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MEMBER SPOTLIGHT

AGING GRANGE UPDATED JEFFERSON COUNTY HBA MEMBERS VOLUNTEER MATERIALS, LABOR FOR COMMUNITY HALL

Established in 1918, the Jefferson County Chimacum Grange #681 has served the community for over 100 years. A cherished community asset, the historic grange hall built in 1932, was in desperate need of some good old fashioned ten// KAREN HALL der-loving care— MEMBERSHIP and much-needMANGER ed repairs and maintenance.

JCHBA MEMBERS STEP UP

Members of the grange reached out to the Jefferson County Home Building Association (JCHBA) and local Realtors—asking for donations of materials, supplies and labor. JCHBA members stepped up to the challenge and came together during the months of August and September to help bring it back to its former glory and community spirit. First thing on the renovation list: a spruced-up, new front porch to welcome members and visitors alike. Porch beams were rebuilt, roof flashing added and a new front door was installed.

UPDATED LOOK

Interior walls, windows and trim were freshened up with a new coat of paint. Brand-new tables and chairs were donated, completing the up-todate look. Windows for the bathroom

BUILDING INSIGHT BIAW.com

and a new utility closet are slated for renovations in 2019. With the support of the community, JCHBA members and Realtors, the Chimacum Grange will now be ready and able to serve the community for another 100 years.

SHARE YOUR PROJECT

If your local association or business has been involved with a community service project, we’d like to hear from you. Contact me at (360) 352-7800, ext. 137 or karenh@biaw.com.

JCHBA members take time out for a quick photo during the Chimacum Grange remodeling event. Participants included (l to r): Richard Berg, Steve Kraght, JCHBA Executive Officer Lizanne Coker, James Lagergren and Kevin Coker.

APPLICATIONS NOW OPEN

SCHOLARSHIP OPPORTUNITIES FOR STUDENTS PURSUING HOME BUILDING INDUSTRY CAREERS

WHAT?

BIAW will award $20,000 in scholarship awards to students and programs supporting construction industry-related fields.

WHERE TO APPLY?

Applications are available at BIAW.com/ education and at all BIAW local home builders associations.

DEADLINE?

Deadline for submissions is May 10, 2019.

QUESTIONS?

For more information, contact Certification/Education Manager Hillary Vanatta at (360) 352-7800 ext. 106 or hillaryv@biaw.com.


//BUILDING INSIGHT  |  BIAW.COM

CONTENTS // // AGING GRANGE UPDATED 2

// REACH HIGHER TODAY 5

WHO WE ARE

  The Building Industry Association of Washington is the state’s largest trade association and represents nearly 8,000 member companies in the home building industry.   Known as the “Champions of Affordable Housing,” BIAW is dedicated to ensuring and enhancing the vitality of the building industry for the benefit of its members and the housing needs of citizens.

2019 SENIOR OFFICERS President Rick Hjelm, CGR MBA of Pierce County First Vice President Sherry Schwab, CAPS, CGR MBA of King & Snohomish Counties Second Vice President Chris Lockhart MBA of Pierce County Treasurer Tracy Doriot BIA of Clark County

// IT AIN’T EASY BEIN’GREEN 7

//R.O.I.I. SELECT IS PREFERRED 10 ®

Secretary LouAnne Neill HBA of Tri-Cities Immediate Past President Kevin Russell, MCGP North Peninsula Building Association BIAW STAFF Executive Vice President Greg Lane

// IT’S TIME FOR A SALES TAX CUT 12

PRESIDENT’S PERSPECTIVE IT PAYS TO BE PREPARED Strategies to weather an economic storm

4

// BE PREPARED FOR WINTER WEATHER 14

EVP VIEWPOINT

SEEDS OF CHANGE Growing optimism for industry’s future

6

Government Affairs Director Jan Himebaugh General Counsel Jackson Maynard Administrative Services Director Jan Rohila R.O.I.I.® Select Program Director Mark Shaffer Editorial Staff Leah Jaber and Brenda Kwieciak CONTACT THE EDITORIAL STAFF

On the Cover: BIAW’s advocacy team is hard at work on condo reform, among other bills, which will allow builders to build more condominiums—and create more housing supply.

Want to submit an article for publication? Have a story tip or suggestion? For consideration, please email communications@biaw.com

FEBRUARY ’19 VOL. 29, ISSUE 2


WINTER IS COMING

// RICK HJELM PRESIDENT

Having grown up on a dairy farm in southeast Idaho, preparing for a hard winter is just what everybody did. We made sure we had enough hay and feed for livestock and enough fuel in case blizzard conditions blocked the roads with snow. It was expected that we were going to lose power at some point; sometimes for a few hours, other times for a week. Either way, wood was split and stacked and candles and lanterns were readied for whenever the need arose. My dad always said, “Hope for the best, prepare for the worst.”

