80 HBAI members attended our 28^th Annual HBAI Lobby Day

held on May 9, 2017 in Springfield. They lobbied on your behalf for:

·         Prohibition of Transfer Taxes on New Homes (HB3826)

·         The defeat of the Home Repair Tax (SB09): 

                (see a short video) https://vimeo.com/216586684

·         The defeat of the Mandatory Paid Sick Days                                                     Bill Ward, Exec. VP  

 

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 House Republican Floor Leader, Steve Andersson (R-Geneva) spoke to the Home Builders on his involvement in assisting HBAI in the defeat of HB3751, the reversal of authority on Public Construction Bonds.

Senate Deputy Republican Leader, Bill Brady (R-Bloomington) spoke at our Legislative Briefing on the perils of the Senate Grand Bargain and the likelihood that there would be new taxation on services in Illinois.

 

Home Builders from the Greater Chicagoland Area(Northern, Greater Chicago, and Southwest Suburban HBAs) meet with Illinois Senate President, John Cullerton (D-Chicago) in his office behind the Senate floor. Cullerton is on the far left in the white shirt and tie.

Members of Southwest Suburban HBA meet with State Rep. Bob Rita (D-Blue Island).   From left to right: Kim Robbins, Gene Briscoe, Kate Payne, Rita, John Wade, Shannon Rocha, Kevin Chaffin, and Patrick McShane.

Members of Southwest Suburban HBA meet with State Rep. Bob Rita (D-Blue Island).   From left to right: Kim Robbins, Gene Briscoe, Kate Payne, Rita, John Wade, Shannon Rocha, Kevin Chaffin, and Patrick McShane.

State Senator Sam McCann (R-Carlinville) reviews the HBAI Lobby Day Brochure with HBAI Immediate Past President, Dean Graven. Senator McCann served as President of HBAI in 2007.

 

 

Home Builders Oppose Reversal of Authority for Public Construction Bonds

Oppose HB3751 – Moylan

State law allows cities & counties to require developers to post a cash bond to insure that the public improvements on new developments are completed. Developers choose to post a cash bond, letter of credit, or surety bond to guarantee that there are funds available to complete the project improvements. Local official sets the rating of the bonds to financially protect their unit of government.

• Prior to 1996, local government units in Illinois repeatedly misused their authority by intentionally refusing to deem a project complete for the sole purpose of using the cash bonds for purposes other than for the assurance of completing the public improvement projects. Their intentional actions and misuse of power tied the hands of developers and builders who needed those funds for home construction and commercial construction projects.
• Even though legislation passed in 1996 allowing developers to choose between a cash bond and a letter of credit for the assurance of project completion, local governments continued to require cash bonds; ignoring state statute and the intent of the Illinois General Assembly,
• The General Assembly expanded the options in 1997 to allow developers the option of using a surety bond deemed good or sufficient by the county or municipality and the law was also placed in the Municipal Code, Counties Code, and the Public Construction Bond Act, Still, developers were told to use cash bonds only, and the bonds were still being held far beyond completion dates.
• In 2001, the G.A. addressed the issue for the third time in six years. strongly clarifies and further reinforces the three forms of assurance that the developers may use. “A builder or developer HAS THE OPTION to utilize a cash bond, irrevocable letter of credit, surety bond or letter of commitment.” The bill also stated that cities and counties “DO NOT HAVE THE OPTION.”
• Not until the passage of some of the most restrictive language ever considered by the Illinois General Assembly to supersede local government authority (including home rule), did the practice of requiring private funds, misusing those funds, and ignoring state statute; curtail in Illinois.
• The passage of HB3751 would reverse the actions of these three Public Acts; would usher back in this misuse of local government power; and, break the backs of the few developers who dare operate in the state of Illinois.

For these reasons, HBAI vehemently opposes any reversal of authority in the Public Construction Bond Act, such as that contained in HB3751. For these reasons, we respectfully request a NO Vote on its consideration.

The Home Builders Association of Illinois supports passage of HB3826 (Fortner) and requests a YES Vote on its consideration in the House Committee on Cities & Villages.

Amendment #1 to HB3826 prohibits home rule municipalities from collecting a real estate transfer tax on homes for which an impact fee has been assessed and collected. The legislation has no effect on State or County transfer taxation.

Collecting impact fees and transfer taxes is a form of double taxation which greatly burdens Illinoisans who wish to buy a new home. With passage of HB3826, home rule municipalities may choose to charge impact fees or transfer taxes on a new home, but not compound the expense by collecting both.

Impact fees are assessed and collected early in the development process and they become an overhead expense in the price of the new home.

A transfer tax is recorded on the HUD application and it can become an issue in determining whether a buyer(s) can afford the down payment, closing costs, and mortgage. The buyer pays the full tax at closing, which creates a great barrier to entry for home ownership.

Illinois is still very much in the housing recession that began nine years ago. We are 50^th in the country in new home construction based upon a ratio of building permits to state population, a position we’ve maintained for over five years.

Please Vote Yes on HB3826, a bill to end double taxation on new home ownership in Illinois. If you have any questions or concerns, please call or write Bill Ward at: (217) 753-3963 or billward@hbai.org.

Here are two examples of how HB3826 will benefit new home buyers in Illinois.

The City of Sycamore has the following fee schedule: currently assesses a school impact fee of $2453 on the construction of a three bedroom home, and $4167 on a four bedroom home. Sycamore collects a $5 per every $1000 of consideration on the purchase price of property, which comes to $1500 on a $300,000 (entry level) home. With passage of HB3826, Sycamore would still collect the $2453/$4167 for school impact fees, but would be prohibited from collecting the $1500 transfer tax.

