Ozarks Communities: Open for Business

On Thursday, October 23, two Ozarks-area city governments each made their own overtures to the development community. At separate high profile events, each city had the same message: “we are open for business - ready to help developers build here.” 

The city of Republic hosted a bus tour of the community, toting residential and commercial builders and developers all over town to see firsthand the many prime opportunities Republic has to offer. HBA President Kevin Clingan and President-Elect Rusty MacLachlan were aboard the tour, and both were impressed by the city’s progressive attitude toward growth.

The approach Republic has taken in recent years should be instructive to other communities throughout the Ozarks. The city recognized that growth was coming, but Republic city leaders didn’t cower in fear. They didn’t attempt in vain to stop or slow down the coming growth. To the contrary, they recognized that growth and economic development had the potential to offer enormous benefits to their community. All that was necessary was a little planning. 

And plan they did. Republic’s approach to sewer trunk line extension may be the most ambitious in the entire region. Initially, some wondered why the city would go to all the expense of building sewer lines where no development had occurred. But it soon became clear the strategy was effective. Those sewer lines were used to guide and accommodate growth as it arrived. Republic city leaders had mapped out precisely how they wanted their city to grow. They used sewer lines as their land use plan, and it has worked remarkably well. Now Republic is poised for its next big boom. Far from hiding from growth, this city is courting it - even in a soft economy. 

The other city aggressively pursuing new growth and development is Ozark. On the same night Kevin and Rusty were touring Republic, Steve Hamm and I attended an economic development dinner hosted by the City of Ozark and the Ozark Chamber of Commerce. City Administrator Steve Childers delivered a presentation outlining the growth history of Ozark, as well as opportunities for today and the future.

Childers and other Ozark city leaders were not the least bit coy about their message: they want growth, they want economic development, and (most importantly) they want the city to be a partner - not an obstacle - to builders and developers.

Over the last two years, Ozark city officials have worked hard to improve the city’s damaged reputation with the development community. The reports we receive at the HBA from builder members who build there are that the city has taken on a less bureaucratic, more “customer service” approach. Reputations can be slow to change, but the city took an important step in the right direction with its message on October 23.

The message coming out of Republic and Ozark is refreshing.  It is no secret that the HBA has had its share of disagreements with these cities in the past. But in 2008, these two cities seem to understand what some others in the area still haven’t yet discovered: they need us as much as we need them.

It seems every municipality in America is suffering revenue shortfalls. The solution is almost too obvious: growth and development are the lifeline cities so desperately need in these difficult economic times. Most cities want commercial (especially retail) development because of the sales tax revenues. But local governments would be wise to be just as welcoming of residential growth. New homes house the customers that will spend dollars in their communities. The construction of homes overwhelmingly relies on locally-sold building materials – which means substantial sales tax revenues. Growth in residential construction should be an essential part of any progressive city’s success plan.

Cities like Ozark and Republic seem to get that. Cities and counties across the region would do well to follow the lead of these ambitious cities.

Mandated Residential Fire Sprinklers: A Serious Blow to Housing Affordability & Safety

On the very weekend the Federal Government proposed an historic bailout plan to rescue the financial markets (and ultimately to get people back into home-buying mode), voting members of the International Code Council adopted an unprecedented frontal assault on housing affordability.

In Minneapolis, Minnesota on September 21, final votes were cast for the inclusion of mandatory residential fire sprinklers in the 2009 International Residential Code – the code utilized by most communities that recognize a building code. A two-thirds vote was required to adopt the new mandate, but the deck was heavily stacked against affordability. Fire sprinkler manufacturers stand to gain billions of dollars when their product is required by code, and they were willing to spend millions to get there - effectively mobilizing hundreds of eligible “yes” voters and flying them from all over the country to vote for the change.

 

The sudden — and controversial — arrival of 900 fire officials eligible to vote at the International Code Council's final action hearings swelled the number of sprinkler proponents, and the measure was approved by a vote of 1,283 to 470. About 1,200 voting devices were turned in immediately after the residential fire sprinkler mandate was approved; suggesting that most of the proponents left immediately after the vote was taken.

 

To be a voting member of the International Code Council, you have to be a governmental member of ICC. City and county building and fire officials were eligible to vote, and they were lobbied effectively. It seems the only people not allowed a vote are those who are governed by the code. Builders and others in the industry are not given the right to vote at this event. The National Association of Home Builders lobbies. Members try to get on key committees. But we are allowed no vote.

 

There’s more. The ICC is a private entity. It is not answerable to any government, to taxpayers, or, well, anyone. It is a private organization that develops the code that thousands of municipalities and counties nationwide dutifully adopt (usually with no substantial local scrutiny or discussion).

