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Builders

utlook

2013 issue 4

Housing Tax Incentives Critical to Maintain Thriving Middle Class NAHB, Washington, DC To meet the nation’s growing need for affordable rental housing and homeownership opportunities, the National Association of Home Builders (NAHB) today called on Congress to maintain its support for vital housing tax incentives, including the Low Income Housing Tax Credit, the mortgage interest deduction and real estate tax deductions. “Home building is an industry dominated by small businesses, so the idea of simplifying the complicated tax rules related to business has great appeal. At the same time, our industry remembers painful lessons from the 1986 Tax Reform Act, when the commercial and multifamily sectors experienced a downturn due to unintended consequences,” said Robert Dietz, an economist and assistant vice president for NAHB, in testimony during a House Ways and Means Committee hearing on tax reform and residential real estate. Moreover, when housing fares well, it spurs job and economic growth, Dietz added. “For these reasons, we urge Congress to be cautious and thoughtful when it comes to housing and tax reform.” U.S. Census data shows that more than 40 percent of renters are “rent burdened,” or pay more than 30 percent of their household income on rent. The need for affordable rental options remains acute. The Low Income Housing Tax Credit (LIHTC) is the most effective tool for the creation of affordable rental housing. Utilizing a public-private partnership to attract investment, the program has produced and financed more than 2 million affordable rental units since its inception in 1986. “As LIHTC properties must generally remain affordable for 30 years, they provide long-term rent stability for low-income households around the country,” Dietz said. “But the demand for affordable housing far exceeds the availability of financing through the LIHTC program. The solution is not to eliminate the most successful affordable housing program in the country, but to provide it with the resources necessary to address the shortage of affordable housing options in our cities and towns.” When it comes to housing and tax reform, the spotlight typically falls on

the mortgage interest deduction, and Dietz set the record straight on a number of false assumptions regarding this important homeownership benefit. “First, we frequently hear that few home owners benefit from the mortgage interest deduction because itemization is required,” he said. “In fact, most home owners will claim it. In 2009, 35 million taxpayers, or 70 percent of home owners with a mortgage, claimed the mortgage deduction in that year. Among all home owners who have ever held a mortgage, the vast majority have claimed the home mortgage deduction for years at a time.” Critics charge that the mortgage interest deduction encourages the purchase of a larger home, but these claims ignore the role of family size. Home owners with larger families need bigger homes and will therefore have a higher mortgage interest deduction. “The need for a larger home created the higher home loan deduction, not the other way around,” said Dietz. He also noted that the cost of housing varies greatly across the nation, so what appears to be a large deduction for a given home in one area may reflect a modest home in a high-cost area. Moreover, the mortgage interest

and real estate tax deductions are two of the few elements in the tax code that that account for differences in cost-of-living. “The real estate tax deduction is an important reminder that home owners pay more than $300 billion in property taxes each year. This fact is often ignored in the federal tax debates because these taxes are collected by state and local governments,” said Dietz. There is also a direct correlation between the age of a home owner and their resulting benefit from the mortgage interest deduction. As a share of household income, the largest deductions are for those 35 and younger. The benefit of a deduction that reduces the net cost of monthly house payments is particularly important to these home buyers, who typically have less equity, tighter household budgets, and must meet the needs of a growing family. “Given this demographic connection, NAHB believes that any policy change that makes it harder to buy a home, or forces young families to defer home purchases, will have a significant impact on wealth accumulation and the makeup of the middle class,” said Dietz. Regarding the mortgage interest deduction rule for second homes, Dietz said that many mistakenly think this refers to expensive beach

property, when in reality, such homes are often owned free and clear or rented, which excludes the owner from taking the mortgage interest deduction. In practice, the second home deduction is important for many who don’t think of themselves as owning two homes. Repealing the deduction for second homes would penalize millions of home owners who move from an existing home and buy a second home in a given tax year. There would be further negative economic consequences in terms of lost home sales, home construction and local tax revenues. Noting that building 100 singlefamily homes creates more than 300 full-time jobs and $8.9 million in federal, state and local tax revenues that helps boost local communities and schools, Dietz said that how housing is treated in an future tax reform will shape the economy going forward. “Housing provides the momentum behind an economic recovery because home building and associated businesses employ such a wide range of workers. With the right policies in place, housing can be a key engine of job growth that this country needs.”


