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4 November/Decemberwww.bldrs.com 2008www.bldrs.comwww.bldrs.com (www.hbat.org) • • 1-800-883-9305 •1-800-883-9305 1-800-883-9305 Tennessee HomeBuilder HomeBuilderTennessee November/December Cover Story 2008 14 Meet Senator Jim F. Kyle 28th District, Part of Memphis, Tennessee Features 13 Safety in a Slowing Economy Layoff Claims Increase in Slow Times 16 Develop an Attitude of Success & Survival During Tough Economic Times 18 Live to Fight Another Day Insights on How to Survive the Housing Downturn 20 Houses in the Year 2025 Who We Are Surviving with the Trends for a Green Future The Home Builders Association of Tennessee 22 Dirty, Rotten, Scoundrels (HBAT) is a not-for-profit trade association Tips from Your Industry Experts comprised of professional builders, develop- ers and associated firms engaged directly or 24 New Product Review indirectly in home building, remodeling and Market Your Homes with Better Green Technology light commercial construction. 26 Ask the Accountant Mission Statement Year End Tax Planning During Tough Times The Home Builders Association of 28 Local, State, & National Happenings Tennessee represents over 5,500 member - HBA of the Upper Cumberland firms as the Voice of the Housing Industry. - HBA of Middle Tennessee We advocate housing affordability and - HBA of Greater Knoxville availability through: • Legislation • Communication Departments • Education 8 President’s Perspective Hard Times for Housing Create Hard Time for Economy 10 Executive Officer Outlook Surviving Smart and Planning for the Future In this edition of the Tennessee Home Builder, 12 Legislative Review meet Senator Jim F. Kyle, Prepare for Change! 28th District - part of Also in this Edition: Meet Senator Memphis, and learn more Jim F. Kyle 13 Local Association Presidents about important builder news and legislative issues. 30 Info Link—Advertiser's Index & Calendar
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6 November/December 2008 (www.hbat.org) Tennessee HomeBuilder 2008 Ex e c u t i v e Co m m i t t ee Senior Officers Executive Committee VICE CHAIRS COMMITTEE CHAIRS Tennessee Associates Council President Ludy Callaway...... 901-766-0974 Voting Members [email protected] James Carbine NAHB State Representative (National Director) David Parsons...... 901-388-2651 HIPAC Trustees 615-661-9995 [email protected] John Floyd...... 615-896-0019 [email protected] [email protected] Government Affairs Steve Cates...... 615-377-9106 Government Affairs [email protected] Davis Lamb...... 615-370-3330 [email protected] Membership/Membership Services Associate National Director Executive Officer Ludy Callaway...... 901-766-0974 Teresa Groves...... 423-624-9992 Vice President/Treasurer [email protected] [email protected] Ed Zarb (Alt. National Director) HBAT Area Vice Presidents Education/Programs (Budget/Finance Chair) Northeast Region Area V.P. Larry Sangid...... 423-773-4040 865-671-1744 David Stauffer...... 423-323-2454 [email protected] [email protected] [email protected] Membership/Membership Services West Region Area V.P. Al Bintz...... 865-385-6891 Mack Andrews...... 901-754-8100 [email protected] [email protected] Local Leadership Vice President/Secretary Middle Tennessee Area V.P. Chris Spores...... 423-650-7167 Davis Lamb...... 615-370-3330 [email protected] Phil Chamberlain [email protected] 901-794-2156 [email protected] Southeast Region Area V.P. HBAT Staff Dennis Epperson...... 423-479-9042 Executive Vice President [email protected] Susan Ritter [email protected] Non-Voting Members NAHB Area 7 Vice President Director of Government Affairs Tim Neal...... 865-579-4666 Frank M. Harris [email protected] [email protected] Immediate Past President David Parsons Education/Programs Director of Communications (Nominating/Past Presidents) Charlie Smith...... 931-598-0500 & Education 901-388-2651 [email protected] Brad Cartner [email protected] [email protected] HIPAC Trustees Keith Grant...... 901-683-4422 Director of Member Services [email protected] Jennifer Bragg [email protected] Local Leadership Mike Arnold...... 615-456-4030 Director of Operations Associate Vice President [email protected] Joy Odjegba Billy Allred [email protected] (Alt. Assoc. National Director) Executive Officers 931-260-0205 Karen Blick...... 931-503-1194 HBAT Office is Located at: [email protected] [email protected] 213 Fifth Avenue North, St. 200 Nashville, TN 37219 Past Associate Leadership (615) 777-1700 Local Kirk Riggins...... 901-755-5526 (888) 550-4228 Toll Free [email protected] (615) 777-1703 Fax
Tennessee HomeBuilder (www.hbat.org) November/December 2008 7 President’s Perspective HBAT President James Carbine Hard Time for Housing Creates Hard Times for the Entire Economy
s a state and as a nation, I believe it will help stimulate the housing sector and enable all Americans to have more is time to recognize the true impor- boost local economies. A newly released stable jobs and retirement investments Atance of the homebuilding industry. National Association of Homebuilders that go up instead of down. The fact is that fifteen cents of every dol- study estimates that in 2008, on aver- lar spent in this nation is spent on housing. age: Mr. Ramsey finished his economic fix It is the engine that runs this country. The with this statement: “This is not a time for importance of residential construction on • Construction of 1,000 new single- envy, and it’s not a time for politics. It’s local economies proves beyond a shadow family homes creates 3,049 jobs and time for all of us, as Americans, to stand of a doubt that regulations and legislative generates more than $89 million in tax up, speak out, and fix this mess.” decisions must always be based on fair, and other revenues for federal, state, common sense solutions that promote the and local governments. As someone who makes a living in best interests of the important economic • Construction of 1,000 new multifamily the homebuilding industry, I could not catalyst of the building industry. rental apartments creates 1,155 jobs and agree more. Today, we must get past the While the federal government has generates more than $33 million in tax bureaucracies, the political bickering and stepped forward with a series of emer- and other government revenues. the thought that homebuilding needs to gency actions to stabilize and restore • $100 million worth of residential re- be the scapegoat of the current economic confidence in the financial markets, it’s modeling activity creates 1,109 jobs and problems. now time for the same sort of innovative generates more than $30 million in tax In this edition of the Tennessee Home- thinking at the local and state levels where and other government revenues. builder magazine, we will focus on public officials are grappling with budget surviving. That is what our industry shortfalls that are putting a squeeze on The estimates are based primarily on must do, and that is what this association spending for everything from schools to industry accounts published by the U.S. must do. As 2008 draws to an end, and public safety and other essential services. Bureau of Economic Analysis, part of the we face what seems to be an uncertain Job losses and declining tax revenues national accounting system that is used economic future, I challenge each of you resulting from the deep housing slump to produce official estimates of Gross to remain diligent and passionate about and the decline in property values require Domestic Product. your membership in this association. state and local governments to consider I also challenge you to get out and get innovative ideas to help put the housing Dave Ramsey, a Ten- involved in your local government and market back on track. nessee icon and a national let them know how important our efforts National Association of Homebuilders economic guru, suggested are to their communities. It is also time Chairman, Sandy Dunn, recently pointed the following as part of his for each member to become committed out that solutions on the local level “… “Common Sense Fix” for and devoted to the mission of recruiting could range from foregoing impact fees the economy: others to join this association. on new development to allowing higher Finally, since this will be my last article density zoning to build more affordable CAPITAL GAINS TAX as the 2008 President of the Home Build- housing and streamlining the entire a. Remove the capital gains tax complete- ers Association of Tennessee, I would like development review process. It is also ly. Investors will flood the real estate to thank my fellow members for allowing important that cities and counties extend and stock market in search of tax-free me to have the privilege of serving in the existing zoning approvals while builders profits, creating tremendous—and place of my brother, Denzel Carbine. As I work out financing for new projects. By immediate—liquidity in the markets. expressed in my first article this year, you encouraging new development rather Again, this costs the taxpayer noth- have honored me and my family in a way than penalizing it, local governments ing. that can never be matched. will be helping to create a new business b. This move will be seen as a lightning Denzel had an unmatched passion for environment that will generate jobs, sta- rod politically because many will say it life and this association, and I know that bilize property values and get the housing is helping the rich. The truth is the rich he would encourage everyone to “turn up market back on track.” will benefit, but it will be their money the heat” and work for a stronger Tennes- Now is the time to take measures that that stimulates the economy. This will see building industry in the future.