 

Enough about process. This is terrible public policy, regardless of the fact that it now is included in the IRC, or how it got there. Local building departments, city councils, and county commissions should exercise reasonable and wise judgment and reject it when they get the opportunity. Among the best reasons to amend the IRC to strike the new sprinkler provision:

 

-          Housing affordability has reached its tipping point. In our area, the median earner can no longer afford the median priced new home. This mandate would push home prices another $5,000 to $7,000 out of their reach.

 

-          The mandate is most punitive against those who can least afford it. Adding a few thousand dollars to the price of a million dollar home may be a nuisance, but it is unlikely to prevent the home from being built or bought. But what about a family’s first starter home? What about workforce housing?  Habitat for Humanity? A $1,000 increase to the price of a home drives 402 Ozarks families out of the ability to buy the home. This mandate will prohibit thousands more from achieving the American Dream of Homeownership.

 

-          The technology is unreliable. Most home owners are unprepared to perform the maintenance required to ensure that the sprinklers remain operational. Pipes installed in attics freeze in colder climates. Sprinklers can be discharged accidentally, with damaging results. In areas served by wells or where water is scarce, the availability of an adequate water supply presents additional problems.

 

-          The new mandate won’t save lives. Fire deaths happen in old homes, not new ones. Basic modern building codes, smoke alarm requirements and other common sense and affordable modern residential fire protection have made new homes the safest in the housing stock.

 

-          The new mandate forces people to live in older, more dangerous housing stock – where their risk of fire death is greater. If people can’t afford a new home, where will they live? Older homes. Homes built before the modern residential fire protection are deathtraps in a fire. The best solution for saving lives is to make new housing as affordable as possible, getting families into safer, new homes.

 

-          The new mandate will lead to urban sprawl, and the “donut effect” in communities. Good builders have traditionally been happy to build in communities with reasonable building codes. But there are plenty of buildable areas in the Ozarks that are not under the IRC or any building code. It will be difficult to resist the temptation to build the same home a little further away for thousands of dollars less. And it will be difficult for buyers to resist the temptation to save those thousands when the only difference in the home is a costly amenity they wouldn’t have chosen if they’d been given the option.

 

These are facts. Don’t take my word for it. The data supports these conclusions. A full analysis of the data was conducted by NAHB’s Elliot Eisenberg and can be found here:

 

http://www.nahb.org/generic.aspx?sectionID=734&genericContentID=34465&channelID=311

 

As undeniable as these facts are, they are not the only facts now in play. The most ominous one is this: Fire sprinkler mandates will be part of the 2009 International Residential Code and will be required in all one- and two-family homes and townhouses that build to the code as of Jan. 1, 2011. Let’s hope our local officials exercise better judgment in amending the code, than the ICC exercised in drafting and approving it.

Multifamily Housing 'Matrix' Needs a Re-Boot

A year ago, Springfield adopted a new system for evaluating multifamily housing rezoning requests. An intricate point system dubbed the multifamily “matrix” has been in use ever since. 

I served along with other members of the community on the task force that drew up the matrix. Throughout the processed I was one of several who voiced concern about the potential outcome of utilizing such a system at all. It seemed to me that we were using a sledgehammer to kill an ant. Why not simply adopt a few statements of principle – guidines, if you will – that become the criteria through which staff, planning and zoning officials and council members exercise reasonable judgment? Instead, we opted for a prescriptive point system.

When the matrix was adopted, I outlined (in a column for the September issue of Housing News) my concerns about the policy and some basic benchmarks we should utilize to evaluate it. Here is an excerpt from that column:

“…I hope my fears prove unfounded, but the stakes certainly are high. That’s why the best part of the task force’s recommendation is that we reconvene in a year to evaluate the system and make recommendations for any needed changes. In the meantime, we should watch a few indicators very carefully:

 Number of rezoning applications received: If we receive significantly fewer rezoning applications over the next year than we did in 2005 & 2006, we need to consider that we may have severely harmed our local economy by driving jobs and revenue out of town. We should always use real market data to evaluate, and avoid rash decisions based on a “general feeling” of city council members or anyone else.

 Percentage of rezoning applications approved: If we are rejecting a significantly higher proportion of applications than in years past, we should re-work the matrix. 

 Financing. The design guidelines section of this matrix is a New Urbanism style guide, put into policy. New Urbanism is one of many design styles, but this matrix makes it the only one that receives rezoning points. Evidence exists that many lenders view the style as a risky and expensive variation from more conventional and proven development styles, and they often avoid them. Since we are essentially imposing New Urbanism on the multifamily development community (to qualify for higher density you must meet at least 50% of the design guidelines), we should take special note of how lenders respond.

