Financial Management for Home Builders in a Changing Market
Five Steps to Take to Protect Your Business

By Steven W. Hays Sr., CPA

As the industry settles into another year that will be less than record breaking, builders in markets in the midst of a slowdown must take action to minimize its economic impact on their businesses. Among the actions to consider are:

• Control fixed general and administrative expenses                                        
• Develop and monitor budgets for other fixed expenses and capital items closely
• Control and manage the number of specs and display homes carried
• Monitor closely the relationship between staffing and sales volume
• Manage and reduce direct construction costs

Read more about how to protect your business in today's housing market.

Customers for Life—Part 6: Planning to Action in 5 Steps
By Steve Lewkowitz
Customer Relationship Management is first and foremost a strategy, not a technology. Your first step should not be a software purchase; it should be an examination of how your company could become more customer-centric—and how it could benefit from such an approach. Know what you want to achieve and why you’re doing it. Once you’ve identified targeted areas for improvement, you can look at how technology could help you streamline and automate the processes that impact your customer’s experience.

Choosing well, planning for liftoff, managing change, and training right are all part of the process of getting your CRM system up and running. Read more about each of these steps. [return to top]

SSA ‘No-Match’ Letters: Employers Urged to Attend to Records

www.nahb.org/biztools

Work site enforcement of U.S. immigration law appears to be increasing and experts say employers may need to update their recordkeeping as a result.

In June 2006, the Department of Homeland Security (DHS) announced proposed regulations that include directives to employers for dealing with “no-match” letters from the Social Security Administration (SSA) when an employee number is not recognized as valid or appears to be inaccurate.

The announcement is part of an increased immigration enforcement effort by DHS, begun last spring, focusing Immigration and Customs Enforcement (ICE) efforts on employers, including construction businesses. Thousands of dollars in fines already have been levied on some builders.

In the latest rulemaking effort, DHS proposes to clarify procedures an employer would have to take after receiving a no-match letter, as well as deadlines for responding. It also would establish non-compliance with the rules as possible evidence of employer disregard for immigration and employment law.

"The world of work-site enforcement is becoming much more sophisticated and the burden on employers appears to be increasing,” said Greenberg Traurig LLP in a July 14, 2006 alert on the subject. " … We find that many of our client’s I-9 recordkeeping practices need to be updated, which often provides an excellent opportunity for employers to develop consistent recordkeeping procedures that … reduce the number of no-match letters they receive.”

Read more about steps to take now. [return to top]

IRS Issues Guidance for GO Zone Depreciation Benefit
By Robert Dietz, NAHB Tax Issues Director

The IRS recently issued Notice 2006-67, which provides guidance to taxpayers who plan to take an additional 50 percent first-year depreciation (so-called “bonus depreciation”) with respect to property and buildings located in the Gulf Opportunity Zone. 

The GO Zone was established in 2005 for counties in Florida, Alabama, Louisiana, and Texas, to provide tax benefits for areas suffering economic damage as a result of Hurricanes Katrina, Rita, and Wilma. These tax benefits, such as the bonus depreciation provision, are intended to encourage investment and recovery in the hardest hit areas.

Taxpayers may claim bonus depreciation if the qualified property is purchased on or after Aug. 28, 2005.  Most property must be placed into service before Dec. 31, 2007.  However, for certain property, including residential rental property, the placed-in-service deadline is Dec. 31, 2008. 

Qualified property is not eligible for the depreciation benefit if it is financed with the proceeds of tax-exempt debt or if the property is in a class for which no depreciation may be claimed.  Additionally, the benefit will not apply if the property is placed in service and sold in the same taxable year, is converted for personal use in the same taxable year, or is a revitalization building qualified for other forms of tax benefits. 

Property only qualifies if 80 percent or more of its use is in the GO Zone.

Notice 2006-67 appears in Internal Revenue Bulletin 2006-33, dated Aug. 14, 2006.

For more information on this and other tax issues, please contact Robert Dietz (800-368-5242 x8285) or NAHB’s tax lobbyist Greg Brown (x8421). [return to top]

Early-Bird Deadline Approaches for Custom Builder Symposium
Don’t miss the early bird registration deadline, next Friday, Aug. 25, for NAHB’s 2006 Custom Builder Symposium.