8 November/December 2008 (www.hbat.org) Tennessee HomeBuilder At ,A mOment like this, Aren t yOu glAd yOu hAve Builders mutuAl?
Construction debris can do irreparable damage to the unprotected eye.
ur WorkSafe program provides our policyholders with valuable information O and safety training to avoid accidents like this one. Your very own field expert can provide free individual consultation at the jobsite and help 800.809.4859 you control losses. Plus, our policyholders have unlimited access to Builders University www.buildersmutual.com OSHA-approved safety courses, English/Spanish Fall Protection Certification, and our risk management CD containing valuable safety reference material. We even offer discounted “Safety Stuff,” like the attractive safety glasses above, through our online store. Staying safe and productive is just a matter of having the right tools. Surviving Smart Executive Officer and Planning Outlook Susan Ritter, HBAT for the Future Executive Vice President read an article recently about turning adversity into advantage. valid? You can determine this fairly easily by simply jotting The article pointed out that individuals and businesses “must down how many and who your competitive businesses are Ireinforce success and build on strengths. In adversarial endeav- within your area be it your community, local, statewide or ors such as sports and politics, victory can only come from relent- nationwide. How are those competitors fairing? Are you doing lessly using one’s strengths against the opponent’s weaknesses. No worse or better than they are? If you’re doing worse, what are sports team ever won a championship by focusing on their own they doing or offering their clientele that’s different? weaknesses. No politician ever won office by admitting to his or 2. How much of the market share does your company have her weaknesses. We may not like that, but that’s the way the world in the industry today? If the market continues to shrink, can works.” So I challenge each of you today to focus on your strengths you manage additional loss of market share? Once you’ve and decide that the only option we have in the Tennessee building determined your market share by evaluating your competi- industry, and in this association, is to survive and succeed. tion, determine if what you offer your clientele is unique As Tom Reilly, author of How to Sell and Manage in Tough enough to entice future business. You can do this by simply Times and Tough Markets states, “You can thrive (in this market), creating a pros/cons list of what you do versus what your but it doesn’t happen by accident. It starts with attitude, since at- competition does. titude drives behavior, and we become what we believe. You must 3. What is your current cash flow? How much does it take to get yourself in the right frame of mind.” sustain your business on a monthly basis? In general, most According to Reilly, 70 percent of companies survive the thriving businesses try to have a cash flow that would cover tough times, 25 percent of businesses will fail and 5 percent will a minimum of six months of operation. We suggest putting actually grow and thrive during this period. Which percentage do a simple Excel file together of basic overhead expenses that you want to fall in? It is perhaps the most important question to you pay whether you have work contracted out or not. ask yourself, and to find the answer, we must go back to business 4. What do your current accounts payable and receivables management basics. You need to do your research—and these look like? Some business owners don’t actually have a grasp slower times are the perfect excuse to find some quiet time and of what money is owed to them or whom they owe. When think about these questions: times are good and cash flows easily, we forgive and forget many of the smaller invoices. If you’ve put off collecting or 1. What is your position in the marketplace today? What billing some items, you could be missing easy cash to hold are your distinctive advantages and will they continue to be your company over through leaner months. 5. How is your client loyalty? Now’s a good time to pick-up the phone and connect with each of your clients, both the new What is success? and the old. Find out how they’re doing, if they need your help To laugh often and much; or if they have any new business available to you. Don’t be a To win the respect of intelligent fair-weather friend—loyal clients stay loyal because they feel people and the affection of children; a connection to you and want the best for you. If you’ve been To earn the appreciation of honest the vendor, supplier or contractor that they’ve come to rely critics and endure the betrayal of upon, they don’t want you to fail any more than you want to false friends; fail. Finding out and listening closely to their criticisms, their To appreciate beauty; ideas or asking for referrals are excellent ways to evaluate how your clientele feels and what makes them happy. (Portions of this To find the best in others; article developed from the NAHB To leave the world a bit bet- Someone once said that “Smooth Seas Never Make Skillful Women’s Council ter, whether by a healthy child, a Sailors.” It is in the times of adversity that we truly define who by Karen Dry and garden patch or a redeemed social we are. Hard times make businesses develop and define what they Linda Hebert and condition; do best, and they learn how to best capitalize on their products Richard Martin’s To know even one life has breathed and services. Our industry will weather the rough seas and the article, “Great easier because you have lived; storms of our current economy, and when this economic cycle Leaders Turn Adversity into That is to have succeeded. has ended, we will all be stronger, wiser and better prepared for Advantage.”) – Ralph Waldo Emerson a future of success.
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Cyan Magenta Yellow Black Prepare for Legislative Review Steven Cates, Chair Government Affairs Committee
prospect of significant change. In Janu- of the legislative challenges that demand ary we begin the first session of the new our involvement. 106th General Assembly. With a larger Change!than normal turnover of seats in both Want To Really Make A the Senate and House, we begin again to establish relationships and alliances with Difference? those who make the laws governing our First, participate in town meetings. industry in Tennessee. With the changes Mingle with local, state and federal and the makeup of the legislature, there politicians. Learn about the issues facing will be inevitable changes in commit- your community. Meet others who sup- tee leadership in both houses and new port the same causes you do. Voice your members becoming acclimated to the opinion, and see what offices in politics legislative process. As in the past, the appeal to you. Government Affairs Committee and the The Home Builders Association of HBAT staff will be calling upon you re- Tennessee encourages members to get garding your relationships with new leg- out there and run for local office. Civic islators and your ability and willingness offices come up for re-election all the to contact them when there are important time. Find a position you know you ow that we know the outcome of matters pertaining to our industry. These couldLOG excel in and IN startAND your campaign. the 2008 federal and state elections, new members represent an opportunity Call your local political party, and ask if None thing is certain—change. There to develop strong relationships with our there are officesEXPLORE up for election. Take to has probably been no other time in recent industry. It is our job to make sure they the streets,WWW.NAHB.ORG and let people know you are history when we have we faced more po- understand the importance that the home- the person for the job. Getting involved tential for change in our nation, our state, building industry has in the economic canACCESS help your BENEFITS community and your our economy and our industry. strength of Tennessee. association.One of the most valuable benefits of NAHB membership From a federal perspective—the During the past session, we were Andis information of course, - and www.nahb.org the most gives important you access toway housing industry information 24 hours a day, 7 days a change is historic, and the question is extremely successful in our