 We must carefully evaluate the point levels during this year, to ensure they are fair to new development.”…”

The multifamily housing task force is now reconvening to re-evaluate the matrix. My hope is that these four criteria will be the ones utilized to determine how the matrix should be changed (or if it should be retained at all). Arguably, the matrix (at least thus far) has failed on all four benchmarks.

Number of rezoning applications received – I know of developers who have simply decided it isn’t worth trying to navigate the complex maze offered by the Springfield matrix.  Surrounding communities require far fewer bureaucratic hoops. To make a good judgment on this point, the task force will need data. City staff should gather the number of rezoning applications (developments, not units) approved and denied over the last year in Greene County, Christian County, Republic, Willard, Nixa, Ozark, Rogersville, etc. to compare. By any objective standard, Springfield should run well ahead of all these jurisdictions. It is more urbanized. It has a higher percentage of renters to owners. Occupancy rates in existing units remain high. There is no reason Springfield shouldn’t outperform all surrounding jurisdictions on the number of multifamily rezoning applications received – unless developers are being pushed away by policies and procedures.

Percentage of rezoning applications approved – This should be simple enough to compare the last 12 months to approval percentages in the past, as well as to current percentages in surrounding communities.

Financing - In the last year, financing for all construction projects has become less flexible.  If “New Urbanism” developments were on less-than-certain ground for financing a year ago, there is no reason to believe lending institutions have loosened standards this year to embrace this financially riskier option.

Evaluate the points – Let’s face it, the points are confusing. Nobody (including staff council members) seems able to agree on just how to allocate points. Despite the best efforts of the task force to keep the process objective and clear, the result has been muddled and confusing. If the matrix has created more confusion than simplification, it should be reconsidered.

Local Housing Market Poised to Rebound Sooner than Expected?

Our friends at the Greater Springfield Board of Realtors last week met with Federal Reserve Vice President Dr. Howard Wall, and the picture he paints for the near future in the greater Springfield market is cautiously optimistic for a nice rebound (and soon). 

We all know that nationwide home sales and new construction have been down severely. Locally, our down period began later.  And we in the Ozarks are hopeful that our reputation for being insulated from the extremes continues. That would mean we can expect this slowdown in the housing economy not to run as deep, or for as long a period of time, here as it has/will elsewhere. 

In the residential construction industry, of course, the first thing that must happen before large numbers of homes can be built again, is for those on the market today to start selling more rapidly. KY3's Cara Restelli reported last week on the possibility that our local housing market may have hit bottom, with a rebound on the way.  In case you missed it, you can watch the news story below.

National Honors for Your HBA

Today was another full day at the Executive Officers Seminar of NAHB in Providence, RI. Education sessions continued and I have pages of important and valuable notes from seminars today on Advanced Association Law and Data Collection & Member Needs Assessments. Charlyce received expert instruction in membership retention and meeting member needs. So much valuable information was shared today that we’ll need some time to sift through it all. Still, it is so useful to get advanced content like this from some of the best experts in their field. I anticipate it will pay off greatly for our members.

Today saw three more Association Excellence Awards for the HBA of Greater Springfield, bringing your HBA’s total national awards to five for the year. You can read about the two we received before today in yesterday’s blog entry. Today, the HBA of Greater Springfield received the honors of:

• Best Political Action Program Administered – Ozark Board of Aldermen Elections 
• Best Workforce Development Plan Implemented – Partnership with OTC on the Construction Readiness Program
• Best Specialty Fundraising Program – CBBT Sporting Clays Tournament

For the second year in a row, the HBA of Greater Springfield received more Association Excellence Awards than any other association in our size category. This is a great recognition of the work of our members, committees, and board of directors, as well as the support efforts of the HBA staff. It is a great honor to work with you on these projects, and I’m so proud that your efforts continue to receive recognition on a national stage.

I was surprised to learn tonight that our president, Kevin Clingan (and our board of directors and staff) had nominated me to receive the EOC’s top national award of Executive Officer of the Year. I was even more shocked to actually receive the award at tonight’s AEA Awards Gala. This is a great honor to receive and I am so humbled by it. 

One of the great things about my job is that I often get credit for the work of others. Because of this reality, I always want to be cautious not to fall into the trap of believing my own press clippings. I want you to know that I consider this award to be recognition of the great home builders association we all treasure. It is recognition of a uniquely visionary and dynamic board of directors; of a remarkably talented and committed staff; and, most of all, of our truly exceptional members - the caliber of which most associations simply could never imagine the privilege of serving. I have said it before, but I believe it cannot be said enough: I am so grateful to work for you, our HBA members. Thank you so much for allowing me that honor.

