By Iris Richmond. Taxing Impact

Can impact fees continue to be calculated toward builders' eligibility for the low-income housing tax credit? The IRS says "Yes." The agency ruled recently that levies placed by jurisdictions may once again be considered part of the cost of doing business.

An audit completed by the IRS in late 2000 brought impact fees under scrutiny. The Real Estate Round Table in Washington, aided by the NAHB, worked with the IRS to resolve the matter. Exclusion of the fees would have increased the cost of development by as much as 10 percent in states such as Florida, California, and Texas.

Defect Check

In Arizona, a recently proposed measure would provide builders with the opportunity to fix a construction defect before being named in a homeowner's lawsuit.

House Bill 2620, sponsored by the HBA of Central Ariz., would prevent homeowners from suing a builder until after giving the company the chance to repair the defects. Owners would be required to give at least 120 days notice before filing a complaint. If legal action proceeded without having done so, a judge will have the option of obliging both sides to utilize the allotted time to resolve the dispute.

A copy of the measure is on the Web site

Top Complaints

  • Stucco cracks
  • Roof/Window leaks
  • Expansive soil
  • Drainage problems
  • Wood rot
  • Costly suitors: The opportunity for a last chance to fix problems could save builders headaches and legal fees.

    The Long Goodbye

    After 31 years as a modular builder, Nanticoke Homes shut down operations in mid-February, laying off 100 people and leaving 40 homes unfinished. More than 138 consumers have since filed complaints with Delaware's attorney general. The builder, located in Greenwood, Del., did not return calls from BIG BUILDER staff.

    At press time, the attorney general hadn't decided whether to handle the case as a civil or criminal matter, according to Olah Rybakoff, director of the consumer protection division. Delaware officials are concerned that the company engaged in business transactions right up until closing. Subcontractors are owed tens of thousands of dollars, Rybakoff says. Steven Spence, an attorney for Nanticoke, says the company's owners will file for bankruptcy. The company built 600 homes in 2000. Raising Its Cap

    D.R. Horton (NYSE:DHI) wears a bigger cap these days. The Texas-based home builder has moved up into Standard and Poor's MidCap 400 Index, filling a slot left open by the bank Marshall and Illsley. The regional bank, in turn, replaces Willamette Industries, now part of Weyerhaeuser's operation. Previously, Horton had been listed on the S and P SmallCap 600 Index. D.R. Horton is the second builder, after Lennar, to appear in the MidCap 400.

    Baby Steps

    Accounting troubles caused (NASDAQ:HOMSE) to be delinquent in filing its financial statements, forcing NASDAQ to de-list the company's stock. Because the company's financial records needed to be corrected and restated for the year 2000 and the first three-quarters of 2001, the company missed its reporting deadline. Homestore's lawyers requested a stay to present its case to NASDAQ, and an internal accounting inquiry should be completed and filed by mid-March.

    A company spokesman says the company is trying to determine how the revenues were overstated and plans to implement a new accounting system.

    Paint It American

    The Pentagon will be awash in at least 20,000 gallons of American Pride (AP), a new environmentally-friendly paint. The polymer science researchers at the University of Southern Mississippi, who developed the paint, characterize AP as an agricultural commodity. They say they've been able to remove the volatile organic compounds (VOCs) found in conventional water-based paint that cause an unpleasant odor and release of pollutants in the air. Not having to worry about VOCs, they claim, eliminates the downtime in painting amassed by shutting down offices and moving personnel out, which will be a money-saver to taxpayers.

    The cost of AP is comparable to conventional paint, say AP researchers, who plan to market the product to home builders in the months ahead.

    On Tape

    Video journals of homes under construction are the latest tool being marketed to builders for use in legal disputes or simply as a way to promote a project. Brett Scott and John O'Connor, co-owners of VideoProof, are two ex-reporters who rope off their gear and scale half-finished walls to shoot key phases throughout a development's evolution. They deliver time-lapse footage on CD-ROMS and DVDs. The result: an official record to protect against possible defect litigation and a promotional package for potential buyers.

    BIG BUILDER Magazine, April 2002