The symposium, Oct. 27-29, at the spectacular Hyatt Regency Lake Las Vegas Resort, Spa, and Casino, is a wonderful opportunity to network with custom home builder peers, have some fun, and learn from outstanding presenters on topics that matter to you.

Also, don’t forget to apply to be named NAHB’s first Custom Home Builder of the Year Award. This program, sponsored by Dryvit Systems Inc., will honor an outstanding custom home builder who has demonstrated achievements in the field and leadership in the community.

For more information on the NAHB Custom Builder Symposium and the NAHB Custom Home Builder of the Year Award, go online to www.nahb.org/custom. [return to top]

Save on Shipping with NAHB and UPS
NAHB and UPS, the world’s largest package delivery company, have joined forces to offer NAHB members discounts of up to 30% on shipping. The NAHB shipping discounts include domestic air and ground, international export and international import.

Association members can also take advantage of hassle-free on-line shipping, 24/7 access and advanced package tracking at your fingertips. NAHB members are eligible for discounts up to 30% to help manage costs with no catch—and no minimums. The shipping discounts—which increase the more packages or letters the user sends—will be applied once enrollment is complete.

The enrollment process is fast and easy and is available to NAHB members through the Web site: www.savewithups.com/nahb.  For more information on UPS savings and the complete Member Advantage program, visit www.nahb.org/MA. [return to top]

Corps Says It Will Not Enforce Ditch Rule
A suit by NAHB against the U.S. Army Corps of Engineers has prompted the Corps to announce that it will stop enforcing the so-called Philadelphia Ditch Rule, whereby the Corps had previously asserted jurisdiction over common roadside ditches.

This move by the Corps is the first significant government action regarding Clean Water Act enforcement since the Supreme Court's decision in the Rapanos and Carabell cases last  June. In those cases, NAHB argued that the Corps' too extensive jurisdictional reach resulted in environmentally unsound land use decisions and costly regulatory burdens, which negatively impact new home affordability.

NAHB filed its suit against the Corps in March, after the Corps' Philadelphia regional office told its agents to treat all upland ditches as navigable waters of the United States , triggering their regulation under the federal Clean Water Act. NAHB's argument got a boost from the Supreme Court's decision in Rapanos and Carabell, which helped point out the confusion over what constitutes a "navigable water" and directed the Corps and EPA to come up with a clearer, narrower definition of what that term means.

As a result, the Corps has decided to halt its regulation in this area until a more comprehensive policy can be uniformly applied across the country. NAHB hopes that with this decision, a foundation has been laid for more sensible, environmentally sound, and consistent guidelines. For more information, contact Duane Desiderio (800-368-5242 x8146) or Calli Schmidt (x8132). [return to top]

Get a Free Moisture Protection Pamphlet for Siding Installers
NAHB’s popular how-to pamphlet for siding installers, “Moisture Protection of Exterior Walls — An Installer’s Guide,” has been updated and is available free to NAHB members. It is available in English and Spanish.

The pamphlet was updated by NAHB’s Building Product Issues Committee and the NAHB Research Center and provides tips for several types of siding and veneer applications ― including brick, manufactured stone, stucco, thin brick and EIF systems over wood sheathing or paper-backed products.

“Moisture Protection of Exterior Walls — An Installer’s Guide” provides guidance on:

• Designing and installing a weather-resistive barrier
• Protecting exterior walls against condensation and moisture penetration
• Protecting moisture sensitive materials against decay, mold, fungus, and rot

The easy-to-download pamphlet is available on the Construction Liability page on the members only side of the NAHB Web site. The pamphlet is available in PDF format. Download a copy from NAHB's Construction Liability Web page.   

To obtain bulk copies, call Cynthia Day at 800-368-5242 x8291. [return to top]

It's Not Too Late to Weigh in on Environmental Regs
The federal government is listening up for your suggestions on how to improve environmental regulatory and enforcement programs. As part of a federal initiative called "Cooperative Conservation," special "listening sessions" have been scheduled across the country in August and September to help government agencies work more collaboratively with state and local agencies, nonprofit groups, and the regulated community.

