Washington Briefs September/October 2003

Senate-Passed Energy Bill Contains Housing Tax Credits
Before adjourning for its August recess, the Senate on July 31 passed the same comprehensive energy bill that it approved last year by a vote of 84-14. The bill includes home energy efficiency tax credits for new homes, existing homes and commercial residential construction.

Passage follows a week of partisan battles over energy amendments and judicial nominees, which prevented significant progress from being made on this year’s energy bill. By clearing last year’s bill, Senate Majority Leader Bill Frist (R-TN) kept his promise to pass comprehensive energy legislation by the start of the August break, and conference committee work to hammer out the differences between the House and Senate bills can begin in the fall.

The Senate bill includes energy efficiency tax credits that provide a credit of $1,250 to builders who construct each new home to efficiency levels 30% above the 2000 International Energy Conservation Code. Consumers would receive a tax credit of up to $300 on the cost of qualified remodeling projects that improve energy efficiency. For multifamily properties, there is a tax deduction of $2.25 per square foot for buildings with efficiency levels that are 50% above the ASHRAE standards.

The House passed energy bill H.R. 6 in April, which would provide builders with a $2,000 tax credit for each home they build that is 30% more efficient. Consumers would receive a tax credit up to $2,000 on projects that reduce energy consumption in existing homes.

National Law Has Unusual Housing Provision
Wouldn’t life be great if there were a national law that ensures executives in public companies could borrow money from their company to buy and build a system built home? One can easily imagine corporate honchos opting to build stately homes constructed with log, modular or panelized technology.

This is in fact the case with the Sarbanes-Oxley Act, the sweeping corporate reform legislation passed by Congress more than a year ago. But the housing provision only applies to “manufactured housing.â€?

Newsday Reporter Ronald E. Roel broke the story in his Aug. 1st Buyers & Cellars column.

“Not much has been said about an unusual provision in Section 402 of the law, which ‘prohibits personal loans extended by a corporation to its executives and directors,’ with several exceptions, such as loans for ‘home improvement and manufactured housing.’â€? Roel writes in his column headlined, “Prefab Homes Gain A Higher Profile.â€?

“You mean the kind of factory-built housing that used to be called ‘mobile homes,’ generally designed for low- income families? How did that get into a law intended to rein in the financial malfeasance of high-powered executives, such those at Enron?â€? Roel asks.

Unfortunately, it’s an unsolved mystery. Roel discovers that the senators who drafted the original bill don’t know, nor do representatives with the Manufactured Housing Institute. Roel concludes, “Whatever the explanation for this legislative quirk…I don’t know that any CEOs are clamoring to get a loan for a manufactured home.â€?

Editor’s Note:
With Competition Increasing, Keep Marketing To Stay Successful
Does it feel like more people are after your job than there are candidates for the governorship of California? You’re not being paranoid. While the majority of other industries in the U.S. struggle to recover from a recession that has plagued us since 9-11, housing continues to shine. Home sales in June, for example, broke another historic record.

This trend has not gone unnoticed by those needing a new career. College grads are jumping into this business with increasingly regularity, as are hundreds of others of varying ages that were set adrift by the dot com collapse. Consider that just in the past six months (from December to June) membership in the National Association of Home Builders (NAHB) has grown by 3% to 218,013 members.

Other associations report similar growing interest. Membership in the National Association of Realtors has increased 25% in the past four years to more than 935,000. The number of active real estate brokers has also grown by about 5% in the past two years, to nearly 540,000. The number of agents or salespeople with active licenses increased by more than 7% in the same period to nearly a million, according to the Association of Real Estate License Law Officials, a national organization that tracks state registration of real estate licenses. Membership in the Association of Home Inspectors has leapt more than 50% since 1995.

What can’t be measured as easily, of course, is how many of those me-too builders are jumping into the market that can’t afford to join an association. Check with your local contractors board if you’re curious.

What do you do to stay successful? Be proactive and start revisiting the basics. Are you watching the bottom line or do you trust someone else to do that? In either case, get an experienced accountant to go over your books (the real ones) with an eye to discovering what your costs are, both immediate and those that are hidden. Are one or more categories out of line? The time to make adjustments is now, when the market is flush.

Take a close look at your employees and subs. How many have perfected the art of doing nothing, or become malcontents or sources of stress? It’s time for them to go to work for the competition. Conversely, concentrate on rewarding those that are diligent and talented with salary increases and more training to keep them sharp and motivated—especially your sales people.

Finally, the time to increase your marketing budget is now. With interest rates rising, you will need to increase your visibility and build your brand name with increased advertising, signage, Internet presence, public relations and lead follow-up. Marketing is like electricity. You can’t see it and you may not understand it fully, but once it stops flowing things cease to work.– Charles Bevier, editor of BSM.

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