Recently, I had the privilege of nominating some of the best and brightest high school students from El Paso to attend America's prestigious service academies.

These students have demonstrated a commitment to excellence, and many of these nominees will join scores of El Pasoans who have excelled at these institutions.

Each year, my Military Academy Advisory Board evaluates candidate applications based on a comprehensive approach. Candidates complete a rigorous application process and demonstrate academic excellence, leadership skills, involvement in extra-curricular activities,

El Paso days at the Capitol sessions now. Both, however, deserve the highest commendations from constituents.

You may wonder why other representatives might be looking forward to El Paso days. It is simply because our event always has a different flavor. In one sense, you can take that literally.

The most famous EP Day featured uniquely flavored margaritas named after some of our best know icons. The only one I truly remember was the Texas Tech margarita. Each different flavor was colored with a unique shade. The event was a terrific success.

Another EP Day milestone was the session where the Governor, Lt. Governor and every Representative and Senator were given one of the famous Spira sport shoes. Those are the shoes with the spring built in. It was a logistic nightmare for Mica and those assisting her to get the 200 plus shoes delivered. And then there were the do overs. Several members requested a swap.

El Paso days may have its casual side, but there is a very serious side to the event.

And, that is especially true this session Most sessions, the visit was a two day affair. The first day would be the distribution of memorable gifts to each legislator and a few meetings with specific officials. The next day would also be filled with meetings. And then the El Paso Days reception in the early evening signaled the last event.

This year, the participants were greater in number and the event was a continual lobby effort by El Pasoans on behalf of our city and county that started on Tuesday and did not cease until five o'clock on Thursday. For the most part, each meeting involved select officials who have direct impact on programs essential to El Paso.

In some cases, the meetings were with the Chief of Staff.

The bottom line is that the visits served an important purpose for our community.

Being that El Paso is so far from Texas,

our voice is not as prevalent as communities within as much shorter driving distance.

El Paso has a great and united delegation. Unfortunately, no delegation from any area can do the best job alone. It does take the community to reinforce the message that we the members put on the table.

Our entire community should be very grateful to the Chamber for finding the private sector money to pay for this event.

It is not cheap at all. That information is for the Chamber to disclose but I am astounded that the organizers can find the revenue.

Richard Dayoub and Mica Short have come through for El Paso in a big way this session. The session may not provide El Paso with as much as we need, but the effort by the Chamber and the visitors on El Paso Days provided an important message to legislators and it was well received.

2011 military academy nominees and a desire to want to serve in the United States military.

There are four Congressionally nominated service academies: the U.S. Air Force Academy, the Naval Academy, the U.S. Military Academy at West Point, and the Merchant Marine Academy. These institutions are challenging, but the 16th Congressional District has a proud history of sending students who work hard and are determined to succeed. This year, I had the honor of nominating 28 stellar candidates who represent 14 high schools in the El Paso area. The young men and women I nominated once again comprise a highly talented group of students from throughout El Paso.

The nominees accepted by the academies will receive a top quality education, and many will go on to distinguished careers in America's Armed Forces. With zero costs to students, the total value of their education and training is about $450,000. In return, each graduate is required to serve their country for a minimum of five years.

This is a wonderful opportunity for candidates to build a rewarding career while serving our country. Students who are in their junior year in high school and are interested in applying for next year can visit my website at www.reyes.house.gov,

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under “Constituent Services,” to get more information about the nomination process.

This is a competitive process, but acceptance to one of our finest institutions is a great achievement. I urge any students interested in applying to contact my office so we can get you on your way to a rewarding experience.

I want to once again congratulate all of the 2011 military academy nominees. I wish them all the best of luck in their future endeavors and look forward to hearing of their achievements in the years ahead.

It’s a great time to buy a new home in El Paso.

The El Paso Association of Builders has been a part of the incredible growth of El Paso for over sixty years.

During that time, the housing market has seen a lot of changes.