legislative thatweek. you Itʼs canfast, easy, help and prepare free! for change is how will these changes affect the politi- efforts. We defeated a number of bills to participate in HIPAC and BuildPAC. Visit www.nahb.org to: cal balance of Congress and the efforts that would have been detrimental to our Through the efforts of our state and our association has made in working national Register political for courses &action events committees, we industry, and likewise, we helped to pass Get current economic and housing data with those who are currently in power? legislation that will be beneficial to our work Sign to upkeep for NBN in Onlineconstant & e-newsletters contact with the Tied closely to this change is the cur- members. appropriate Learn best business legislative practices bodies to track rent economic situation in which we In 2009, we are sure to face the proposed Access council legislation & committee informationthat will have an find our country’s financial future. As continuing challenges of immigration impact Shop on online, our look industry. up staff contacts we all know, our industry is one of the reform, workers' compensation issues, EXCLUSIVEGet RESOURCESinvolved! backbones of the financial success of this water quality, green building practices, Why should you log in? Because members get more! country, and without a strong homebuild- codes, growth taxes and fees. These Members Swhotay log in see in twicev asol muchv informationed! as ing industry, we will not have a strong non-members,Make including a differenceexclusive award opportunities, ! issues that can so drastically affect our member discounts, directories, and more. U.S. economy. We need strong support industry must be studied and given the on the efforts of the National Associa- proper attention during their development GET STARTED NOW tion of Home Builders to urge those in on Capitol Hill in Nashville. To createLOG your login, go to INwww.nahb.org/loginnowAND , enter the required fields, and click Submit. If you need help, Washington to do whatever is necessary This is why I encourage you to be call 800-368-5242 x0. to provide the financial stability to our diligent in participating in local govern- EXPLORE Log in now and explore what industry and assist homebuilders to make ment and keeping membership numbers www.nahb.orgWWW.NAHB.ORG has for you. a strong recovery. strong. We will all strive to survive from a In Tennessee, we are also facing the business standpoint and never lose focus ACCESS BENEFITS One of the most valuable benefits of NAHB membership 12 November/December 2008 (www.hbat.org) is information - and www.nahb.orgTennessee gives HomeBuilderyou access to housing industry information 24 hours a day, 7 days a week. Itʼs fast, easy, and free! Visit www.nahb.org to: Register for courses & events Get current economic and housing data Sign up for NBN Online & e-newsletters Learn best business practices Access council & committee information Shop online, look up staff contacts EXCLUSIVE RESOURCES Why should you log in? Because members get more! Members who log in see twice as much information as non-members, including exclusive award opportunities, member discounts, directories, and more. GET STARTED NOW To create your login, go to www.nahb.org/loginnow, enter the required fields, and click Submit. If you need help, call 800-368-5242 x0. Log in now and explore what www.nahb.org has for you. Area Presidents 2008 Clarksville/Montgomery Co HBA Mark Reynolds...... (931) 326-5003 Cumberland County HBA K. Gay Reeves-Stewart...... (931) 456-9478 [email protected] Greene County HBA Ralph Dingus...... (423) 639-5429 Safety [email protected] HBA of Dyer County in a Slowing Economy Kirby Ogden...... (615) 645-5335 By Technical Insurance Services, Inc. [email protected]
e have seen the slowing in 40 percent. If your employees are paid HBA of Greater Kingsport Sam Kassem...... (423) 646-9300 residential construction, but hourly or per unit, a decline in produc- [email protected] how does this affect workers tion may lead to the same proportionate HBA of Greater Knoxville W Brian Shugart...... (865) 690-9009 compensation costs? The state of Min- increase in claim activity. [email protected] nesota released data in 2001, following The study also found that the time of HBA of Middle TN Mike Arnold...... (615) 377-1055 the September 11 attack, comparing the disability increased when work was slow. [email protected] slowing in the building industry and Workers had a tendency to remain away HBA of Southern TN Tim McClure...... (423) 595-4166 workers compensation cost. To their from the job and in rehab or therapy for [email protected] surprise workers compensation rates longer periods of time. So how does one Jackson Area HBA Craig Taylor...... (731) 686-2851 actually increased even though construc- protect their company from higher claim [email protected] tion productivity decreased. The cost rise activity and increased premium? Johnson City Area HBA Robert J. Garrett...... (423) 929-8656 occurred for two reasons: the number of The best solution is to closely watch [email protected] claims reported grew and the time of dis- your workers on the job and monitor Maryville/Alcoa HBA ability lengthened. It is believed the fear their work methods. Provide them with Joel Jones...... (865) 981-4423 [email protected] of layoff increases claim activity during necessary personal protective equipment Memphis Area HBA slow times. As a precaution, employees and regularly conduct safety commu- Doug Collins...... (901) 751-4301 [email protected] might “incur” injuries to remain on the nications. Try to work your employees Ocoee Region HBA payroll receiving benefits. in areas where they are trained and Chris Spors...... (423) 650-7167 [email protected] One example in the report occurred at comfortable. Rutherford Co HBA a major manufacturer that announced it Jim Averwater...... (615) 274-3993 [email protected] was going to have to downsize; one plant, Technical Insurance Services has pro- Sevier Co HBA employing 225 workers, was forced to vided loss control services to members of Tim Milks...... (423) 453-6624 [email protected] close. As the plant closed, the employees the HBAT-SIT since 1995. These services South Central HBA filed nearly 400 workers’ compensation are also available to non-HBAT-SIT Burl Hiles...... (931) 967-4547 [email protected] claims for injuries on the job, despite members. If you are interested in devel- Warren Co HBA having filed only six in the entire previ- oping safety training for your company Keith Bouldin...... (931) 473-8718 [email protected] ous year. The increase in claims caused please contact John Hilbrandt at 423- Upper Cumberland HBA the company’s revenues to drop nearly 400-7233 or at [email protected]. Mark Smith...... (931) 260-7613 [email protected] Tennessee HomeBuilder (www.hbat.org) November/December 2008 13 Meet SenatorJim F. Kyle Memphis Tennessee can boast of being the birthplace and inspiration for music genres such as In our continuing efforts to introduce our readers “The Blues” and “Rock and Roll.” Elvis Presley, to important Tennessee Johnny Cash and B.B. King all got their starts in leaders, the Tennessee Memphis. The city can take its share of bragging HomeBuilder magazine rights when it comes to its rich, diverse history, submitted the following mouth-watering southern cuisine and unmistak- questions to Senator Jim able icons such as Beale Street and Sun Studios. Kyle. Here are his re- Memphis has produced a vast array of famous personalities like sponses: Cybill Sheperd, Morgan Freeman and Aretha Franklin. But even beyond the glamour of Hollywood and Motown, Memphis Ten- During the 105th General Assembly you lead the push nessee continues to produce important Tennessee leaders who have for passage of SB2400 relative to scrap metal, scrap dedicated their lives to public service. One of those individuals is 1metal dealers, theft and criminal trespass. While it has Senator Jim Kyle. just gone into effect October 1, what are your initial feelings regarding the effectiveness of this new law? James F. Kyle, Jr., born October 14, 1950 in Memphis, Tennessee, is a member of the Tennessee Senate for the 28th district, which is Thus far, the feedback we have received from those on the composed of part of Memphis. He has served as a state senator since frontlines of this problem, the business owners and law enforce- the 