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Builders Outlook

2013 issue 4

STAY SAFE. CALL BEFORE YOU DIG. If you have digging or excavation work to do, remember to call 811 at least 48 hours in advance. Natural gas and other utility lines may be buried a few feet deep. By calling 811, utility crews can mark locations of underground lines at no charge. The markings are done in paint and will eventually wash away. Marking line locations can help prevent you from accidentally damaging a natural gas line. Always call before you dig. It can help keep you and your construction crew safe, and failing to do so can result in a $1,000 fine.* * Texas Utilities Code 251.201 Civil Penalties

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2013 issue 4

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Builders Outlook

President’s Message | Edmundo Dena

El Paso Disposal

President, El Paso Association of Builders

I have to take my cap off to all the golfers who attended the Spring Golf Tournament, Golf by the Rio presented by my good friends at WestStar Bank. There is no doubt that truthfully you golfers are nuts, in a good way. I got to be around these golfers in wind (or should I say dirt) gusts of 40 and higher miles per hour. Bad enough that I know most of you have a hard time playing on the calmest days, but this was amazing to see. I remember looking at Ray and Mike the pro give you guys direction, when somebody yelled out “here it comes”, and everyone took off to tee off. I looked towards downtown and there it was, big, hazy, rolling dirt coming towards us. I could only think that this was the end. No one in their right mind would play in that, but once again I just didn’t understand the thought process for golf. “The worst day on the golf course is better than sunshine at the office” someone blurted. Right, and so you guys went out into the haze and played. Sam and I did all we could do to keep drinks in the “tinas” and you did an excellent job of hanging in there. I’d like to thank Sam Shallenberger and Ray Adauto for making the event so much fun as promised. It would have been good in great weather, but it was awesome in the crud you guys played in. My special thanks to the women’s professional council for helping and to the members who came out and spotted on different greens. The support of the sponsors and advertisers really make things like this happen. I’m very grateful to so many but in particular to WestStar Bank, HUNT, Time Warner, MTI Ready Mix, and Western Wholesale. As you read this it will be time to vote in the city election. I can tell you that we have some excellent choices in a lot of races, but we have to vote in order to get the kind of government we want for our business and industry. One member has tossed his hat in the ring and I’d like to acknowledge Gus Haddad for doing so. I’ve learned that we can talk the talk but we need to walk the walk in order to assure the industry has responsible government. So I’m asking you to go out and vote and get information on the Charter amendments. I’m nervous that those will pass without a clear understanding by you about what they are and what they will do if passed. I’ve attended forums to educate myself about who and what to vote for. I recommend that for you as well. Our association does not endorse candidates but we evaluate them through the Build PAC. The Build PAC has donated to two candidates running for City Representative, Carl Robinson and Emma Acosta. Both have demonstrated an open door policy for issues relating to new home construction in El Paso and have listened to us on numerous topics. I urge you to support those who support your industry by voting. We’ll know by this time next month who’s in and who didn’t make it. To help get your candidate in go and vote and take your family and friends with you. Until next time, go out and sell some houses.

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Builders Outlook

Perspective

2013 issue 4

|

Ray Adauto, Executive Vice President EPAB

I have never been to an implosion of a building even though I’ve wanted to witness one. In two days in April all that changed as I was witness to an implosion and a demolition. I had mixed emotions about watching these two events not because I opposed them but because I almost didn’t care. Jaded with the arguments for and against dropping city hall and the Asarco smoke stacks caused me to almost wish that they go ahead and forget the hoopla. I’m glad that I got a chance to see both now, and share that with my grandchildren. Interesting I thought, since my grandkids will be paying for the city hall demolition after I’m long gone. At least they can say that their grandpa was with them when the stacks fell, and we shared the experience of the implosion downtown. Hearing their excitement at the falling was interesting because all I could think about was that this is permanent and perhaps a once in a lifetime event. At least for me. There will never be smokestacks like those again in El Paso. I’m glad in a way as I remember hacking up when the sulfur was so thick you could taste it in the air when I attended Cathedral. Sometimes you would taste that stuff while trying to eat at Luby’s downtown, or walking around UTEP. I often wondered how ironic it was to have people in Providence Hospital for respiratory problems, only

Changes to city landscape made with a bang coming out and having to breathe that air. Automatic patients for the hospital I guess, and yet on the other hand I remembered that one of my aunts and an uncle of Margaret’s made a good living working at Asarco. They’re both gone but for a brief moment as the large stack fell I couldn’t help but think of them and what they would have thought. Somehow these stacks had been connected to many El Pasoan’s but now they are gone as is the era that created them. I had a completely different opinion of city hall. I never liked the layout and thought it strange that the front entrance actually faced Mexico rather than El Paso. Was it a beacon like the statue of Liberty? Perhaps to some. It was an unintended target of the violence when bullets narrowly missed the guy who would be in charge of the demolition, Alan Shubert. He was almost killed by that stray (or was it?) that hit his office, missing him by inches, the slug imbedded in the wall to his left. I hated the layout and I hated that there was never enough public parking. Of late I disliked the security done there; thinking that all the purse and pocket searches meant nothing if someone is determined to do what was done in Oklahoma City. I hated that the building was renovated as recently as last year when a reported $800,000 roof job was done. I also heard

that the building still had furniture or fixtures inside when it was blown up, some calculations that over $500,000 of stuff went down with the building. I get angry that there was so much haste that there wasn’t a sale or auction for that. But I guess since the administration was so intent to bring it down that it really didn’t matter. A half million here, million

there and pretty soon it’s real money. For that I’m still angry that my tax dollars weren’t properly cared for in my opinion. I hope we never see another such example. The only way we can guarantee that is to vote for change. I hope that change comes and that I never have to see the same again in my lifetime. I pray my grandkids don’t either.