But never before has there been a better time to buy a new home in El Paso.

Our builders offer El Pasoans value, variety and a vested interest in our community. If you are considering buying a new home, the time is now.

www.elpasobuilders.com

6 MARCH 2011

Builders Outlook

Builders Call On Congress To Address Housing Lending Crisis With the housing production credit crisis taking a severe toll on the nation's small home building firms and threatening future job growth and the fragile economic recovery, the National Association of Home Builders (NAHB) today called on Congress to take tangible steps to improve access to credit for small builders.

"With the spigot for housing production loans cut off, and the threat that the uncertainty from new rule-making under the Dodd-Frank financial services law will further impact the ability of small community lenders to service the credit needs of our industry, it is clear that congressional action is needed to help open the flow of credit to home builders," NAHB Chairman Bob Nielsen, a home builder from Reno, Nev., told members of the House Financial Services Subcommittee on Financial Institutions and Consumer Credit.

"Without such action," he added, "there can be no housing recovery, which has major implications for our nation's ability to recover from the current economic downturn."

Builders are coming under increased pressure from lenders -- including calls for additional equity, denials on loan extensions and demands for immediate repayment on acquisition, development and construction (AD&C) loans – even when their loans are current. Lenders are often citing regulatory requirements or pressure from bank examiners to reduce AD&C loan exposure as the rationale for their actions.

"While federal bank regulators maintain

that they are not encouraging institutions to stop making loans or to indiscriminately liquidate outstanding loans, reports from my fellow members and their lenders across the nation suggest that bank examiners in the field are adopting a much more aggressive posture," said Nielsen.

To address this situation, NAHB has presented banking regulators with specific instances of credit restrictions, provided data showing no difference in credit access across market conditions and requested specific changes to current regulatory guidance.

To date, these efforts have yielded no concrete results, which is why NAHB will soon be offering a formal legislative blueprint to Congress that focuses on fixing specific instances of regulatory excess while helping to ensure adequate credit availability to home builders.

Nielsen stressed that problems in the housing sector resulting from the economic impact of the credit crunch have placed an enormous toll on the nation's economy. The sharp decline in home building from the 2005 peak – a drop of one million units – has translated into 1.4 million lost jobs for construction workers and the loss of $70 billion in wages.

Factoring in the effect of the housing plunge on industries that provide materials and services to home builders, the total impact of the housing slump has been the loss of more than three million jobs and $145 billion in wages in all housingrelated industries.

"NAHB estimates that over the next decade there will be a need for at least 1.7

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Plumbing

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Builders are coming under increased pressure from lenders -- including calls for additional equity, denials on loan extensions and demands for immediate repayment on acquisition, development and construction (AD&C) loans – even when their loans are current. million additional homes per year," said Nielsen. "This translates into five million jobs and significant economic activity.

Without increased AD&C lending, this future demand will not be met, job loss will occur and job creation will suffer."

Qualified Residential Mortgage On a related topic, NAHB urged the federal banking regulators to take an expansive interpretation regarding forthcoming credit risk retention rules required by the Dodd-Frank Act concerning the definition of a Qualified Residential Mortgage (QRM). The law requires lenders to have "skin in the game" by holding a small percentage of each loan that they sell into the secondary market.

What is still to be determined is how the risk retention rules will be established and what definition regulators should apply to include an exemption from the QRM requirements for certain high-quality, lower-risk mortgages.

If agencies establish a QRM standard that is significantly tighter than current credit standards, which are already tougher than they have been in decades, Nielsen warned that millions of creditworthy

borrowers would be deemed, by regulatory action, to be higher-risk borrowers.

"As a result, they would be eligible only for mortgages with higher interest rates and fees, which would prohibit many potential first-time home buyers from purchasing a home, especially if the definition includes an excessively high minimum downpayment requirement," said Nielsen.

Further, an overly restrictive QRM definition would also drive numerous current lenders from the residential mortgage market, including thousands of community banks, and enable only a few of the largest lenders to originate and securitize loans.

