On January 30, 2015, President Obama issued Executive Order 13690, "Floodplain Management," to amend Executive Order 11988, signed in 1977 in an effort to improve the Nation's resilience to current and future flood risk. Since 1977, "floodplain" has been defined as "the lowland and relatively flat areas adjoining inland and coastal waters including flood prone areas of offshore islands including flood prone areas of offshore islands, including, at a minimum, that area subject to a one percent or greater chance of flooding in any given year. " The new Executive Order now requires federal agencies to expand their flood plain oversight from the current base flood elevation (BFE) associated with the 100-year floodplain to a higher elevation and a more expansive area. There are now three approaches for establishing Federal Floodplains: utilizing the best-available, actionable hydrologic and hydraulic data and methods that integrate current and future changes in flooding based on climate science; freeboard, an additional two feet shall be added to the BFE, or three feet for critical actions defined as any activity for which even a slight chance of flooding is great; and a 500-year flood elevation.

 

The NAHB published this in-depth analysis of the Executive Order and describes all three approaches to Federal Floodplain management here: NAHB: Floodplain Executive Order

 

NAHB, HBAGNO, and other organizations remain actively engaged in the public comments FEMA hosted around the nation to give guidance on the Executive Order. Unfortunately, FEMA did not have much information to give to the public and, in turn, created great concern about the potential ill-effects of the Executive Order. Industry leaders requested an extension to the window allotted for public comment for an additional 60 days, which was granted.
We encourage our members to learn more about the Executive Order and submit public comment directly to FEMA's website, via this link. regulations.gov

Local Issues: Vinyl Siding Ban, City of Gretna
The past Legislative recap addressed the City of Gretna and the potential vinyl siding ban that was brought forth by Councilmember Marino. Unfortunately, the ordinance was passed in a 3-2 vote, whereby use of vinyl siding is banned in the Gretna Historic district on new residential construction. It remains our position that outright blanket bans on perfectly acceptable, code-compliant building materials is bad public policy, both for our industry and the home buying consumers that we service. We will continue to monitor the effects of this and other restrictive policies that impede our ability to do our work. For more on this issue, please click on the attached articles: 

Gretna bans vinyl siding on new homes in historic districts

and 

Gretna vinyl siding ban: Is the issue about preservation or property rights?

Legislative Meet and Greet
The HBA's Legislative and PAC committees will be hosting a Legislative Meet and Greet at Sake Caf�, 2830 Magazine St, New Orleans, LA 70115, on April 9, 2015 from 6:00pm -9:00pm. We encourage our members of the HBA to attend this event and engage your state legislators before they go head to Baton Rouge April 13th to convene the 2015 Louisiana Legislative session. For more information on the event or to purchase tickets, please email or call Rita Bautista, [email protected] or 504.837.2700.
 

Last year 3.2 million net new jobs were created, the best performance since 2000, and total employment is now several million higher than it was before the recession began.  In addition, the unemployment rate which is 5.7% continues to fall and should be at or near 5% by year end, a level economists consider full employment.  All of this good news, yet serious problems remain.  The labor force participation rate (LFRP) is at levels last seen in 1978, which makes the unemployment rate look better than it really is and after adjusting for inflation, wages have been declining for years.  What is going on?    

The LFPR peaked at 67.3% in January 2000 and had had already fallen to 66% by the start of the Great Recession in January 2008, suggesting that other forces beyond the weak economy were already at work pushing it down.  That said, by the end of the Great Recession in June 2009, the LFPR was down just half-of-one-percentage-point to 65.5%.  Normally, it then would have started rising as the improving economy pulled unemployed workers back into the labor force from the ranks of the unemployed.  Instead, the LFPR went into free fall, hitting a low of 62.8% in October 2013 where it has remained since. 

The decline in the LFPR from 66% to 62.8% not only represents a loss of four and a half million workers, but also has no historic precedent.  That said, much of the decline was inevitable.  About half the decline is due to demographics.  That is the number of Baby Boomers who are retiring is currently vastly outpacing the number of new entrants into the labor market.  Exacerbating this trend is that today's youngsters are better educated and thus spend longer in school than earlier generations, further delaying their entrance into the world of work.

Another quarter of the decline is due to the severity of the recent recession, and the remaining 25% decline is simply unexplained.  These might be people who are obtaining additional education, receiving disability insurance and may or may not work again, those who have become unemployable and those who simply gave up.  Whatever the cause, knowing how many people in this category return to work is critical to understanding what lies ahead.  

Some have returned, some will return and some will never return.  However, no matter what happens to those persons, close to 10,000 Baby Boomers retire every day.  As a result, the fact that the LFRP has not fallen since October 2013 suggests these discouraged workers are returning.  Were that not the case, the LFRP would have continued falling.  So flat really is the new up!