2013 issue 4

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Builders Outlook

Builders to Congress: Improve Immigration Bill’s Guest Worker Provisions The National Association of Home Builders (NAHB) commends the bipartisan Senate sponsors of legislation to advance comprehensive immigration reform and called on lawmakers to improve the guest worker provisions in the bill to address the significant role that foreign workers play in the housing industry and to help alleviate current labor challenges that are hampering the housing and economic recovery. Testifying before the Senate Judiciary Committee on the Border Security, Economic Opportunity, and Immigration Modernization Act (S. 744), NAHB Chairman Rick Judson, a home builder and developer from Charlotte, N.C., urged Congress to implement a new market-based visa system that would allow more immigrants to legally enter the construction workforce each year. “Despite our efforts to recruit and train American workers through the HBI Job Corps program and other programs, our industry faces a very real impediment to full recovery if work is delayed or even cancelled due to worker shortages,” said Judson. “A new, workable visa program would complement our skills training efforts within the nation’s borders, and fill the labor gaps needed to meet the nation’s housing needs.” In a recent survey of NAHB’s membership, 46 percent of the builders surveyed experienced delays in completing projects on time, 15 percent had to turn down some projects and 9 percent lost or cancelled sales as a result of recent labor shortages. Foreign-born workers have traditionally

played a vibrant and important role in home building. Today, they account for 22 percent of the construction labor force, according to the Census Bureau. Moreover, trades with a high concentration of immigrant workers also tend to have more vacancies and labor shortages. There are currently 116,000 unfilled positions open in the construction sector – a post-recession high. While the W Visa program that addresses a guest worker program for the low-skill sector within Senate bill S. 744 reflects a good-faith attempt on the part of lawmakers to address a serious concern, NAHB believes the program is unworkable for the residential construction industry. “First and foremost, the program wrongly singles out the construction industry with a discriminating set of rules, including an arbitrary and meager cap that not only ignores but rejects the value of the housing industry to the nation’s GDP,” said Judson. “Our industry, which in normal times accounts for more than 17 percent of the nation’s total economic output, should be afforded the same opportunities as any other sector of the economy. Congress must reassess this critical flaw in the legislation.” Judson also outlined other components of the W Visa program as areas of concern: • The 8.5 percent unemployment trigger. Putting an unemployment trigger in the program ignores the simple fact that immigrant workers and native-born workers sometimes

perform jobs that are independent. Moreover, with the current unemployment rate well below 8 percent, labor shortages in all facets of the industry – including framers, carpenters, bricklayers and weatherization workers – continue to undermine the housing recovery. • Prevailing wages. Employers will already have to pay fees for selfregistration and any positions needed. Further adding a complex prevailing wage scale to the program will deter private small business firms from taking advantage of it. Employees should be paid market rate, or actual wages. • The inclusion of a commission in the W Visa program. The marketplace is best-suited to make wage and worker shortage determinations, not a new

bureaucratic entity, said Judson. The most accurate way to measure whether immigrant workers are needed is for employers to try, and either succeed or fail, to hire U.S. workers. • Complete portability. Under this provision, a registered employer faces the stark reality that a W Visa holder has the option to quit and work somewhere else beginning on the very first day of work. NAHB believes that it is only fair that employers have some assurances that after navigating a confusing and expensive process, the visa holder will actually have to show up and work for the employer who sponsored the worker. This concern is even more pronounced for the construction industry, considering the meager 15,000 visa cap. Employers should receive a credit for losses incurred.

it’s time to get serious about your retirement. The El Paso Association of Builders is proud to now offer an individualized retirement plan created for you.

ThE EPAB MEMBEr rETirEMEnT PlAn As an EPAB member, you have the unique opportunity to take control of your retirement investing. We understand the challenges of retirement planning. That’s why we have partnered with Employee Benefits of El Paso to offer you the opportunity to create an individualized retirement plan under the umbrella of the El Paso Association of Builders. • investments • irA’s • 401K now is the time to start planning for the next phase of your life. let your membership with EPAB help you get there.

Call (915) 542-0900 for more information today. Prior to selecting investment options for your plan you should consider the investment objectives, risks, fees and expenses carefully. For this and other important information, you obtain prospectuses for mutual funds, any applicable annuity contract and the annuity's underlying funds, and/or additional disclosure documents from the appropriate retirement plan representative. Read them carefully.There is no guarantee that participation in any retirement plan will result in a profit or that your account will outperform a self-managed portfolio. Please consult with your financial planner, attorney and/or tax adviser as needed.