"This sharp dilution of mortgage market competition would have a further adverse impact on mortgage credit cost and availability," said Nielsen. "We therefore urge the agencies to define the QRM's parameters in a way that facilitates a housing recovery and ensures access to conventional mortgage credit for all buyers and refinancers, while preserving high quality, empirically sound underwriting and product standards."

From NAHB

Builders Outlook

MARCH 2011

Builders Urge Representatives to Co-Sponsor Resolution Supporting the Mortgage Interest Deduction From NAHB: The National Association of Home Builders (NAHB) urges members of the House of Representatives to show their support for homeownership and the mortgage interest deduction by cosponsoring H. Res. 25.

"This resolution acknowledges the importance of homeownership to individual households, the economy and the nation," said NAHB Chairman Bob Nielsen, a home builder from Reno, Nev. The resolution also states that the mortgage interest deduction "may well be the most important component of housing-related tax policy in America today" and should not be further restricted, he said.

"The mortgage interest deduction has been a cornerstone of the nation's housing policy for almost a century, and it is vital to homeownership and healthy housing markets," Nielsen added. "NAHB commends Rep. Gary G. Miller (R-Calif.), who introduced the resolution, and the more than 40 co-sponsors for their commitment to homeownership and support for the deduction."

Eliminating or restricting the mortgage interest deduction would erase the emerging stability in the nation's housing markets, increase the cost of homeownership, make the tax code less progressive and essentially raise taxes on the middle class. Ultimately, it would put more home owners underwater, fuel more foreclosures and impede job creation in the housing sector, where unemployment is about twice the national rate.

Additionally, removing or scaling back the mortgage interest deduction would shrink the local tax base of many communities, prompting cash-strapped state and local governments to cut jobs and essential services or raise taxes.

"The nation's home builders strongly believe that Congress should not tamper with the mortgage interest deduction. Members of the House of Representatives should demonstrate their belief in the value of homeownership and co-sponsor this important resolution," Nielsen said.

"Americans overwhelmingly oppose any action by Congress to tamper with the mortgage interest deduction, according to a nationwide survey of likely voters that NAHB commissioned last fall," he added.

"Almost 80 percent of the people surveyed said they support retaining federal tax incentives to promote homeownership. I encourage people who support the mortgage interest deduction to contact their Representatives and ask them to co-sponsor H. Res. 25," Nielsen said. "Members of Congress need to know that there is widespread support for the mortgage interest deduction and that their constituents do not want it to be eliminated or restricted."

Additional information about H. Res. 25 and contacting members of the House of Representatives is available in the "Take Action and Stay Connected" section of NAHB's mortgage interest deduction website, SaveMyMortgageInterestDeduction.com.

Affordability Rises to Highest Level in Two Decades From NAHB: The National Association Nationwide housing affordability during the fourth quarter of 2010 rose to its highest level in the 20 years since it has been measured, according to National Association of Home Builders/Wells Fargo Housing Opportunity Index (HOI) data released today.

The HOI indicated that 73.9 percent of all new and existing homes sold in the fourth quarter of 2010 were affordable to families earning the national median income of $64,400. The record-setting index for the fourth quarter surpassed the previous high of 72.5 percent set during the first quarter of 2009 and marked the eighth consecutive quarter that the index has been above 70 percent. Until 2009, the HOI rarely topped 65 percent and never reached 70 percent.

"Today's report shows that housing affordability at the end of 2010 was at its highest level since we started computing the HOI," said Bob Nielsen, chairman of the National Association of Home Builders (NAHB) and a home builder from Reno, Nev. "However, while this is good news for consumers, both home buyers and builders continue to confront extremely tight credit conditions, and this remains a significant obstacle to many potential home sales."

Indianapolis-Carmel, Ind., was the most affordable major housing market in the country for the second consecutive quarter, after relinquishing for a quarter the top spot it has held for five years. In Indianapolis, 93.5 percent of all homes sold were affordable to households earning the area's median family income of $68,700.