ECONOMIC PREDICTIONS

STRATEGIES TO WEATHER AN ECONOMIC STORM

PRESIDENT’S PERSPECTIVE

IT PAYS TO BE PREPARED

4

If you’re paying any attention to economists, whether from the National Association of Home Builders or others, most are predicting a hard winter is ahead of us. Granted, they admit they may be all wrong, but just in case they are right, it’s time to take a good look at how we’re running our business. Contrary to these predictions, 2019 looks like an awesome year for BIAW members. As my wife Lynda and I visit with many of you at your local association leadership installations, we have heard builders, remodelers and associates are busier than ever and have a steady backlog. It’s exciting to hear the optimism in your voices. But now comes the reality part. I don’t believe most of what I hear or read in the media, yet we can’t ignore it all. Some of it rings true. So, as we’ve done for hundreds of years, we need to look into the proverbial crystal ball and prepare for what may lie ahead: not with fear but with the optimistic satisfaction that we have plenty of hay in the barn and dry wood under cover.

STEPS FOR STABILITY

In a recent article by Michael C. Stone, The Economy And Your Business, he explains if we are to weather an economic storm we need to: 1. Get out of debt 2. Build some reserves 3. Focus on your niche and keep a steady course 4. Be careful with speculation 5. Aim for profitability, not volume In the end, I hope economists and media outlets are all wrong; but just in case, it’s safe to be smart—wisdom we have all learned from our past. Our families, as well as our employees, depend on it. In the meantime, I’m looking forward to some dry days ahead and a great summer that looks to be busier than ever.

STRATEGIC PLANNING HAS BEGUN

In the end, I hope the economists and media outlets are all wrong; but just in case, it’s safe to be smart—wisdom we have all learned from our past.

BUILDING INSIGHT BIAW.com

In preparation for the years to come, BIAW’s strategic planning process has begun and is well underway. In late January, all BIAW members were asked for their input via an electronic survey. During the months of February and March, focus groups will be held across the state to discuss the results of the survey and issues facing our members and industry. As we reestablish our foundation and determine our long-term goals, I encourage you to stay positive and keep your feet dry.


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TAKE IT TO THE NEXT LEVEL

REACH HIGHER TODAY BIAW’S CERTIFIED BUILDER DESIGNATION SETS YOU APART FROM YOUR COMPETITION

BIAW is proud to announce three new builders to the Certified Builder program. Launched in mid-2018, BIAW’s Certified Builder program creates a way to recognize and designate achievement for those in the industry // HILLARY VANATTA whose work experience and CERTIFICATION/ business pracEDUCATION MANGER tices exceed state standards. Our main goal in creating the Certified Builder designation is to showcase skills, services and business practices that are truly needed to build a better place for Washingtonians to call home. Knowing who reaches higher helps the customer make a more informed choice, which in turn creates a more powerful designation. To learn more about the program or how to apply, please visit BIAWCertifiedBuilder.com, call me at (360) 352-7800 ext. 106 or hillaryv@ biaw.com.

Paul and Tim Woodmansee, BYK Construction

As a third-generation contractor, Paul Woodmansee was exposed to construction at a young age and was taught that hard work and dedication to your craft would create an overwhelming sense of accomplishment. In 2004, he graduated from Western Washington University with a Bachelor of Science degree, but decided to return to his roots and began working for his father’s construction Tim Woodmansee Paul Woodmansee company. In 2008, Paul started BYK Construction with his brother Tim, however, this was during the height of the recession and it was a real struggle to make ends meet—but they would not compromise on the quality of their product or the services they provided. For several years Paul and Tim did just about everything together: pounded nails, rode to work every day and in the evenings worked on the company books—until finally they were able to grow BYK Construction and hire more employees. BYK Construction started with custom homes and they have now used those processes to create a growing spec home division. They have also diversified their company to include multi-use and commercial projects.

John Johnson, Johnson Custom Homes

John Johnson, Johnson Custom Homes, has been designing and building affordable, custom-built homes in the South Puget Sound area since 1990. John is a third-generation home builder who began working for his father at the age of 10. You could say building is in his blood. From the design and planning stages until the moment he hands over the keys, John is focused on building homes that people love. He believes one of the keys to his success is limiting the number of homes built each year, so he can give focused attention to each home he builds. A member of the Olympia Master Builders Associations (OMB) since 2004, Johnson’s adherence to his mission statement, “We will use honesty and integrity as the basis in all of our transactions with our customers. We will attempt to satisfy every home buyer’s expectations to furnish them a quality home within an agreed upon time frame, at a fair and reasonable price,” earned him the OMB Golden Hammer Award in 2017.

FEBRUARY ’19 VOL. 29, ISSUE 2


GROWING OPTIMISM FOR INDUSTRY’S FUTURE

EVP VIEWPOINT

SEEDS OF CHANGE

6 What a tremendous time I’ve had attending many of the local association installation dinners during December and January. Congratulations to all of the new incoming local officers and thank you to all of the outgoing officers for your dedication and commitment to the association. Also, a big “cheers” to the local association staff members across the state for organizing such fun and successful events. The enthusiasm, excitement and optimism of our members make // GREG LANE me extremely encouraged that 2019 is going to be a great year for our local associations. I am very much looking forward to working togethEXECUTIVE er to support and grow the industry. VICE PRESIDENT Here at BIAW, our attention naturally shifts to the legislative session during this time of year, and there are a number of issues of great concern being proposed at the Capitol. But before I get to that, I wanted to first update you on a couple of programs on which we expect to make great progress over the next few months.