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Builders Outlook

2013 issue 4

The Economy

A Tale of Two Households During the last year and especially the last five or six months, the economic data have been of two minds. On one hand, household net worth is way up, the stock market has been setting new highs and the number of millionaires is at 9 million, just below where it was before the recession. At the same time, we read that the amount spent at restaurants, bars, and department stores recently fell as households compensate for higher gas prices and payroll tax increases by reining in discretionary spending. Elliot Eisenberg Which is it? Is the economy getting better or are households hunkering down? Turns out, it’s both. Behind this seeming paradox is the growing gulf between America’s wealthier households and its poorer ones. And the past recession has put this gap into bold relief. While suffering during the Great Recession, wealthier households, because they are more likely to own equities and a home, have enjoyed the recent rise in house prices and the stock market, as well as the special year-end dividends that were timed to avoid tax increases that went into effect the first of this year. In addition, because they can borrow money at today’s historically low rates, they are spending more on vacations, cars and other high-end discretionary purchases as their financial situation improves. Moreover, over the last few years their incomes have been rising, something the majority of the population has not been experiencing. By contrast, households in the bottom half of the income distribution are having a tough time of it. The combination of stagnant wages in the years before the Great Recession,

large job losses during the recession, current high levels of unemployment, the dramatic increase in those unemployed 12 months or more, high gasoline prices and delayed income-tax refunds are forcing these households to forgo many purchases. As such, retailers that cater to lower and middleincome Americans are feeling the pinch. Worse, the payroll tax hike will probably take three or four months before its impact is fully felt. Fortunately, those in the top half of the income distribution are doing well and they pack a lot of retail punch. The top 20% of households account for 38% of all spending while the top 50% of all households account for 70% of all spending. By contrast, the bottom quintile is responsible for a tad less than 9% of all spending. And so far, higher income households have been carrying the load, with spending most recently rising at a month-over-month rate of 0.7%, the best level since a 0.8% gain in September 2012. Despite high-income households facing higher taxes due to the expiration of the Bush tax cuts and everyone facing the vagaries of the sequester, the economy is not on the ropes. A diet of dirt-low interest rates, a booming energy sector, and solid improvement in the all-important cyclicals including autos, big ticket items, business fixed investment, and most importantly homebuilding, should translate into increases in middle- and lower-class employment and (hopefully) wages, and thus more household spending among those doing relatively little of it now. 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.

is your retirement plan making every dollar count? The El Paso Association of Builders is proud to now offer an individualized retirement plan created for you.

ThE EPAB MEMBEr rETirEMEnT PlAn Even if you already have a retirement plan in place, it is well worth your time to talk to us about the new options designed for members of the El Paso Association of Builders. We understand that when it comes to retirement planning, saving every dollar can add up. That’s why we have partnered with Employee Benefits of El Paso to offer you the opportunity to create an individualized retirement plan under the umbrella of the El Paso Association of Builders that can help reduce set up fees and other associated expenses. • investments • irA’s • 401K now is the time to start maximizing your plan for the next phase of your life. let your membership with EPAB help you get there.

Call (915) 542-0900 for more information today. Prior to selecting investment options for your plan you should consider the investment objectives, risks, fees and expenses carefully. For this and other important information, you obtain prospectuses for mutual funds, any applicable annuity contract and the annuity's underlying funds, and/or additional disclosure documents from the appropriate retirement plan representative. Read them carefully.There is no guarantee that participation in any retirement plan will result in a profit or that your account will outperform a self-managed portfolio. Please consult with your financial planner, attorney and/or tax adviser as needed.


2013 ISSUE 4

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Builders Outlook

CITY BEAT

Out with the Old The city of El Paso had a very interesting weekend of demolishing three structures in two days, City Hall and the Asarco Smokestacks. The stacks came down after considerable environmental challenges and a last minute appeal to keep at least one standing as a historic monument. Once considered the tallest smokestack in the world the larger stack fell to the ground in about 8 seconds, after the base of the structure was exploded. The second

smaller stack was dropped first in what was seen by thousands of people as an end of an era. That smaller structure, still over 30 stories tall, made an impact that was registered on seismic instruments at UTEP and a cloud of dust that for the most part was contained around the property. Last minute stunts by some parachutist looked to delay the drops, but with an all clear the stacks came down. City hall was a little different in that the 10 story building had been

prepped to drop on top of itself, kind of a folding effect. Surrounding businesses were shut down and apartment dwellers next to the site cautioned to stay away from windows and the debris. In a matter of moments the 30 year old building went down as the way is being cleared for the new Triple A ball park.

In with the New The EPAB General Meeting for April was held at the El Paso Club with featured speaker City of El Paso

Chief Engineer Alan Shubert. His presentation on the construction of the new Triple A ballpark showed the members how much work has already gone into the project and how much is left to do. Part of the work that was to be done was the successful demolition of city hall, the site for the new ball park. Three days after the presentation Alan accomplished his mission as city hall was imploded. Work at the site continues with removal of debris. Our thanks to Alan for a very informative presentation.