The Village of Bolingbrook has the following fee schedule:

School Impact Fees:         $3580.80 for a 3 bedroom home / $4563.20 for a 4 bedroom home.

Park Impact Fees:              $4136 for a 3 bedroom home / $4838 for a 4 bedroom home.

Sewer Tap on Fee:             $12,000.

Transfer Tax:                         $7.50 per $1000 of consideration / $2250 transfer tax on a $300,000 property transfer.

The $16,838 could still be collected in impact fees, but not the $2250 transfer tax.

The Tax on Home Repair under SB09

Bill Ward, Home Builders Association of Illinois

SB09 is the omnibus tax bill to raise new revenues for the state of Illinois. One tax that seems to be flying under the radar is a new “Use Tax” on home repair work which can be found in Amendment #3 to SB09, beginning on Page 213:

(2) Repair, servicing, alteration, fitting, cleaning, painting, coating, towing, inspection, or maintenance of tangible personal property that has been affixed to real estate; this paragraph (2) does not apply to new construction, reconstruction, or expansion of a building or structure.

Many who have read the amendment fail to grasp the impact of this section due to the vague manner in which it is written. Let’s just say, for all intents and purposes, this is a 6.25% Use Tax on Home Repairs.

Within the Wisconsin Administrative Codes is a chart that identifies what is taxable under their terminology: “tangible personal property that has been affixed to real estate.”

If Illinois is to follow Wisconsin’s lead, here is what will be taxed starting January 1, 2018:

The Repair Work of:

1.      Central air conditioning.

2.      And installation of window air conditioners.

3.      Roof mounted antennas.

4.      Awnings.

5.      Bar equipment.

6.      Boilers.

7.      Installation of Buildings sold for Removal.

8.      Burglar Alarm fixtures.

9.      Cabinets in bathrooms.

10. Carpeting.

11. Coolers.

12. Counters in bathrooms.

13. Curtains.

14. Dehumidifiers.

15. Dishwashers.

16. Drapes.

17. Electric Clocks.

18. Electric Dust Collectors.

19. Electric Signs.

20. Faucets in the bathroom.

21. Fire Alarm fixtures.

22. Furnaces.

23. Furniture.

24. Grills & Rotisseries.

25. Home Theatre Systems.

26. Television sets.

27. Humidifiers.

28. Incinerators.

29. Intercoms.

30. Jukeboxes.

31. Laundry & Dry Cleaning machines.

32. Manufactured homes on leased land.

33. Manufactured homes on owned land not on a foundation.

34. Ovens.

35. Partitions & Movable walls.

36. Piers.

37. Portable Appliances.

38. Portable Lamps.

39. Pumps.

40. Radios & TVs.

41. Railroad Signs & Signals.

42. Satellite Dishes.

43. Shades.

44. Sinks.

45. Standing Timber for Removal.

46. Stop & Go lights.

47. Street Identification Signs.

48. Sump Pumps.

49. Swimming Pools.

50. Tables.

51. Temporary Electric Service.

52. Transformers.

53. Utility lines above ground within the right-of-way.

54. Venetian Blinds.

55. Washers.

56. Water Heaters.

57. Water Softeners.

This is Wisconsin’s list: what Illinois taxes will be left to the Governor, the Ill. Dept. of Revenue, and the Joint Committee on Administrative Rules.

If the Home Repair Tax is imposed, the National Association of Home Builders projects a decline in home repair work that would amount to at least $30 million and would lay off over 330 workers, statewide.

And let’s not forget, Illinois is dead last in new home production given a ratio of building permits to state population. The National Average for new home construction starts is close to 60% of normal construction rates; Illinois’ construction rate stands still at 25% of normal.

Illinois home construction market dropped by 85% after the economic collapse of 2008. We are nowhere close to being back on our feet, and now is not the time to tax homeowners for home repair work.

The solution is simple: delete language in SB09 that taxes “Tangible Personal Property Affixed to Real Estate” (Code Name: Home Repair Tax).

Illinois Senate Puts Tax Bill on Ice

Bill Ward, Executive Vice President, HBAI

Leaders in the Illinois State Senate have failed in their attempt to pass SB09, the omnibus tax bill that was part of the “Grand Bargain.” HBAI opposed the taxation portion of the bipartisan effort as it would have implemented a new Excise Tax on home repair services that would have increased costs to home owners by 5%.

Senate President John Cullerton (D-Chicago) announced on Wednesday that, due to a lack of support by Republican members in the Senate, SB09 would not be called for a vote. Cullerton blamed Governor Bruce Rauner for intervening during the time that Cullerton and Senate Republican Leader, Christine Radogno (R-Lemont) were attempting to put enough Democratic and Republican votes on the board to move SB09 to the House of Representatives.

SB09 was particularly bad for those of us in the home repair and remodeling industry. On top of a personal and corporate income tax increase, there was a new Excise Tax on “the repair of tangible personal property attached to real estate.”

This tax would work like a 5% sales tax on repair work, and home repair work was only one of five economic sectors to be burdened with this new form of taxation. The other four sectors included dry cleaning, warehouse storage, landscaping, and amusements. Another 140 possible services could have been named in SB09, but Senate Leaders kept it to these five to allow for easier passage.

The Excise Tax was initiated after retailers and soda pop manufacturers removed from SB09, a penny per ounce tax on the sale of soda pop. To fill the gap left by the vacancy of the soda pop tax, Senate leaders embraced a Wisconsin law taxing the five service sectors that seemed to have little clout in the Illinois Senate.

One other tax in SB09 was the Business Opportunity Tax that would have assessed businesses with a tax based upon the size of company payrolls. HBAI was opposed to this form of taxation, as well.

HBAI has maintained throughout the process, that we are willing to accept broad based forms of taxation to help solve Illinois’ budgetary problems.