Builder Legislative Issues
National Association of Home Builders
DON’T LET CONGRESS TAKE THE SUMMER OFF
TELL THEM HOUSING IS THE ONLY WAY TO CREATE JOBS AND
REVITALIZE THE ECONOMY
Write Congress at www.capitolconnect.com/builderlink and/or call at 1-866-924-6242 (NAHB)
Your senators and representative have returned home for the August Congressional recess. Take advantage of this opportunity to arrange a meeting with your senators and representative and voice your support for housing and its role in fixing the national economy. To reinforce the message you deliver during your meetings, you can write your member of Congress at www.capitolconnect.com/builderlink and/or call at 1-866-924-6242 (NAHB).
Over the past few weeks, there have been tentative signs that the economy has hit bottom and could be on the mend; however, it remains very weak. Even if a modest recovery has now begun, most analysts predict that the economy will continue to shed more jobs well into next year and that unemployment will top ten percent. We can’t sustain a long-term recovery without creating jobs, which is why this upturn could run out of steam by the end of the year or continue at a snail’s pace.
Housing and related industries account for over 15 percent of the GDP and stand out as one of the few sectors that can revive today’s lackluster economy and quickly put Americans back to work. But several critical factors threaten to undercut whatever positive momentum is starting to build in the housing market. The impending expiration of the first-time home buyer tax credit could slow demand and sales, appraisal issues are torpedoing more than a quarter of new-home sales, and ongoing credit problems are hurting builders and buyers alike.
The National Association of Home Builders (NAHB) has responded to these challenges head-on by launching an aggressive legislative initiative that calls on your federal lawmakers to:
• Extend the $8,000 home buyer tax credit until December 1, 2010, and expand eligibility to all home buyers;
• Urge federal housing regulators to correct the flawed home appraisal process;
• Urge federal banking regulators to improve acquisition, development and construction (AD&C) credit conditions; and
• Co-sponsor net operating loss (NOL) relief bills: S. 823 in the Senate and H.R. 2452 in the House.
Revive Housing — Restore America
Goal: Increase Housing Demand/Encourage Housing Price Restoration/Stabilization
Extend and enhance the first-time homebuyer tax credit:
• Extend the expiration date until December 1, 2010.
• Open the program to all buyers of principal residences.
Goal: Correct the Appraisal Process
Halt inappropriate appraisal practices that are destabilizing home prices. Ask members of Congress to urge the Federal Housing Administration, Federal Housing Finance Agency, Fannie Mae, and Freddie Mac to:
• Issue and enforce appraisal guidance that requires appropriate information and adjustments on comparable sales that are foreclosures or other distressed transactions.
• Establish a requirement for an appeals process similar to that used for appeals of appraisals performed with the Department of Veterans Affairs (VA) Loan Guaranty Program.
Goal: Improve Acquisition Development & Construction (AD&C) Credit Conditions
Remove current regulatory impediments that are blocking the extension of AD&C loans for viable residential projects and causing unnecessary foreclosures on performing AD&C loans. Ask members of Congress to urge the federal banking regulators to:
• Relieve excessive bank examiner pressure that has shut off credit for new AD&C loans and impaired the ability of financial institutions to work out outstanding AD&C loans.
• Require banks that have received TARP funds to account for how these funds are being used in financing and/or working out loans on AD&C projects.
Goal: Bolster Opportunities for Builder Business Survival
Cosponsor S. 823 and H.R. 2452, which expand the ARRA net operating loss carry back (NOL) provision:
• Expand the 5-year carry back period for tax losses arising in 2008 and 2009.
• Repeal the gross receipts test.
• Establish regulatory rules that would that would prevent churning or wash sale transactions. Suspend the 90% AMT limitation on NOL carry back deductions for 2008 and 2009 losses.
California Building Industry Association
Agreement Reached on Flood Protection
SB 5 (Machado), a bill signed by the Governor in October and supported by CBIA, adopts a comprehensive, system-wide approach to flood protection – assigning responsibilities to state and local agencies and creating performance standards, not moratoria.