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Builders

utlook on the scene |

Golf Tournament at Ascarate - Pachanga! The 2013 Spring Golf tournament was titled Golf by the Rio. It could’ve easily been Gone in the Wind for what turned out to be the windiest day of the year actually made the tournament a challenge and a unique golfing experience. The tournament was held at the Ascarate Golf Course, one of El Paso’s oldest and closest border golf courses in the country. Twenty six teams teed off at the one o’clock shotgun start, directly into a cloud of dust kicked up by high winds. The teams hung in there through the wind and dirt and most completed the round. At the dinner award the topic was the difficulty of playing in those conditions and how everyone compensated or gave up. “I have never played in these conditions,” said Rudy Guel. “I know it was difficult to play but it was fun in a strange way,” he continued. Tournament Chairman Sam Shallenberger praised the teams for playing and gave kudos to those who actually finished. “I can’t begin to tell you how many times Edmundo and I encountered guys laughing because of the conditions,” he said. It was either laugh or cry and because there was so much wind the afternoon appeared to be a part of a Martian landscape instead of something earthly. “When

you hit the ball you really had no way of telling where it would go,” said tourney player Frank Torres. “I know this course so well, but it was a totally different experience today with these winds,” Torres continued. WestStar Bank was the presenter and participant in the tournament. “I have to tell you that had it been a regular day we would have had a great tournament, but with the weather this tournament will go down as one for the records,” said Henry Tinajero of WestStar. His comments were echoed over and over as familiar faces were covered in sand. One observer said that there were some interesting faces at the dinner. “I think that there was more dirt on my face than in my yard,” said John Reich of Texas Gas. “This was a blast if for no other reason that now we can take playing in high winds off my bucket list,” he continued. The tournament was played on the nearly 60 year old public course for the first time. It was billed as a “pachanga”, slang for party and it turned out exactly like that. “One thing that happened was that survival was the game, not golf,” said Shallenberger. “There wasn’t any course records broken and if there had been I’m sure the other players would’ve screamed a challenge,” he continued.

Mike Smith, PGA Pro at the course said that the day was one of the worst he’s seen in a long while, but added that he was amazed at how much fun everyone was having. “I can tell you that every time we went out there we didn’t see anyone complaining more than usual, as a matter of fact they appeared to just go with it,” Smith said. The Women’s Professional Council sold mulligans for scholarship and also did some of the “dirty” work of being witnesses out on the course. “I want to thank the council members for coming out and helping today,” said Lorraine Huit, WPC chair. “Holy smokes, I can’t believe I’m out here,” said Beverly Clevenger. Her reaction was shared by all the members who withstood the wind and sand to bear witness on long drives, closest to the pin, and other holes. Arturo Guerra with McCoy’s had a ring side seat to the action as he and his wife spotted on a par three hole. “Man, it got tough out there, but we had a ball with everyone being so fun to be around,” he said as they enjoyed the inside of the clubhouse. The dinner sponsored by Western Wholesale Supply was held in the dining room after the tournament. Awards were presented for the top three team scores and for long drive, close to the pin, and in ran-

dom drawings. No one captured the $10,000 cash award for a hole in one on number 16. “The wind made it nearly impossible for someone to hit, but it was fun watching the ball go everywhere but on the green,” said Joe Bernal, Employee Benefits of El Paso principal and sponsor of the contest. “It would have been aan absolute miracle if someone had hit it, but at least they had the chance,” he continued. Plans are underway for the fall tournament that is designed for better play. “Our next event will be one for the real serious golfers and will be challenging. I just don’t think we want to invite the wind to that one,” said Shallenberger. Goodie bags and beverage cart sponsored by HUNT, Time Warner. Beverage stations provided by Tony Mullen at MTI Ready Mix. Team tournament winners: 1st place: Steve Raney team; 2nd place, Tropicana Homes; 3rd place, Rudy Guel Construction. Long Drive went to Dan Ruth, Millenium Homes; Piñata hit went to Henry Tinajero, WestStar Bank.


2013 issue 4


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Builders Outlook

FHA Reform Efforts Must Ensure Borrowers Have Access to Affordable Home Loans With tight mortgage lending standards preventing well-qualified home buyers from obtaining home loans and impeding the housing and economic recovery, the National Association of Home Builders (NAHB) today expressed support for congressional efforts to reform the Federal Housing Administration (FHA) but urged lawmakers to proceed in a cautious manner to avoid any disruptions to the nation’s housing finance system. Testifying before the House Financial Services Subcommittee on Housing and Insurance, NAHB First Vice Chairman Kevin Kelly, a builder and developer from Wilmington, Del., pointed out the vital role that FHA played to help the housing sector emerge from its worst downturn since the Great Depression. “While there is no doubt that the housing finance system needs to be reformed, the contributions that the FHA made during the economic downturn underscore the need for a government backstop for both the primary and secondary mortgage markets,” said Kelly. “In times of crisis, private sources of mortgage credit have been unable or unwilling to meet housing capital needs.” Without government support for home purchasing and refinancing, Kelly warned lawmakers that the nation’s mortgage markets “will grind to a halt in times of economic stress and uncertainty.” In 2006 before the housing downturn hit, FHA’s share of the market was a meager 3 percent as private financial institutions boasted a healthy presence. When the housing downturn hit, there was a role reversal, as private players fled the market and FHA-insured mortgages became the only credit option for first-time home buyers, minorities and those with limited downpayment capabilities. “This dramatic shift is evidence that FHA is performing its mission of providing the federal backstop to ensure that every creditworthy American has access to a stable mortgage product,” said Kelly. “As the private market assumes a greater role in the mortgage marketplace, maintaining an appropriate level of government support is essential to preserve financial stability, promote investor confidence and ensure liquidity and stability for homeownership and rental housing.” Noting that the Federal Reserve and leading economists have warned that overly restrictive underwriting requirements are preventing creditworthy borrowers from accessing mortgage credit, Kelly called on lawmakers to take a long-term, holistic approach to housing finance reform. “Changes to FHA’s programs

