The North Peninsula Building Association represents builders and associates of the building industry. We advocate constant improvement of building and business practices to provide quality construction in our community.
Vol. 6, Issue 1
PO Box 748 • 3430 E. Highway 101, Ste. #1, Port Angeles, WA 98362
Builders & Buyers Bypass Budget Bullet by Dr. Elliot Eisenberg The mortgage interest deduction (MID) cost the U.S. Treasury $88.8 billion in 2011, making it the second largest tax break for individuals. That is precisely why Congress has its sights set on it. However, there is much debate about how to reduce its costs to the Treasury and by how much. No matter what happens, reducing the MID will lower some house prices. That being said, how Congress reduces the MID will determine Dr. Elliot how much how many houses lose value. And since so many of us own a home, sell homes or build homes, the MID will not be singled out for special treatment. Rather, Congress will cap or phase out the value of all deductions and in that way avoid favoring one deduction over another. While there are several possible approaches, the fiscal cliff compromise bill passed into law on Jan. 2 of this year phases out itemized deductions for households with incomes over $300,000. While at first blush this may appear to be quite damaging, I think hom-
eowners, realtors, builders and the entire housing industry have all dodged a bullet and should sleep well for quite a while, or at least until Congress reopens debate on the tax code sometime in the future. Phasing out Schedule A deductions for couples with incomes over $300,000 limits the impact to buyers of only the most expensive houses. For example, with a 10 percent downpayment on a $1.5 million house, mortgage interest Eisenberg would be $54,000/ year, property taxes would average $16,500, and insurance would be about $8,000, totaling $78,500 in annual housing-related expenses. To finance that mortgage, the $78,500 should ideally not be more than 30 percent of gross income, which means qualifying requires having an annual income of roughly $260,000; comfortably below the income level at which deductions start phasing out. That being said, how much will a house valued at $2 million decline? By very little! In theory it will fall by the one-time lumpsum amount necessary to com-
pensate buyers for the new income taxes they will pay due to their being at or above the phaseout threshold. With interest rates currently at 4 percent, this means, and trust me on this, every $1,000 in added income taxes reduces the house price by ($1,000/4 percent or) $25,000. However, in reality, these impacts will be dramatically mitigated by tax avoidance strategies available to the very wealthy including systematically larger down-payments, cash purchases, corporate purchases and so on. In short, few homeowners will be impacted by the new tax treatment of deductions including the MID. For households with incomes below $300,000, there are no impacts stemming from this change and for those with higher incomes, the impacts will largely be mitigated by tax avoidance behavior. At worst, only homes worth well over a million dollars will be adversely affected. With huge deficits as far as the eye can see, the tax treatment of deductions is sure to continue to change and evolve. Enjoy the debate, but be aware that next time you may be on the menu. Elliot Eisenberg, Ph.D. is president of GraphsandLaughs, LLC and can be reached at Elliot@ graphsandlaughs.net. His daily 70 word economics and policy blog can be seen at www.econ70.com.
NPBA Silent Auction Raises $2,300!
NPBA Silent Auction Chair, Donna Knifsend of Lawsuit Prevention & Management, would like to send a special thank you to all of those who contributed auction items and bid generously at the NPBA Silent Auction & Holiday Gala which took place on Dec. 6. Thanks to our very generous members and community supporters, the auction raised $2,300 for the NPBA Community Support Fund! Stay tuned to our February newsletter to see where funds were distributed. If you would like to be a part of the fun this year, e-mail email@example.com.
S N S Roofing, llc
Sean Marshall began his career in the building industry as an assembler of mobile homes. He also worked for general and roofing contractors in Seattle, Spokane and locally for 15 years until colleagues who appreciated the quality of his work, encouraged him to start his own roofing business. In fact, they told him he “would be stupid not to.”
For the first three years, Sean and his wife Shawna worked together as a team on all of their roofing jobs. With the financi their good friend John Cross, Shawna quit her job to “take on full-time with Sean.” Now with a larger crew of five, they tackl residential and commercial roofing, from composite and metal torchdown and TPO. Their trustworthy staff works well togethe their goal is that “there shouldn’t be any reason to have to retu
Save the date for Expo 2013 April 6 & 7 at SHS
Sean enjoys working on steep roofs and challenging projects. Recently
“We hired Sean to repl was a big project with
Check out the latest building products and S-N-S reroofed a home that meet required He did everything he a huge tear off of old clay tiles, ten and he didn’t cut corn builders and remodelors who can help you with new skylights, all new fascia and it was summertime, h Snap-Loc weathered-copper your projects! Enter to wina new one of four $250 gift left the roof protected metal roof. “Plus I get to meet a lot of in case of rain. He fini certificates during the shopping spree sponsored nice people. That’s the part I like the was reasonable and th most,” says Sean. by Angeles Millwork & Hartnagel Building Supply. For more info, excellent.” — Jim Em S-N-S purchases the majority of their visit sequimexpo.com. roofing materials at Hartnagel Building Supply “where the custo Sponsored by: service staff is easy to work with,” says Sean. “We are very fami
oriented and so are our employees. Family comes first, along w purchasing locally to to keep our money here,” adds Shawna.