Looking to the future, the greater the number of these discouraged workers who return to the labor force, the slower the decline in the unemployment rate will be, the higher the LFRP will be but perhaps most importantly, the slower wage growth will be.  And that's the kicker.  By contrast, if discouraged workers stop returning to the labor force, the unemployment rate will fall faster and wages will start rising more quickly but it would also mean that millions of previously employed persons have given up on work and that is very bad. 

Jennifer Gerarve, CFP�, CRPC�, CRPS�
Wealth Solutions LLC
610 Belle Terre Blvd
LaPlace, LA 70068
985-658-7702
[email protected] 

Over the past many weeks, HBAGNO's board and professional staff continue to build relationships with our local, state, and Federal policy makers (legislative & administrative) in an effort to ensure that the HBAGNO has active representation in all industry-related policy conversations.

For example, in our previous newsletter, we distributed this article (insert link here) written in nola.com regarding a proposed vinyl siding ban in Historic Gretna. This ban was pioneered by Council Member Marino of the Second District.  In a recent follow-up meeting, HBAGNO senior leadership and staff, armed with information provided by the Vinyl Institute, and a representative from HBAGNO-member Norandex Building Materials, met with Council Member Marino and the Mayor of Gretna Belinda C. Constant, to discuss adverse consequences that could result from an outright building material ban. Subsequently, the Mayor and Council Member Marino are requesting more time to visit the findings brought to them in our meeting. We will continue to bring updated information to our members on the status of this ordinance and we will continue to stand by the premise that banning quality materials, manufactured and distributed locally by our members, is not good public policy.

We will continue to actively work on building relationships with local, state, and Federal policy makers in an effort to educate them on the value that residential and light commercial construction brings to a state, region, and local community.  We also promise to keep you, our members, informed.  You can help make our legislative and government relations efforts even stronger by helping to be our ears and eyes in your parish or local municipality.  Please don't hesitate to contact me (insert email link here) if you have any questions or need any additional information.

Let us not forget that the closer we work together, the stronger our voice is.

Gulf Coast Bank's Community Rewards Program will be giving away a total of $50,000 to 10 local non-profits to assist them in their missions in our community. This year, over 400 non-profits registered for our 3rd Annual Community Rewards Program.  Help NOEL finish in the money!

The voting period is from Wednesday, February 25th until Wednesday, March 25th at 8 p.m. Voting is limited to one vote per day per valid email address.

If this is your first time voting, or if you've forgotten your Access Code, enter your email address, then click Email my Access Code and your unique Access Code will be sent to your Email account. Otherwise, enter your information and click Vote. For further inquiries, please email [email protected].

The combination of ongoing weak GDP growth and a steep rise in corporate inversions designed to reduce US corporate tax liabilities has again brought the perennial idea of tax reform to the fore.  Done right tax reform is a winner.  By closing loopholes and lowering marginal rates the economy can better perform and GDP growth can be raised.  That said, despite the positive rhetoric coming out of Capitol Hill, don't count on it soon.  Moreover, the sharp, and short-lived seven day brawl about scaling back tax breaks for 529 college savings plans is painfully instructive and illustrative as to why.

In his State of the Union address, President Obama proposed doing away with the tax-free treatment of capital gains in 529 college savings plans.  Instead, he proposed increasing the size of the American Opportunity Tax Credit, available only to families with pretax incomes of less than $180,000, from $1,000/year to $1,500/year and to allow it to be used for five years, up from four.   

Looked at in isolation, the economics behind this particular policy is pretty solid.  First, there is limited evidence that tax breaks designed to increase savings actually do so.  Rather, the evidence generally finds that tax breaks reward individuals who would have saved anyways.  Worse, the tax incentives don't seem to increase the total amount of savings either! 

Second, most of the tax shelter goes to higher income households.  According to the White House, 70% of the benefits from 529 plans go to households with incomes greater than $200,000, while a GAO study from 2010 found that 47% of families with a 529 plan had incomes above $150,000.  A recent College Savings Foundation study found that not quite 10% of 529 account holders have household income below $50,000.  In short, these plans give tax breaks to wealthier households who already send their kids to college and would have saved as much with or without the plan.  By contrast, giving all households with incomes below $180,000 slightly more money for college might raise the percentage of kids from middle- and lower-class households that attend college. 

More concerning is that be it via 529 plans, the American Opportunity Tax Credit, guaranteed student loans and now increasing student loan forgiveness, government, through the tax code and elsewhere, heavily subsidizes college costs, and in the process dramatically inflates the cost of college tuition.  Real tax reform would scrap these inflationary subsidies and implement a more coherent and more focused approach.                     

But here is the rub, taking away the advantageous tax status of 529 plans created an instant coalition of three powerful groups that rolled the administration.  The groups included parents with kids bound for college fearful they were about to lose a valuable tax break that they "deserved," higher education that was concerned it was losing a subsidy and the financial industry which feared losing the billions in fees associated with administering a huge $250 billion program.