93rd Tennessee General Assembly, and he has been elected the ment officials, has been positive. We have been in communication Democratic Leader since the 104th General Assembly. with the police departments that helped us pass this bill, and their During the 95th General Assembly, James F. Kyle, Jr. was the Demo- feeling is that while it’s early, they are much better equipped to cratic Caucus Chairman, and during the 96th through 100th General deal with this crime than they were before we passed this law. Assemblies, he was the Chairman of the Select Oversight Committee As for the response from scrap dealers, it is important to note on Corrections. Jim Kyle holds membership on the Senate Finance, that when we began this process, we had no idea how many scrap Ways and Means Committee, the Senate Calendar Committee, the dealers were even in this state. With the new requirements of Senate Judiciary and the Senate Late Bills Committee. registration, the Department of Commerce and Insurance has now He is married to Sarah Kyle who serves as Chairman of the Ten- identified over 500 scrap dealers who have either registered or are currently in the process, and I believe that number will continue nessee Regulatory Authority which is similar to most state’s Public to go up. Knowing who and where these people are throughout Service Commission. They have four children, Sarah, a graduate of Tennessee will be an invaluable tool for law enforcement as we Lambuth University; Mary, a graduate of Rhodes College; Jim, III, move forward. a rising freshman at Auburn University; and Caroline, age 10. When we think about gauging the effectiveness of SB 2400, Jim Kyle graduated from Arkansas State University in 1973 with we have to realize that we are doing is regulating an industry that a Bachelor of Science degree in Marketing. He was a member of had previously operated without any such guidelines. Obviously, Tau Kappa Epsilon fraternity and a recipient of the Distinguished in any situation like that, it is going to be a complex process, Service Award at graduation. In 1976, he obtained a J.D. from the and time will tell us if any adjustments will need to be made to University of Memphis School of Law. He possesses membership protect Tennessee’s business owners. in the Memphis Bar Association. From 1994 to 1998, he served on the Board of Governors of the American Correctional Association. Also, in this legislation, there is a provision that in- He is also a member of Ducks Unlimited and serves on the Board creases the penalties for criminal trespassing on a con- struction site. What effect do you see this having on the of the University of Memphis Law School Alumni Association. 2 reduction of construction site thefts in Tennessee? Senator Kyle is a member of the law firm of Domico Kyle, PLLC in Memphis, Tennessee. To understand how to reduce the incidence of construction For a brief period during 2007, Senator Kyle was the Minority site thefts, you really have to understand just how rampant the Leader in the Senate, with the state republicans holding a one seat problem had become, something most Tennessee homebuilders majority over the Democrats. Only a few months later, however, are all too aware of. In my hometown of Memphis, there were Republican Senator Mike Williams switched parties to become an 433 cases of copper theft in 2006. Only a year later that number Independent, establishing a 16-16-1 ratio in the Tennessee Senate. increased to 1156 reported cases, an increase of 167 percent. This made Kyle the Majority Leader, rather than Minority Leader. Prior to the passage of SB 2400, we held a special study com-
14 November/December 2008 (www.hbat.org) Tennessee HomeBuilder mittee to really try to understand all facets Interesting Memphis Facts of the copper theft epidemic. We were from Senator Kyle’s Home lucky enough to have Doug Collins, an HBAT member, with us on that commit- Town: tee. He provided a first hand perspective • Memphis is the Pork Barbecue of how construction site theft has affected Capital of the World. Tennessee’s homebuilders. • Memphis is the home of the first When it came to specifically address- Greyhound and Continental Trail- ing construction site theft in this bill, the ways bus lines. request was made from the home building • Memphis is home to FedEx, the industry that we address it. And I think world’s largest overnight package that the thieves who have been preying on delivery company. construction sites will be deterred when • Memphis is home to St. Jude Chil- they learn that there is absolutely no toler- dren’s Research Hospital, founded in ance for this sort of criminal activity. 1962, by entertainer Danny Thomas. • The Piggly Wiggly, the world’s first With the current market condi- self-service grocery store, opened in tions, what effect do you see an Memphis in 1916. 3economically stronger home • Memphis is the hardwood capital of building industry having on the econ- the world. omy of Tennessee? • Memphis is the largest spot cotton market in the world, with nearly I have always viewed the home build- half of the U.S. cotton crop going ing industry as one of the great “moth- through Memphis. erships” of economic growth. Home • 24 of the 97 stars featured in the builders directly employ thousands of Rock’n’Roll Hall of Fame are from Tennesseans, but it is also an industry by the process we followed in drafting the within a 100-mile radius of Memphis. that extends into so many other economic copper theft legislation we just discussed. arenas and occupations. That being said, I That bill was the model of how a citizen Homebuilding History in think the chances of Tennessee’s economy legislature should function: a problem improving without the home building was brought to the attention of the legis- Memphis industry being shored up are very slim, lature by citizens, we studied the problem Kemmons Wilson and at this point we seem to be facing with the industries that it concerned, and 1913-2003 • MEM- a situation far outside the realm of any we crafted a law that addressed the issue PHIS Already one of individual state. in an appropriate fashion. I think respon- Memphis’ best known The takeovers of Fannie Mae and Fred- siveness like that is how we can make and most successful die Mac, the Wall Street crisis, and the Tennessee’s legislature more accessible homebuilders with decreasing confidence of American con- and thus, strengthen Tennessee’s home- a knack for building sumers have all been part of the formula building industry. larger, nicer homes at for our current economic crisis. What we As for other specific actions we can a better price than his all hope is that the Emergency Economic take, one action will be for us to retain competitors, Kemmons Wilson co-founded Stabilization Act passed by Congress will Tennessee’s current method of select- with Wallace E. Johnson the Holiday Inn be the first step towards reestablishing ing judges. While this may seem to be motel chain. He did so in response to his the conditions that home builders need: unrelated to the concerns home build- frustration at having to pay a surcharge credit availability for businesses, halting ers, the fact is that this is a state where for his children at roadside motels during the drop in home prices and stemming the business owners can operate without a family vacation in 1951. Hallmarks of tide of foreclosures. fear of activist judges proving political travel lodging Wilson introduced included points with judicial rulings. In fact, the standard room rates as well as air condi- What role do you see state gov- American Justice Partnership Foundation tioned rooms, free ice, and greater cleanli- ernment playing in encouraging recently recognized Tennessee as the most ness. This high school dropout, who got his 4a strong homebuilding industry business-friendly state in the nation when entrepreneurial wings selling popcorn in in Tennessee? it comes to litigation. Who presides over a movie theater, eventually sold the motel our courts, and how those that preside chain, which at one point numbered 1,700 I think the primary role that state gov- are selected affects all Tennessee’s busi- locations, but launched several new com- ernment can play in building a strong nesses, including homebuilders. panies under the Kemmons Wilson Co. homebuilding industry is demonstrated —Continued on page 27 umbrella that his family now runs.