—————————— Contractor Spotlight is sponsored by ——— Lumber and building materials for all types of construction projects.
1601 S “C” St., Port Angeles
457-8581 • angelesmillwork.com
3111 Hwy 10
Rely on the employee owned and operated stores that contra
Vol. 6, Issue 1
HEALTH CARE REFORM QUICK FACTS: WHAT IT MEANS TO YOU Topic: Employer Mandate – “Play or Pay Penalty”
Background: Employer Mandate to Provide Affordable Health Insurance Options The Play or Pay penalty which begins in 2014, states that large employers (those employing 50 or more full-time equivalent employees) will be subject to a penalty if one or more full-time employees receives a tax credit or cost-sharing reduction (a “Subsidy”) based on one of the following conditions: 1. The employer doesn’t offer coverage, or 2. The coverage offered by the employer either does not provide minimum value or is unaffordable to the employee. Note: If you have less than 50 full time (or full time equivalent) employees, this requirement does not pertain to you.
Topic: Medical Loss Ratios or MLR
Background: The Affordable Care Act requires health insurance issuers to submit data on the proportion of premium revenues spent on clinical services and quality improvement
versus administration costs. Large group plans (over 50 Employees) must spend at least 85% of premium dollars on claims and activities to improve health care quality. Individual and small group insurers must spend at least 80% of premium dollars on claims and activities to improve health care quality. If they fail to meet these standards, they will be required to provide a rebate to their customers starting in 2012. Rebates must be paid by August 1st each year.
Topic: Summary of Benefit and Coverage (SBC) Background: As directed by the Affordable Care Act, health insurance companies will soon provide consumers with documents detailing, simple and consistent information about health plan insurance policy benefits and coverage. The goal is to help consumers better understand the coverage they have. Health insurance companies will be required to make available a uniform glossary of healthcoverage and medical terms commonly used in those documents, such as “deductible” and “co-pay”.
Topic: Pre Existing Conditions Background: Under the Affordable Care Act, if you have a pre-existing condition, insurance companies will not be allowed to deny you coverage based on that condition. For children under the age of 19, this protection was phased in beginning on September 23, 2010. For adults aged 19 and older, it will be phased in beginning on January 1, 2014. Insurers will have to accept everyone who wants to purchase a plan, regardless of their health status.
Topic: Dependent Coverage For Children Up Until The Age of 26 Background: Plans that provide coverage for dependents are required to extend the coverage of dependents to age 26, regardless of their eligibility for other insurance coverage, effective Sept. 23, 2010. Plans must provide coverage to all eligible dependents, including those who are not enrolled in school, not dependents on their parents’ tax returns, and those who are married.
Navigating Your Health Care Reform The Affordable Care Act is reshaping the manner in which all of us think about health care and health insurance. Over the next few months and years, as the various pieces of the Affordable Care Act take effect, it will be important for everyone to understand how the changes being made affect you, your employees and your business. The class will cover specific pieces of the regulations that everyone needs to be made aware of and strategies on how to best prepare for the upcoming changes. Join Will Compton of EPK & Associates/Capital Benefit Services at the Gardiner Community Center from 4-6 p.m. Feb. 20 to learn more. There is no charge for the class but you must register by visiting www.biaw.com/Education_ClassRegister. aspx?sID=29813 or by calling Amanda with the BIAW at 360-352-7800 ext. 114.
