JUNE 2021 NEWSLETTER To promote, educate and advocate for the Residential Building & Remodeling Industry; providing resources that benefit industry professionals and consumers in the communities we serve. The Shooters aim was spot on for a day of fun and friendly competition at NILO Farms. YAEKEL & ASSOCIATES INSURANCE SERVICES “CLAY BUSTERS” TOP SQUADRON TEAM SCORE = 318 Everyone was excited to be back out together with a beautiful setting, ammo on the course and anticipation to break every clay in their sites. Followed by a delicious lunch from Who Dat’s Southern Food and winner announcements. WHATS INSIDE EXCAVATION & FOOTINGS DONE! June will bring many trades and updates as we are scheduled to have the foundation to exterior completion by month end PWB Scholarship Recipient Announcement Upcoming Events June 24 - Bury The Hatchet / Axe Throwing Event July 16 - Herschel E. Johnson Golf Classic Sport Clay Shoot pictorial Membership Renewal Updates NAHB Eye on the Economy News: Material Prices Continue to Set Record Highs Mill Owner Discusses Lumber Crisis Illinois Reports: HBAI Legislative Update FOID Card Law new ruling Illinois Policy Institute: Covid Debt Page 1
Page 2
Page 3
Next up on the schedule: ON-SITE • • • • • • • • • • Footings & Foundation Install sewer and water Basement Plumbing Rough Back fill Foundation Pour basement and garage floors • Water Meter Framing Electrical Rough In • HVAC Rough In Roof Installation Exterior Siding & Brick Plumbing Stack Out OFF-SITE / COLOR & MATERIAL SELECTIONS Roof, Siding, Shake & Stone Kitchen & Bathroom Cabinets Flooring & Backsplash Kitchen & Bathroom Countertops Lighting Paint Plumbing Fixtures Blinds Page 4 Check out the latest videos as key trade partners share the process of Building a New Home in the Metro East
Page 5
Higher Costs Limiting Builds and Sales The expected impact of longer delivery times and higher material costs — plus greater overall uncertainty — had measurable impacts on single-family construction and sales in April. Despite the softening of these measures, builder confidence remains strong in the face of solid demand and inadequate resale inventory. The NAHB/Wells Fargo Housing Market Index (HMI) stood steady at a level of 83 in May, although comments in the HMI survey indicate that concerns continue to grow regarding building materials prices, and labor and lot availability. New home sales declined in April by 6% on a monthly basis to a seasonally adjusted annual rate of 863,000, as the median sales price rose above $372,000 — up 20% from a year ago. In April of last year, 45% of new home sales were priced below $300,000. Today, that share has fallen to 27% as the entry-level market is particularly affected by higher material costs. Because of these challenges, single-family starts fell back 13% in April to an annual rate of 1.09 million. Resale home prices are headed even higher due to lack of inventory, which stands at a mere 2.4-month supply, per the National Association of Realtors. According to the S&P CoreLogic Case-Shiller Index, home prices have increased 13% over the past year — an unsustainable pace, given income levels and an expected rise in interest rates later in 2021. These higher prices have stalled existing home sales, the rate of which fell to a 10-month low in April. Our forecast projects an ongoing readjustment, returning from the recent post-Great Recession high levels of sales and starts to more sustainable long-run trends given current (un)availability of materials, labor and lots. Although not a bubble, the current rate of gains for home prices will increasingly price buyers out of the market. Policymakers need to focus on ways to improve the supply chain, which will ultimately help preserve economic momentum and offset rising inflationary pressure. –NAHB Chief Economist Robert Dietz Eye on Housing Page 6