cannot be separated from the larger discussion of reforming the complex housing finance system, including future reforms to Fannie Mae and Freddie Mac,” he said. “NAHB urges Congress to proceed cautiously and not to significantly alter the role of FHA programs.” “Housing has led America out of every economic downturn and can do so again if the future policies regarding housing finance reforms are addressed in a manner that provides liquidity for the entire housing sector,” he added.

2013 issue 4


2013 issue 4

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Builders Outlook

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Builders Outlook

2013 issue 4

Expert Advice

Dental Benefits and the Affordable Care Act

Joe Bernal Employee Benefits of El Paso Of the 45 percent of employees who had access to a dental benefit plan through their employer, 78 percent participated, making dental benefits a very popular offering. Will the Affordable Care Act change all that? The vast majority of Americans with dental insurance (98 percent) have coverage through a standalone dental plan, or a plan sold separately from medical coverage. Whether written on a group or individual basis, the Affordable Care Act (ACA) does not apply to this type of “excepted health plan.” Although the ACA might not apply to your employee dental plan, it could affect dental benefits under your group health plan. The ACA and Dental Benefits Starting in 2014, all health plans offered on the individual and small group markets must offer a comprehensive package of items and services known as essential health benefits (EHB). These EHBs must include pediatric oral care. This means medical plans for small groups and individuals, whether sold on an exchange or not, must include

benefits for oral health risk assessments and screenings and treatment for dental cavities (caries) with no cost-sharing. Medical plans do not have to cover these services for adults. In November 2012, the U.S. Department of Health and Human Services (HHS) provided states with two benchmarking options for supplementing coverage in plans that do not include coverage for pediatric dental benefits. The first option is to add benefits included in the FEDVIP (Federal Employees Dental and Vision Insurance Program) dental plan with the highest national enrollment. The second option is to supplement with the benefits available under that state’s CHIP program of health benefits for low-income children, if applicable. The problem with this approach is that these plans provide “richer” benefits than the typical small group dental plan. The National Association of Dental Plans (NADP) estimates the cost of covering a child under a small group dental plan at about $21 per child per month without orthodontia benefits, and at about $23.80 per month with orthodontia benefits at 50 percent coinsurance (the insured pays half and the insurer pays half of covered charges). This compares to a monthly cost of $27.90 for benefits under the FEDVIP plan or $32.05 per month under the CHIP standard. Evelyn Ireland, NADP’s executive director, told Medscape Medical News (November 29, 2012) that the price difference due to benefits required by

the ACA could cause about half of the adults who pay toward dental benefits through small employer plans to drop their own coverage, since their children will have dental benefits through the group medical plan. If your organization requires employees to share premium costs for dental coverage ( and the majority of employers do, with 54 percent requiring employees with single coverage to share costs, and 67 percent requiring employees with family coverage to do so), be prepared for changes in dental plan takeup rates in plan years 2014 and later. The Importance of Dental Insurance Lower dental plan participation rates could cause more health problems in the long term. More than one-third of adults surveyed for the Surgeon General’s study on oral health (2000) had not visited a dentist in the past 12 months. Fewer adults with dental benefits could mean that number will increase. Laurence R. Weissbrot, FSA, MAAA, director of actuarial and underwriting at Northeast Delta Dental in Concord, N.H., says that “75 percent or more of the people who have dental coverage see their dentists on a regular basis. Fewer than 50 percent of people without dental coverage do so.” Unfortunately , oral health conditions can progress rapidly without treatment. Most adults show signs of periodontal or gingival (gum) diseases, with about 14 percent of those aged 45 to 54 having “severe” periodontal disease.

