Illinois state legislators in the current 96th General Assembly are targeting the ailing housing market with four bills and one resolution to be voted on by the end of the session in May. Builders, while applauding the concept of help, have had mixed reactions to the details of the proposed legislation.
The main bill, HB2698, focuses on enactment of a home buyer tax credit of 1% of purchase price, not exceeding $5,000, for any home that is purchased from 2009 through 2011. Following in the shadow of California's $10,000 home buyer tax credit passed Feb. 19, some in the Illinois building industry say that the proposed $5,000 buyer tax credit falls short of what is needed.
"It's much too little, much too late," said Buz Hoffman, president of Chicago-based Lakewood Homes. "Until people have confidence, no incentive with that small of a tax credit will work." While Hoffman was speaking of both the $8,000 federal tax credit and the proposed state tax credit, he did admit: "States are trying, but states are so broke there is nothing the state can really do--Illinois has a $9 billion shortfall. Any real thing they could do would have to overwrite something federal."
In regards to the other bills and resolution before the Assembly--HB2699, HB0458, HB2700, and HR0113--Hoffman said they are more conceptual, especially HB2699 and HR0113 that both urge banks to lend financing.
"They can urge all they want, but they need something more concrete," Hoffman said.
HB0458 and HB2700 both amend the property tax code. HB0458 would prevent the assessed values of newly constructed homes from increasing until the structure is actually completed or occupied. HB2700 ensures the continuation of the Developer's Exemption for vacant land that has been developed but remains in the construction process.
Hoffman is joined by others in the Illinois market who think, while anything will help, numbers more in line with California's plan will bring out more buyers and get things moving.
"Right now, anything will help," said Lance Ramella, principal at RW Real Estate Advisors in Oakbrook Terrace, Ill. "They have to throw everything at this to make it work. [California's plan] has legs and teeth. Theirs creates jobs and will generate new construction. Illinois' [plan] is not geared toward new homes."
Bill Ward, executive vice president of government affairs for the Home Builders Association of Illinois (HBAI), said the bills were written as is to "get the whole housing ladder going again. And we need to restart the industry from the ground up."
"We are not trying to make it just for us," noted Scott Eckstein, owner of James Scott Custom Builders and immediate past president of HBAI. "We want this to work for Main Street."
By opening the tax credit up to any primary buyer on any home, new or resale, the state gains because they will be able to collect revenues upward of $10,000 for the sale of properties that are sitting empty, said Ward. And Eckstein added that it also helps get real estate agents on board and gets the inventory moving.
And with "builders getting eaten alive by fees and assessed values," Ward said HB0458 and HB2700 will help to "fulfill the intention of the original Developer Exemption Act, as well as keep the prices of homes down, which helps the consumers as well."
But the exact wording of the plans are not what HBAI's Ward is focusing on. "Legislation is at a standstill," he said. "Some [legislators] are looking at these proposals as a builder bailout. I'm a little pessimistic [about the current state], but that is what's driving me."
"We don't want money in out pockets [from this tax credit]," Eckstein added. "We will build ourselves back up. We are asking for our consumers and for the 75,000 who have lost jobs [in the Illinois residential construction industry]."
Reaching for any act that could potentially lift the state of the market, Ward also mentioned that he has been meeting with nonprofit organizations in the industry, which has started to open the lines of communication in order to gain greater support.
"You never know," Ward said, "There could be a new coalition between for-profit and nonprofit building."