Legislative Update Following are important bills that the Illinois General Assembly are looking at in the last days of Spring Session that were to be addresses by midnight last night. The House adjourned at 2:30 this morning and Senate is coming at in today at 11am to finish up. • Consumers & Climate First - Legislation that would mandate electric car chargers and allow munis to impose the Stretch Energy Code is still being worked on but is on life-support. The 950 page bill mostly covers issues with the public utilities and their carbon foot print. However, a little slice of heaven was carved out just for us regarding housing standards to lower global warming. No bill number to report, but we know the language we oppose is still in the draft being worked on. • HB2621 - This is the Affordable Housing bill that, in part, allows tax credits for developers constructing affordable housing. It also contains language for rental assistance, both items we support. The bill has passed the Senate and is on Concurrence in the House where it will likely get final passage today. • SB58 - This the Transportation Bill that has contained in it the lowering of registration fees on light weight hauling trailers from $118 down to $36. The fee went up two years ago from $18 to $118. Because so few trailer owners were willing to pay the $118, the fee was cut way back to $36 and it is estimated that this will be a revenue neutral tax cut as trailer owners will be willing to pay the new fee. • SB1847 is the Equal Pay bill, employers with 100 or more employees will register pay data to the state to determine if employers are abiding by equal pay laws. The original language had a 1% gross receipts tax for non-compliance, the new penalties are less severe. • HB3437 imposes Prevailing Wage mandates on industries considered to be dangerous for employees. Oil and gas refineries, chemical plants, and ethanol plants would be required to pay Prevailing Wage if HB3437 were to pass. While the bill moved last night from 2nd to 3rd reading, it has opposition from the Black Caucus and may not be called for lack of the votes necessary for passage. • And finally, the Constitutional Amendment to prohibit statutory passage of a Right to Work Law in Illinois has passed and voters will choose in November of 2022 whether Illinois needs this amendment or not. Page 7
Page 8
TEAM SCORE = 260 TEAM SCORE = 237 TEAM SCORE = 228 TEAM SCORE = 242 TEAM SCORE = 235 TEAM SCORE = 226 TEAM SCORE = 208 TEAM SCORE = 276 TEAM SCORE = 289 TEAM SCORE = 297 TEAM SCORE = 251 Page 9 TEAM SCORE = 238
INDIVIDUAL SCORES OF 100+ SHOOTERS Scott Wadlow Chad Meier Steve Gower Jay Toler Cody Srogus Mike Hartoin Jerry Yaekel Scott Gower Zec Bishop Mike Baalman Kurt Lauer Chris Huff Marc Frederich Scott Giffhorn Dave Dillow Luke Brett Schwalb Mike Farrell Joseph Goley Mark Frey Brian Oeltjen Hunter Oeltjen Chris Cooper Pat Flowers Matt Seggerman Scott Schneider Bryan Herbert Kevin Betley Tony Huff Aaron Klemme Don Padgett Luke Yarber Cole Berry Jon Meyer Scott Billings David Isselhard Tom Cummings Scott Bauman Matt Steely Cody Trosley John Voellinger Adam Davis EJ Pfirshey Chris Berry Mark Dill Brian Orr Brandon Weathers JR Landdeck John Klopmeyer 86 TFH Construction 85 Metro Marble & Granite 84 Yaekel & Associates - Clay Busters 81 CA Jones Inc. 81 Srogus Construction 81 SCI Engineering 80 Yaekel & Associates - Clay Busters 79 Yaekel & Associates - Clay Busters 79 Padgett Building & Remodeling 78 TWM 77 Ron Woods Excavating 76 TFH Construction 75 Yaekel & Associates - Clay Busters 75 Red-E-Mix 75 SCI Engineering 73 Red-E-Mix 73 Busey Bank 73 SCI Engineering 73 Goley Insulation 71 Red-E-Mix 71 Yaekel & Associates - Flying Saucers 70 Yaekel & Associates - Clay Busters 70 Red-E-Mix 70 Light Brite 69 TWM 69 Busey Bank 68 Padgett Building & Remodeling 68 SCI Engineering 68 TFH Construction 68 Henges Interiors 66 Padgett Building & Remodeling 66 Ron Woods Excavating 66 Yaekel & Associates - Hot Shots 65 Helitech 65 SCI Engineering 65 Yaekel & Associates - Orange Crush 64 SCI Engineering 64 Yaekel & Associates - Flying Saucers 63 Padgett Building & Remodeling 63 Red-E-Mix 62 Helitech 62 Busey Bank 62 Johnson Home Contracting 62 Yaekel & Associates - Hot Shots 61 Yaekel & Associates - Clay Busters 60 CA Jones Inc. 59 Crown C Supply 59 TWM 59 Yaekel & Associates - Orange Crush Gaines Smith Bud Dustin Mark Eichholz Clarence Goebel Keith Reinneck Steve Dill Jim Lynch Mark Mueller Scott Behrmann Jim Lugge Pierce Widham Herb Frohock Mark Vasquez Larry Vitale Cale Henke Jack Klopmeyer Kevin Benson Mike Yarber Nathan Sox Jason Paliatka Chris Jones Dan Haverstick Martin Todd Rhoades Bobby Russell Paul Hanson Dan Kolb Kevin Underwood BJ Srogus Jake Newman Tom Martindale Mark Davitz Ron Wilson Shawn Mitchell Jim Johnson Mark McBride Ron Woods Jim Bargannier Shane Smothers Eric Allmon Mike Geller Bryan Dodd Adam Fricke Jon Travetto Marty McCabe Drew Halliday Page 10 58 Padgett Building & Remodeling 58 Srogus Construction 58 Henges Interiors 58 Yaekel & Associates - Orange Crush 58 Light Brite 58 Light Brite 58 Yaekel & Associates - Eagle Eyes 58 Yaekel & Associates - Hot Shots 57 Goley Insulation 57 Yaekel & Associates - Flying Saucers 57 Yaekel & Associates - Eagle Eyes 56 Padgett Building & Remodeling 56 Busey Bank 56 Yaekel & Associates - Flying Saucers 55 Red-E-Mix 55 Busey Bank 55 Yaekel & Associates - Orange Crush 55 Yaekel & Associates - Eagle Eyes 54 Ron Woods Excavating 54 Ron Woods Excavating 54 HBAI / American Colony Homes 53 CA Jones Inc. 53 Authorized Appliance 52 Srogus Construction 52 Parksite 51 Henges Interiors 50 TWM 50 Yaekel & Associates - Eagle Eyes 48 TFH Construction 47 Srogus Construction 45 Busey Bank 44 Srogus Construction 43 CA Jones Inc. 43 Goley Insulation 42 Crown C Supply 42 Johnson Home Contracting 42 Cardinal Door 41 Ron Woods Excavating 40 TWM 40 Light Brite 39 TWM Scott Muehlhauser 38 Yaekel & Associates - Flying Saucers Tyler Jones 36 Authorized Appliance 36 Johnson Home Contracting Derrick Klopmeyer 36 Yaekel & Associates - Orange Crush Jon Clores 33 Helitech 30 Yaekel & Associates - Hot Shots 29 Helitech 29 Parksite 29 Yaekel & Associates - Hot Shots 28 Metro Marble & Granite
TEAM SCORE = 283 TEAM SCORE = 256 TEAM SCORE = 220 FELLOWSHIP AND ACTION ON THE COURSE TEAM SCORE = 248 TEAM SCORE = 216 TEAM SCORE = 237 Page 11
AND THE WINNERS ARE…………. Pierce Windham w/Padgett Team SHOTGUN RAFFLE WINNER Scott Wadlow w/TFH Team TOP GUN WINNER Chad Meier w/Metro Marble & Granite Team SHARP SHOOTER WINNER - $100 Bud Jacobs w/Srogus Team 50/50 RAFFLE WINNER - $350 B FLIGHT Winners 1st Place - TOP SQUADRON Winners Yaekel Team | Clay Busters: Hunter Oeltjen, Jerry Yaekel, Mark Frederich, Mark Dill, Scott & Steve Gower LUNCH IN THE PAVILION Henges Interiors Team: Aaron Klemme, Bobby Russell, Dustin, Jason Paliatka & Jon Edler Page 12
Court rules FOID card law unconstitutional A Southern Illinois Judge has ruled Illinois’ FOID card law unconstitutional, paving the way for the Illinois Supreme Court to take up the issue. The case is The People of Illinois vs. Vivian Claudine Brown. Four years ago, Brown was accused of possessing a firearm without a FOID card. On April 27, Judge T. Scott Webb dismissed the charges against Brown, and also ruled the FOID card unconstitutional. In his ruling, Judge Webb stated: “A citizen in the State of Illinois is not born with a Second Amendment right. Nor does that right insure when a citizen turns 18 or 21 years of age. It is a façade. They only gain that right if they pay a $10 fee, complete the proper application, and submit a photograph. If the right to bear arms and self-defense are truly core rights, there should be no burden on the citizenry to enjoy those rights, especially within the confines and privacy of their own homes. Accordingly, if a person does something themselves from being able to exercise that right, like being convicted of a felony or demonstrating mental illness, then and only then may the right be stripped from them.” Page 13
