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HBA HOME BUILDING NEWS
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PROTECTINg your industry
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January, 2013
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HBApdx.org
One of the difficulties inherent
in writing a column where the
publication date is several weeks
away from the time the column
is created is that current events
when I’m writing will no longer
be all that current when you’re
reading. Occasionally, though,
there are occurrences where the
potential significance extends
beyond a specific time.
For example: Governor Kitzha-
ber just announced that he is go-
ing to call the legislature into spe-
cial session to address a concern
raised by Nike. Nike apparently
has some significant expansion
plans in their immediate future,
and they are nervous that a par-
ticular feature of Oregon tax law
would - if changed - disrupt their
finances to such an extent that
expanding someplace other than
Oregon would be a viable if not
necessary option.
The tax provision that they’re
worried about is called the Single
Sales Factor. What it does, in vast-
ly simplistic terms, is to say that
companies with national or inter-
national sales scope are taxed on-
ly on the portion of their income
attributable to Oregon sales. It
provides a benefit to a relative
handful of Oregon companies,
but it’s a significant and criti-
cal handful: in addition to Nike,
it includes such outfits as Intel,
Columbia Sportswear, Precision
Castparts, Mentor Graphics...not
lightweights in terms of Oregon’s
economy. In Nike’s case, notwith-
standing the fact that they are an
Oregon company, their Oregon
income tax obligation is calcu-
lated on the number of sneak-
ers and golf hats and whatnot
that they sell in Oregon, not their
global sales. As you can imagine,
the SSF results in a significantly
lower Oregon tax bill for Nike
than they would have without
it, and you can also understand
their anxiety that this particular
rug not be pulled out from under
them just when they are looking
to spend a bunch of money on
expanding their footprint here.
Many on the political left, of
course, hate hate hate the Single
Sales Factor. Hate it. From their
perspective, it has two hideous
flaws: one, it reduces the amount
that the state can extract from
taxpayers, and two, it is good for
business and if it’s good for busi-
ness, it must be bad for people.
Or something like that.
But by the time you read this,
it will all be a done deal (at least
that’s my assumption). But since
this column is more than a histo-
ry lesson, let’s look at the longer
range implications of this SSF:
1.
The Governor is doing this in
December, notwithstanding the
fact that the legislature is conven-
ing in regular session in a couple
of months. There are some legal
justifications for doing this now
as opposed to during the regular
session - laws passed now take
effect now, laws passed in regu-
lar session, even with emergency
clauses, lose at least a tax year
- but I personally don’t believe
that’s why he rang the bell. I think
he wants to act now because he
lost six Republicans in the House
last election, and he is concerned
about the Democratic left derail-
ing this idea. He’s probably right...
but now think about the same
political problem as it applies to
other issues such as PERS reform
and tax law changes that will be
on the table next session.
If he knows he needs the Rs on
a relatively simple issue like the
SSF, then this is a good sign for
the influence the Rs can have in
2013 when the big ticket tax and
pension issues are on the table.
2.
During the Measure 66 and
67 fight, the pro-tax crowd (which
included all but one of the Ds in
the legislature) steadfastly and
uniformly refused to concede
that there was any connection
of any sort between govern-
ment tax policy and business
investment and growth and job
creation. Now, without actually
saying so, the Ds are implicitly
recognizing that yes, indeed, tax
policy and government volatility
has an effect on business deci-
sion making. For lots of us, this
seems a lot like a recognition that
water is indeed wet, but given the
stubbornness with which the Ds
have clung to their position, any
movement for any reason is good
news and will help us with our
policy discussions going forward.
3.
Even though the SSF only
directly benefits a few large com-
panies, this discussion gives the
rest of us in the business lobby
the opportunity to point out both
the policy and political problems
inherent in providing certainty
only to the big guys. Politically,
even though Nike et al are criti-
cal to the state’s future, most Or-
egonians aren’t employed there
but in thousands of smaller busi-
nesses...and it would be a costly
electoral mistake to be seen as
favoring a few large operations
and hammering a bunch of small
ones. On the policy side, more
importantly, this discussion gives
us the opportunity to work on
substantive changes that might
provide more certainty to busi-
nesses (which would be a good
thing, now that everyone seems
to be in agreement that uncer-
tainty is a bad thing...), one of
which might be our bill from the
2011 session that would require
an economic and job analysis for
any legislative or administrative
proposal that might negatively
impact job creation.
So long story short: yes, it’s
good we’re cementing the SSF,
but if you see the discussion as
being part of the larger context
of Oregon’s economic and fiscal
problems, the issue is even more
intriguing. 2013 might not turn
out to be such a bad year after all.