CERTIFIED BUILDER

The number of builders who are becoming members of our outstanding new Certified Builder program is growing steadily. More and more builders are realizing this program is a great way to distinguish themselves and be officially recognized for running their business to higher standards. Learn more about BIAW’s Certified Builder designation—and apply to become a Certified Builder—at BIAWCertifiedBuilder.com.

STRATEGIC PLANNING

The strategic planning process is now underway and we very much appreciate everyone who has responded to the electronic survey we emailed out in late January. Those responses will inform the next phase of the process—eight focus groups at various locations around the state during February and March. These focus groups will each spend a half day discussing the results of the survey, further flesh out the challenges facing the building industry and begin to prioritize long-term goals for BIAW. Following the focus groups, the BIAW executive committee will hold a retreat in early May to draft our Strategic Plan to present to the entire BIAW board at the June meeting in Yakima.

LEGISLATIVE SESSION

With so many newly elected state legislators here in Olympia this session, as well as the Democrats now having significant majorities in both legislative chambers, we are seeing an enormous number of concerning pieces of legislation being introduced. I encourage you to read the report from BIAW Government Affairs The enthusiasm, excitement and Director Jan Himebaugh (see page 8), but I do want to highlight three specific issues: optimism of our members make

me extremely encouraged that 2019 is going to be a great year for our local associations.

n  Budget/Taxes Governor Jay Inslee’s budget proposal includes three tax increases that would target BIAW members. A new income tax on capital gains, a 67 percent increase in the B&O tax on services and an increase in the real estate excise tax would raise $3.7 billion. These new taxes would help fund the whopping 22 percent increase Inslee proposes for the next state budget. If Inslee’s spending plan is adopted, it would mean the state budget increased 75 percent during his two terms as governor!

See CHANGE on page 15//

BUILDING INSIGHT BIAW.com


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SUPREME COURT RULING

IT’S NOT EASY BEIN’ GREEN DECIDING BETWEEN CRITICAL HABITAT AND CRITICAL RIGHTS

of attention from environmental groups and representatives of New NAHB estimates based on the latest data show that, industry includon average, regulations imposed by government at all ing the National levels account for a whopping 24.3 percent of the final Association of price of a new single-family home. Home Builders (NAHB) which filed a “friend of 30.3%* During Construction the court” brief. During Development 12.7% In a recent study sponsored by 24.3% NAHB, regulatory costs imposed by 9.7% state and federal 18.8% agencies (such as the U.S. Fish and Wildlife Service) 14.6% 14.0%* had a tremendous 4.0% impact on the price of homes. 7.9% “Three-fifths of this—14.6 percent of the final house price—is Lower Average Upper Quartile Quartile due to a higher price for a fin*For quantities, construction and development costs do not sum ished lot resulting to the total from regulations imposed during the lot’s development. The other two-fifths—9.7 percent of the house price—is the result of costs incurred by the builder after purchasing the finished lot.”2 The Court held that the Service could only control use of private land as a “critical habitat” for an endangered species if the land was a fit habitat for the species without any changes. This decision modified a previous rule which allowed the Service to control land that was not fit for habitation by the endangered species but could be made a fit habitat through, often expensive, changes. This decision will protect the ability of landowners to productively

Government Regulation in the Price of a New Home

Source: NAHB/Wells Fargo HMI survey, assumptions described in the Appendix

The United States Supreme Court decided a case, Weyerhauser Co v. US Fish and Wild Life Svc., in late November that will likely have a significant impact on environmental and administrative law. The Weyerhauser Compa// JACKSON ny appealed a MAYNARD decision of the GENERAL COUNSEL U.S. Fish and Wildlife Service that designated part of its private property in Louisiana as “critical habitat” for the “dusky gopher frog” which is an endangered species. This designation occurred despite the fact that “the land had long been used as a commercial timber plantation, and no frogs had been spotted there for decades.” Weyerhauser challenged the agency decision reasoning that survival of the frogs would require significant modifications to the property including replacing the closed-canopy timber plantation with an open canopy longleaf pine forest. Because of these required changes to make the property suitable for the frogs, Weyerhauser argued it could not be legally considered critical habitat. In addition, Weyerhauser challenged the U.S. District Court’s deference to the Service’s discretion which under prior case law would have placed the agency decision beyond further review in the courts.1 The case attracted a great deal

See GREEN on page 14 //

FEBRUARY ’19 VOL. 29, ISSUE 2


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CONDO REFORM BILL INTRODUCED

A BEVY OF BILLS

A MIXED BAG OF LEGISLATION AIMED AT BUILDERS IS INTRODUCED IN EARLY DAYS OF SESSION

// JAN HIMEBAUGH GOVERNMENT AFFAIRS DIRECTOR

The 2019 legislative session kicked off at a frenetic pace on January 14. Being a budget year, session is set to be 105-days, meaning sine die (adjournment) is set for April 28. The following are key proposals and bills that BIAW’s advocacy team has been focused on since their introduction. Of course, there are many more issues and bills—in the first nine days alone there had already been nearly 1,000 bills introduced—and undoubtedly more to come. If you would like to stay informed on legislative happenings, subscribe to BIAW’s weekly Lawmaker Review and/or participate in our weekly legislative update conference calls, contact BIAW Regulatory and Government Affairs Manager Josie Cummings at josiec@ biaw.com.

