Rep. Wasson & Rep. Schoeller Facilitate Meeting with Division of Workers' Compensation

In 2009, HBA Government Affairs Chair Matt Bailey and the committee members have been researching and meeting with various elected officials and government agencies (including the state Attorney General's office) in regard to the issue of non-compliance with the workers' comp coverage requirement for companies in construction. The ultimate goal is to improve compliance with state law and prevent unfair competition from those businesses that either (1) knowingly opt not to carry required work comp coverage or (2) genuinely but mistakenly believe they are exempt because they do not understand state law's requirements.

Thanks to the efforts of Rep. Jay Wasson, your HBA had one of its most productive meetings to date on this issue with the Deputy Director of the Missouri Dept. of Labor and Industrial Relations and the Chief of Operations for the Division of Workers' Compensation. Rep. Shane Schoeller also attended the meeting and was very helpful in communicating about this issue, thanks to his past experience as Government Affairs Director for the HBA of Greater Springfield. In addition to HBA staff, HBA President Rusty MacLachlan and President-Elect Matt Bailey also were in attendance.

The HBA focused its comments on administratively changing the Affidavit of Exemption for Workers' Compensation Insurance Pursuant to 287.061 (download form by clicking here.) In any jurisdiction that issues business licenses, if a construction-related company/contractor does not provide proof of insurance, the licensing entity is required to provide the business with this affidavit form, which the business may sign to confirm it is exempt from the state requirement to carry workers compensation insurance. In its current format, this affidavit leads many in the construction industry to falsely and/or mistakenly declare they are exempt from Missouri’s requirement to carry workers' compensation insurance. Affiants check the first box (“sole proprietor with no employees”), believing that they qualify because they are a sole proprietor and they have no direct W-2 employees. What is not clear on the form is that Missouri workers compensation law holds a broader definition of “employee” than is most commonly assumed. Nearly all of these affiants utilize subcontractors, family members, or volunteers – any one of which would, in most cases, meet the definition of “employee” for the purposes of work comp coverage.

Within the scope of Workers’ Compensation law, Missouri recognizes the doctrine of “statutory employment”, i.e., recognizing that the employees of the second company are deemed to be employees of the first company in a subcontracting arrangement. This means that even when a general contractor does not have a traditional W-2 employee, the business may meet the definition of having an "employee," and therefore is required to maintain workers' compensation insurance coverage, as long as all of these requirements are met:

• work is done under contract (either express or implied, oral or written);
• work is done by the second company’s employees that the first business has a right to control; and
• the work is in the operation of the usual business of the first business.

The HBA of Greater Springfield contends that the Affidavit of Exemption should include additional language which more fully defines an “employee” within the scope of workers compensation law. Such language should be plainly stated on the main form as well as on the additional page of definitions. Attorneys for the licensing jurisdictions with whom the HBA has met agree that it would be an extremely rare and unlikely scenario for any construction business to actually meet the state-defined criteria of having “no employees” within the scope of workers’ compensation law and yet many contractors are filling out and turning in this form at the licensing office. Further, employees of the licensing office (city or county staff) have no authority or obligation to explain or clarify the definition of “employee” to those who utilize the form. Consequently, the form is its own only defense, and should therefore be exceedingly clear on this point.

Making these changes to the form would educate those who unknowingly believe they are exempt and ultimately improve overall compliance and consumer protection. Making the signed forms available electronically would allow contractors and homeowners to check on claims of exemption. The officials the HBA met with also suggested calling this toll free number to verify proof of workers' compensation insurance, and to report non-compliance with the state requirement for construction related companies: 1-800-775-2667. The Division is also working on a web-based search mechanism to verify work comp coverage. This would be helpful in those jurisdictions with permitting, but without a licensing process, to check proof of compliance with the work comp law prior to issuing a permit.

If you have questions or comments about this issue, you can email Government Affairs Chairman Matt Bailey by clicking here.

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ADVOCACY: Extension/Expansion of Homebuyer Tax Credit

An Important Advocacy Update from

NAHB Chairman Joe Robson

I am writing to update you on the status of NAHB’s efforts to secure an extension and expansion of the first-time homebuyer tax credit (tax credit) and five-year carryback of Net Operating Losses (NOLs) established under the American Recovery and Reinvestment Act of 2009.

This week the Senate began its consideration of legislation to extend additional unemployment insurance benefits to unemployed Americans. Because of the work of NAHB, members of the Association from around the country and a number of our allies in the Senate, proposals to extend and expand the homebuyer tax credit and expand the NOL carryback are included in that legislation. These proposals are the result of bipartisan efforts of Senate Finance Committee Chairman Max Baucus (D-MT) and Senators Johnny Isakson (R-GA), Chris Dodd (D-CT), Olympia Snowe (R-ME), Lamar Alexander (R-TN) and Joe Lieberman (I-CT), and Senate Leaders Harry Reid (D-NV) and Mitch McConnell (R-KY). Without their support and persistent advocacy in the Senate, we would not have been able to achieve this result.

