Kevin Kelly’s volunteer work takes him from the Midwest to the West Wing. His to-do list reads like Wall Street Journal headlines – immigration reform, mortgage regulation, construction codes, the Clean Water Act.
As this year’s chairman of the National Association of Home Builders, the Hockessin executive is the point man for the home construction industry.
Kelly, whose day job is president of Leon N. Weiner & Associates in Wilmington, is at the center of the housing turnaround, whether he’s listening to builders or sharing their concerns with Obama administration policy advisers at the West Wing.
“We welcome and appreciate the open and candid dialogue we have with the White House and the administration,” he said, adding that the administration and the homebuilders agree on some issues but disagree on others.
“I think our insight as to what is currently happening on the ground – literally — is valued and provides real-time, real-world assessments,” he said.
This year, he spends 90 percent of his time jetting from city to city to as the homebuilders’ voice on issues as varied as immigration and mortgage lending. He said that would have been impossible if not for two vice presidents at Weiner who have filled in the blanks – David Curtis and Glen Brooks. Even when he’s at his Hockessin home, Kelly is often reading a pile of position papers.
The outlook for homebuilders has improved markedly in the past 18 months, he said, but it’s not all the way back. Delaware is picking up, he said but still lagging behind the rest of the country, with one exception. Sussex County, with its unique mix of vacation buyers and out-of-state retirees taking advantage of Delaware’s low real estate taxes, has come back strong.
As Kelly sees it, housing is the fulcrum on which the economy turns: “Until the housing industry recovers, the American economy will never fully recover, because we’re such a massive provider of jobs. The spinoff is just massive. Forty trades are involved in providing every element of a home.”
When Kelly was elected, Gov. Jack Markell predicted his leadership would lead to better housing opportunities for everyone. “His commitment to affordable housing has made a different for people in Delaware” the governor said.
This year, Kelly represents homebuilders on some controversial issues – immigration, the mortgage interest deduction, low-income housing credits and a federal backstop for mortgages.
Sometimes the homebuilders score a partial win, as they did recently when Kelly testified before Congress on the Waters of the United States Regulatory Overreach Protection Act. Builders feared new regulations would slow construction because the EPA’s proposed definition of “waters” was so loose that it could be applied to ditches and potholes. The House passed the bill to stop overregulation, but Kelly said Senate Majority Leader Harry Reid wouldn’t let it get any further. He hopes the bi-partisan support in the House sends a message to the EPA that excessive regulation could stymie the housing recovery.
Asked about Delaware developer Joseph Capano’s September indictment for allegedly running gas, water and electric lines through wetlands near New Castle, Kelly said, “People tend to paint the development industry with a very broad brush, but I hope intelligent people both on the regulatory side and the enforcement side draw a distinction between those who are responsible and those who are not responsible. There’s nothing we guard more strongly than our reputation. I’ve got an A+ rating from the Better Business Bureau because I trade on my reputation, and that’s the case for the vast majority of homebuilders, but it’s just like any other profession. There are journalists who will slant a story. There are, in every profession, those people who give the profession a black eye.”
The good news of the budding recovery sends Kelly on another mission – pushing for wider immigration. During the recession, scores of carpenters and skilled tradesmen couldn’t find work so they moved on to other industries. Now, with construction doing a slow about face, builders are finding themselves short of help and paying more for labor. Nationally, there are close to 150,000 openings in the residential construction business.
Today’s customers have sustainability on their shopping lists — superior insulation, airtight windows and high-efficiency furnaces. Kelly, whose own company boasts green construction with energy-efficient features, said green building is a fact of life in his industry now. He expects coming greener construction codes to add about $6,000 to the cost of producing a standard single-family home. As he puts it, “Have you priced a hybrid car recently?”
The cost of permits and unpredictable regulation also adds to the homebuilders’ expenses, he said: “They seem to have a playbook they love to go to. They seem to say, ‘How can we cover our operating expenses? Oh, I know. Let’s charge builders an additional fee.’ It seems every time there is a need for additional resources, they tend to look at the homebuilding industry as an ATM.”
Tight mortgage money limits home buying, an issue that affects association members and Kelly’s company in particular. Weiner, long known as a high-quality provider of affordable housing, sells homes from Albany to Alexandria and west to Cleveland – when mortgage money is available.
“They are only providing mortgages to people with literally pristine credit,” Kelly said. “That translates to leaving millions of Americans behind. In part, we’re leaving first-time homebuyers behind because they do not, as a rule, have pristine credit. They’ve only been working for a short time. They may have student loans. They have a short credit history. That is the single greatest drag on the housing economy.”
Some building codes and zoning codes are also on his hit list. He said current building requirements would make it impossible to build some popular older developments in Hockessin and North Wilmington now, because the Hockessin lots would be too steep and the North Wilmington ones would be too small.
“Delaware’s population is expanding. Where would you like your children to live? I’d like them to live close by,” Kelly said. “As Gov. Markell says, we’ve got to stop just saying no to anything that has to do with growth or development.”