Also ranking near the top of the most affordable major metro housing markets were Youngstown-Warren-Boardman, Ohio-

Pa.; Syracuse, N.Y; Warren-TroyFarmington Hills, Mich.; and DetroitLivonia-Dearborn, Mich.

Among smaller housing markets, the most affordable was Elkhart-Goshen, Ind., where 97.0 percent of homes sold during the fourth quarter of 2010 were affordable to families earning a median income of $58,600. Other smaller housing markets near the top of the index included Lansing-East Lansing, Mich.; Kokomo, Ind.; Mansfield, Ohio; and Bay City, Mich.,.

New York-White Plains-Wayne, N.Y.-N.J., again led the nation as the least affordable major housing market during the fourth quarter of 2010. In New York, more than a fourth — 25.5 percent — of all homes sold during the quarter were affordable to those earning the area's median income of $65,600.

This was the 11th consecutive quarter that the New York metropolitan division has held this position.

The other major metro areas near the bottom of the affordability index included San Francisco-San Mateo-Redwood City, Calif.; Honolulu; Los Angeles-Long BeachGlendale, Calif.; and Santa Ana-AnaheimIrvine, Calif., respectively.

Santa Cruz-Watsonville, Calif. was the least affordable of the smaller metro housing markets in the country during the fourth quarter. In Santa Cruz, 45.0 percent of the homes were affordable to families earning the median income of $84,200. Other small metro areas ranking near the bottom included Ocean City, N.J; San Luis Obispo-Paso Robles, Calif.; Laredo, Texas; and Santa Barbara-Santa Maria-Goleta, Calif.

Please visit www.nahb.org/hoi for tables, historic data and details.

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7

MARCH 2011

EPAB ON THE SCENE Rally Day 2011 A contingent of El Paso Association of Builders members descended on the state capital on February 23 to meet with the El Paso elected delegation. Members who went on the trip were led by President Greg Bowling. Joining Greg was Frank and Ruth Arroyos; Kelly Sorenson; Ryan Harding; Mike Santamaria; Bruce Meyer; Lance Van Deman; Sam Shallenberger; Rudy Guel; Edmundo Dena; Bobby Bowling IV; Randy Bowling; Doug Borrett; Gus Loy; Andy Arroyos; John Chaney and staff Angie, Margaret and Ray. Meetings were held with each of our State Representatives and with Senator Jose Rodriguez’s chief of staff. Productive was the word used most often as the El Paso delegation joined 1000 other TAB members for this event.

A day long of visits culminated in a reception at the Driskill Hotel where State Rep Marisa Marquez joined us to celebrate a good day.

President Greg Bowling sponsored dinner on Tuesday, February 22 at Fogo De Chao, one of Austin’s great places to dine. All in all the trip was a great way for members to connect with legislators and to understand better the role of the Texas Association of Builders.

BUILD a better social network! find us on facebook: elpasobuilders

10 MARCH 2011

Builders Outlook

Home Builders Call on Congress to Repeal 1099 Reporting Requirements The National Association of Home Builders (NAHB) called on Congress today to repeal all new expanded 1099 reporting requirements imposed in recent laws that will harm job creation and place a major paperwork and cost burden on the nation's small businesses.

Testifying on behalf of NAHB before the House Small Business Committee, Mike Kegley, a builder from Union, Ky., and president of the Home Builders Association of Kentucky, told lawmakers that the collection of W-9 forms, monitoring payments over the course of a year, and additional staff time will cost individual small businesses thousands of dollars per year.

Under the Patient Protection and Affordable Care Act approved last year, starting in 2012 businesses will have to file an IRS Form 1099 for each vendor from whom they spend more than $600 in goods or services in any given tax year.

Kegley, who built six homes last year and employs seven workers, estimates his firm would have had to file an additional 173 forms for 2010 had the law been in effect.

