MARCH 2022 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. Large crowds visited the HBR Home Show WHATS INSIDE Upcoming Events Mar 31 TopGolf in Chesterfield Apr 21 Lunch with Belleville Mayor Gregory May 13 Sport Clay Shoot 2021 Year End New Home Starts Report Student Scholarships of $500+ awarded from the HBR PWB & HBR UCC available. Encouraging careers in the building industry while enhancing the education experience. CLICK HERE TO DOWNLOAD APPLICATION TO SHARE WITH STUDENTS IN NEED Home Show pictorial Membership Renewal Updates Annual Scholarship Program Sponsorships 45L Energy Tax Credits for New Construction HBAI Legislative Update: Contractor Licensure, Wage Theft and Electric Car Chargers are at the top of our industry list. Illinois Policy Institute: Hot Real Estate Market Missed Illinois New Construction Page 1 2022
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Don’t Miss Out on Potential Energy Tax Credits for Your Projects As tax season is upon us, many Home Builders may be unaware of potential tax credits that could translate into significant savings. The 45L tax credit is available to singlefamily and multifamily developers exceeding 2006 energy standards. Being that in Illinois we must build to a much higher standard with the 2018 Illinois Energy Conservation Code this should be a no brainer for our Builder members! BACKGROUND The Energy Efficient Home Credit, as established by the Energy Policy Act of 2005 and codified under §45L of the Internal Revenue Code, allows eligible developers to claim a $2,000 tax credit for each newly constructed or substantially reconstructed qualifying residence. The residence or building must not be more than three stories above grade in height. This incentive was extended by the “Consolidated Appropriations Act, 2021” and applies to residences sold or leased on or before December 31, 2021. HOW IT WORKS An eligible contractor must have constructed a qualified energy efficient home, as well as owned and have had a basis in the home during its construction. An eligible contractor may claim the credit for each home that qualifies for the credit if: • It is located in the United States • It meets certain energy saving requirements • It is sold or leased on or before December 31, 2021 for use as a residence (the credit can be taken retroactively for 4 years back or to any open tax year) • The residence or building must not be more than three stories above grade in height. The §45L credit not only includes new construction, but reconstruction and rehabilitation projects. The incentive applies to single-family homes as well as condominiums, apartment complexes, and other multifamily residential buildings whereby each unit may qualify for a $2,000 credit. ENERGY SAVING REQUIREMENTS The §45L credit is $2,000 for a dwelling unit that is certified to have an annual level of heating and cooling energy consumption at least 50% below the annual level of heating and cooling energy consumption of a “comparable dwelling unit” and has building envelope component improvements that account for at least 1/5 of the 50% reduction in energy consumption. A comparable dwelling unit: • First, it must be constructed according to the standards of chapter 4 of the 2006 International Energy Conservation Code, including supplements, as in effect on January 1, 2006, Second, its heating and cooling equipment efficiencies must correspond to the minimum allowed by Department of Energy regulations under the National Appliance Energy Conservation Act of 1987 that are in effect when its construction is completed. CLAIMING THE §45L CREDIT Certification must be obtained to verify that the home satisfies specific energy efficiency requirements. Further, certification must be done using an independent, qualified individual to verify and certify that the property installed satisfies specific energy efficiency requirements using IRS-approved software. The tax credit is filed using IRS Form 8908, Energy Efficient Home Credit. Page 6
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LEGISLATIVE UPDATE The following Bills are in the House chamber thats deadline is to move the Bill this week for Senate consideration. HBAI holds weekly Legislative calls with updates and here is the latest: HB2538 General Contracting Licensing Act - OPPOSED. Currently in the Labor & Commerce Committee. Many members came forward with their Opposition and reasoning that included no trust in our State regulating our industry, a fallacy to think that licensing will level the playing field, obtaining a building permit is already in place. This proposal has come up many times over the years and has been successfully defeated. ACTION ITEM: Link to Witness Slip HB3125 Electric Car Chargers for Single Family Homes - OPPOSED. Currently in the Energy & Environment Committee. New language was proposed that didn’t change much of our opposition, this would still require 1 parking space to be EV-Capable. ACTION ITEM: Link to Witness Slip HB5412 General Contractors Responsible for Sub Non-Payment of Wages - OPPOSED. Currently in the Labor & Commerce Committee. There are several other groups in opposition of this Bill that include Associated Builders & Contractors, Black Contractors Owners &Executives, Hispanic American Construction Industry Association, Illinois Chamber of Commerce and Women’s Construction Owners & Executives. ACTION ITEM: Link to Witness Slip Links to Witness Slips will take a few minutes to complete. In Section III. Position, check off opponent, Section IV. Testimony, check of “record of appearance only” and then “agree to the ILGA Terms of Agreement” and Create Slip. Page 9