Vol. 6, Issue 1
Dear Donna Donna L. Knifsend
Dear Donna: Question: It is that time of year when most of us make New Year resolutions and hope that the economy picks up for the new year. What should we do to prepare our construction business for 2013? Answer: There are so many tips that could be written, but getting your legal affairs in order would top my list. With many new laws enacted as of Jan. 1, it is important to consult with your attorney to make sure that your business contracts and policies are compliant with state and federal laws. A few of the new laws include: • Mandatory carbon monoxide alarms in residential homes/apartments; • Minimum wage increases to $9.19 in Washington. (Note: The federal minimum wage remains at $7.25 an hour.) • Compact fluorescent bulbs containing mercury must be recycled. • The Underground Utilities Damage Prevention Act commonly known as Washington’s so-called dig law assigns new responsibilities to local governments and contractors when soil is to be excavated. Stiffer penalties are in effect for violation of this law. • Federal estate tax exemptions decrease to $1 million this year; • Social media liability remains unresolved in many areas of law. More importantly, remember that laws pre2013 remain in effect. For example, all contractors must provide a written disclosure to consumers for residential improvements and
construction over $1,000. This regulation has been in place for several years, but it is surprising how many contractors are unaware of this requirement. Contractors also must have the consumer sign the disclosure and retain the document for three (3) years. Why is this document important? Besides avoiding Labor & Industry sanctions, this disclosure is a pre-requisite to filing a mechanic’s lien. This disclosure is in addition to other requirements and is necessary even if you are in direct contract with the owner (as opposed to the preliminary notice). A model disclosure form is available on the Labor & Industries website. In addition to new laws, many court decisions and regulatory rulings have an effect on how you conduct your business. Be proactive and remember that legal contracts are “living documents” that need to be reviewed no less than annually for compliance. To make legal advice affordable, consider: • Alternative fee arrangements with your attorney. Review your legal invoices to determine whether a flat retainer or modified retainer is cost effective compared to hourly fees; • Have counsel review your contracts in advance of signing them because it is cheaper more cost effective to keep most clients out of a lawsuit then to get them out; • Educate yourself. Understand what clauses are in your contract. It is your responsibility to understand what your rights and obligations are under the contract. • Be proactive by incorporating mediation and dispute resolution procedures in your business. Customers may not always be right, but they are the foundation of your bottom line. Remember this Donnaism: “It is often not what you say, but how you say it!” Good communication skills by owners and employees can save thousands of dollars every year in lawsuit avoidance. Disclaimer: The advice given herein is strictly for informational purposes only and does not reflect advice to the readers. If you have a legal issue, see an attorney for full evaluation and advice.
Calendar of Events Jan. 19 Jan. 24 Jan. 30 Feb. 8 Feb. 14 Feb. 20 Feb. 23 Feb. 25-27
NPBA Annual Planning Meeting General Membership Meeting, Eagles Club Port Angeles, 6 p.m. NPBA Program at Sequim Association of Realtors Directory Update Form Due for 2013 NPBA Directory NPBA Board of Directors Meeting, Midway Business Center Healthcare Reform Seminar, Gardiner Community Center, 4-6 p.m. NPBA 4th Annual Bowling Tournament, Laurel Lanes, 6 p.m. BIAW Winter Board of Directors Meeting, Olympia
CODE CORNER Clallam and Jefferson County, Port Angeles, Port Townsend, Sequim, Juan de Fuca Chapter of ICC
Building a set of stairs off your deck? Keep stair geometry in mind: The maximum riser height shall be 7¾ inches. While the riser height can vary slightly, the greatest riser height shall not exceed the smallest by more than 3/8 inch. Open risers are permitted provided that the opening between the treads does not exceed 4 inches. The minimum tread depth shall be 10 inches. The tread depth can vary but not more than 3/8 inch. There shall be a minimum of 80 inches of headroom over the stairs measured vertically from the nosing. In addition, there shall be provided a minimum of 36 inches of clear width above the handrails. Handrails are required when there are four or more risers and can be installed on only one side but must be located between 34 inches and 38 inches above the nosing. For more deck construction codes, stay tuned.
Dungeness Water Rule Now in Effect Presently, those seeking a building permit can apply for mitigation credits at the permit counter in the Department of Community Development. There are many details that are being worked out and finalized. Be sure to mark your calendars for the Public Open House/ Workshop from 4-7 p.m., Thursday, Jan. 17, at John Wayne Marina, that will cover how to obtain mitigation credits for building permits. The Olympic Resource Protection Council is accepting pledges to present a legal challenge against the rule. Visit its website at olympicresoucepc.org for more information.