"It would have cost my company $6,400 to obtain and catalog the W-9 forms and $2,600 to generate the additional Form 1099s, for an estimated total of $9,000," he said.

These burdensome tax paperwork requirements would make it more difficult for small businesses to put new employees on their payrolls, he added.

"Rather than hiring additional workers to expand and grow, small businesses will be spending money on accountants and bookkeepers in order to keep up with these new requirements," he said.

The real onus does not necessarily fall on businesses issuing the additional forms, Kegley cautioned.

"For each small business that will now generate an additional 40, or 80 or 100 new 1099 forms, businesses large and small that sell goods will receive thousands, if not tens of thousands, of additional forms that they will have to match against their records.

Businesses will be overwhelmed," he said.

NAHB also believes that the expansion of the 1099 requirements will make small businesses less competitive relative to larger, corporate businesses because smaller firms will take steps to reduce their paperwork burdens by purchasing from fewer sources.

"Rather than purchasing nails from the local hardware store, lumber from the specialized dealer and drywall from any supplier, builders may simply take all of their business to a larger retailer to reduce the resulting paperwork from each purchase," said Kegley. "Small product suppliers will pay a price."

While all small businesses will be hit by the broader 1099 reporting requirements next year, the Small Business Jobs Act of 2010 stipulates that independent landlords as of Jan. 1, 2011 must now submit 1099s for transactions totaling more than $600 in a year.

"By imposing this change in the law with less than three months notice, we believe it is reasonable to say that landlords have been set up for failure when it comes to compliance," said Kegley. "NAHB urges Congress to reexamine the wisdom of imposing these burdensome requirements on independent landlords and, ultimately, to repeal them."

Meanwhile, the Senate on Feb. 2 adopted an amendment to the Federal Aviation Administration reauthorization bill to repeal the new 1099 reporting requirements in last year's health care law.

"I applaud the Senate's action last week and urge the House to follow suit," said Kegley.

From NAHB

Builders Outlook

MARCH 2011

11

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One Home at a Time...

The Associates Council presents The EPAB/Young Designers Golf Tournament Painted Dunes Golf Club Tuesday April 19 Registration:

www.swher.com 7365 El Paso, TX Tx. 79912 5400Remcon SuncrestCircle Dr. C-6 El Paso, 79912

Ph. (915) 613-4168 Fx. (915-833-6437

www.energystarelpaso.com

11 a.m.

Shotgun start: 12:30 p.m.

Call 778-5387 to sign up your team or for sponsorship opportunites

12MARCH 2011

Builders Outlook

Builders Outlook

MARCH 2011

13

Membership News UPCOMING EVENTS March 9

March 23

April 13

April 21

Board meeting 3:30 Associates Council 3:30 El Paso Association of Builders

Land Use Meeting 12:00 El Paso Association of Builders

Board Meeting and General Meeting 3:30 El Paso Association of Builders

Fall Protection 1:30 – 4:30 El Paso Association of Builders

March 16

April 5

2011 NAHB Legislative

Associates Council 3:30 El Paso Association of Builders

Conference Washington, DC

RENEWALS Display Service

Masco Contractor Services

Ferguson Enterprises, Inc.

dba Gale Insulation

Gaddy Construction

PLC Construction Finishes

Galaxy Homes

Solar Smart Living

Lawyers Title

NEW MEMBERS Southwest Chimney & Stoves & Air Duct Cleaning Contact: Paul Kennedy 11385 James Watt, B2 El Paso, Texas 79936 915-591-6998

Ann’s Home Solutions of El Paso, LLC Contact: Ann De La O 2609 Samoa El Paso, Texas 79925 915-412-6843

April 19 Young Designers Golf Tournament Painted Dunes

SODA SPONSOR Thanks to our MARCH SODA SPONSOR: Mountan Vista Builders

OSHA FALL COMPLIANCE CLASS The United States Department of Labor's Occupational Safety and Health Administration (OSHA) has issued a directive rescinding the Interim Fall Protection Compliance Guidelines for Residential Construction.