The Surgeon General’s report points out that oral health is integral to general health. “You cannot be healthy without oral health…. Oral diseases are progressive and cumulative and become more complex over time. They can affect our ability to eat, the foods we choose, how we look , and the way we communicate. These diseases can affect economic productivity and compromise our ability to work at home, at school, or on the job”. Employees who drop their employer based coverage will be able to buy stand alone dental insurance on an individual basis. However, Weissbrot points out that individual buying coverage on insurance exchanges will lack the double tax advantages employer-provided benefits enjoy: employers can deduct premiums as a business expense, and employees do not have to report their value as income. Many employers, even some smaller employers, self-insure dental benefits. Even when they add the cost of using a third-party administrator to manage their plans, some employers may save money on dental benefits this way. Although standalone health reimbursement arrangements (HRAs) will not meet the ACA’s “no annual limit” requirement, a dental HRA might fall under the “excepted health plan” exemption from ACA requirements.

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2013 Issue 3

13

Builders Outlook

www.elpasobuilders.com www.epbuilders.org

Membership News UPCOMING EVENTS | MAY 9 BOARD MEETING 12 NOON WEsTERN WhOlEsAlE 1345 GERONIMO

JUNE 13 BOARD MEETING 11:00 GENERAl MEETING 12:00 NOON El PAsO ClUB ChAsE BANK BlDG. DOWNTOWN

JUNE 21 – JUlY 7 PARADE OF hOMEs ThE FAlls AT CIMARRON

JUNE 24-25 sUNBElT shOW sAN ANTONIO, TEXAs

RENEWALS | ABC SUPPLY CO. INC. EL PASO STAR READY MIX MARTHA TAPIA AC REFRIDGERATION ENERGREEN ENERGY STAR RATERS MARTIN DE LEON CARPET SERVICE AFFORDABLE WINDOWS E P TEMPLINE MARTINEZ IRON WORKS AUGUSTIN SANCHEZ ESS ENVIRONMENTAL & SAFETY SOLUTIONS MECHANICAL TECHNOLOGIES ALBRITE ELECTRIC CO., INC. EVERST HOMES MILLENNIUM HOMES ALFONSO MAESE FIRST LIGHT FCU MOUNTAIN VISTA BUILDERS ALIANZA PLUMBING FORTUNE CUSTOM HOMES NORTHEAST PRINTING AMERICAN WEST DOOR, INC.

FRANKLIN BUILDING MATERIALS PEDRO RAMIREZ AMERICH GABRIEL HIGAREDA PFISTER ANDRES MORALES GRADING GARAGE DOORS AND MORE PH CONSTRUCTION ANTONIO MARTINEZ GARDNER TURFGRASS POINTMAN ENTERPRISES ARTchitecture HADDAD MORTGAGE GROUP POLAR HEATING & COOLING B’s TILE EXPRESSTIONS HERNANDEZ CONSTRUCTION PREWIRE OF EL PASO BACHMANN & LUTHI REAL ESTATE HIGH TECH ELECTRIC Q MARTINS BARNETT & BENNETT CONSTRUCTION HILDA’S JANITORIAL QUALITY GRANITE

BCR CONSTRUCTION HOME WARRANTY OF AMERICA R. C. DRYWALL BENITO CASTRO H P CONSTRUCTION RAMIREZ HEATING & COOLING BOCK & ASSOCIATES HUB INTERNATIONAL RAUL CALDERON BRUNSON PUMP SERVICE HUITT-ZOLLARS RICHMAN GROUP C. ALVARADO HUMANA, INC. RIO BRAVO TITLE CABINET IDEAS IDS INTERIOR DESIGN SOLUTIONS SALVADOR GUERECA CARRETES PLUMBING IVAN’S PUMPING SERVICE SATURNINO SUAREZ CESAR GONZALEZ JAMES HERREN

SERGIO GUZMAN PLASTERING CHINO’S CONSTRUCTION JAVIER JARAMILLO PLUMBING SERVAZ PLUMBING COM CORP OF EL PASO JOHNNY’S GENERAL CONSTRUCTION SKI HEATING & AIR CROWN HERITAGE HOMES JORGE MARTINEZ SOLAR COMMUNITY CUNNINGHAM DISTRIBUTING JOSE HERNANDEZ SOUTHWEST GARAGE DOOR D.CHEVALIER ELECTRIC, INC JURADO GRANITE STEWART SOLUTIONS D.R. HORTON KB REALTY TEXAS TITLE CO. DAKOTA HOMES LASER TECH THE BICYCLE CO. DAVALOS INC. LEC ENGINEERING

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For the latest updates & event information, visit: elpasobuilders.com 11395 James Watt, Suite A-11 79936 915-633-8002


14

Builders Outlook

Associates Council

Sam Shallenberger Western Wholesale Supply

As the old saying goes, time flies when you are having fun. I must be having a blast because it seems like we just got started for the year. Let me start with the Golf by the Rio, presented by WestStar Bank. I have been a member of this great association since the late 80s I even had hair it has been so long ago and this is the first time I can remember being sold out over a month in advance. It just goes to show you what this association is all about and that is NETWORKING. This Golf Pachanga is not about the golf, it is about everyone getting together and having a good time with friends and

associates. Our Association works hard to keep our builders building and our associates supplying the product through relationships at the local and state levels. For all you serious golfers we are planning a tournament in the fall. I can’t comment on exactly what and where it will be but you will need to bring you’re A game and Sun Country Handicap Card to enter. More details coming soon. The other fun thing we do during the summer is the Bowling outing. Once again it is not about the Bowling it is about NETWORKING with each other. We will have a announcement on where and when next month. I would like to schedule a associates meeting early in May if that fits everyone’s schedule? Come out and mingle with the other associate members, make some contacts, do some business. A special thanks to all of you who participated in the Golf by the Rio . It was windy but we had a great time. Until next time, have a great month.

