Issue 1 2011 Building El Paso’s tomorrow today From NAHB El Paso home builder Bobby Bowling IV was selected by NAHB to represent the building and development industry as a Small Business Representative on a federal Small Business Regulatory Fairness Act (SBREFA) panel to review a proposed new rule from the EPA. The rule the EPA is proposing would require "post- construction" stormwater discharge permitting and reporting to the EPA. In other words, the EPA is considering requiring property owners to continue along the same lines of the type of reporting builders and developers are familiar with regarding Storm Water Pollution Prevention Permits (SWPPP) indefinitely (i.e. forever!!!). For example, the proposed rule could require you to log in and record data on every rain event, and file regular reports to the EPA, the city of El Paso (El Paso's designated "MS4" agent for EPA), and/or the state of Texas. The issue from the EPA's perspective is best summarized from the caption below taken directly from a briefing paper the EPA submitted to the SBREFA: Long term stormwater discharges from developed sites, such as subdivisions, roadways, and commercial buildings or shopping centers, can significantly alter the hydrology of a site and can have a negative impact on receiving waterbodies*. Generally, as sites are developed, there is an increase in impervious areas where water cannot infiltrate into the ground, leading to increases in stormwater discharges. Additionally, as stormwater moves over land, it picks up pollutants from various sources, such as fertilizers that have been applied to land, oil, grease and metals contained on roadways, and sediments contained on a variety of surfaces. These pollutants, as well as the velocity and volume of the stormwater discharges, contributes to water quality impairment. In fact, stormwater remains a leading cause of water quality impairment. According to the 2004 Water Quality Inventory, urban stormwater discharge is the source of problems in: • 22,559 miles, or 9.2% of all impaired rivers and streams • 701,024 acres, or 6.7% of all impaired lakes • 867 square miles, or 11.3% of all impaired estuaries As the above summary reflects, the EPA is responsible for enforcing the Clean Water Act (CWA), which is intended to protect the nations navigable waterways (*the term "waterbodies" that the EPA inserted is actually not the correct term from the statute). However, as the statistics provided by the EPA themselves show, "urban stormwater discharge" accounts for less than 10% of the problem! ("Urban stormwater discharge" includes stormwater runoff from ALL development activity, building activity, industrial activity and even every completed development!) Where does the other approximately 90% of the pollutants into the nations waterbodies come from, you might ask? Well, some comes from industrial and other development activities outside of urban areas, but the vast majority come from farms, which are completely unregulated and exempt from the CWA. "It's crazy that our industry is building and developing incredibly eco-friendly communities and infrastructure, yet the EPA keeps coming back to our industry to increase our costs of development and now, just simple land ownership, for an incredibly insignificant diminishing return for the environment," says Bowling. Bowling also points out that increased costs would make development infeasible in most instances, especially in today's environment. "I showed them an example for a 10-acre apartment project where their additional rule could add as much as a million dollars to the cost of the project. They keep mentioning that 'green jobs' could be added, by I fail to see how ANY jobs can come from a project that is infeasible and won't be done." During the most recent SBREFA hearing at EPA headquarters in Washington, several small business entity representatives voiced their concerns over the fact that the EPA continues to seek new rules limiting developers while continuing to ignore the farming and other unregulated communities. However, the solution to that complaint seems to be only through congress and a change in the CWA. "The CWA also is very unfair to the desert southwest, because we really have very little, if any, 'navigable waterways' or even any 'waterbodies.' El Paso and other desert communities should be exempt from these portions of the Clean Water Act, because all rainfall either evaporates or percolates into the ground far before it ever reaches a body of water. Plus, a long time ago, developers here began building retention ponds to alleviate natural flooding patterns, so even less stormwater is flowing here after a rain event than mother nature intended in El Paso today anyway." The SBREFA committee has until January 5, 2011 to submit comments to the EPA with regard to the rule. After that, the formal SBREFA report would be published sometime in mid-February, and a proposed rule from EPA could then be promulgated and published for public comment. The final rule (in one is recommended for passage by the administration) would come in late 2011 or early 2012. Bowling concluded, "Every property owner in the United States should be concerned about this rule. It could potentially burden cities with the task of spending billions of dollars to comply with an EPA rule that would do little or nothing to protect the nations waterbodies in some parts of the country. And, as history shows us, when the feds burden the cities and states with unfunded mandates, the only alternative local governments have is to raise taxes or create another fee." Builders Outlook PRSRT STD U.S. POSTAGE PAID EL PASO TX PERMIT NO. 429 www.elpasobuilders.com Local builder chosen to represent industry in controversial EPA Storm Water proposal ‘Every property owner in the United States should be concerned about this rule. It could potentially burden cities with the task of spending billions of dollars to comply with an EPA rule that would do little or nothing to protect the nations waterbodies in some parts of the country. And, as history shows us, when the feds burden the cities and states with unfunded mandates, the only alternative local governments have is to raise taxes or create another fee.’ Bobby Bowling IV
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Small home builders are the mainstay of thenation’s housing industry, including a sizablenumber of self-employed mom-and-popoperations, according to a new study byeconomists at the National Association ofHome Builders.
