New McGraw-Hill Benefit for Commercial Builder Members
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As a NCBC member you can subscribe now to ENR for only $39, a 53 percent savings off the basic rate of $82. You’ll get 51 issues of ENR in print including the Top 400 Contractors Sourcebook, Top 500 Design Firms Sourcebook, Top 600 Specialty Contractors Sourcebook and the ENR Quarterly Forecast and Cost Reports. Plus exclusive password access to ENR.com.

Go to www.mcgraw-hill-sales.com/nahbenr.htm or call 877-876-8208 and mention Promocode 4ENRNAHB to get this special rate.

Tax Increase Prevention and Reconciliation Act of 2005 Signed Into Law
On May 17, President Bush signed into law the “Tax Increase Prevention and Reconciliation Act of 2005” (“TIPRA”).  The legislative objective of TIPRA is to provide temporary extensions of certain expiring or limited tax provisions.  In general, the bill furthers NAHB tax policy objectives by reducing the rate of taxation on investment, by limiting the reach of the AMT, and by encouraging business investment through an increase to the ability of small businesses to expense certain capital assets.  Particular changes to tax law that are of interest to NAHB members include the following provisions.

Two-Year Extension of Reduced Rates on Capital Gains and Dividends

Under current law, capital gains and dividend income are taxed at a maximum rate of 15% through 2008.  For taxpayers in the 10% and 15% tax brackets, the tax rate is 5% through 2007 and zero in 2008.  The Conference Report extends the rates effective in 2008 through 2010. 

Increase in AMT Exemption Levels

The provision extends the Alternative Minimum Tax (AMT) exemption levels though the end of 2006 at a higher level than in 2005.  The new exemption levels for 2006 are $62,550 for joint filers and $42,500 for single filers.

AMT Relief for Non-Refundable Personal Tax Credits

The tax code includes many non-refundable personal tax credits, such as the dependent care credit, the credit for the elderly and disabled, the credit for interest on certain home mortgages, the Hope credit for certain college expenses and the Lifetime Learning credit, among others.  Claiming these credits may push an individual into the AMT.  The provision extends present law which allows most non-refundable personal tax credits to be claimed against the AMT so that families continue to receive the full benefit of these tax credits.

Two-Year Extension of Enhanced Section 179 Expensing for Small Business

Under current law, small businesses may expense (i.e., deduct in the first year) up to $100,000 of investments in depreciable assets.  The deduction phases out dollar-for-dollar to the extent the business's annual investments exceed $400,000.  Without action, the expensing limit would have declined to $25,000 and the phase-out threshold would have declined to $200,000 after 2007.

Enhancing Veterans' Access to Affordable Mortgages

Under current law, veterans are eligible for access to financing from certain mortgage revenue bonds only if they served prior to 1977 and apply for these mortgages within a 30-year eligibility period after they leave active service.  The provision expands eligibility for the program in a number of these States by repealing the requirement that veterans must have served before 1977 and reducing the eligibility period from 30 years to 25 years.

Amend Information Reporting Requirements to Include Interest on Tax-Exempt Bonds

The provision provides that interest paid on tax-exempt bonds is subject to information reporting in the same manner as interest paid on taxable obligations.

Domestic Manufacturing Deduction Wage Limitation

The domestic manufacturing deduction for a taxable year is limited to 50% of the wages paid by the taxpayer during the calendar year that ends in such taxable year.  The provision clarifies that only those wages allocable to domestic production gross receipts are included for purposes of this limitation.  The provision also repeals the special rule limiting the amount of W-2 wages that may be allocated by pass-thru entities. 

Tax Treatment of Tax-Exempt Entities Participating in Reportable Transactions

The provision establishes an excise tax on tax-exempt entities and their managers if the entity participates in a listed tax shelter or a prohibited transaction.  Prohibited transactions include contractual protection clauses, as found in many Section 42 partnership agreements.  IRS regulations will be required to be sure that LIHTC and other Code sanctioned credits are exempted from this provision, which is intended to penalize tax-exempt organization participation in prohibited tax shelters. [return to top]

Commercial Builders Awards of Excellence Deadline Extended

The NAHB National Commercial Builders Council (NCBC) is accepting applications for its 2007 Awards of Excellence program, which recognizes achievements in the national commercial building industry for design (remodeling and new construction), market appeal, energy efficiency, challenges faced during building and overall success of projects that are either built or renovated.

The new deadline for entries is Friday, Aug. 18.

Applications are open to builders, architects, designers, engineers, contractors, developers and building owners for non-residential retail, commercial, institutional, medical, industrial, recreational, entertainment and mixed-use commercial/residential projects completed within the country after Dec. 31, 2003.