GMA and SEPA REFORMS// MAJOR TAX INCREASES// The Governor opened session asking the legislature for an extra $9.7 billion in spending. Below are three of his proposals BIAW opposes which would further increase the cost of building a home and make it much more difficult to achieve the dream of homeownership. Restructuring and Increasing Real Estate Excise Tax (REET) (currently set at 1.28 percent)—a plan directed squarely at real estate development. For properties valued: Below $750,000................................... 0.75 percent tax $750,000—$1 million........................ 1.28 percent tax $1 million—$5 million..............................2 percent tax More than $5 million............................2.5 percent tax Establishing a new capital gains tax of 9 percent with some very limited exemptions. The proposed tax mirrors the federal law and is in addition to the REET tax proposal. Increasing B&O Tax Rate on Professional Services from 1.5 percent to 2.5 percent. This rate increase would apply to many construction-related businesses including architects, landscape designers and services and interior designers.

BUILDING INSIGHT BIAW.com

BIAW supports Growth Management Act (GMA) and State Environment Policy Act (SEPA) reforms that help land use and environmental policies work together instead of against each other. SB 5008 expands the short plat thresholds from 4 to 9 and allows a local option of increasing short plats to 30 inside an Urban Growth Area (UGA), which tracks with Ecology’s categorical exemption ceiling. n  SB 5194 adds a balance of housing types at a variety of economic price points to the housing element of UGA considerations. n  SB 5243 reforms standing requirements for appeals before the Growth Management Hearings Board making standing requirements mirror the Administrative Procedures Act standards. A person or organization can challenge only when they own property in the area, will be or will likely be prejudiced by the action and will suffer harm. BIAW is also working on legislation that would complete the full SEPA review at the comprehensive plan stage—clarifying what mitigation would be necessary for any time of development that meets the underlying planning goals.


9

CONDO REFORM//

INCREASE IN L&I COSTS//

BIAW has worked diligently over the interim on condo liability reform language with members of the legislature and other stakeholders. BIAW supports SB 5334 and HB 1306, bills that represent this hard work. In addition to condo liability reform, these bills also make technical changes to the Washington Common Interest Ownership Act, which passed last year and was always acknowledged that it would need changes. Builders, Realtors, insurers, affordable housing and other advocates all agree—Washington needs condo reform to reintroduce condos back into the housing market. Currently, it is an almost certain guarantee that if you build a condo project, you will be sued. In addition, a lack of condo ownership options puts additional pressure on rentals and other homeownership opportunities. BIAW supports the following changes: n  Providing that damage should actually exist or be reasonably likely to happen n  Removing strict adherence to the building code as a warranty claim (the same as single-family home rules) n  Protecting condo association board members from personal liability when serving as an officer of the association In addition, BIAW supports SB 5219, which implements a threshold for projects that would be covered by certain condo act provisions. Projects with under seven units would be exempt from some of the condo act requirements necessary for larger scale projects.

There have been a whole host of laborrelated bills introduced, including changing the time loss calculation for injured employees. BIAW opposes SB 5217 as it would disincentivize returning to work after an injury as it increases the percentage of wages and creates a shorter period for averaging wages. BIAW also expects an independent contractor bill that would generally make it impossible to be an independent contractor—this would be a devastating hit on the industry as many have chosen to set up businesses this way. This idea is also premature as just last year the legislature passed a budget proviso creating a work group to study independent contractors across various sectors. BIAW is a part of that group at the Department of Commerce and will advocate that any changes to the independent contractor statute will derail the state-directed process set up to collect and report on information around this type of work.

HIGHER RESIDENTIAL ENERGY EFFICIENCY REQUIREMENTS// The Governor also has a number of “green” initiatives that seek to reduce carbon in an effort for the state to individually impact global climate change—from 100 percent “clean” energy and requiring low carbon fuel—even if the required demand for that fuel cannot be supplied. A bill directly targeted at residential construction, which BIAW opposes, is SB 5293 which deals with energy efficiency requirements. BIAW is incredibly concerned about the impact on housing costs should this bill pass in its current form. SB 5293 does the following: n  Allows local jurisdictions to adopt a higher residential energy code than the state n  Balkanizes the energy codes, potentially creating a scenario where the other building codes will not fit together in a cohesive manner and cause training, supply and practice issues n  Practically removes the cost-effectiveness analysis from commercial energy code changes It’s important to remember that Washington already has a 2030 energy code goal of a 70 percent reduction from the 2006 energy code—we’re told that the state is on track (although in the 2015 code update there was no hard metric ever reported by the State Building Code Council). BIAW’s code experts estimate the increased costs from the 2012 and 2015 energy codes—is between $4,000 and $6,000 per house—an incredible amount of additional costs on every home in the midst of a housing crisis.