Tennessee HomeBuilder (www.hbat.org) November/December 2008 15 g An— pin Strategy 2: elo If you have to cut, DO IT FAST. DO IT ev and Sur ONCE. D uccess vival • If your business is truly in trouble, then you of S may be forced to cut. Most companies wait ude too long and don't cut deeply enough. tit Tear off the Band-Aid. At During Tough • If you have data that is telling you things are really bad, assume it is even Economic Times worse. Don't get caught thinking it is just one bad quarter. There is no such thing. Cut at least 10 percent more than your CFO tells you to. uring training, Green Berets are • Remember there is nothing worse for exposed to the kind of conditions morale than doing multiple layoffs. Dand treatment they might endure if Never mind the bad PR and the mul- caught by the enemy. In mock-POW camps, tiple whacks your stock will take. they are hooded, blindfolded, mistreated and pushed to the breaking point. Green Berets Strategy 3: receive SERE (Survival, Evasion, Resistance and Put your best people on your biggest project. Escape) training to help them remain one step ahead of Legendary people produce legendary results. During a down- the enemy or to escape when caught. But instruction can’t turn take your best executive, regardless of their background, predict everything that may come up in the field. So a Green and put them in charge of the big projects: Beret receives perhaps his most important training—how to adapt and think on his or her feet. This is a great analogy for • New technology those who will survive the current economic downturn. It • New marketing campaigns is impossible to predict every obstacle that will arise in the • New hires future. But we all must be ready to “ADAPT AND THINK • New product development ON OUR FEET.” • New companies Christopher Lochhead, the former chief marketing officer at Scient and Mercury, offers this advice on how companies Downturns are great opportunities for change and growth. can do more than pray for survival in a prolonged economic (Information gathered from news.cnet.com – article by Dan downturn. It’s easy to be great when things are going great. Farber) The real test of leadership is who you are when things are NAHB Chief Economist, David Seiders points out that the tough. Leaders take market share in bad times, and losers “near term housing outlook has darkened.” Seiders reported in lose share, money, and market advantage. Since we seem to early October that “Fixed-rate home mortgage credit remains be heading into a multi-quarter (or maybe longer) downturn. available at reasonable rates through the FHA/VA/Ginnie Mae Planning for a long downturn is the right approach, even if system as well as through Fannie Mae and Freddie Mac—the you think this is just a blip. GSEs currently under federal conservatorship. With respect to our baseline (most probable) forecast, we’ve Strategy 1: essentially kicked out the projected lowest points in new-home Don’t cut the budget sales, housing starts and residential fixed investment by one The first thing scared executives do in bad times is cut calendar quarter and deepened the declines modestly in the spending. It’s easy. But often completely wrong. J. Paul process. The projected peak-to-trough (lowest point) declines Getty said, “Buy when everyone is selling. And hold until easily stack up as the deepest since the 1930s. everyone is buying.” However, there is good news ― most of the projected decline Downturns are time to invest in: is behind us, and the growth potential from the cyclical trough Surviving • New technology is immense.” • New marketing campaigns So how does a Tennessee homebuilder develop a plan for • New people (hire the best salespeople, product de- survival in tough economic times? We asked several successful, velopers, etc. from your competitors, especially past presidents of the Home Builders Association of Tennessee those doing layoffs and missing their quar- to comment on how they have survived tough economic terly numbers) times in the past. Here are their responses: • New products • New companies (buy or start some) 16 November/December 2008 (www.hbat.org) Tennessee HomeBuilder Look at your situation Seek out the benefits of 1. Keep your lender up from the worst case posi- your local, state and na- to date and don’t tion and make your plans tional associations as you sugar coat it. from there. If things have never done before. 2. Evaluate every as- turn out better, you are Work as a team and take pect of your orga- no worse off for having advantage of every as- nization balancing planned for the worst. pect of your membership. cost against need If you have debt with Accentuate your best and effectiveness. banks meet with them abilities, and have faith. 3. Pray. early and often to let them know your situation. David Parsons James Carbine Be honest with yourself HBAT Past President HBAT President Current/Past about the reality of this 2007 2005/2008 slow down and the length of any noticeable recovery and look at every part of your business for ways to • Work with local banks and keep them save and stretch your as- informed about your business. sets to the max. • Manage your balance sheet. • Do business with reputable suppliers Tim Neal and subcontractors who are members. HBAT Past President 2006 Network with fellow HBA members and ask questions. Your membership in this association has never been more important than it is today. Seek out Secretary of State, Polo- the experience of others who nius said to his son Laertes have survived tough times, in Shakespeare’s Ham- and brainstorm new, fresh let “neither a borrower ideas. Now is the time to or lender be.” That is the be a team, prepare your business best advice today. Get for the short term challenges and debt free immediately and remember that there are better stay out of debt, and this days to come. economy will be academic. Debt is what got us into Earl Sharp this mess. HBAT Past President Sit down with your en- 1986 tire family and come up with a plan to love each other and a plan to focus on how to survive this downturn. This includes a budget. Read as much as you can on survival and at- tend meetings to educate yourself professionally. Go back to school if you have Surviving the years in front of you.
Jackson Downey HBAT Past President 1989 Tennessee HomeBuilder (www.hbat.org) November/December 2008 17 Live to Fight Another Day A successful Florida builder for 35 years, Barry Rutenberg offers his insights on how to survive the housing downturn
Barry Rutenberg believes builders at your market and your place in it. Don’t must focus on the quality of their op- rely on your own intuition. Get as much erations and maintain profitability third-party feedback as you can from and liquidity to take advantage of brokers, focus groups, and past customers. future opportunities. But in the face of it, be positive and make —By Barry Rutenberg sure everyone on your team is positive about the fact that now truly is a great time In my 35 years in the home to buy a home. building business, I have Today, cash is king. Open your mind to never seen a time where selling assets to decrease debt payments. so many of my colleagues We are having some success selling lots are as frustrated as they (with an option to repurchase) to prospect are today. With a few who wants to build a home in a year or exceptions, demand for two. Lenders and partners will look favor- new homes is minimal ably on those companies that recognize in most communities reality and act appropriately. and home builders are Expense your land and inventory home developing new busi- carrying costs of interest and taxes so you ness strategies in order to can sell assets closer to market value. Con- survive. sult your accountant. If you can expense I have no easy answers, but I the interest and taxes for tax purposes, you “Be flexible with can share what we have learned in the may be able to reduce your tax liability past during downturns as well as offer or qualify to receive a refund based upon your prospects. some ideas that might be useful to you. taxes paid in previous years. You’ll do more Right now, it’s important to focus on Consider refinancing your model home the quality of your operation and strive to or other assets with untapped value. Con- special stuff take your share of whatever market exists in sider getting second mortgages on assets now than you your area. The object is to maintain liquid- as a basis of a line of credit. Look for ever dreamed ity so that you can take advantage of future unsecured lines of credit and new lines of opportunities. credit, and increase the number of banks of doing in the Your personal attitude is extremely impor- you are engaging. Community banks may good times.” tant. Your customers, employees, subcontrac- be friendlier than the big banks now, espe- tors and vendors are looking to you for strong cially those smaller banks with which you and steady leadership. You must show enthu- have developed some relationship. siasm, work hard, and exude confidence in the Work with your trades professionals future even while you make the painful decisions and suppliers on competitive pricing and that will allow your company to survive. ways to work together to reduce costs. Your corporate attitude is important as well. My Don’t sacrifice quality for a low-ball company just opened a new model home in our price. Remember that your subcontrac- local builders association’s Fall Parade of Homes. tors and suppliers are your partners, not Over the next several weeks, we are hosting sev- your enemies. eral functions at the new model home for our past Watch your material prices. It is more customers, prospects, Realtors, and local business likely that material prices will increase leaders. We hope to differentiate ourselves with en- than decrease further. Work with your thusiasm and a new and innovative model home. suppliers to obtain longer-term pricing- But it’s also very important to take an honest look and-availability commitments.
18 November/December 2008 (www.hbat.org) Tennessee HomeBuilder Many customers smell blood in the Invite people for a wine and cheese water and are looking for a great deal. Be party in an inventory home; do specific prepared to let some offers pass. But in a time-frame promotions (This weekend time of declining values, don’t let your only! Or each Sunday in a particular pride keep you from accepting something month); and engage your Realtors with reasonable. There is a price that will make special promotions and incentives. the sale. Update your appraisal. Do your The key person in your organization needs own market analysis. Talk to a knowl- to be available to prospects and homeowners edgeable broker. The market does not and be prepared to meet in the evening and care about historical cost. Know as much weekends. Return calls within 24 hours and as you can about your prospect. There settle questions within 48 hours unless you might not be a second chance to sell to advise the homeowner otherwise. that prospective buyer. Walk your inventory. Be prepared to Support your sales staff, especially if rip out and make changes. In this market, they have a new idea on how to spur sales. you may only get one chance to capture a Spend money on well-placed promotion prospect’s attention. and training. Shop the competition and On a personal level, don’t take out your bring back ideas you can implement frustration on your spouse or children. quickly. Look on the positive side and count your Keep your design team engaged with blessings. This too shall pass. And remem- the sales team. Your office personnel ber, laughter is still the best medicine. can have ideas too so don’t ignore them. Bring in part-time people as needed for Barry Rutenberg is the president of Ruten- special projects to improve the quality of berg & Associates, a custom home builder and the company. remodeler in Gainesville, Florida, and the Area Be flexible with your prospects. You’ll 5 National Vice Chairman representing Florida do more special stuff now than you ever and Puerto Rico on the Executive Board of the Na- dreamed of doing in the good times. tional Association of Home Builders (NAHB).
