Barbed questions about the effectiveness of the National Association of Home Builers' (NAHB) lobbying and advocacy efforts during the debate over the federal stimulus and housing rescue bills have caused an unusually public rift between the association and some large production builders within its membership. That rift has led to finger pointing about why the $787 billion bill, which President Obama signed in February, excluded most of what the housing industry fervently pleaded for to stimulate buyer demand and provide tax relief.
However, a group of small builders interviewed on Thursday suggests that disputes like these are inevitable within an organization of diverse constituencies, especially during times of economic volatility and stress. These builders believe that the common interests of big and small companies are still best served by a unified housing association that, if splintered, could lose whatever leverage it wields on the political stage.
"Our greatest asset is our commitment to stay together, even in tough times," asserts David Parsons, a custom builder and remodeler in Bartlett, Tenn.
Like most housing-related assets, though, it's harder to calculate the value of membership in the NAHB, at least from the perspective of the group's High Production Home Builders Council, comprised of many of the industry's largest builders, several of which are publicly owned. The Council's leadership has voiced its displeasure with the NAHB's officers and lobbying, which failed to convince Congress to meet the housing industry even half way. The public builders were particularly incensed that one component of the stimulus they pushed hard for—an expansion of the period that companies could write off annual net operating losses (NOL) against profits to five years—was downplayed by the NAHB.
On its Web site, the NAHB has posted a message to its entire membership "seeking comment on the stimulus bill," as well as "our ongoing relationship with the High Production Builders Council." The national group also will be holding a series of conference calls with elected regional association officials.
The NAHB also provided its members with various supporting documents that include a nearly 1,400-word letter that its chairman, Joe Robson, sent to Centex's CEO, Tim Eller, who is the Council's chairman. Robson vigorously defends the association's actions, which supported the NOL "clawback" but gave greater priority to advocating higher tax credits and lower mortgage interest rates to incentivize potential home buyers.
Robson voices his support for NAHB President Jerry Howard and his staff, even as he criticizes the "tone" of a Feb. 11 letter that Howard sent to Nancy Pelosi, the speaker of the House. In that letter, Howard concurred with reporting in TheWall Street Journal that describes how expanded NOL provisions had the potential "to create tax incentives whereby opportunistic, well capitalized home building companies would be able to unload their excess inventory of land onto the market at fire-sale prices solely for a tax benefit," Howard wrote.
Robson takes issue with the way, in his estimation, big builders attempted to hijack the agenda of the Fix Housing First Coalition, which became the focal point of the housing industry's stimulus lobbying. "From the beginning, the NAHB was to take the lead on strategy, lobbying, and the media after it joined the Coalition last November," Robson writes. He points specifically to interviews that Hovnanian Enterprises' CEO Ara Hovnanian gave to Fox Business News and CNBC, which Robson contends gave viewers the impression that "those who caused the problem [i.e., builders] were asking for a government bailout"; and a presentation to the National Association of Realtors by Lennar's chief Stuart Miller, which Robson claims "did not follow trade association protocol" and "created a credibility and relations problem for NAHB leadership and staff with NAR."
In an e-mail, Robson declined to comment further. Through an NAHB representative, Howard declined to be interviewed, stating "at this time this is an internal discussion." The NAHB would not disclose how many members have offered their comments so far or what they were saying. Eller stated in an e-mail, "We have been having and continue to have an active dialogue with the NAHB leadership on industry issues, which has been one of the roles of the High Production Home Builders Council from the start." Hovnanian did not return a call from BUILDER seeking comment.
As member comments roll in, the NAHB should get a clearer picture of whether discontent with its actions over the past year or so goes deeper than what's being expressed by its largest members. However, BUILDER randomly interviewed six smaller builders yesterday and found strong support for the NAHB, some bewilderment about its schism with large builders, and accord that disagreements among members do not portend a serious decline in the trade group's solidarity of strengths.
For the most part, these builders say they are satisfied with the association's lobbying efforts, if not the results. "You're dealing with politicians, so you can only do the best you can, and not everyone is going to come out a winner," says Ashley Richards, who owns Richards & Co. in Yarmouth, Maine. That being said, Parsons observes that the stimulus debate “was the most proactive I've ever seen NAHB get involved at the legislative level."
Finley Perry, who owns F.H. Perry Builder in Hopkinton, Mass., and who sits on the NAHB's executive board, lauds the quality of the association's advocacy as "second to none." However, he also observes that the trade group "sometimes has difficulty communicating in ways that the membership can understand." Jack Hebert, who owns Hebert Homes in Fairbanks, Alaska, says that while he supports the association's efforts, he wishes it had projected a more expansive role for itself during the stimulus debate. "It was too 'housing first, me first,' " says Hebert, "when it should have been more like, 'Look, we have a new administration coming in. We're a major economic force. How can we help?' "
As for its rift with the High Production Builders Council, the builders interviewed note that the NAHB is constantly walking a tightrope between the needs and demands of its smaller and larger members, which on occasion clash. "The biggest production builders have a different point of view about what's important and like to throw their weight around sometimes," says Michael Bell, owner of Bell Construction, a custom builder and remodeler in Westville, Ind. But none of the small builders thinks the association is incapable of representing the industry as a whole, no matter how diffuse and contentious its parts might sometimes be. "We don't have to agree on everything to find common ground, which is that we believe in this country and in the importance of housing," says Hebert. Perry adds that divergent views are fine, even healthy, "as long as everyone can agree at the end of the day that the association speaks for them."
Hanging together will be critical to both the association and the housing industry, says Robson, at a time when "housing interests are being targeted as part of the Obama administration's efforts to 'change.' " He points specifically to proposed reductions to the tax deductibility of mortgage interest and property tax. "Assuming we can heal the battle scars of the stimulus, how do we go forward?" he asks Eller in his letter.
Some of the builders interviewed say that they and their competitors must become more politically active on the grassroots level to heighten the profile of their companies and the industry. Richards, who also owns an insulation installation company, recently testified for five hours in front of Maine's lawmakers to lend his support for a bill that proposes to reduce the state's dependence on oil. On March 24, he will be in Washington with other NAHB members from around the country for the trade group's Day on the Hill, where they get to meet their states' congressmen and senators.
Jerry Passman, who owns Passman Homes in Baton Rouge, La., says builders in his state have been "leaning on" its two senators, through a postcard mailing campaign, to get them to consider reinstating some of the housing provisions that got dropped from the stimulus bill. "We want to let them know that we're still out there," he says.
John Caulfield is senior editor at BUILDER magazine.
Learn more about markets featured in this article: Washington, DC, Baton Rouge, LA.