 

Another late night. Signing off from Providence, RI until tomorrow.  

- Matt

Wednesday in Providence: Awards & Education

I’m just getting back in my hotel room after HBA Operations Manager Charlyce Ruth and I went to dinner with Crystal Harrington. Crystal is the Executive Officer at the HBA of Southwest Missouri (Joplin). Part of the value of this event is sharing information with peers, and I always enjoy getting together with Crystal. 

Day two of the annual Executive Officers Council Seminar of the National Association of Home Builders was filled with useful information and a couple of honors awarded to the HBA of Greater Springfield.

Charlyce and I split up today so we could cover more educational ground. I attended seminars on increasing the effectiveness of a local PAC, on ‘When to Lead and When to Follow,’ and on anticipating and fulfilling expectations and wishes of members even before they are expressly mentioned. 

Charlyce caught an excellent program from association law attorney Jeff Tennenbaum on legal issues pertinent to a 501(c)3. The content should help the HBA Charitable Foundation to excel. She also learned a new method for systematically evaluating association programs for effectiveness and their relevance to members.

The HBA of Greater Springfield also was honored with two Association Excellence Awards. The association’s Fiscal Strategy and Financial Plan for a Shifting Market received the AEA award in the category of Best Association Operations Program. This tool was developed by the budget committee as an accompanying document to the annual budget. It provides a roadmap for accurately forecasting those areas of the budget that are most and least likely to be affected by the shifting housing market. It anticipates which departments will be affected for the better or for the worse, and by how much. It also provides contingency financial plans for use in the event any projections and forecasts ever fall short.

We also received the AEA award for Best Communication to Members – Directories Published for the HBA membership directory. Our members are familiar with this product and have found it quite useful over the years. The most recent version of the award-winning directory is available to HBA members in the showroom of HBA Directory Distribution Sponsor Southern Materials Company. 

The rest of the Association Excellence Awards will be announced tomorrow (Thursday), so I hope to have more to report then. In the meantime, please know Charlyce and I are working hard to learn everything we can while we are here to help provide greater value to our members for their membership dollar. 

That’s all for now. More tomorrow.

- Matt

Matt and Charlyce Attend EOC Seminar in Providence

This week marks my first attempt to provide full-scale daily blogging to our members, from a location abroad. HBA Operations Manager Charlyce Ruth and I touched down tonight just before midnight local time in Providence, Rhode Island. Providence is the site of this year’s Executive Officers Council Seminar of the National Association of Home Builders. 

This annual event provides opportunities for Executive Officers and senior staff of HBAs from across the country to network, share ideas and successful programs and services for members. We also learn from a wide variety of expert seminar presenters on topics ranging from association legal issues to enhanced member services to political strategies (the list goes on and on). Annually the EOC Seminar provides valuable content that is put to work for the benefit of HBA members. This year’s seminar is focused largely on providing support for HBA members and their businesses in an increasingly challenging housing market. Charlyce and I will be actively seeking any and every membership edge your HBA can offer to help your business survive and even thrive. The EOC seminar is also the venue for the annual Association Excellence Awards where HBA programs, advocacy & services to members are evaluated and measured against those of peer associations from across the country. The HBA of Greater Springfield again is up for several awards this year, and I hope to have good news to report to you as winners are announced throughout the week.

Tomorrow will be a busy day at the EOC Seminar. Charlyce is enrolled in NAHB’s spokesperson training program. This is excellent and very useful training. I have taken the course, as have a number of our board members over the years, and it has helped us carry your association and industry message in the local media and in other public settings. I’ll be busy with my duties as a member of the national EOC board of directors, welcoming new executive officers and serving as a guide/mentor to a couple of first-time attendees the board has assigned to me. Of course, I’ll also have the opportunity to learn in seminars. And the first series of Association Excellence Awards will be announced. 

It was nice to get some work done in the office today before catching our 5pm flight, but we are paying for it now - checking into the hotel as the clock strikes midnight.  If you need to reach Charlyce or me this week, we will be checking e-mail frequently. Meanwhile, Public Affairs Director Jennifer McClure is riding herd back at the HBA headquarters, along with Kay Wylie and Linda Thieman. They will happily help you with any needs you have this week.

Don’t forget Tuesday is Election Day (I voted absentee last week). Several HBA members and friends will be on the ballot and they need your support. Of special note is HBA builder and board member Terry Ozborn who is in a tight race for Greene County Public Administrator. If you live in Greene County, please pull a republican ballot to vote for him (and tell every friend you can find to do the same). More tomorrow.

- Matt