Clallam PUD - Your Partner in Conservation
Vol. 6, Issue 1
S N S Roofing, llc
Lic. # SNSRORL918LC
Sean Marshall began his career in the building industry as an assembler of mobile homes. He also worked for general and roofing contractors in Seattle, Spokane and locally for 15 years until colleagues who appreciated the quality of his work, encouraged him to start his own roofing business. In fact, they told him he “would be stupid not to.” For the first three years, Sean and his wife Shawna worked together as a team on all of their roofing jobs. With the financial support of their good friend John Cross, Shawna quit her job to “take on the business full-time with Sean.” Now with a larger crew of five, they tackle all types of residential and commercial roofing, from composite and metal, to slate, tile, torchdown and TPO. Their trustworthy staff works well together and knows their goal is that “there shouldn’t be any reason to have to return to a jobsite.” Sean enjoys working on steep roofs and challenging projects. Recently S-N-S reroofed a home that required a huge tear off of old clay tiles, ten new skylights, all new fascia and a new Snap-Loc weathered-copper metal roof. “Plus I get to meet a lot of nice people. That’s the part I like the most,” says Sean.
“We hired Sean to replace our roof. It was a big project with a huge tear off. He did everything he said he would do, and he didn’t cut corners. Even though it was summertime, he made sure he left the roof protected each night just in case of rain. He finished on time, was reasonable and the clean up was excellent.” — Jim Emerson, Sequim
S-N-S purchases the majority of their roofing materials at Hartnagel Building Supply “where the customer service staff is easy to work with,” says Sean. “We are very family oriented and so are our employees. Family comes first, along with purchasing locally to to keep our money here,” adds Shawna.
—————————— Contractor Spotlight is sponsored by —————————— Lumber and building materials for all types of construction projects.
1601 S “C” St., Port Angeles
457-8581 • angelesmillwork.com
Custom home sales professional attends 3-day building related training
Nell Clausen of Estes Builders recently completed a three-day class focused on the art and science of new home construction. “There was a great deal of important information presented in these three training days,” said Clausen. “I will share what I learned about construction terms, home site preparation and the array of available financing options out there with my clients.” Sponsored by the Building Industry Association of Washington, the class “taught me skills to help our customers understand the building process and feel more involved in the construction of their custom home,” said Clausen. The training was held in Tacoma. Do you have news that you would like to share with your fellow members? Please email firstname.lastname@example.org or call us at 4528160 to have your latest happenings published in our monthly newsletter or weekly Building Bulletin.
Learn how to use a free marketing tool to reach potential customers! Get your New Year marketing plan started off right by learning how to use Facebook to reach potential customers and create a free web presence (especially if you don’t have a traditional website) or would like to interface it with your existing site. Join the NPBA and social media expert Michael Howe at our next General Membership Meeting to learn about what social media is and why it should matter to you. Examples of local industry professionals who are using Facebook for marketing will be showcased along with 7 Simple Tips that you can take away and implement right away! E-mail or call us at 452-8160 to RSVP to save your place at 6 p.m. Thursday, Jan. 24, at the Eagles Club in Port Angeles. Cost is $15. The 2013 Officers will also installed at this meeting.
NPBA is hiring!
3111 Hwy 101 E, Port Angeles 452-8933 • hartnagels.com
Rely on the employee owned and operated stores that contractors rely on!
For a part-time Membership Coordinator. To see complete job description and requirements, visit: NPBA.info/news. Please submit resume and cover letter via e-mail to email@example.com.
Thank you renewing members!
Team McAleer Re/Max Fifth Avenue Security Services Northwest Horizon Excavating Inc Allform Welding Inc NW Inside Out Painting Inc Lawsuit Prevention & Management
2013 NPBA Directory Update forms are due back in the office by no later than Feb. 8! Be sure to review the form that you received, either by e-mail or regular mail to ensure that your information is presented as you would like it to appear. Once again, our directory will be included as the center section of our Expo Program Guide which is distributed via the Sequim Gazette and Peninsula Daily News the week prior to Expo.
2013 NPBA BOARD OF DIRECTORS & STAFF Garret DelaBarre, DelaBarre Construction President Annie O’Rourke, Drafting Solutions Secretary/State Director Julie Myers, First Federal Treasurer Bill Feeley, Feeley Construction 1st Vice President Greg McCarry, Westerra Homes 2nd Vice President Rick Gross, Estes Builders LLC Immediate Past President/State Director Mark Smith, Mark Smith State Director Larry Hanna, LP Hanna Construction Builder Director Scott Schwagler, J & J Construction Builder Director/State Director Dan Donovan, Allform Welding, Inc. Associate Director Tracy Gudgel, Zenovic & Associates Associate Director Kelly Raymond, Cherry Creek Mortgage Associate Director Roger Wheeler, RJ Services, Inc. Associate Director Bill Roberds, Excel Utility Construction Inc. Life Director