2013 issue 3


Builders

utlook

www.elpasobuilders.com www.epbuilders.org 6046 Surety Dr. El Paso, TX 79905 915-778-5387 • Fax: 915-772-3038 ■ execuTive oFFicerS edmundo Dena – President Accent Homes Frank Torres – vice President GMF Custom Homes edgar montiel – Secretary/Treasurer Palo Verde Homes Sam Shallenberger – Associates chair Western Wholesale Frank Arroyos- immediate Past President Cisco Homes ray Adauto – executive vice President El Paso Association of Builders

■ TAB STATe DirecTorS Doug Borrett, Karam Co., Life Director Randy Bowling, Tropicana Homes ■ NATioNAL DirecTorS Bobby Bowling IV. Demetrio Jimenez NATioNAL ASSociATioN oF Home BuiLDerS (800) 368-5242

TexAS ASSociATioN oF ■ couNciL/commiTTee cHAirS Associates council Sam Shallenberger Build PAc Randy Bowling Desert Green Building council Javier Ruiz Land use council Sal Masoud Young Designer Award John Chaney remodelers council Rudy Guel membership retention Mike Santamaria, Greg Bowling Finance committee Edgar Montiel Women’s council Lorraine Huit ■ ADviSorY To THe BoArD J. Crawford Kerr, Attorney, Firth, Johnston & Martinez ■ BoArD oF DirecTorS Juanita Garcia, Icon Custom Builders Samira Gonzalez, Edwards Homes Walter Lujan, Dawco Construction Carlos Villalobos, Pointe Homes Don Rassette, Rassette Homes Beverly Clevenger, Automated Division 6 Builders Frank Spencer, Aztec Contractors Kathy Parry, Hunt Communities Sal Masoud, Del Rio Engineering Robert L. Foster, Southwest Land Development Services Leti Navarette, Custom Dream Homes Linda Troncoso, TR-Engineering Lance VanDeman, Hub International John Chaney, Passage Supply Joe Bernal, El Paso Employee Benefits Ken Wade, El Paso Building Materials Ruben Orquiz, MTI Ready Mix Kathy Carrillo, Pioneer Bank Henry Tinajero, West Star Bank Paul Zacour, Zacour & Associates Chuck Gabriel, Carpets West Ted Escobedo, Snappy Publishing Lorraine Huit, Cardel Design Javier Ruiz, Border Solar & Senercon

BuiLDerS (800)252-3625

2012 Builder member of The Year Frank Arroyos Cisco Homes 2012 Pat cox Award Mike Santamaria Mountain Vista Homes 2012 Associate of The Year Sam Shallenberger Western Wholesale Supply John Schatzman Award Hunt Companies

Honorary Life members Rudy Guel Brad Roe Cliff Anthes Wayne Grinnell Chester Lovelady Don Henderson Anna Gil

Past Presidents committed to Serve Greg Bowling Kelly Sorenson Mark Dyer Mike Santamaria John Cullers Randy Bowling Doug Schwartz Robert Baeza

Bobby Bowling, IV Rudy Guel Anna Gil Bradley Roe Bob Bowling, III E. H. Baeza Hershel Stringfield

ePAB mission Statement: The El Paso Association of Builders is a federated professional organization representing the home building industry, committed to enhancing the quality of life in our community by providing affordable homes of excellence and value. The El Paso Association of Builders is a 501C(6) trade organization. © 2013 Builder’s Outlook is published and distributed for the El Paso Association of Builders by Snappy Publishing 240 Thunderbird • Suite C El Paso • Texas • 79912 915-820-2800


DEVELOPING DREAMS. IN EAST AND WEST EL PASO.

Hunt is developing family focused neighborhoods in both east and west El Paso. Our communities feature amenities such as neighborhood parks, walking trails, bike paths, and landscaped roadways. Only in a community by Hunt will you find home options for everyone – from the first-time buyer to those searching for their ultimate dream home.

EAST Horizon Mesa

Eastlake Boulevard to Horizon Mesa Boulevard

Emerald Estates

Eastlake Boulevard to Emerald Park Drive

Emerald Pass

Eastlake Boulevard to Emerald Sands Drive

Mission Ridge www.liveatmissionridge.com I-10 and Eastlake Boulevard

WEST Cimarron www.liveatcimarron.com Helen of Troy at Redd Road

www.huntcompanies.com

Builders Outlook 2013 Issue 4  

The offical publication of the El Paso Association of Builders

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