Regulation states as an employer, you shall provide a training program for each employee who might be exposed to fall hazards.

Date: April 21, 2011 1:30pm-4:30pm Location: EPAB Office, 6046 Surety Drive Course Length: 4 Classroom Hours Course Objectives: This training teaches the importance of recognizing fall hazards, using the correct fall protection, providing a detailed illustration of the various types of fall protection and how to properly use them to avoid a deadly fall.

Topics • Hazards • Recognizing hazards • The six foot rule • Fall Protection Systems • Types of fall protection systems • Guardrails • Warning Lines • Safety Monitors • Covers • Personal Fall Protection • The Body Harness • The Body Belt/Safety Belt • Lanyards • Anchorage point • Swing falls • Locking snaphooks • Protection from falling objects Cost $35. Call EPAB 778-5387 for reservations

EL PASO ASSOCIATION OF BUILDERS

ASSOCIATES COUNCIL Young Designers

The Associates Council presents The EPAB/Young Designers Golf Tournament Painted Dunes Golf Club Tuesday April 19 Registration: 11 a.m.

Shotgun start: 12:30 p.m.

Call 778-5387 to sign up your team or for sponsorship opportunites

11395 James Watt, Suite A-11 79936 915-633-8002

14 MARCH 2011

Builders Outlook

Industry Reports Associates Council

Sam Shallenberger Wholesale Supply

Hello, do you want to go to Vegas?

I’d like to say hello and introduce myself to the Builders Outlook reader.

I’m Sam Shallenberger, President of Western Wholesale Supply, Inc., and the new Associates Council Chairman. I have been an active member in this association for well over two decades and have been involved in many of our association’s events. Over the years I can attest that the Associates in this membership are vital and very important to the health and welfare of the El

Paso Association of Builders. While I may be preaching to the choir for some, others have to understand that I know first hand what it means to have an association actively supporting our home building industry in El Paso. After all it’s a symbiotic relationship the builders and associates have. We come together to make sure that no one in the public domain or in the government imposes regulations and laws that would take away our ability to earn a living. It is with this importance that I am so proud to be your chairman for the rest of this year. My hat goes off to Eric Lowenberg for his time in the saddle. I already know that this ride may have some bumps to it, but I promise you one thing: I will work to ensure that the Associates voice is strong and that Associates will work to keep home building in El Paso a reality.

The next few months are critical to a lot of

things including scholarship and fun.

Fortunately we have a lot of great ways to combine both but one event brings those together better than others. I’m talking about our annual Young Designers Golf Outing. This year we will tee them up at Painted Dunes on Tuesday, April 19. This tournament is usually sold out pretty fast so get your teams in by calling the EPAB office. Some advertising opportunities also exist as well as ways for your company to present some goodies for our tournament goodie bag. I’d like to thank John Chaney for his efforts with this event and the Young Designer program.

Also for the upcoming months we are working on two exciting new ventures. The first is a fair or feria for the members to showcase their products or services, mixed in with a chili and menudo cook-off, car show and arts and

before April 30, 2010. If you entered into a binding contract by April 30, 2010, you must have closed on the home on or before September 30, 2010.

if you claim the credit you will not be able to file electronically.

crafts displays. We are working to secure the area around the EPAB offices for this event and hope to have a date ready to announce soon.

Secondly Las Vegas is calling and we’re answering. Ray and I are working on a general membership meeting three night visit to Vegas in late May or early June. This will be an adults only group trip. We are looking forward to holding our meeting at a fabulous hotel with the sights and sounds of Las Vegas as the backdrop.

Golfing, shopping, gaming and fantastic food are what we’re talking about here. We have a lot of interest in this and some folks have already said they are making plans. More on this as well soon.

If you have anything you need from me please feel free to let me know.