A Journey to the Heart of the Lumber Shortage By Henry Grabar / Slate.com The late-pandemic supply chain crisis never smelled quite as good as it did on Wednesday morning in Searsmont, Maine. The air on the 80-acre campus of Robbins Lumber was thick with the scent of eastern white pine—the tallest trees in the Maine forest— being sliced into boards. Yet the warehouse, a cavernous hangar designed to store pallets of finished lumber for shipment, was virtually empty. The company cannot keep wood on the shelves. “Traditionally, these tiers are about four deep with lumber on both sides—you can hardly get a unit of lumber down the middle,” said Alden Robbins, the company’s vice president. “Look at it now. We’re running at about a quarter of our inventory, and we’re running at full speed, that’s how much demand there is. And if we produced 10 times as much as we produce, we could sell it all right now.” That morning, the price of lumber futures on the Chicago Mercantile Exchange surged above $1,500 for the first time, a 300 percent rise from this time last year. Two-by-fours are suddenly very, very expensive, sending the cost of building a new home up by about $36,000 on average, according to the National Association of Home Builders. Lumber companies are reporting record profits. Inside the mill, pine logs are stripped, cut, and sanded into lumber over a production line that spans hundreds of yards of belts, chains, and band saws spinning at 100 miles an hour. The machinery roars and whines, and the planks turn and tumble from one stage to the next with the deep, constant clattering of a supersized bowling alley. As the empty warehouse attests, the lumber run-up is great news for the sawmill, which the Robbins family founded on the St. George River in 1881. Alden Robbins runs the company with his brother and sister; he went to high school with many of his employees, and the sawmill manager’s mom was his babysitter. “It’s going to allow mills to reinvest,” Robbins said of the price surges. But it’s also been tough to see shortages irritate the company’s longtime buyers and force locals to bail on a new deck or even a new home. “I get asked that from customers who say, ‘Why can’t you get me more product? Why don’t you just build another sawmill?’ “ On the demand side, the lumber issue is relatively straightforward: Americans are flush. Interest rates are low. Wealthier households are buying pandemicPage 14 proof second homes or diving into long-awaited renovations. Younger families are trying to buy starter homes and settle down. Many multifamily builders have turned to timber as well, which is now commonly used to frame five- or six-story buildings. All that has created enormous demand for wood. But the case of lumber supply is a little more perplexing. True, shipments from Canadian forests, which contribute about one-third of U.S. lumber consumption, have been constrained by tariffs, beetle infestations, and wildfires. But there is plenty of wood on both sides of the border, and fast-growing pine in the U.S. South is actually cheaper than it’s been in two decades. Instead, the culprit is the decade of instability and low prices that followed the Great Recession, when America stopped building homes, leaving the lumber trade out to dry. The stunted recovery stripped the industry’s crucial middlemen—the mills themselves—to the bone. Building a new deck is expensive now because mills can’t ramp up to meet the demand surge—or won’t, nervous they’ll get caught with millions in underused machinery when prices crash back to earth. Nowhere more so than Maine, the nation’s most forested state, where wood and paper make up about 10 percent of the economy. The long-term decline of New England paper mills has taken the bottom out of the timber market here. Lumberjacks like Andrews have nowhere to go with anything that’s not a grade-A saw log; sawmills have nowhere to send the scraps that remain when a cylindrical log is cut into rectangular boards.