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www.Belgard.Biz Contact your local Belgard dealer at: Big Rock Building Products/Oldcastle Company 888-624-3088 or Your Middle Tennessee Belgard Representative: Darryl Sapp 865-388-8707 Belgard pavers and walls combine rich, earth-tone colors with texured surfaces to impart on authentic old-world ambience. Picture the grace of aged stone, the subtlety of curves, the highlighting of green spaces. All perfectly complement a home whichTe wasnnessee designed HomeBuilder to blend naturally into its surroundings.(www.hbat.org) November/December 2008 19
Knowing how to identify the most subtle nuances is a fine art in itself.
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Surviving with2025 the Trends for a Green Future nderstanding the future trends ter and privacy, they will also serve as a construction sites. of marketing products towards centralized hub for organizing continuing With concerns over water and wastewa- Uindividuals who are increasingly education, health maintenance, fitness, ter throughout the country and the world, mindful of environmental issues can help communications, entertainment, and work expect homes to use little to no net water your company be ready for a “greener” productivity. In addition to these added in the future and to virtually eliminate the marketing position. Those who survive in features, these homes will perform better. need for waste water treatment. Homes will the future will market themselves as being They will be more durable and require less recycle water back through the home for environmentally conscious, technology maintenance and repair. Water and energy multiple uses. In fact, waste water treatment experts who are ready for the tech-savvy efficiency will be optimized through the systems can already produce effluent that is requests of generation Y. use of sophisticated controls. In fact, homes drinking water quality. Few home buyers know that in these are expected to be able to diagnose their Finally, the information explosion will environmentally conscious times, a typical own product and system failures prior to a continue to have a significant impact on residence built today is considerably more breakdown and alert service professionals how we build. Commuting patterns could “green” than the most energy efficient home to schedule timely preventative repairs. change because the home office will be of a decade ago. And the home of 2025 Many of these repairs to appliances and indistinguishable from the work environ- could push these trends further. Within a other computerized equipment will be ment in many sectors of the economy. E- generation, homes, apartments, condomini- performed remotely through the Internet, commerce will create a better environment ums and townhouses could become energy and the owner will not even be aware that when we can use our home to place orders self-sufficient or “zero energy” green build- a repair has been made. instead of going out, or when our smart ing residences. The residence of 2025 should be a net en- homes can arrange deliveries so that deliv- Green building is more than just energy ergy producer, not a consumer. Through the ery companies can reduce needless trips. efficiency; it also incorporates resource use of advanced conservation techniques With all of these innovations it’s safe efficiency and environmental stewardship. and energy efficient appliances like fuel to say the house of the future will be built Builders are learning to reduce and reuse cells, the building’s energy use will be kept greener, better, with more energy efficiency job site scrap and waste, to recycle building to a minimum, while photovoltaic roofing and high tech features. For home buyers in materials from houses and other buildings and mini-turbines will supply power to the the year 2025, this is news to look forward that are being razed, to design and build house and could even produce excess power to. an advanced energy-efficient and environ- for sale to utility companies operations. Want to get ready for Green Future of mentally-efficient building, to use building The way homes are constructed will also homebuilding? Why not become a Green products containing recycled materials, and change significantly over the next17 years. Professional and get the Green Market- to take advantage of solar technologies. Industrialized housing and components will ing Advantage now? Just check out the Outwardly, the residences of 2025 may become even more commonplace than they Education area and the Calendar of Events look like the homes of today, but they will are today, and technical innovations will al- at www.hbat.org. You will find an updated not perform the same. Not only will they low construction that uses only the materials listing of educational opportunities through- continue to provide comfort, secure shel- necessary without the waste often seen on out the state.
20 November/December 2008 (www.hbat.org) Tennessee HomeBuilder In today’s economic climate, the choice of heating & cooling systems you make are more important than ever. And with skyrocketing prices of natural gas, propane and fuel oil, many builders have found that a WaterFurnace geothermal comfort system is a smart choice. Geothermal heating and cooling systems operate at a fraction of the cost of ordinary systems, saving your client money every month. In fact, many homeowners save as much as 60% in energy costs. That’s because geothermal systems tap into the free, renewable energy found in their own backyard. For product information, builder incentive programs, area dealers or dealer opportunities contact us at waterfurnace.com or (800) GEO-SAVE. It’s money in the bank.
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During the 105th General Assembly, the HBAT worked to have the punishment for unlawful entry to posted property increased Dirty, Rotten Scoundrels to the charge of Aggravated Criminal Tres- pass punishable by imprisonment for up to Reported Theft & Vandalism Claims in TN (2007) one year a $2,500 fine. This section of the law is part of the Public Act 690 relative to scrap metal, scrap metal dealers, theft, and criminal trespass and was passed in response to the large increase in thefts of cooper, HVAC equipment and appliances from construction sites. Tips from your industry experts— f you weren’t wearing it, jobsite thieves would probably steal the shirt off your Iback. They have little regard for con- tractors. Did you hear about the thief who burglarized the house, only to steal the front door, too, on his way out? Talk about *Data excludes vehicle thefts covered by Commercial Auto Policies adding insult to injury! Just like the build- —Source: BMIC Claims Department ing industry can be a booming business, so can the business of stealing from it. tank empty. Thieves had siphoned the diesel, on schedule. According to a DEWALT study, thieves breaking the pump’s nozzle in the process. Worst of all, the typical criminal doesn’t strike 95 percent of contractors at least once So, what’s missing from your jobsite? exactly tiptoe around the jobsite. Think of annually. So, if there was any question as Check out the pie chart to see what con- the damage a criminal does when yanking to whether you are at risk, just answer the tractors reported to Builders Mutual as copper wire out of the wall. Maybe you don’t question, “Are you a contractor?” stolen or vandalized during 2007. need to imagine it; maybe, you’re simply remembering the time it happened to you. Crooks get creative More Than the Cost of What’s With a resale value of $3-$4 per pound, thieves are in a hurry to get as much as pos- With less permits getting issued as com- Lost sible as quickly as possible. The combination pared to years past, can we let our guard Prevention can be costly, but the losses of increased costs, project delays, damage, down? No. In Tenneessee, more HVAC units you suffer are often far greater than simply and headaches from all the hassle get you and mobile equipment have been stolen the cost of the stolen goods. Yes, the mobile thinking about prevention. in the first seven months of the year than equipment, building materials, or tools during all of 2007. In fact, recent economic all have price tags. So do their temporary Deterrents hardships, like the increasing cost of fuel, replacements—the tool or equipment rentals encourage criminals to get creative. This which keep your project on schedule. Or, you What layers of deterrent can you add summer, a fellow contractor arrived at the may need to absorb an increased delivery to your jobsite to discourage criminal jobsite to find the 1,000-gallon portable fuel cost to rush reordered materials to keep you activity?
22 November/December 2008 (www.hbat.org) Tennessee HomeBuilder 1. Be smart about your trailer. If you can’t trailer it home each evening, back it up against the house so the back door isn’t easily accessible. Consider the bad luck of the contrac- tor from neighboring NC that had two trailers stolen from the jobsite within weeks of one another. Fed up, he began parking it at home each evening until a third trailer was stolen from his driveway. He finally gave in and leased a secured, gated spot!