REALTOR/Builder Angela Ochoa GEPAR

Eight Essential Facts about Claiming the First-Time Homebuyer Credit

Provided by: IRS Newswire If you purchased a home in 2010, you may be eligible to claim the First-Time Homebuyer Credit, whether you are a first-time homebuyer or a long-time resident purchasing a new home. The purchaser must have been at least 18 years old on the date of purchase; for a married couple, only one spouse must meet this age requirement. A dependent is not eligible to claim the credit.

Here are eight things the IRS wants you to know about claiming the credit: • You must have bought – or entered into a binding contract to buy – a principal residence located in the United States on or

• To be considered a first-time homebuyer, you and your spouse – if you are married – must not have jointly or separately owned another principal residence during the three years prior to the date of purchase.

• To be considered a long-time resident homebuyer you and your spouse – if you are married – must have lived in the same principal residence for any consecutive fiveyear period during the eight-year period that ended on the date the new home is purchased.

• The maximum credit for a first-time homebuyer is $8,000, half that amount for married individuals filing separately. The maximum credit for a long-time resident homebuyer is $6,500. Married individuals filing separately are limited to $3,250.

• You must file a paper return and attach Form 5405, First-Time Homebuyer Credit and Repayment of the Credit with additional documents to verify the purchase. Therefore,

• New homebuyers must attach a copy of a properly executed settlement statement used to complete such purchase. Buyers of a newly constructed home, where a settlement statement is not available, must attach a copy of the dated certificate of occupancy. Mobile home purchasers who are unable to get a settlement statement must attach a copy of the retail sales contract.

• If you are a long-time resident claiming the credit, the IRS recommends that you also attach any documentation covering the fiveconsecutive-year period, including Form 1098, Mortgage Interest Statement or substitute mortgage interest statements, property tax records or homeowner’s insurance records.

other eligibility requirements for the FirstTime Homebuyer Tax Credit, visit http://www.irs.gov/recovery.

Many of our buyers from last year purchased a home with the intent of claiming the FirstTime Homebuyer Tax Credit. Now is the opportunity to show your real estate expertise by passing along this information and a copy of their Final HUD statement.

March Meeting: 3/10/11 from 11:30-1:30 PM at the Greater El Paso Association of REALTORS®.

Speaker will be Desert Agave Homes and their Education Topic will be Outdoor Kitchens.

Fostering harmony amongst home builders, real estate professionals, and affiliate companies.

• Members of the military and certain other federal employees serving outside the U.S. have an extra year to buy a principal residence in the U.S. and qualify for the credit.

For more information about these rules including details about documentation and

GUEST COLUMN Safety Tool from OSHA

Lupe Alaniz A&E Environmental & Safety Consultants

What’s one of your top priorities for everyone in and around your home life? I would say it would have to be the Health, Safety and Wellbeing of those around you, especially family.

So why not incorporate this mentality into the workplace?

Sure you may not socialize with one another while at work or socially away from work, but we all have one thing in common, we all would like to go home safely at the end of the day.

Often workplace safety is overlooked or brushed aside due to deadline/time constraint, lack of funds for proper training, lack of

knowledge or willingness to change. In our line of work we always hear one epic excuse from the experienced worker who has been working his trade for 20+ years: “I’ve been doing things this way for 20 years and nothing has happened to me.” My reply is “While you have been lucky in the way you do your job, others doing the same job with the same techniques as yourself have been seriously injured, even killed. OSHA is committed to the safety of yourself and others while you work that is why it is required that…” and then I go on to educate them.

The understanding, commitment and implementation for a strong safety culture must start with ownership, to management, then the common employee. Safety is required in all facets of life, especially the workplace. What is the safety attitude around you?

