Developer News:
Urban Infill Builders Feel the Pain of the IRS:
CityMark Homes a San Diego based urban infill
builder with projects in Southern California
and Las Vegas reports that urban infill homebuilders
face an unfair tax burden from the IRS. Infill
builders are at a competitive disadvantage to
suburban builders due to the fact that under IRS
code section 460, multi-family developers are
required to pay taxes based on the percentage of
units sold in a project and the construction percentage
completion BEFORE any escrows can close and money
is released to the infill builder. This presents a
huge cash-flow challenge for any builder but especially
infill builders attempting to enter the
burgeoning
urban market. Suburban builders pay no taxes until
its homes are built and sold. It is ironic that
city governments are pleading with developers to help them
rebuild and re-develop their urban centers to meet Smart
Growth goals, yet these builders are hit with this onerous
one-sided tax burden. At a time when housing affordability and urban
decay are major problems throughout the US, amending this
section of the tax code would greatly help to increase the
supply of housing and to direct more development into urban
areas where our infrastructure is concentrated and where jobs
are located. What better way to achieve Smart Growth goals
than to reduce the financial burden on infill developers and
help them get their projects built? Please urge your local
BIA or HBA to support amending this IRS code section 460.
|
|
SB 800 News:
SB 800 Claims Corner:
We continue to count approximately 5 to 7
new SB 800 claims made by homeowners and
homeowners associations each quarter. Most
of the claims are in the Chapter 2 repair process.
We have heard of 2 claims going into Chapter 4.
We have not heard of any claims going into litigation.
Plumbing & Electrical Statute Approaches:
SB 800 is now just over 4 years old.
We are at a pivotal point in the law because
the 4-year statute of limitations for
plumbing and electrical is quickly
approaching. Electrical and plumbing both have a 4
year statute attached to them. We will continue
to keep our ear to the ground on these types of claims.
CBIA SB 800 Survey:
The California Building Industry Foundation
has agreed to provide funding for a SB 800
Research Project. This project is being
spearheaded by CBIA’s Risk and Insurance
Committee under the aegis of Mike Strech
and a subcommittee of 5 members. There are
two separate questionnaires: there is a
trade contractor survey with 25 questions
and a separate builder questionnaire with
40 questions. The purpose of the survey
is to find out if SB 800 has been effective
for builders and trade contractors and what
improvements may be required to make if more
effective. Look for the survey in May and please make sure to get it
to the “correct” person in your company and
encourage that person to provide precise answers.
Important Note: If you have problems, questions
or complaints about an SB 800 claim please contact Nick Cammarota at the California Building Industry Association at (916) 325-9300
Risk Management Guidance:
BIA:San Diego’s Risk committee is busy
putting the finishing touches on a new
outline
that will provide builders and trade contractors
guidance on a myriad of “best practices”
surrounding SB 800: included are wrap insurance,
customer expectations, customer service,
post-construction project management, project
exit strategies, among many topics. Look for
this outline later this year.
List of ProTec's Services:
- Homeowner Association (HOA) Maintenance Manuals
- Home Owner (HO) Maintenance Manuals
- Manufactured Products Warranty Manuals
- Community Maps
- Monthly Building Maintenance Programs (Manual Implementation)
- Facilities Engineering: mid & high-rise maintenance program
- Maintenance & Repairs
- General Contracting (SB 800 Repairs)
- Concrete, decks, doors, fencing, gates, gutter cleaning…
- Electrical, lighting, painting, plumbing, welding, windows…
- Inspections
- Annual HOA maintenance inspections
- Common area turnover inspections
- Physical element reports: building analysis
- Stormwater BMP inspections
- Playground audits/inspections
- Peer review of plans & DRE budgets
(common area maintenance only)
|
HOA Management News:
HOA Management Company Roll-up’s Hit California:
In the past 3 years there has been considerable consolidation in the California HOA management industry. While the pace of consolidation doesn’t come close to the “Home Depofication” that has occurred in the hardware or waste management industries it is nonetheless gaining momentum. We know of at least
two large companies headquartered outside California that have been purchasing management companies within California and met with success in its acquisition strategy. There are two other California companies that have been “rolling-up” smaller HOA management companies into their orbit. What has taken the business community so long to get interested in consolidating the HOA management industry? At first blush the management industry looks ripe for consolidation with over 286,000 communities in the US having 23.1 million homes housing over 57,000,000 people. California now has over 34,000 HOA communities housing over 6,000,000 people.
There are two major barriers to consolidation. First, over ˝ of all these
HOA communities in California are small,
comprising less than 25 units. Thus, there aren’t sufficient management and accounting fees to entice
or afford a professional management company. Plus, there is no legal requirement mandating professional management so most of these small HOA’s have no management whatsoever. However, in the past 10 years more newly built HOA’s are larger and have enough money in their budgets for professional management. Look for further consolidation in the future. Let me know if you want to sell your management company as I might be able to connect you with a buyer.
|
|
|
Upcoming Speaking Engagements:
- New Home Customer Service Conference - Las Vegas:
- August 6th and 7th, 2007 at The Orleans Hotel.
- CBIA/BIA: Superior - Risk Management Conference:
- Sacramento Double Tree Hotel on September 18th, 2007
- CBIA/BIA: San Diego - Risk Management Conference:
- Del Mar Hilton on October 9th, 2007
|
'Did you knows' (courtesy NAHB):
- In 2005 condos accounted for ˝ of all multifamily starts (about 350,000)
- 3.7 million: Total number of condo residents
- 28: Percentage of condo owners over 65
- 27: Percentage of owners under 35
- 20: Percentage of owners with income of $80,000 or more
- 52: Percentage of condos occupied by one person
- 29: Percentage occupied by two persons
- 75: Percentage of those who bought a condo conversion who were first time buyers
- 54: Percentage of those who bought an existing condo who were first-time buyers
- 44: Percentage of those who bought a new condo who were first-time buyers
|
|
Copyright 2007 ProTec Building Services. All rights reserved.