FEBRUARY ’19 VOL. 29, ISSUE 2


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ENROLLMENT NOW OPEN

R.O.I.I. SELECT IS PREFERRED ®

FIND OUT WHY NEARLY 2,000 COMPANIES CHOOSE R.O.I.I.® SELECT AS THEIR PREFERRED RETRO PROGRAM

R.O.I.I.® Select is excited to kick-off enrollment for the upcoming 2019-2020 plan year. We are now accepting new applications for the July 1, 2019 through June 30, 2020 plan year. If you’re not familiar with the valuable services R.O.I.I.® Select has to offer find out below why nearly 2,000 companies prefer the experts at R.O.I.I.® Select. Our goal is simple: eliminate injuries through improvements in work place safety and preventive strategies. Hire our experts today so we can help you become a better, safer company. If you’d like to find out if R.O.I.I.® Select is right for your company, go to BIAW.com/roii, contact us at (360) 352-7800 or enroll@biaw.com.

R.O.I.I.® SELECT IS THE PREFERRED RETRO PROGRAM WE ARE THE OLDEST AND LARGEST CONSTRUCTION RETRO GROUP IN THE STATE

MEMBERS RECEIVE A REFUND

R.O.I.I. Select has returned over $500 million in refunds to companies since 1982.

If the group and participant have a positive claim performance, they receive a refund.

NO ADDITIONAL PREMIUM (PENALTY)

WE ARE A ONE-STOP-SHOP FOR ALL YOUR WORKERS’ COMP NEEDS

®

In our 36 year history, not one R.O.I.I. Select participant has ever paid a penny of additional premium, a claim many retro programs cannot make. ®

WHAT’S INCLUDED?

WE TAKE THE HASSLE OUT OF WORKERS’ COMP

OUTCOME BASED CLAIMS ASSISTANCE

SAFETY SERVICES

Our experienced claim representatives go straight to the source on your behalf. We help L&I make faster decisions so claims close quicker. We keep a pulse on your claim at every juncture until it closes, giving you peace of mind.

The best injury claim is the one that never happens — even a small accident can cost an employer big. This is why we are dedicated to helping you develop and implement effective safety programs and strategies. Prevention is our number one priority.

HOW WE DO IT

HOW WE DO IT

Identify Red Flags Vocational Services Litigation

BUILDING INSIGHT BIAW.com

You won’t find any other retro program that offers all the services at no additional cost.

Hire Investigators Medical Provider Communication Seek Forensic Medical Opinions

Identify Claim Trends Teach Best Practices Builder Basics Safety Kits

Safety Solutions Statewide Field Reps


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WHAT MAKES US BETTER? OUR PEOPLE.

The R.O.I.I.® Select team is made up of workers’ comp experts who are committed to helping participants navigate L&I’s daunting system.

EXPERTS YOU CAN COUNT ON

DON’T JUST TAKE OUR WORD FOR IT COMMITMENT AND DEDICATION

Our company has been participating in R.O.I.I.® Select for over 20 years. It’s still one of the best business decisions I have made. I appreciate all of the efforts the program has extended to me over the years. ­—Gene George, Gene George Construction

We are committed to safety, prevention and controlling costs. The best claim is no claim at all. However, if a claim does happen, we provide support and share ways to prevent future claims from happening.

R.O.I.I.® SELECT GROUP REFUND

42% 34%

Competitors’ Averages

Competitors’ Averages

*Current projection

NO SURPRISE FEES

2012

30% Competitors’ Averages*

2015*

2014

36%

25%

Competitors’ Averages

37%

34%

40%

2013

As the oldest and largest construction retro group in the state, BIAW’s R.O.I.I.® Select program has returned over $500 million in refunds to participating members since 1982.

RISK MANAGEMENT SERVICES Our job is to identify risk and assist you with implementing preventive measures to avoid claims from happening in the first place. If a claim does occur, we offer strategies to help control the severity and cost of the injury.

HOW WE DO IT L&I EMR Calculation Risk Class Review

Return-to-Work Programs L&I Audit Assistance

We’re upfront about our program fees. Other retro programs bury additional fees to pad profits and aid their bottom line. Our program fee is 10% of the group’s overall refund from L&I, and an additional 10% divided between BIAW-affiliated local associations. These fees support continuing education, government affairs and the building industry as a whole.

RETURN TO WORK We are committed to providing better outcomes for all parties during the claim process. Our goal is to keep an injured worker engaged in the recovery process and connected with their employer. No claim is ever alike, and it’s our ability to be creative with return-to-work strategies that sets us apart.