2. Hold on tightly to your tools. Again, if you can’t take them home with you, be particular about the locks you use on your trailer, and be sure to etch your tools with personal identifiers. An engraving tool is a minimal purchase—in the $25 range. Some contractors use distinctive fluorescent sprays on large items like ladders to easily distinguish theirs.
3. Immobilize your mobile equip- ment. Common keying saves you time when one employee’s lost key doesn’t halt work. On the flip side, criminals’ keys easily start your equipment. Some companies equip newer models with locking mecha- nisms for both the ignition and the gas tank. Block your mobile equip- ment in with your trailer. Record identifying numbers, or consider reg- istering it through a private company. The Ultimate Surveillance System 4. Make friends with local law en- forcement. Some localities will for Every Need patrol your jobsite for you. Consider Monitoring and Helping Protect Heavy Equipment and giving them and even nearby neigh- Construction Sites from Theft and Vandalism bors your contact info and the hours • Each Vigalert surveillance unit is fully programmable to the customer's exact you’ve authorized workers to be there. specifications. It will even tell the difference between a human being and an animal.
5. Install surveillance. It’s costly and it • Vigalert will send an immediate e-mail alert, including a jpeg photo of the intrusion, based on customer specifications and programming. may not prevent trespassers, but it cer- tainly helps uncover their identities. • Customers may monitor and program their Vigalert surveillance units from any laptop or desktop computer with internet access. 6. Beware of inside jobs. Not all crimi- • Each Vigalert unit has its own internet address. Vigalert units can stand alone or be nals are strangers, unfortunately. integrated into an existing security system. • Each Vigalert system is fully portable, powered by a distinctive long-life battery system, With our collective efforts, optional solar panels or an existing source of electricity. we can keep thieves and vandals from making our business their business. 877-239-2763 www.vigalertvs.com
Tennessee HomeBuilder (www.hbat.org) November/December 2008 23 November/December 2008 New Product Review Market Your Homes with Better Green Technology
s today’s consumers grow more To find a Tennessee dealer, just call and commercial applications where envi- educated and concerned about the 1-877-540-5624. ronmentally responsible, beautiful, stable Aenvironment, they are demanding and durable solid wood is desired. more responsibility from their brands. Are Sun Frost Refrigerators TerraMai flooring can easily be used you listening? Are you prepared?? in kitchens and bathrooms, providing it By educating themselves on the avail- Sun Frost re- is professionally installed, finished and ability of green products and technology, frigerators and sealed for moisture control. TerraMai builders can learn how to increase their freezers are so flooring can also be used over concrete brand’s emotional, cognitive and financial outstandingly slab floors and with radiant heat systems, connection in today’s “greening” con- energy-efficient, using industry-accepted techniques. sumer markets. powering a home Specific product recommendations are Here are few new technologies that with solar power available upon request. are available today: or other low out- To learn more about TerraMai, or put energy sourc- to speak to an account manager, call Green “Wheatboard” es is both feasible 800.220.9062. Cabinets and affordable. All models are IceStone Countertops available in 12 or 24 volt DC, or 110 or 220 volt AC. Even in a home using conventional utility power, energy consumption for refrigeration is typically cut by a factor of five! Sun Frost refrigerators are a cool way to go green in an ever increasing environ- mentally conscience society. These are unique green products. Want to know more? Call us today at IceStone is made from 100 percent re- (707) 822-9095. cycled glass and cement to make a highly durable, highly beautiful concrete surface. TerraMai Floors For countertops, floors, or wall coverings, Koch Cabinets operates out of Seneca, IceStone’s versatility of color, tint and Kansas and offers a variety of “Green finish offers exceptional design options, unparalled durability and sustainability. Cabinets,” including the elusive “Wheat ® Board Cabinets.” IceStone products are the ideal choice Wheat Board Box - Most of the material for green kitchen countertops. They’re used in constructing sustainable cabinets also a great option for backsplashes, can be grown in a single season and is bathrooms, vanities, bathroom dividers, manufactured without formaldehyde. tabletops, interior walls, and commercial Wheatboard is similar to particle board in flooring applications. Beautiful shower that it is composed of small fibers glued surrounds and bathtubs could be made together to make a larger board. It is made with IceStone durable surface material. It from straw, the stalk of a cereal plant can be shaped, inlaid and mounted verti- after the grain or seed has been removed. cally or horizontally. While there are 27 Recycling this unwanted agricultural by- TerraMai floors are a mixture of numer- standard colors available, the color palette product into building materials increases ous tropical hardwood species, reclaimed is infinite. the useful yield from the crop, and reduces from antique railroad ties and other sal- Find out more about IceStone by call- the pollution created when it is burned to vage sources in Southeast Asia. These ing: (718) 624.4900. clear the fields. floors are used in residential, municipal 24 November/December 2008 (www.hbat.org) Tennessee HomeBuilder The Marketplace for Residential Construction
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Tennessee HomeBuilder (www.hbat.org) November/December 2008 25 Ask the Accountant Year End Tax Planning During Tough Times
ough times. purchases would allow you to accumulate under this can be cre- funds for your pension contributions and provision. Tated by a investments while stocks are priced lower. Income shifting variety of events. Building a nest egg during good and bad at your year-end is Health issues, years will create security against unfore- an excellent strategy. Accelerating or de- family crisis and seen events. Now is a good time to evaluate ferring sales will help recognize income job loss loss are your financial goals and set a plan in place into the year that is of the best advantage just a few. The for achieving each of them. A pension plan to you. Bob Bellenfant current situations is essential for every business owner. Should you incur a net operating loss, of the stock markets, banking industry, Long term capital gains continue to be evaluate how to utilize the carry back/carry housing and the war in Iraq have created a taxed at 15 percent. If you have realized forward provisions to your best advantage. troubling environment for everyone. With gains earlier in 2008, you will want to Channeling that net operating loss to a high all of the problems, the responsibility of evaluate selling securities that are at a loss income year, with its corresponding high filing and paying taxes continues to persist. to offset those earlier gains. Discuss this tax rate, will yield the best results. Also, you Many of the strategies of reducing taxes ap- strategy with your stockbroker to see if it might decide to either increase or decrease ply during good and bad economic times. fits your situation. that loss by using other ideas common to Maximizing pension contributions, tak- If you need any additional equipment, tax planning. ing advantage of low rates of capital gains, now is the time to take advantage of the One other perspective that you should and expensing equipment all continue expensing election allowed under Section not ignore is communications with your to apply. Reducing expenses by sticking 179 of the Internal Revenue Code. You can banker. Try not to put your banker in a to a budget and eliminating nonessential also purchase and deduct certain trucks position to make an unplanned decision. Keep your communications open and honest. Supply them with interim financial information. Let your creditors know how Werthan Tile you are managing your business within the current economic environment. Do not withdraw pension funds early to pay current obligations. Not only do you pay tax on the distribution, but you are sub- ject to a 10 percent penalty as well. Think about how hard you worked to accumulate those pension funds. They will be difficult to replace if you take them out and also incure 30 - 45 percent taxes and penalties that you will never recover. Tough times are a much better teacher than good times. I read once that if you operate your business as if it is on the verge of bankruptcy, you have a better chance at At Werthan Tile, we work with natural stone, ceramics, glass, and metal success. My thoughts are that if we elimi- tiles. From start to finish, we take pride in each project and give every job nate unnecessary expenses and concentrate the attention to detail it deserves. our efforts on our core strengths, our busi- Our sales staff is committed to assisting our clients through the entire nesses will thrive throughout both good process from tile design and selection to scheduling and installing. and bad times.