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Jobs + Growth Bryce Hill Illinois saw new residential building permits in 2021 issued at one of the slowest rates in the nation. The rest of the U.S. saw real estate booming. Real estate markets in the U.S. caught fire in 2021 as low mortgage rates, pent-up demand and low inventories sent sales prices soaring during the year. But Illinois was just lukewarm. Residential construction permits per capita grew by 17.5% nationally in 2021, according to data released Feb. 17 by the U.S. Census Bureau. Illinois was far slower, coming in at 10.6%. The state’s slow growth in residential construction permits meant Illinois remained one of the states with the least home construction activity in the nation. Illinois issued 1.6 residential construction permits per 1,000 residents in 2021, the third-slowest rate in the nation. Only Rhode Island and Connecticut issued new permits at slower rates. While Illinois did experience growth in total residential permits during 2021, it was far lower than the national average. Illinois was one of only eight states where the number of permits has declined since 2019. Total residential permits issued are down 3.6% relative to prepandemic levels, even after adjusting for the state’s declining population. The data includes both single-family and multifamily construction permits. Illinois performed equally as poorly when it came to single-family construction permits, ranking 48th in the nation, while faring only slightly better when it came to multifamily construction permits, ranking 41st in the nation. Multifamily construction permits are down nearly 29% since 2019, the fourth-largest decline in the nation. Illinois’ lagging residential construction figures come as no surprise. Even a national housing boom hasn’t been able to increase demand enough to offset Illinois’ declining population. 2021 marked the eighth consecutive year of population decline in Illinois, as people moving away and total population loss reached record levels. The major reasons Illinoisans are choosing to leave the state are for better housing and employment opportunities, both of which have been made worse by poor public policy decisions. Illinois’ secondhighest property taxes in the nation are now equivalent to nearly seven additional mortgage payments annually for new homeowners. Nearly half of Illinoisans have thought about moving away, and they said taxes was their No. 1 reason. High taxes aren’t going to improved services or quality of life for homeowners. In the past two decades, less than 50 cents of every additional dollar paid in property taxes went to pay for services. Statewide, only 20% of the increases in property taxes collected for municipal police and fire departments went toward protective services. The bulk of new tax collections went to pensions. Growth in pension costs statewide has exceeded Illinoisans’ ability to pay. When rising property tax dollars do not go to valuable current services, Illinois housing becomes less desirable and the Illinois exodus worsens. As more and more Illinoisans leave the state, there is even less incentive for builders to construct new homes and fewer homeowners to carry the state’s high-tax burden. Without structural reform to Illinois’ pension system and spending priorities, expect these trends to continue. Page 12
2022 MEMBERSHIP UPDATES NEW MEMBERS RENEWING MEMBERS A Royal Flush Plumbing - 4 years Bank of Belleville - 2 years Cardinal Door - 4 years Heartland Turf Farms - 9 years McCullough’s Flooring Enterprise - 18 years Otten Contracting - 14 years Remington Properties - 6 years PROFESSIONAL WOMEN IN BUILDING COUNCIL 1st National Bank of Waterloo BOS C.A. Jones, Inc. Earthworks (2) Jacob Sunrooms, Exteriors & Baths R.P. Lumber Joe Bowler 2231 Woodlawn Ave., Granite City, IL 62040 O: 618.610.2992 Email: joe_bowler@mwsolarsolutions.net www.midwestsolarsolutions.net RODRIGUES Siding & Roofing LLC Luiz Rodrigues 650 Arrowhead Lane, Union, MO 63084 O: 314.393.4006 Email: rodriguesluizc@yahoo.com Jeff Marquitz 12 Flynn Forest Lane, St. Louis, MO 63122 C: 314.910.2450 Email: jmarquitz@westlake.com www.royalbuildingproducts.com Page 13
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OFFICERS P L A T I N U M President, Mike Lippert Liese Lumber 1st Vice President, Mike Needles C.A. Jones, Inc. 2nd Vice President, Steve Macaluso Halloran Construction, Inc. Associate Vice President, Jerry Yaekel Yaekel & Associates Treasurer, Richard Coolbaugh First Mid Bank & Trust Secretary, Jon Edler Henges Interiors DIRECTORS G O L D S I L V E R Allen Roofing & Siding B R O N Z Page 15 Jason Klein - Ameren Illinois Erik Huber - Bank of Springfield Matt Warren - Carrollton Bank Mary Ann Lopez Drake - Drake Construction Coy Mullenix - CMI Construction Michelle Rauk - Eagle Flooring Scott Gruber - First Mid Bank & Trust Mark Fulford - Fulford Construction Robert Dee, Jr. - Homes by Deesign Scott Blumberg - Huntington Chase Steve Dill - SLD Enterprises Josh McDermott - J.T. McDermott Remodeling Contractors Derek Brandmeyer - Light Brite Aaron Klemme - Klemme Construction 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.
6100 West Main Street Maryville, IL 62062 Phone: 618-343-6331 E-mail: tbutler@hbrmea.org Web: www.hbrmea.org
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