…... Lumber Shortage continued Last spring, for example, a digester that processes wood pulp at a paper mill in Jay, Maine, exploded— robbing both Samuel Andrews and Robbins Lumber of a buyer for chips, branches, knotty wood, and the narrow, tapering tops of the tree trunks. The mill’s Pennsylvania-based owners have decided not to replace it, and laid off more than 150 workers. This symbiosis is important to the sawmills. Eric Kingsley, an industry analyst in Portland, Maine, recently helped a large company study the possibility of putting a sawmill in Maine. “The big constraint wasn’t workforce, it certainly wasn’t log supply, it was ‘What do we do with all these chips?’ Because if another paper mill closes, are we going to be able to move these in 20 years?” Robbins Lumber has a solution, but it wasn’t cheap. Two years ago, the family committed $30 million to an on-site biomass power plant that uses the mill’s waste chips to generate power for thousands of local homes—and enough heat to dry its own white pine boards in a massive kiln building before they are shipped to market. The expense of that project is part of the answer to the question: Why not build another sawmill? Robbins in front of the piles of chips left over from the mill. Many will wind up inside the company’s on-site power plant. The other lies inside the mill. Step inside and see the bewildering array of technology that’s required to turn a log into lumber. A metal detector, for one thing: Maine’s eastern white pines may be a century old by the time they are felled to make boards, so a tree might contain hooks, nails, or bullets that can gum up the works. More expensive are the computer scanners that make instantaneous decisions about how to slice a plank into marketable boards for maximum value, based on the location of cracks, knots, and other imperfections; the calculations and the cut are made in a fraction of a second. There are 30-pound saws that shape the planks Here and there, as we duck, twist, and climb our way down the production line, the ruddy-faced Robbins snatches a board from a conveyor like a grizzly bear pawing a salmon from a stream, to show me up close the work of all his machines. It’s this technology that marks the real impediment to a quick expansion to meet lumberyards’ big offers. A new sawmill could take years to be completed—and the last lumber price spike, in 2018, came and went in half that time. I was lucky to visit when I did: Next week the plant will shut for maintenance. Yes, in the middle of an all-time spike in lumber prices. “You need good times to reinvest to keep yourself competitive,” Alden Robbins says. New blades, new belts, new gears. That’s what a good year of sales makes possible. But a new sawmill? For an industry that’s been in the dumps for 10 years, that will take more than a run on Home Depot. Page 15
Page 16
RENEWING MEMBERS Crown C Supply - 16 years FCB Banks - 21 years First Mid Bank & Trust - 4 years (Scott Gruber) J.T. McDermott Remodeling - 23 years Klemme Construction - 8 years Roofers Mart Exterior Building Products - 9 years SCI Engineering - 6 years TFH Construction - 5 years REMODELERS COUNCIL RENEWALS BOS - Bank of Springfield Copious Technologies Landscapes Unlimited Page 17
Federal Covid-19 Relief Going to Illinois Debt Rather than Business Relief Senior Director of Budget & Tax Research Adam Schuster Pritzker borrowed during the pandemic rather than making responsible budget decisions. So Illinois’ federal relief must repay debt rather than helping businesses recover like other states. The U.S. Treasury Department on May 10 issued guidance derailing Illinois Gov. J.B. Pritzker’s plan to use federal financial help to pay down debt issued to cover budget deficits during the pandemic. Pritzker and state Comptroller Susana Mendoza now say they plan to use higher than expected state revenues to pay off the debt. But money is fluid, so he is essentially taking money from one pot rather than another. The practical effect is exactly the same as if the state had used federal aid to pay down the debt. Treasury will send Illinois a total of $8.1 billion for state government, $2.7 billion for metropolitan cities including $1.9 billion for Chicago, $2.5 billion for counties, and $742 million for smaller cities. The interim final rule released by Treasury “precludes the use of [Fiscal Recovery Funds] to cover the cost of debt incurred prior to March 3, 2021.” Initially, Pritzker and Mendoza indicated they would seek changes to the rule to allow their original plans to move forward, saying it was the most fiscally responsible use of the funds. Federal borrowing should not have been necessary Illinois was the only state to rely on emergency borrowing from the Federal Reserve to shore up its budget