The six divisions in which a project can be entered include:

• Small-scale projects less than 5,000 square feet
• Projects 5,001-10,000 square feet
• Projects 10,001-40,000 square feet
• Projects 40,001-75,000 square feet
• Projects 75,001-100,000 square feet
• Projects more than 100,000 square feet

Project of the Year, Grand, Merit and Chairman’s awards will be given in all categories.

Entrants will receive a one-year subscription to the award-winning magazine, Commercial Builder, a granite recognition award and publicity at the International Builders' Show and in the convention issue of Commercial Builder.

Winners will be notified by mail no later than Nov. 1.

For more information, visit 2007 Awards of Excellence: Building Excitement on the NAHB Web site, or e-mail Nick Lashinsky at NAHB, or call him at 800-368-5242 x8455.

New NAHB Tool Navigates EPA Regs, Saves Time and Money
A tool to enable construction companies to more easily create comprehensive, company-wide environmental policies and programs — and save time and money doing so — is now available for purchase on the NAHB Web site.

The NAHB Environmental Management System (EMS), the first tool of its kind for the residential construction industry, helps members better comply with federal, state, and local environmental regulations, especially those regarding storm water permits, as well as target issues of importance.

Designed for medium- to large-sized firms, the $25 EMS tool includes a CD and a detailed manual ― including ways to customize templates so that companies can create their own forms, policies, procedures and more.

The heart of the EMS tool is the “Significant Aspect/Impact Register,” a Microsoft Excel spreadsheet that allows construction companies to prioritize potential environmental issues they may have to address — ranked by impact or importance as they relate to the environment, regulatory compliance and costs.

EMS Availability

The time is right for companies to harness the vast array of environmental regulations and responsibilities.  Particularly, EPA is looking for companies to use a standardized management system to adopt policies and programs that integrate environmental responsibilities into their business practices. The new EMS tool fits the bill. The ability to calculate potential environmental impacts and to immediately determine what to do about them should save NAHB members time and money.

NAHB is planning a seminar to provide demonstration and training on development and implementation of an EMS this fall, and at the International Builders Show in February, 2007.  Additional information will be available soon.

Other Resources for Commercial Construction

Though NAHB’s Model EMS was developed for residential construction companies, all aspects are applicable to commercial construction.  In addition, Associated General Contractors of America (AGC) has produced an EMS Guide ($129 for members and $193 for non-members) tailored to large commercial builders.  This EMS Guide can be purchased online at www2.agc.org/ecrm/scriptcontent/ProductDetail.cfm?pc=3212.

For more information regarding NAHB's Model EMS, please contact Kimberly Wagoner at 800-368-5242 x8662, or via e-mail at kwagoner@nahb.com. [return to top]

NAHB Interest Rate Concerns Arise in Bernanke Testimony
Recent warnings by NAHB that the Federal Reserve runs the risk of turning the cooling process now underway in the nation’s housing market into a full-fledged downturn if it continues to push up interest rates resounded in congressional testimony last week by Fed Chairman Ben Bernanke.

When confronted in the Senate on July 19 with evidence of falling housing starts and permits, including the sizeable declines reported by the Commerce Department that morning for the month of June, Bernanke noted significant uncertainties and risks in the housing outlook and stressed that the Federal Reserve is watching housing “very carefully.” He repeated these points the following day under questioning in the House.

On a significant housing-related issue of a more technical nature, Chairman Bernanke acknowledged NAHB’s concern that the Fed’s inflation-fighting efforts are having a perverse impact on the government measures of core consumer price inflation that are being used to guide its policies. In written testimony, he agreed with association economists that “increases in residential rents, as well as in the imputed rent on owner-occupied homes” have contributed to higher core consumer price inflation.

In a July 18 letter advising members of Congress of the impact of rising interest rates on housing, NAHB said that the Fed has been relying on “deficient inflation measures to rationalize the interest rate hikes that have been taking a serious toll on the housing sector. Ironically, much of the recent increase in ‘core’ consumer price inflation that the Federal Reserve is trying to control with higher interest rates is coming from a weakening housing market.”

Under questioning during the Senate and House hearings, Bernanke agreed that the large imputed “owners’ equivalent rent” component of the core Consumer Price Index was being pushed up because of the weakening of home buying and the related firming-up of market rents. In this regard, he also conceded that tighter monetary policy can actually put upward pressure on core inflation through the imputed “owners’ equivalent rent” mechanism, possibly creating a self-defeating cycle of monetary policy tightening and accelerating core inflation.