HOW WE DO IT Retraining Assistance Program On-the-job Training

Return-to-Work Options Vocational Services

FEBRUARY ’19 VOL. 29, ISSUE 2


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GUEST COLUMNIST

IT’S TIME SALES TAX CUT FOR A

Jason Mercier is Director of the Center for Government Reform at Washington Policy Center, an independent, non-profit think tank that promotes sound public policy based on free-market solutions with offices in Tri-Cities, Spokane, Seattle and Olympia.

$53.7

$50.0

$45.7

IN BILLIONS

Ready or not the 2019 Legislature is in session and Governor Inslee is starting with a big focus on taxes. The question is whether lawmakers will dramatically increase the taxes they impose or instead provide people with long overdue tax relief. The Governor in late December stated his vision for Washington by proposing a massive $3.7 billion tax increase package. Included in these new taxes is a stand-alone 9% income tax on capital gains, increasing the B&O tax on people who provide service and changing the flat Real Estate Excise Tax to a graduated rate, so people selling more valuable homes would pay a higher tax rate. Considering the state is currently experiencing strong revenue growth, there is another vision for Washington. Instead of massive // JASON MERCIER tax increases and adding an income tax, the sales tax should be cut instead. GUEST COLUMNIST Washington’s growing economy is generating more tax money for state lawmakers, providing them the opportunity during the 2019 Legislative Session to provide families a sales tax cut. The state’s projected total budget reserves are more than $3 billion and taxpayers continue to provide record amounts of revenue. In fact, according to the state Economic Revenue and Forecast Council on Washington’s November revenue forecast: “Forecasted Near General Fund-State (GF-S) revenue for the 2017-19 biennium is FORECASTED GF-S REVENUE now $45.799 billion, 17.3% more than that of the 2015-17 biennium. Forecasted Near GF-S $55B revenue for the 2019-21 biennium is now +7.6% $50.002 billion, 9.2% higher than expected +9.2% $50B 2017-19 biennial revenue, and forecasted Near GF-S revenue for the 2021-23 biennium +17.3% is $53.795 billion, an increase of 7.6% over $45B expected 2019-21 biennial revenue.” These numbers show state revenues $40B continue to increase substantially under current tax rates. Over the last ten years $35B state revenues will have grown by 75%, 2017-19 2019-21 2021-23 BIENNIUM from $28.5 billion in 2009-11 to the foreSource: Economic Revenue and Forecast Council casted $50 billion for 2019-21. This growth rate is far above the 17 percent inflation rate during that time. During this time of increasing revenue, however, the legislature has not provided See TIME on page 13 //

BUILDING INSIGHT BIAW.com


13 //TIME from page 12 sales taxes could be passed on to consumers. On June 21, 2018, the U. S. Supreme Court issued a ruling in the case South Dakota v. Wayfair, Inc. and overturned the longstanding prohibition on states imposing a tax on the online sales of out-of-state businesses. As a result of this ruling, the Washington Department of Revenue announced that it “will require some out-of-state retailers to begin collecting sales tax” and sending the money to the state. This U.S. Supreme Court ruling means the state has the potential to see even more growth in its sales tax collections.

POTENTIAL SALES TAX RATE CUT SAVINGS AT VARIOUS TAX RATES

WA SALES TAX RATE HISTORY

$3.5B

8% $3.43B

$3.0B $2.5B

$2.57B

$2.0B $1.7B

$1.5B $1.0B

$550M

currently 6.5%

7% 6% 5% 4% 3%

$851M

6.25%

SALES TAX RATE

POTENTIAL SAVINGS

much tax relief to Washingtonians, other than a temporary, one-time property tax reduction planned for 2019 (the one-year reduction comes after higher tax rate imposed in 2017). With the state Supreme Court having approved the legislature’s long-term K-12 McCleary school funding plan and with state revenues growing, lawmakers should now provide families tax relief with a sales tax cut. When it was first imposed in 1935, Washington’s sales tax rate was just two percent. The rate is currently 6.5 percent, more than three times higher, and citizens have not seen a rate reduction since 1982. The chart ar right shows the steady rise in the sales tax burden imposed on us by Washington lawmakers. With state tax revenues projected to rise by more than $4 billion for the next state budget, lawmakers should reduce the financial burden they impose on families. According to the state Department of Revenue, the chart above shows the potential 201921 taxpayer savings people would receive at various levels of sales tax rate cuts. With the current projected increase in the state revenue forecast, lawmakers should consider passing and sending to the governor a sales tax rate cut of at least 0.25 percent. A larger sales tax cut could also be enacted to include a policy mechanism by which any large revenue increases the state receives due to the new U.S. Supreme Court ruling allowing state online

6.0% 5.75% 5.50%

SALES TAX RATE

2%

1940

1960

1980

2000

Source: WA State Department of Revenue

Washington’s growing economy, the continued increases in state revenue growth (with over 9 percent forecasted for the 2019-21 budget), and the U.S. Supreme Court’s ruling that allows states to impose online sales taxes means state lawmakers have the opportunity to make tax relief for Washington families a priority during the 2019 Legislative Session. Cutting the state sales tax rate would reduce the tax burden for families and provide savings for every household and business in Washington state. Several lawmakers have already endorsed the call for a sales tax cut including Senate Minority Leader Mark Schoesler. We’re hopeful others will as well. Taxpayers don’t need a massive tax increase. Instead lawmakers should finally cut the sales tax.