Dubbed the “Central Valley Flood Protection Act of 2008”, SB 5 is designed to update the state’s near-dormant flood-protection plan and establish a higher level of flood protection – ultimately 200 years. Areas in the watersheds of the Sacramento and San Joaquin Rivers that already have 10,000 residents or are planned to have that many residents must achieve the 200-year standard by 2025.
Under the bill, the state Reclamation Board, renamed the Central Valley Flood Protection Board, must adopt the Central Valley Flood Protection Plan (the Plan) by July 1, 2012. The Plan must contain a description of area flood-protection facilities, including their performance; their design capacities; associated risk factors such as overtopping, under-seepage, seismic activity and climate change; and a funding plan for making necessary improvements.
After the Plan has been adopted, SB 5 gives cities and counties 24 months to amend their general plans to incorporate the data and information contained in the Plan, establish goals, policies and objectives to reduce flood risks as well as feasible implementation measures to carry out those goals, policies and objectives. After the local general plans have been amended, cities and counties will have 12 months to amend their zoning ordinances to be consistent with the Plan. SB 5 says that all of these steps should be completed by July 1, 2015.
Once general plans and zoning ordinances have become effective, development projects must demonstrate compliance with the appropriate level of protection. (Amendments to the general plan and zoning ordinances do not become effective until the statute of limitations has expired to challenge the amendments or if there is a legal challenge to the amendments or any associated environmental document, when a court has issued a final decision upholding the amendments and environmental documents.)
Compliance with the flood-protection provisions of general plans and zoning ordinances is demonstrated by meeting any of the following three criteria: 1) the project has already achieved the appropriate level of flood protection; 2) conditions (fees, elevation of the structure, flood insurance, compliance with building codes applicable to floodplains, participation in assessment districts or any other condition within the authority of a city or county) have been imposed that will eventually result in the achievement of the applicable level of flood protection; or 3) adequate progress is being made towards achievement of the applicable level of flood protection. “Adequate progress” is determined by a scope of the project and a schedule of funding and construction developed by the local flood management agency. Cities and counties may take advantage of the “adequate progress” option provided the local flood management agency can demonstrate it is on track to raise and expend funds and complete improvements according to the schedule.
Building Code Mandate Vetoed
By vetoing AB 1058 (Laird), Governor Schwarzenegger reaffirmed the state’s role in developing and adopting building standards – particularly those to promote “greenbuilding” – that are right for California. AB 1058 would have mandated unreasonable and, in many cases, unworkable greenbuilding standards for residential construction.
CBIA had targeted AB 1058 for a veto after the author refused to amend the measure to eliminate some of the most offensive provisions, including the proposed use of the LEED Greenbuilding Rating System – a national so-called greenbuilding organization promoting sustainable site development, water savings, energy efficiency and indoor air quality in connection with commercial and residential construction. And, as the Governor stated in vetoing the measure, the LEED standards don’t necessarily work in California. Said the Governor, “If implemented, provisions in this bill would put the health and safety of Californians at risk by being in conflict with current safety standards.” The Governor said LEED’s framing standards don’t meet seismic standards in California nor does LEED support state precautions for wildfire safety.
The Governor also took issue with LEED, a private entity not accountable to any public body, setting building standards for California. The Governor also vetoed similar bills affecting public and commercial buildings.
CBIA supports the Governor’s efforts to expand greenbuilding in California, utilizing the expertise and deliberations of the state Building Standards Commission and its contributory state agencies such as the Department of Housing and Community Development and the California Energy Commission.
Radical Land-Use Reform Tabled
The Assembly Committee on Appropriations put the brakes on SB 375 (Steinberg), concerned that the radical change in planning and land use could have serious implications for needed housing and transportation investments.
State Delays Effective Date of New Energy Standards
The California Energy Commission has changed the effective date for the new Building Energy Efficiency Standards to Jan. 1, 2010. The standards were originally set to take effect on Aug. 1.
The CEC decided that a five-month delay was appropriate. It provides the industry and building officials more time to prepare for the new standards. The Commission will use the additional time to provide more information on the standards and work with the California utilities, building industry and the California Building Officials to provide training on the new standards.