during the pandemic. Pritzker borrowed $1.2 billion in June 2020 with a 3.83% interest rate and a one-year repayment term. After voters rejected Pritzker’s proposed progressive income tax hike in November, he secured another $2 billion loan with a 3.42% interest rate to be repaid over three years. Mendoza told Treasury that Illinois’ borrowing “was essential for the continued performance of government services” during the pandemic. Because the state could have balanced the budget with just two fiscally responsible policy changes, pension reform and flat funding, this clearly is not the case. Additionally, 49 other states were able to manage their budgets without borrowing from the Federal Reserve. But Mendoza is right to say using the funds for repaying the debt is “entirely consistent with the spirit of the American Rescue Plan.” Mitigating economic harm from the pandemic, replacing lost government revenues, and supporting the funding of essential services are core purposes of the fiscal recovery funds. Directly or indirectly, repaying short-term borrowing incurred during the pandemic fits each of these purposes. Remaining federal funds should be used to bolster economic recovery Bond Buyer reports Illinois still owes $2.175 billion to the Federal Reserve and $600 million to other state accounts. That would still leave about $5.4 billion in federal funds for other uses. Pritzker in his February budget address endorsed the principle of reserving a share of federal aid for business relief. He has yet to propose specifics and is currently pushing nine tax increases, mostly on businesses, worth at least $932 million. In fact, the most recent update from the governor’s budget office shows he is counting only nearly $1.5 billion in “revenue enhancements,” indicating additional tax hikes could still be on the table. The governor had previously backed a plan to withdraw pandemic tax relief from around 440,000 small businesses. Before considering what type of economic relief Illinois can provide to businesses, a logical first step would be to avoid imposing additional harm. Federal aid and higher revenue projections mean lawmakers should reject all of Pritzker’s proposed tax increases to ensure businesses are in a position to create jobs and grow wages in the postpandemic recovery. Illinois’ 7.1% unemployment rate remains higher than the nation and the Midwest. Additionally, the state should use federal funds to replenish the unemployment trust fund emptied during the pandemic. If it doesn’t, it will have additional federal loans to repay with interest. It also risks automatic unemployment insurance tax hikes on businesses that current law mandates until the trust fund is refilled. . Illinois will need to use much of the aid for debt service, directly or indirectly. Failing to pay off that debt would harm Illinoisans. But that debt only exists because of a fiscally irresponsible budget adopted during the pandemic. Illinois needs significant fiscal reforms to be able to continue providing essential services in the long run at a tax burden that doesn’t ruin its economy. Most important among these is a constitutional amendment to allow true pension reform. A five-year fiscal plan from the Illinois Policy Institute, Illinois Forward, provides lawmakers with a road map to success. Page 18
OFFICERS P L A T I N U M President, Ryan Butler Remington Properties 1st Vice President, Mike Lippert Liese Lumber 2nd Vice President, Mike Needles C.A. Jones, Inc. Associate Vice President, Mindy Shafer Wells Fargo Home Mortgage Treasurer, Scott Gruber First Mid Bank & Trust Secretary, Jerry Yaekel Yaekel & Associates, Inc. Immediate Past President, Aaron Klemme Klemme Construction DIRECTORS G O L D S I L V E R Allen Roofing & Siding B R O N Z Page 19 Jason Klein - Ameren Illinois Barry Buchman - Arrowhead Building Supply Matt Warren - Carrollton Bank Coy Mullenix - CMI Construction Michelle Rauk - Eagle Flooring Mark Fulford - Fulford Construction John Snapat - Fulford Home Remodeling Steve Macaluso - Halloran Construction Jon Elder - Henges Interiors Robert Dee, Jr. - Homes by Deesign, Inc. Scott Blumberg - Huntington Chase Ken Diel - Kerber, Eck & Braeckel Mike Lippert - Liese Lumber Josh McDermott - J.T. McDermott Remodeling Contractors Derek Brandmeyer - Light Brite Jason Huelsmann - New Tradition Homes David Padgett - Padgett Building & Remodeling Ron Padgett - Padgett Building & Remodeling Scot Lehr - Quality Installation & Home Improvement Jeff Schmidt - RLP Development Sue Schultz - Sandberg Phoenix & von Gontard P.C. Mike Rathgeb - Spencer Homes Mark Vogt - Vogt Builders, Inc. Jim Vernier - Village of Shiloh
6100 West Main Street Maryville, IL 62062 Phone: 618-343-6331 E-mail: tbutler@hbrmea.org Web: www.hbrmea.org Page 20
1 Publizr