BIAW

STAY CONNECTED Follow Us! Twitter.com/BIAW2 Follow Us! Instagram.com/BIAofWA Like Us! Facebook.com/BuildingIndustryAssocWA Follow Us! Linkedin.com/company/building-industry-association-of-washington

FEBRUARY ’19 VOL. 29, ISSUE 2


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BE PREPARED

WINTER WEATHER

BRINGS SAFETY CHALLENGES Winter weather in Washington means new outdoor recreational opportunities but it also brings icy and wet slippery snow conditions, too. Many companies add winter maintenance options to their list of customer service items— snow removal (roof and awning), gutter upkeep and holiday light installation/removal—that can expose employees to potentially hazardous working conditions.

CHALLENGING CONDITIONS

Establishing fall protection on snowy roofs can be very challenging, as well as encountering unseen obstacles such as rotten underlayment or covered skylights. When the ground around ladder footing kick-outs are muddy or icy, injuries from falls rise significantly. Employees should be reminded to secure the ladder at the top and bottom, as well as to inspect for ice buildup and cracked or bent rungs. Whenever possible, workers should use methods to clear ice and snow without going onto the roof. The aid of ladders to apply deicing and snow rakes to remove snow buildup can help to mitigate risk significantly. In many residential applications, checking for low-hanging power lines due to ice buildup should also be on the safety checklist. Workers, as well as any equipment, should always be at least 10-feet away from any energized lines at all times.

PREVENTION IS KEY

Revisiting ladder safety during company safety meetings is also a wise precaution. Safety training documents need to

BUILDING INSIGHT BIAW.com

be on file in the event an employee falls or is hospitalized, as the Department of Labor & Industries’ (L&I) safety investigators will ask for these documents.

PLAN AHEAD

Furthermore, while winter weather conditions can add risk to these type of activities, a little planning before employees head out for the day can help reduce the chance of an injury. When deciding on the safest method for your employees to complete the job at hand, ask yourself these questions: n  Are my employees dressed properly for today’s weather (wind chill index)? n  Should my employee be working alone on this job? n  What if an accident happens at below freezing temperatures? n  Are my employees trained to recognize the signs of cold stress and hypothermia?

STAY IN TOUCH

If you are an R.O.I.I.® Select participating member and would like to receive our monthly safety bulletins contact R.O.I.I.® Select Safety Services Director Bob White at (360) 352-7800 ext. 109 or bobw@biaw.com.

//GREEN from page 7 use their property. Additionally, the Court held that the Service’s decision to designate land as a “critical habitat,” in spite of arguments by the landowner to exclude the land, was reviewable by a court for abuse of discretion. Lower courts had held that the Service was not accountable to a court when deciding which areas to include in “critical habitat.” The new decision gives landowners a more meaningful chance to overturn an agency decision in front of a judge, rather than the agency itself.3 The Court’s opinion could have repercussions beyond federal law. State jurisdictions with similar provisions in an Administrative Procedures Act to the provision reviewed by the court, may also begin to allow for greater review of discretionary decisions by agencies than previously would have been allowed deference. In addition, an argument could be raised in states that have similar environmental provisions governing habitat that the more narrow interpretation of what can be considered “critical habitat” is appropriate. For example, RCW 79A.15.010 in Washington state contains a definition of “critical habitat” that may bear further review in light of this decision. If successful, such new challenges in state venues based upon the Weyerhauser case could be significant in lowering the regulatory cost of housing. Opinion Syllabus, pp. 1-2. Government Regulation in the Price of a New Home, Special Study for Housing Economics, (May 2016) p. 1 3 Opinion Syllabus, pp. 1-2. 1 2


15 //CHANGE from page 6 n  Condo Liability Along with the Master Builders of King and Snohomish Counties, BIAW has played an active role in a group working with Senator Jamie Pederson (D-Seattle) to craft legislation to reform Washington’s onerous Condominium Act, approved in 2009. Senate Bill 5334 is the result of this work and we are optimistic lawmakers will finally take action that will allow builders to, once again, build more condominiums. Of course, while this reform is much needed, it would only be a small step toward the real solution to the housing affordability crisis—to create more supply across all types of housing. n  Unlock the Door Speaking of housing affordability, you might have seen the recent media campaign launched by a coalition of organizations called Unlock the Door for Affordable Homeownership. BIAW is proud to be a partner in this effort. In fact, at the summer NAHB board meeting in Portland, BIAW secured $20,000 from the NAHB State & Local Issues Fund to support the ad campaign. Learn more about Unlock the Door at UnlockTheDoorWA.com.

WINTER BOARD MEETING

In short, there is plenty for us to be discussing with legislators this session, so I strongly encourage you to join us March 11-13 in Olympia for the 2019 BIAW winter board meeting. In addition to the annual legislative reception on March 12, we’ll provide an update on BIAW’s strategic planning and discuss in more detail the state policy issues facing our industry.