“Small businesses have always been thepredominant force in housing and they lend thisindustry its economic vitality,” said Bob Jones,NAHB chairman and a builder fromBloomfield Hills, Mich.
“We are seeing market conditions returningto normal in many parts of the country after along, hard downturn, and these companies havethe agility to move quickly and start leading theeconomy forward,” Jones said. “But first theyneed access to financing to build, whichremains scarce during this critical phase of therecovery.”
The study notes that the small builders andtradesmen who produce the majority of thenation’s new homes “compete in a fiercemarketplace that challenges their economicsurvival. A much higher share of smallbusinesses both enter and fail in the residentialconstruction industry when compared to allU.S. firms,” according to the report.
“The residential construction industry is verydynamic, and a large number of firms enter theindustry each year and a large number exit eachyear,” the report says. “With few barriers ofentry, start-up builders can launch theirbusiness with a single new home.” Most homebuilders and remodelers are small businesses,“further facilitating movement into the industrywhen opportunities improve, and exiting eitherbecause of business failure or life-cycledecisions.”
The report concludes that housing remainsthe domain of small businesses and looks at theCensus Bureau’s Economic Census, whichprovides information on the size of businessesin various industries. Conducted every fiveyears, the most recent census is based onbusiness activity that occurred in 2007. Finaltables for the construction industry werepublished this fall, on Oct. 19.
Among the data that provides a profile of
the housing industry as of 2007:
• Slightly more than 65 percent of all homebuilding establishments had annual receiptsbelow $1 million. Almost 31 percent generatedbetween $1 million and $10 million; and 4.1percent had more than $10 million. • In 2007, 41,483 new single-family general
contractors (who build on the owner’s land) didless than $1 million in business, about a 70percent share of the 59,679 businesses in thisgroup. Although multifamily generalcontractors tend to be somewhat larger, 42percent of them also recorded less than $1million in yearly sales or receipts. About 60percent of the 35,378 “operative builders” (whoown the land upon which they build) did lessthan $1 million in business. Eighty-four percentof 73,888 residential remodelers and 61 percentof 6,462 land developers saw less than $1million. • Some 25 percent of $89.3 billion in totalconstruction value delivered by single-familygeneral contractors in 2007 was subcontractedout. Subcontracting amounted to half of $34.6billion worth of construction amongmultifamily general contractors, 22 percent of$180.1 billion for operative builders and 23percent of the $52.1 billion for residentialremodelers. • These results are consistent with findingsfrom NAHB’s monthly Builder EconomicCouncil survey. Among the single-familybuilders responding, 40 percent said theysubcontracted 100 percent of their work andanother 39 percent subcontracted 76 percent to99 percent of the work. The same builders used24 specialty trade contractors in the process ofbuilding the average single-family home. • Seventy-four percent of a total of 477,950specialty trade contractors rang up less than $1million in business in 2007. • Under U.S. Small Business Administrationstandards, at least 96 percent of residentialbuilders and remodelers were small (defined asdoing no more than $33.5 million in annual
business). Also considered small were 94percent of land developer (less than $7.0million) and 98 percent of specialty tradecontractor (less than $14 million)establishments. Most of the home building andtrade contractor establishments were far belowthe SBA ceilings.
Looking beyond the Economic Census,which only counts establishments withemployees on the payroll, NAHB estimates thatthe ratio of the income of usually small, self-employed independent contractors to wagesand salaries generated in the constructionindustry is one to four. This is compared to aratio of one to 10 in some other industries, suchas manufacturing.
Housing is also providing moreopportunities for Hispanic businesses than U.S.industries overall, the study found.
The 2007 Survey of Business Owners (SBO)recently reported that in 8.3 percent of a total27 million businesses -- or 2.3 million -- at least51 percent of the stock or equity was Hispanic-owned. The Hispanic share for the constructionindustry (both residential and nonresidential)was higher -- at 10.0 percent, or 340,766 out of3.4 million construction firms.
Of the 2.6 million construction non-employers found in the SBO survey, 11.6percent were Hispanic-owned, as were 12.2percent of the 1.9 million non-employerspecialty trade contractors. For several trades,the Hispanic share among non-employers wasaround 20 percent -- including structural steeland precast concrete, drywall and insulation,tile and terrazzo and poured concrete.
NAHB Report: Small Builders Mainstay of the Nation's Housing Industry