Inside Line:
Reflections
from 2012
Continued from page 9
others lack the money or
staff. I know that the Gov-
ernment Relations staff
at the HBA and many of
our members are working
very hard to help loosen
these constraints. Even
if this is not something
you’ve thought about I’m
sure we can all agree that
a slide backwards in activ-
ity would hurt all of us af-
fecting remodelers, build-
ers, developers, title com-
panies, banks, designers
and many more. The staff
at the HBA has done a su-
perb job these past few
years dealing with this re-
cession and its effects on
membership and staffing.
I ask for your support
and your help on behalf
of the HBA to increase
membership. Each time
we increase our numbers
we become stronger and
only a strong association
can together face the con-
straints of the new year
and those that follow.
Spread The Word
To register for this event,
contact Jessica Metteer at
503-684-1880 (jessicam@hbapdx.org)
housing and homebuilding.
“To climb steep hills requires
slow pace at first,” he said. “That’s
a nice way of taking a look at it,
because what we’re really doing
is we’re in a very dark, deep,
dank, horrible hole and we’re
trying to crawl our way out of it.
We’re doing it, but it’s a slow pace
going.”
Po t i ows k y no t ed t ha t
construction jobs have fallen off
steeply since their high of about
100,000 jobs during the boom.
They are now at about 70,000,
but appear to have stabilized.
He said patience will be key
with this slow recovery, but
also that Oregon has a lot of
“underlying strengths.”
“The fundamentals are there
for the recovery to keep going,”
he said.
Among those: unemployment
of 8.6 percent as of October 2012,
which was down from 9.3 percent
last year, continued population
growth and the fact that the
state was recently listed as the
26
th
fastest in terms of growing
new jobs. Low mortgage rates
are also expected to remain
in place through most of 2013
and possibly into 2014, which is
helpful to the housing industry.
Po t i ows k y
s a i d
mo s t
economists are not seeing a
recession on the horizon; he also
predicted slow economic growth
of just below 3 percent, and said
housing will similarly improve.
“Housing is contributing to
growth again,” Potiowsky said.
“The bottom line is it will be
positive going forward. Positive
but slow.”
During his presentation, which
at times came off asmore standup
comedy than market forecast,
Perry cautioned about new
mortgage industry regulations
that are set to take effect in mid
January, which he said could
ultimately hamper new activity
in the housing market.
The regulations could amount
to “massive punishment for
people who didn’t do anything
wrong,” Perry said. “We will really
have to go to battle to protect
the industry and keep financing
moving.”
He also said that although
foreclosures are still a problem
in the market, it’s gotten more
difficult for banks to foreclose
on homeowners. Some banks
even participated in a foreclosure
moratorium over the holidays.
A big fan of information,
Perry said it ’s important for
professionals in the housing
industry to consider but also be
skeptical of the numbers they
read about in the news. Statistics
about foreclosures or other
elements of the market can be
misleading and should be taken
with a grain of salt.
“Don’t give fear too much
power,” Perry said.
Forecast:
Brightening outlook sparks laughter
Continued from page 9
News from the Oregon Home
Builders Association
Jon Chandler’s
Oregon
Update
Single Sales Factor: Is it good for business?
By Justin Wood
Associate Director of
Government & Builder Relations
Since my time at the HBA, one
of the things I have tried to fig-
ure out is a way to provide more
timely information to our mem-
bership regarding issues and
updates concerning our industry.
Including our interaction with
the various governmental juris-
dictions in the Portland Metro
Area. We have always had issues
updates in the HBN on a month-
ly basis as well as a PEG report
which came out every couple of
weeks. The problem I have felt
is both of those formats did not
provide a way to share informa-
tion with members regarding
time sensitive information.
Starting in January 2013, we will
be adding a Government Rela-
tions section to the HBA Website.
On the home page of that section
there will be a searchable topics
blog that will be available for
website viewers. It is my intention
to provide updates to this blog as
they occur. This blog will provide
a forum if there are fee changes,
city meetings, policy discussions
or any other information we wish
to get out to our membership.
Each blog post will be able to be
tagged as well. That way if I enter
something dealing with the Ti-
gard Tree Policy update, you can
click on Tree Policies or Tigard
and get a list of all the recent
posts dealing with either of these
items. It is my hope that this will
provide an issues database for us
to keep track of work we have do-
ne tracking these various issues. It
is also my hope that the blog will
allow for comments which could
help to facilitate discussion on
topics where feedback would be
helpful.
It is my goal to create an e-mail
similar to the PEG report, howev-
er the new format will just give a
brief description of the item and
a link to the blog post if you want
further information on the item.
This will allow for the new e-mail
to be much more concise. We will
still continue to post some of the
more important updates in the
HBN as well as providing a link to
the blog for more information.
Please feel free to contact me at
justinw@hbapdx.org if you have
any ideas or suggestions once we
get the blog up and running and
I look forward to seeing you all
online. Please check in with
www.
hbapdx.org/governmental-affairs
for the latest updates.
Changes coming to HBA
Government Issues updates
BUILD Retreat
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