Referencing the association’s letter, Senate Banking Committee Ranking Member Paul Sarbanes (D-Md.) said that “NAHB makes a rather valid point in communicating with us about this measure” and the Fed being caught in a “vicious cycle” of raising interest rates in response to a “technical measure” that doesn’t really indicate what home owners are actually paying.

During his appearance the next day before the House Financial Services Committee, Bernanke was closely questioned by Rep. Gary Miller (R-Calif.) about the effect of rising interest rates on housing costs. He cautioned Bernanke that “every time you raise interest rates, you price buyers out of the market,” and again pressed him on the “equivalent rent” issue.

In its letter to Congress prior to Bernanke’s appearance, NAHB cited growing evidence that the moderate and orderly housing downswing described by the Fed Chairman could evolve into something far worse if interest rates continue to be raised.

“NAHB’s recent surveys of home builders show a serious downtrend in housing demand, due largely to the series of interest rate hikes already enacted by the Federal Reserve,” the letter said. “and builders’ expectations for future home sales are weakening considerably as well.”

Among the downside risks for the housing market, NAHB warned, are the deepening of affordability problems for prospective home buyers and the potential for a quick surge in builder inventories if investors and speculators in single-family and condominium markets in many areas of the country decide to flee the market by cancelling their sales contracts.

The exchange between Bernanke and members of the Senate on both the downside risks to housing and the effect of “owners’ equivalent rent” on the core inflation measures presumably contributed to the soothing effect of the testimony on the financial markets, according to NAHB Chief Economist David Seiders.

“Recognition of the downside risks to home sales and housing production reduced the markets’ estimates of the probability of more Fed tightening,” said Seiders. “And the markets now know that the Fed at least partially discounts the increases in the ‘owners’ equivalent rent’ component that recently helped drive both the core CPI and the core Personal Consumption Expenditures price index above the upper ends of the Fed’s apparent comfort zones for these measures.” [return to top]

Fall Board Meeting Schedule
The National Commercial Builders Council Fall Board meeting will coincide with NAHB's Fall Board meeting this September in Salt Lake City . The NCBC Trustees, who oversee the council, will address council business as well as issues on the horizon that are of direct relevance to commercial building. The preliminary schedule is as follows:

• Wednesday, Sept. 13   
  9:00-10:30 a.m. — Joint Council Chairs
  Noon-5:00 p.m. — NAHB Executive Board Meeting
   
  
• Friday, Sept. 15   
  8:30-9:30 a.m. — Membership Subcommittee
  9:30-10:30 a.m. — Issues Subcommittee
  10:30-11:30 a.m. — Communications Subcommittee 
  3:00-5:30 p.m. — Board of Trustees Meeting
  
  
• Saturday, Sept. 16   
  8:00-10:00 a.m. — Area Caucuses
  10:30 a.m.-noon — NAHB Executive Board Meeting 
  1:00-5:00 p.m. — NAHB Board of Directors
  
  
• Sunday, Sept. 17   
  8:00 a.m.-noon — NAHB Board of Directors
  

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Protect Your Workers and Your Profits
National Safety Month was in June, but that doesn’t mean that safety should be put on the back burner. The failure to properly train workers is one of the top 15 most frequently cited Occupational Safety and Health Administration (OSHA) standards in residential construction and could cost a company up to $7,000 for a single serious violation.

OSHA requires employers to train their employees to recognize and avoid safety hazards on the job and to understand the applicable safety regulations. To help meet this need, BuilderBooks.com offers numerous safety publications in both English and Spanish.  

The “NAHB-OSHA Jobsite Safety Handbook: English-Spanish Edition” is a pocket-size manual that covers the key safety issues on which residential builders need to focus to reduce injuries and fatalities. Topics include:

• Employee and employer duties
• Orientation and training
• Personal protective equipment
• Housekeeping
• Stairs and ladders

To view or order “NAHB-OSHA Jobsite Safety Handbook: English-Spanish Edition” online, click here, or call 800-223-2665. 

Available as a Video, Too

A companion "English-Spanish Jobsite Safety Video," based on the handbook and also available through BuilderBooks.com, provides an overview of the key safety issues on which residential builders and workers need to focus in order to reduce accidents and injuries and to comply with OSHA regulations. Two 20-minute videos — one in English, the other in Spanish — are included on one DVD.

To purchase the video online, click here, or call 800-223-2665.

To view or purchase other safety publications available at BuilderBooks.com, visit www.builderbooks.com/Safety.
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UPS Offers Up to 30% Discount to NAHB Members on Shipping
NAHB and UPS, the world’s largest package delivery company, have joined forces to offer NAHB members discounts of up to 30 percent 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 percent 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.
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