Also, the Obama Administration, through a joint statement issued by Treasury Secretary Tim Geithner and HUD Secretary Shaun Donovan, last week said, "We welcome efforts taken by Congress to extend the First Time Homebuyers Tax Credit for a limited period. This credit has brought new families into the housing market and contributed to three consecutive months of rising home prices nationwide.”

Here are the specifics of the proposals as we know them:

Homebuyer Tax Credit

• Extends the $8,000 tax credit until April 30th for first-time homebuyers;
• Creates a new $6,500 tax credit for move-up buyers for the same period;
• Both categories of homebuyers have an additional 60 days (June 30th) to close on the home;
• Both categories of homebuyers have new, higher income limits of $125,000 for individuals and $225,000 for couples;
• Move-up buyers must have been residing in their primary residence for 5 consecutive years out of the last 8 in order to qualify for the credit; and
• Homes over the purchase price of $800,000 do not qualify.

NOL Carryback

• Five year carryback for NOLs in either 2008 OR 2009, not both;
• Years 1-4 allow for 100 percent use of NOLs, year 5 is limited to 50 percent of a company’s taxable income in that year;
• No size limitation or other cap on revenues; and
• Unused NOLs in year 5 are still eligible for 20 year carry forward.

We anticipate that the Senate will pass this legislation this week with the House to follow shortly after that. We anticipate that the House will accept the bill – and homebuyer credit/NOL proposals – as crafted, although that could change.

I wanted you to have the latest information on the status of our efforts. Hopefully in a matter of days I will be able to report that these critical proposals have passed both Houses of Congress and signed into law by President Obama. As always, please contact me with any questions or comments.

Regards,

Joe Robson

NAHB Chairman

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ADVOCACY: "Revive Housing, Restore America"

An Important Advocacy Message / Call to Action

from NAHB Chairman Joe Robson:

With members of Congress now taking a closer look at extending and possibly expanding the $8,000 first-time home buyer tax credit, NAHB is seeking to build on this momentum by running two separate ads this week targeted at Capitol Hill and the general public.

Enclosed are links to the two ads to keep you updated on our activities. The first full-page ad is a joint effort with the National Association of Realtors that will run in the front section of USA Today and the Wall Street Journal on Wednesday, Oct. 21. The message is simple and straightforward: Extending and expanding the home buyer tax credit will create nearly 350,000 jobs, inject $28 billion into the U.S. economy and generate $12 billion in additional tax revenue. It's time for Congress to help put America back to work.

The second full-page ad, jointly sponsored by NAHB, NAR and the Mortgage Bankers Association, includes a similar theme that calls for the home buyer tax credit to be extended to keep housing and the economy moving forward. The ad has been running for several weeks in the following "Inside-the-Beltway" publications geared specifically toward members of Congress: CQ Weekly, Roll Call, The Hill, Politico, the New Republic, the National Journal and the National Review.

We are also taking our message directly to Congress. NAHB Chief Economist David Crowe testified upon request today before the Senate Banking Committee on the need for Congress to act quickly to extend the home buyer tax credit for another year and make it available to all buyers of a principal residence in order to create jobs and boost the economy. Crowe warned lawmakers that the approaching expiration of the $8,000 home buyer tax credit on Nov. 30, combined with the massive hurdles that builders face in obtaining construction financing and appropriate appraisals on new homes, could derail the fragile recovery in housing just as it is starting to take shape.

Further, NAHB this week stepped up its "Revive Housing, Restore America" grassroots campaign. An e-mail has been sent out to all members of the NAHB federation asking for a grassroots push on the extension and expansion of the home buyer tax credit. Members are encouraged to log on to www.capitolconnect.com/builderlink to send a letter to their individual lawmakers or call 1-866-924-6242 (NAHB) and urge their senators and representative to extend and expand the home buyer tax credit to create jobs, reduce foreclosures and excess housing inventories, and to push housing and the economy on a glide path to recovery.

As leaders of our association, I strongly encourage you to take part in this effort. Together, we can make a difference.

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NAHB: Builders Urge Congress To Act On Home Buyer Tax Credit, Appraisal And Lending Issues

October 7, 2009 - The National Association of Home Builders (NAHB) this week called on Congress to help housing take a lead role in putting America back to work by taking quick action to extend and enhance the $8,000 first-time home buyer tax credit, resolve appraisal problems that have been slowing home sales and urge regulators to restore the full flow of credit needed by both home buyers and home builders alike.