Bob Bellenfant is a certified public accountant with • Bellenfant & Miles, P.C. CPA’s in Brentwood, Tennessee. 4004 Hillsboro Pike Nashville, TN. 37215 He has served homebuilders and other construction related 615.460.9655 • [email protected] businesses in Tennessee for over twenty years. You can reach www.werthantile.com him at (615) 370-8700, extension 12 or by e-mail at bob@ bellenfantmiles.com. 26 November/December 2008 (www.hbat.org) Tennessee HomeBuilder Meet Senator Jim F. Kyke —Continued from page 15 Finally, I think Governor Bredesen look at the members of the State Senate working with him to find a solution. and the Commissioner of Economic and five years ago, we have had almost turn- It is also vitally important for groups Community Development, Matt Kisber, over of over 50 percent. So clearly, there like the Home Builders Association of have been extraordinarily successful in will be some changes in who makes up Tennessee to provide input to us during their efforts to draw new companies to the General Assembly. the legislative session so we can be aware Tennessee, as evidenced by the recent Second, this General Assembly will of how pending legislation affects your announcement of Volkswagen’s reloca- convene as our state and our nation is in industry. We need that sort of first hand tion to Chattanooga. The workers that the middle of this economic crisis. I can perspective and I know that HBAT and build those cars will need houses, and assure you that not one person that ran HBAT members will continue to provide your members will, in turn, build those for office ran on a platform of having to it. houses. reduce government services, but that is exactly what legislators will be called What do you see as some of the upon to do this year, absent a miraculous key issues that will be facing the economic upturn. I have been through 5106th General Assembly when it these budget shortfalls before, and it’s a convenes in January? time when you find out who in the state legislature are workhorses and who are This General Assembly that convenes show horses. in January will be different in a couple At the end of the day, it is wise to re- of ways. For one, it will have some new member that when Governor Bredesen faces. We know already that some legisla- came into office, our state was facing tors have retired, and new legislators will equally challenging budget conditions. I The Home Builders Association of be arriving to take their place. For the have no doubt that the Governor has the Tennessee would like to sincerely thank first time in 36 years, John Wilder won’t expertise and ability to lead Tennessee Senator Jim Kyle and his staff for their be returning to the Senate. If you were to through this period, and I look forward to assistance in producing this article.
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Tennessee HomeBuilder (www.hbat.org) November/December 2008 27 Local, State, and National Happenings
HBA of the Upper Cumberland
HBAUC recently participated in the Cookeville/Putnam Co. Chamber’s Small Business Expo. The theme for the expo was “Our Community Under Construc- tion.” In addition to having a display to promote the association, members served lunch on the second day! Attorney John Williams (center right) HBAMT President Michael Arnold pres- with law firm Tune, Entrekin & White ents State Representative Susan Lynn (R P.C. spoke to members of the HBAMT – District 57) with PAC check. outside of the Supreme Court building in downtown Nashville following a briefing for the association’s appeal of a lawsuit against Williamson County. The lawsuit involves a privilege tax on new construction where builders must pay a given amount per square foot at the time of permit. The county assessors were then attempting to reassess fees on homes that, upon completion, were shown to have a Photo left to right: Dave Boender, Cove larger square footage than on the original Builders Development; Andy Hammock, plans. The HBAMT is currently awaiting Andy Hammock Construction, and the Davis Lamb (right) presents State Repre- a ruling. barbecue expert, Milt Collins. sentative Glen Casada (R – District 63) with a PAC check. HBA of Greater Knoxville HBA of Middle Tennessee Congressman Zach Wamp ad- d r e s s e d t h e HBAGK member- ship at the Annual Parade of Homes Awards Dinner. Congressman Wamp was quoted Bill Kottas (left) and Steve Cates with as saying, “If you can’t build it, make it, HBAMT President Michael Arnold pres- NAHB Chairman, Sandy Dunn, at an or grow it, you can’t sell it or service it.” ents State Representative Debra Maggart HBAMT BuildPAC fundraiser hosted Congressman Wamp stressed his commit- (R – District 45) with PAC check. by Cates. ment and support for the homebuilding industry and to small businesses. 28 November/December 2008 (www.hbat.org) Tennessee HomeBuilder Viva Las Vegas! (Note: Julie Dupree, Dupree-Graf Con- struction, and Parade of Homes Com- mittee Chair, is shown in the background announcing the winners.)
HBAGK & HBAT Past President Earl Sharp is shown presenting a BuildPAC check to Congressman Wamp. Vegas IBS 2009 k Brian Shugart, President of the HBAGK, The International is shown addressing the attendees of the Parade of Homes Award Dinner. Builders’ Show is the largest annual light construction Ed Zarb, incoming 2009 HBAT Presi- show in the world. dent, is shown receiving awards for his We thank our advertisers for helping Parade home; he received a silver, gold, make this publication possible. and a perfect score for his Parade entries. January 20-23, 2009 WHICH WILL SELL MORE EASILY? THE GREEN ONE. Consumers want green. It’s hard to imagine a building resistant to mold, mildew and fungus, so interior walls made material greener than brick. Conservatively, it provides a of brick let people breathe easier. 100-year lifespan with virtually no maintenance. That’s Brick. The material that’s good for the Earth because durability. Which is green. It’s made from clay, one of the it is the Earth. Consumers are going green. most abundant raw materials on Earth. Green again. And And so should you. To get more information it’s 100% recyclable, whether intact or crushed. Very green. and the free DVD, Brick Masonry Don’t forget energy efficiency and indoor air quality. Techniques for Builders, just call It helps take the burden off furnaces and A/C units by 1-888-62-BRICK, or visit us on the web Clay Brick – The Most Sustainable absorbing and releasing thermal energy. And brick is at gobricksoutheast.com. Green Building Material Made.
Tennessee HomeBuilder (www.hbat.org) November/December 2008 29 Info Link Our PeOPle, PrOducts & service Index of Advertisers HelP Build YOur Business. Belgard...... 19 www.belgard.biz Builders Insurance Group...... 4 www.bldrs.com puT us To Work Builders Mutual...... 9 For you. www.buildersmutual.com visiT one oF Countrywide Mortgage...... 19 These locaTions: www.countrywide.com Gary Hughes & Associates...... 2 Jackson, Tn 38301 [email protected] (731)664-1449 HH Gregg...... 27 www.hhgregg.com/commercialdivision (866)566-5625 Fax(731)664-1453 Hodges & Hodges Realty...... 25 (615) 522-1410 or (615) 586-8825 knoxville, Tn 37921 James Hardie Building Products...... 32 www.jameshardie.com (865)524-8631 KleenWrap...... 31 (800)841-4850 www.kleenwrap.com.com Fax(865)637-8446 Norandex Reynolds ...... 30 www.norandex.com MeMphis, Tn 38118 Norbord ...... 11 (901)366-6622 www.stabledgeosb.com (800)654-8986 Pointer Insurance Agency, Inc...... 25 Fax(901)794-3401 PeoPle–Highly trained, www.pointerinsuranceagency.com Screeneze...... 25 nashville, Tn 37210 motivated and knowledgeable www.screeneze.com (615)248-3198 to help our customers succeed. Southern Brick Association...... 29 (800)237-3446 www.gobricksoutheast.com Fax(615)248-0917 Products–The right mix Tennessee Gas Association...... 6 www.tngas.com piney FlaTs, Tn 37686 of products, with orders filled Water Furnace...... 21 (423)538-0766 accurately, on time and at www.waterfurnace.com (800)548-7672 Werthan Tile, LLC...... 26 Fax(423)538-3485 a fair price. www.waterfurnace.com service–Providing Future HBAT Meetings customers what they need, when 2009 — they need it, in a friendly and
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