MARCH 2011

EPAB ON THE SCENE Speed Networking

www.elpasobuilders.com 6046 Surety Dr. El Paso, TX 79905 915778-5387 • Fax: 915-772-3038

■ executive officers Greg bowling, President Tropicana Homes del Huit, vice President Cardel Design Group frank arroyos, secretary/treasurer Cisco Homes sam shallenberger, associates council Wholesale Supply Kelly sorenson, immediate Past President Vision Consultants ray adauto, executive vice President El Paso Association of Builders

NatioNal associatioN of Home builders (800) 368-5242

texas associatioN of builders (800)252-3625

■ couNcil/committee cHairs Affordable Builders Council Bobby Bowling IV Associates Council Sam Shallenberger Build PAC El Paso Randy Bowling Desert Green Building Council Javier Ruiz Industry Promotions Kelly Sorenson Land Use Council Linda Troncoso Sal Masoud Adams Pro AM Committee David Bogas Young Designer Award John Chaney Code Committee Kelly O’Leary Home Show Sam Shallenberger Remodelors Miguel Herrera Membership Drive Mike Santamaria Finance Committee Kathy Carillo Education Committee Frank Spencer ■ advisorY to tHe board J. Crawford Kerr, Attorney, Firth, Johnson & Martinez ■ board of directors Danny Andrus, Trinity Homes John Arranda, Southwest Securities Bank, FSB Joe Bernal, Joe Bernal Insurance David Bogas, EPT Communities Doug Borrett, Karam Co. Edmundo Dena, Accent Homes Ted Escobedo, Snappy Publishing Art Garcia, El Paso Door Juanita Garcia, ICON Custom Home Builder,LLC Danny Gerard, Desert Agave Builders, LLC Miguel Herrera, Simply the Best Custom Homes Lorraine Huit, Cardel Design Group Walter Lujan, Dawco Home Builders Bruce Meyer, JDW Insurance Robert Najera, Joseph Homes Kathy Parry, Hunt Communities Bob Paschich, Oeste Homes Kathy Rose, Builders Source Regina Sanchez, Bank of Texas Sam Shallenberger, Western Wholesale Frank Torres, GMF Homes Paul Zacour, Zacour & Associates

■ tab state directors Doug Borrett, Karam Co., Life Director Randy Bowling, Tropicana Homes

2010 builder member of the Year Mike Santamaria Mountain Vista Builders 2010 Pat cox award Randy Bowling Tropicana Homes 2010 associate of the Year Javier Ruiz Border Solar/Senercon John schatzman award Lorraine Huit Cardel Design Group

Honorary life members Brad Roe Cliff Anthes Wayne Grinnell Chester Lovelady Don Henderson Anna Gil

Past Presidents committed to serve Mark Dyer Mike Santamaria John Cullers Randy Bowling Doug Schwartz Del Huit Herschel Stringfield Robert Baeza

Bobby Bowling, IV Rudy Guel Anna Gill Bradley Roe Bob Bowling, III Pat Woods EH Baeza

ePab mission statement: The El Paso Association of Builders is a federated professional organization representing the home building industry, committed to enhancing the quality of life in our community by providing affordable homes of excellence and value.

The El Paso Association of Builders is a 501C(6) trade organization.

■ NatioNal directors Bobby Bowling IV. Demetrio Jimenez

© 2011 Builder’s Outlook is published and distributed for the El Paso Association of Builders

by Snappy Publishing 240 Thunderbird • Suite C El Paso • Texas • 79912 915-820-2800

A smaller but enthusiastic group of Associates and Builders met for the first Speed Networking event of the year. Thirteen Associate members showed products or services to builders who found some new and unique products to use in their homes. As Joe Najera put it, “It’s an opportunity to see what is out there, and even if you already do business with someone you might find they offer more than what you’re already buying,”. From the Associates side it was equally important to showcase their latest wares. New member A& E Environmental and Safety was impressed. “I want to make sure our builder members know who we are and what we do, and this venue helps me do that. Where else can I get in to see this many builders in one day?” Lupe Alaniz said to us.

The next Speed Networking opportunity will be held in the later part of the second quarter. For information on this contact the office at 778-5387.