The sessions are to be hosted by senior-level Bush Administration officials, including Secretary of the Interior Dirk Kempthorne and EPA Administrator Stephen Johnson. State and local HBA leaders are strongly encouraged to attend sessions near them. Topics of particular interest include reform of the Endangered Species Act and EPA's storm water enforcement program. The following schedule and locations are subject to change:

• August 21, Columbus, OH - 4:00 p.m. at Ohio State University's Agricultural Admin. Building
• August 22, Redmond, OR - 10:00 a.m. at Deschutes County Fairgrounds Expo Center
• August 24, Omaha, NE - 1:00 p.m. at Qwest Center Omaha-Convention Center Jr. Ballroom
• August 26, Muncie, IN - 10:00 a.m. at Horizon Convention Center Exhibition Hall
• August 28, Fairbanks, AK - 10:00 a.m. at The Carlson Center
• August 29, Jefferson City, MO - 1:00 p.m. at the Runge Conservation Nature Center
• August 30, Enid, OK - 1:00 p.m. at the Cherokee Strip Conference Center, Pioneer Hall
• September 13, Redding, CA - 9:00 a.m. at the Cascade Theatre
• September 15, Colorado Springs, CO - 9:00 a.m. at the University of Colorado at Colorado Springs
• September 20, Brewer, ME - 4:00 p.m. at Jeff's Catering Banquet and Convention Center
• September 21, Brunswick, GA - 1:00 p.m. at Coastal Georgia Community College
• September 28, Colton, CA - 10:00 a.m. at Colton High School Auditorium

NAHB is providing background materials,  comments and talking points to help prepare NAHB members for participation in the meetings. Contact Michael Mittelholzer at 800-368-5242 x8660 for more information. [return to top]

Fed Pauses on Interest Rates
The Fed finally paused on Aug. 8 and, as NAHB expected, held short-term interest rates steady, maintaining the 5.25% target for the federal funds rate.

The Federal Open Market Committee (FOMC) of the Federal Reserve Board cited the recent slowdown in economic growth, singling out the “cooling of the housing market,” in a statement. The statement also said that “inflation pressures seem likely to moderate over time.” It stressed that future policy adjustments will depend on the evolution of the outlook for both inflation and economic growth.

The FOMC’s economic projections, revealed in the Fed’s recent Monetary Policy Report to the Congress, show expectations for slowing growth and receding core inflation. NAHB’s current forecast goes even further in those directions. According to NAHB Chief Economist David Seiders, if we (and the FOMC) turn out to be on target, the Fed should be able to hold policy steady for some time and possibly drop rates some time next year. Read more of Seiders' analysis in his latest Eye on the Economy report.

NAHB had warned in a letter to Congress that the Federal Reserve runs the risk of turning the cooling process now under way in the nation’s housing market into a full-fledged downturn if it continued to push up interest rates. That analysis resounded in congressional testimony last month by Fed Chairman Ben Bernanke. [return to top]

Free Samples of NAHB's 2007 Metro Starts Forecasts
Want to know more about the future of local housing markets? You can get free samples of 2007 Metro Starts Forecasts available to subscribers to HousingEconomics.com. For more information, e-mail Karel Leon, or call 800-368-5242 x8476. [return to top]

Navigate the Challenges of Land Development
Increasing local governmental regulations and constraints on land use combined with a growing concern over smart growth have made land development an even greater challenge for builders.

To better prepare for this challenge, BuilderBooks.com has released Land Development, 10th Edition, a step-by-step guide to help builders learn how to successfully navigate the complicated land development process.

New sections in this revision examine the latest environmental regulations affecting land development, emerging demographics for targeted marketing, and innovations in housing types. The book emphasizes flexibility to accommodate the ever-changing trends in demographics, plan designs, technology, and regulations.

A key resource for developers, builders and students, Land Development , written by Daisy Linda Kone, a Houston-based architect, planner and manager in residential design-build, helps readers better understand the factors that contribute to a successful land development project, including:

• Market study and analysis
• Financing
• Site selection and analysis
• Environment regulations
• Developing a master plan concept
• Site engineering and storm water management
• Neighborhood and street design

To purchase a copy of Land Development, 10th Edition, www.BuilderBooks.com or call 800-223-2665. [return to top]