Though existing and new home sales appear to have stabilized in recent months, NAHB Chairman Joe Robson, a home builder from Tulsa, Okla., told members of the House Small Business Committee that the industry is facing a number of housing-specific headwinds that are continuing to buffet any significant housing recovery.

“Not only are we continuing to feel the impact of foreclosures and short sales in the market, but we’re facing a severe credit crunch for acquisition, development and construction (AD&C) lending,” said Robson. “Meanwhile, the use of foreclosed and short-sale properties as comps is resulting in inappropriately low appraisals that are effectively sinking one quarter of all new-home sales right now. Add to this the fact that demand and home sales are already showing signs of slowing with the pending Nov. 30 expiration of the first-time home buyer tax credit.”

To create jobs and put the housing market and the economy on sounder footing, NAHB is urging Congress to extend the credit for an additional year and to make it available to all purchasers of a principal residence.

“We estimate that this would increase home purchases by 383,000 in the next year and help mitigate the foreclosure crisis by whittling down inventory at all levels of the housing market, setting the stage for a full recovery,” said Robson. “This stimulus alone would create nearly 350,000 jobs over the coming year, which is exactly what the economy needs right now.”

In a recent survey of more than 500 builders by NAHB, 25 percent reported they are losing sales because the appraisal is coming in below the contract sales price. The process has gone seriously wrong because some appraisers are using distressed properties – many of which have been neglected and are in poor physical condition – as comparables in assessing the value of brand new homes without accounting for major differences in condition and quality.

“Any prospective buyer would recognize the differences in the value between a well-kept home and a distressed property that is damaged or not properly maintained. The same should be true of an appraiser,” said Robson.

He said Congress can help resolve this issue by urging the Federal Housing Administration and Fannie Mae and Freddie Mac to adopt and enforce guidance that instructs appraisers on the proper procedures for the use of distressed and/or foreclosed properties as comparables.

Lawmakers can further help put the housing industry back on its feet by exerting their influence on regulators and the banking industry to restore lending for viable home building projects and to take meaningful steps to avoid unnecessary foreclosures on outstanding loans.

“This would provide relief for a major sector of the economy that has suffered because of regulatory overkill and the inability of banks to provide the necessary funding and flexibility that would otherwise keep loans performing as scheduled,” said Robson.

To further promote energy efficiency in new-home construction, Robson called on Congress to make permanent and enhance the new energy efficient home tax credit due to expire at the end of the year. Section 45L of the Internal Revenue Code provides a $2,000 tax credit to a home builder who constructs a qualified new energy-efficient home that is certified to achieve a 50 percent reduction in energy usage.

“As the only incentive in the tax code for energy efficiency in single-family home construction, this program will help to ensure that new homes built today and going forward are highly energy-efficient,” said Robson. “We strongly urge the Congress to make the 45L credit permanent and increase the credit amount to $5,000 to pay for a bigger percentage of the higher building costs that are incurred when making a home 50 percent more energy-efficient.”

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Survey Shows Credit Woes Threaten Housing Recovery

From Nation's Building News Online, Week of September 28:

Nearly two-thirds of single-family home builders are reporting a severe lack of credit for housing production, threatening the fragile housing recovery before it has time to take hold, according to a new builder survey of acquisition, development and construction (AD&C) financing conducted by NAHB and released on Sept. 28.

“Across the country, home builders and developers are reporting a deterioration in credit availability and intensifying pressure on borrowers with outstanding loans,” said NAHB Chairman Joe Robson.

“Lenders are cutting off loans for viable new housing projects and producing unnecessary foreclosures and losses on AD&C loans,” Robson said. “With the pending expiration of the $8,000 first-time home buyer tax credit, these challenges threaten to halt any positive developments we have seen in the housing market in recent months.”

In their ongoing “Revive Housing, Restore America” grassroots campaign, NAHB members are asking their members of Congress to improve housing credit conditions as one of four crucial steps to support housing as the framework for creating jobs and pulling the nation’s economy out of recession.

In the latest NAHB survey of AD&C financing conditions, 63% of builders stated that the availability of credit for single-family construction loans worsened in the second quarter of 2009.

Builders reporting deteriorating credit conditions cited the following reasons:

80% said that lenders are lowering the allowable loan-to-value ratio.

76% reported that lenders are not making new loans.

75% stated that lenders are reducing the amount they are willing to lend.

62% said that lenders are requiring personal guarantees or collateral not related to the project.

Two-thirds of respondents reported putting single-family construction projects on hold until the financing climate gets better.

