Home Builders Association says ‘Help!’

Beleaguered builders ask cities to hold fees

By Lee van der Voo

The Lake Oswego Review, Nov 27, 2008, Updated Oct 30, 2009 (25 Reader comments)

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Struggling homebuilders are looking for a lifeline from local governments, asking for flexibility on rules and fees to help them get back to building.

In a letter sent to cities and counties, the Home Builders Association of Metropolitan Portland sought a helping hand Oct. 31.

Since then, their requests have sparked thoughtful debate among elected leaders in Metro area communities, including Lake Oswego. Several jurisdictions plan meetings with the Home Builders Association in the next two months.

Pointing to the global financial crisis and unprecedented economic hardship among home builders, the Home Builders Association has asked for several reprieves from local governments:

• As home construction freezes, they want governments to extend project approvals and permits until stable financing and consumer demand for housing resumes in 2011 or 2012. Doing so prevents builders from having to reapply for project approval and lose money already spent on engineering, planning and permitting fees. Those costs can sometimes reach $100,000.

• The Home Builders Association also wants governments to exempt projects already approved for construction from increases in related fees. Builders are charged fees called system development charges for the impacts of new homes on community infrastructure like roads and parks. Those fees are set to increase in several communities and could complicate financing on approved developments while banks lend cautiously.

• Governments are also being asked to temporarily reduce, suspend or delay fees on new construction until homes are sold. Delaying payment of system development charges, permits, plus planning and engineering fees could help builders improve their odds of getting funding from banks, according to the Home Builders Association. The agency has suggested delaying payments of up to 18 months.

They say any help jurisdictions can provide will help jumpstart new development as the housing market turns, as well as help builders to complete stalled projects and bolster the economy by providing jobs.

Bad as the ’80s

Joe Keizur, interim vice president of government affairs for the Home Builders Association, said builders are essentially calling in favors from governments after being generally cooperative with fee increases while building was lucrative.

“Right now we need some reciprocity,” said Keizur.

A quick look at the industry underscores the problems builders face: The global financial crisis has tightened credit markets and bank lending is in short supply. Buyers and builders alike are less likely to obtain loans and demand for housing is low. Those factors have caused three of the region’s top 10 home building companies to file for bankruptcy in recent months.

The effects of those bankruptcies have trickled down, forcing contractors who paint, tile floors, build cabinets, install plumbing and wire new homes out of work.

The Oregon Employment Department noted 11,000 construction jobs were lost in the development sector between September 2007 and September 2008. Many small-scale home builders and contractors aren’t counted in those figures, or in the current unemployment rate of 7.3 percent, because they are self-employed.

“It’s probably as bad a building environment than it’s been since the ’80s and given that, we need jurisdictions to help us out,” Keizur said.