BASICS FOR EMPLOYERS

IN COMPLIANCE ?

MINIMUM WAGE INCREASE AND PFML REQUIREMENTS IN FULL SWING

MINIMUM WAGE INCREASE

The new year arrived and with it came a higher minimum wage for employees across Washington state. The minimum wage, which applies to both agriculture and non-agricultural jobs, is now $12 per hour. Keep in mind though, if you work in the cities of Sea-Tac, Seattle or Tacoma the minimum wage is higher. In Jan. 2020, the statewide minimum wage will be $13.50. Starting Jan. 1, 2021, minimum wage increases will be calculated by the Department of Labor & Industries (L&I) using a formula tied to the rate of inflation. For more information on the state minimum wage, visit https://www.lni.wa.gov/WorkplaceRights/Wages/Minimum/.

PAID FAMILY AND MEDICAL LEAVE

Your employees will notice a reduction in their take-home pay this year. Starting Jan. 1, deductions of up to 0.4 percentwill begin being taken from most employee’s paychecks. Most employers, regardless of size, will have the responsibility to:

n  Collect premiums from all employees n  Report employee’s wages, hours worked and other information to the Washington Employment Security Department (ESD) n  Display the required poster and notices in the workplace The first report is due April 30 to ESD. Companies with less than 50 employees are not required to pay the employer portion of the premium, but may choose to pay part or the total amount of the employee portion of the premium through a Voluntary Plan. Companies with more than 50 employees must pay the employer portion of the premium. For more information on PFML or to download the employer toolkit, visit paidleave.wa.gov/employers.

DON’T MISS: Low Impact Development (LID) Course#2 Protecting Your Best Management Practices (BMPs): Ensuring LID BMPs are not Degraded by Construction Activities

Participants will examine project planning strategies and construction sequencing to ensure LID BMPs are protected during construction and costly repairs and rehabilitation are avoided. All classes are $20 and includes a boxed lunch. Visit BIAW.com/education to register today! 2/12..... 9:00 a.m. - 2:00 p.m. .................Norm Dicks Government Center, Bremerton 2/28..... 9:00 a.m. - 2:00 p.m. .....................................Robert J. Drewel Building, Everett 3/6........ 9:00 a.m. - 2:00 p.m.......................................................DOE Headquarters, Lacey 3/6........9:00 a.m. - 2:00 p.m..... video conference.......DOE Regional Office, Bellevue 3/6........9:00 a.m. - 2:00 p.m..... video conference........ DOE Field Office, Bellingham 3/6........9:00 a.m. - 2:00 p.m..... video conference...........DOE Field Office, Vancouver *Attendees must complete Courses 1 & 2 to receive a LID certificate

FEBRUARY ’19 VOL. 29, ISSUE 2


[SAVE THE DATE] GENERAL MEMBERSHIP LUNCHEON BIAW members and guests are invited to attend BIAW’s general membership luncheon in conjunction with the Winter board meeting at Hotel RL in Olympia. A special guest speaker is scheduled to address attendees and take Q&As.

Tuesday | MARCH 12  |  $25  |  11:30 a.m. RSVP to your local association by February 26.

Building Industry Association of Washington 111 21st Avenue SW  |  Olympia, WA 98501 (360) 352-7800  |  BIAW.com | 

TOP RECRUITERS

SPIKE WINNERS

For the third consecutive year, BIAW is proud to announce MBA of King and Snohomish Counties member Luellen Smith as the 2018 overall top Spike recruiter and recipient of the Omar Brown Award. Smith recruited a whopping 39 new members in 2018. Luellen, along with the Spike contest category winners, listed below, will be honored next month during the Winter board meeting in Olympia. Congratulations to all our Spike recruiters!

CATEGORY 1,000+ 500 - 999.5 250 - 499.5 100 - 249.5 50 - 99.5 24 - 49.5 6.5 - 24.5

WINNER

NEW MEMBERS

Steve Cory, MBA K-S Luellen Smith, MBA K-S Erica Ridout, MBA K-S Martin Sippy, MBA Pierce Nichole Banegas, HBATC Nick Gilliland, Spokane HBA Taylor Ward, Spokane HBA

33 39 8 33 27 13 13

Excellence in Remodeling Awards are Now Open The Excellence in Remodeling Awards, presented by the BIAW Remodelers, are now accepting submissions. This annual event is held to celebrate the outstanding craftsmanship, quality, design and exceptional remodeling expertise from members all across the state. Please note: all categories and descriptions have been updated for 2019. Download your entry form at BIAW.com/awards and submit by April 19, 2019. For more information, contact Al Audette at BIAW at (360) 352-7800 ext. 105 or ala@biaw.com.

Profile for BIAofWA

Building Insight February 2019  

Monthly magazine of the Building Industry Association of Washington.

Building Insight February 2019  

Monthly magazine of the Building Industry Association of Washington.

Profile for biaofwa

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