While federal banking regulators continue to maintain that they are not instructing institutions to stop making loans or to indiscriminately liquidate outstanding loans, builders responding to the survey said the top reason that lenders have given them for restricting the availability of new loans or for tightening the terms of outstanding loans is that “regulators are forcing lenders to do it.”

NAHB believes that regulators and lenders should provide leeway to residential construction borrowers who have loans in good standing by providing flexibility on re-appraisals, loan modifications and perhaps forbearance on loans to give builders time to complete and sell their inventory.

“There can be no meaningful economic recovery until the flow of credit is restored to housing,” said Robson.

'Revive Housing' Campaign Enters Second Month

In its push to focus congressional attention on housing, NAHB is also asking for the extension of the current $8,000 first-time home buyer tax credit for an additional year when it expires at the end of November and its expansion to all buyers of a principal home with a qualifying income.

Builders have urged Congress to assist in correcting problems with the appraisal process, and they have asked for expanding the tax code’s net operating loss (NOL) carryback provision for businesses.

NAHB has developed some key resources to help association members communicate with their lawmakers; they are available at www.nahb.org/ReviveHousingNow.

This one-stop site contains information to call or e-mail your members of Congress, talking points, banners for Web pages, print ads, op-ed letters that HBA presidents can send to their local newspapers, and more.

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Kelby Creek Gets Green Light and Cuts Red Ribbon!

Kelby Creek, a 735-acre master planned community located in Nixa, Missouri announced it has received final plat. Receipt of this legal document signifies that the development is now able to begin selling lots. In commemoration, the Nixa Chamber of Commerce conducted the Kelby Creek Ribbon Cutting on site Wednesday, October 7th. The developers also broke ground on the Kelby Creek Clubhouse immediately following the ribbon cutting ceremony. Kelby Creek also has been selected as the site for the 2010 St. Jude Dream Home which will be built by HBA Builder Member Jeff Fahrlander.

“We are actually very pleased with the timing,” said Shelley Forell, Director of Sales & Marketing for Kelby Creek. The seasoned development team has dedicated the past 24 months to planning, construction and working with the City of Nixa. “Now, as the market is in recovery, we receive final plat and we’re ready to begin selling,” said Forell.

The city’s growing economy was a significant factor in selecting Nixa as the development site. A symbiotic relationship, Kelby Creek represents opportunity for the city. "Kelby Creek is important to Nixa because it expands our boundaries south down the 160 corridor and poises our community for future commercial growth,” said Mayor Brian Hayes. “Kelby Creek is going to be a fantastic community. Their team has invested a significant amount of time and money into ensuring that the community is a success.”


Kelby Creek has been designed to offer a newer, more relevant master planned concept that fits the way residents now want to live: abundant green space, hiking trails and water features, easy access to shopping and work, and a variety of unique common areas available for community and special events. The clubhouse design will blend Old World Architecture with modern amenities. Over 3,400 square feet of common area will be available for the exclusive use of the community residents. Offering a great room with double-sided fireplace, a party room with kitchen café, a fitness center, covered patio with grill and a beautiful outdoor swimming pool, the Kelby Creek Clubhouse will serve as the community’s heartbeat.

Residential home sites are now available for sale. Contact Shelley Forell at Kelby Creek for a personal tour (417) 724-2261.
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Builders Ready To Work With White House, Congress To Extend Home Buyer Tax Credit

WASHINGTON - The National Association of Home Builders (NAHB) today commended the White House for recognizing the success of the $8,000 first-time home buyer tax credit and said that extending the program past its Dec. 1 expiration date will help to bolster the economy.

“The tax credit has clearly had a positive effect on housing demand and in the job market,” said NAHB Chairman Joe Robson, a home builder from Tulsa, Okla. “We stand ready to work with President Obama and the Congress to extend and enhance the tax credit to help reduce foreclosures and excess housing inventories, to stabilize home values and to push housing and the economy on a glide path to recovery.”

NAHB estimates conservatively that approximately 200,000 additional home sales are attributable to the tax credit and that it has resulted in a net increase of 187,000 jobs. Extending the credit through Nov. 30, 2010 and making it available to all purchasers of a principal residence would result in an additional 383,000 home sales and generate 347,000 new jobs in the coming year.

White House Press Secretary Robert Gibbs said yesterday that “there has been quite a bit of success” with the home buyer tax credit. He added that President Obama is considering extending the tax credit to strengthen the economy and create jobs.

“Housing is the best opportunity to put this country back to work. Prompt congressional action on the tax credit is a crucial first step to shoring up the fragile housing recovery and leading the economy to higher ground,” said Robson.

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