National group launches campaign to contain costs

March 13, 1994|By Lorraine Mirabella | Lorraine Mirabella,Sun Staff Writer

WASHINGTON -- Homebuilders hope to rein in development costs and keep mortgage rates low as part of a national, three-pronged campaign launched last week.

Builders want to overhaul the government's regulation of wetlands and end the gridlock driving up lumber prices, the National Association of Home Builders said after members met for a legislative conference on Wednesday.

The trade group also urged the Federal Reserve to reassure financial markets that it does not plan any dramatic increases in short-term rates.

Builders called for major reform of wetlands regulations they view as costly and falling short of fully protecting environmentally sensitive areas.

"Now all wetlands are treated the same," said Tommy Thompson, the NAHB president. "The Everglades would be regulated the same way as a pond that's only wet seven days of the year."

The approval process drags on for months, driving up development costs and housing prices as builders pay interest on their property or are forced to reconfigure site plans, Mr. Thompson said.

"You have an idea of what the market wants," he said. "If you have to wait a year or longer, the market could pass you by."

The group threw its support behind a House of Representatives bill that would clearly define wetlands and classify them by value and function. The proposal would streamline the approval process, placing it in the hands of the U.S. Army Corps of Engineers, eliminating overlapping and often conflicting reviews by the Environmental Protection Agency, U.S. Fish and Wildlife Service and the Soil Conservation Service.

Builders hope to create rights similar to eminent domain in which government would compensate property owners for the market value of wetlands that appeared usable for development but later were deemed unusable.

Lumber prices

Builders also will lobby Congress to designate a level of timber harvest in the Pacific Northwest forests that would be immune to court challenges. Congress could set a level as part of the annual appropriations bill funding the national forest sales program.

A federal judge several years ago blocked most logging in the region until the government could offer a plan to protect the habitat of the endangered northern spotted owl. In his pending 10-year forest plan for the region, President Clinton has projected annual logging of 1.1 billion board feet. It takes about 10,000 board feet -- 1-foot square by 1-inch thick -- to build a typical single-family home.

Interest rates

During a press conference, the association also criticized how the Federal Reserve publicized plans to raise short-term interest rates. The Fed raised rates Feb. 4 for the first time in five years to keep ahead of any jumps in inflation.

But traders and investors have interpreted the announcement as a move to keep rates up and inflation down, the builders association said.

"The Fed seemed to shock the bond market and sent long-term interest rates up, which means higher mortgage rates for homebuyers," Mr. Thompson said.

Mortgage rates bottomed out at 6.75 percent in October and have increased about a percentage point.

Mr. Thompson called on the Fed to reassure financial markets that it plans no dramatic increase in short-term rates.

"We're concerned about the message the Fed sent," he said. "They very much confused the market. The Fed made such an issue of reining in inflation, and investors began saying if they're talking about it, there must be inflationary pressures. The message has been unclear."

About 600 builders from across the United States met for the builders' daylong conference Tuesday, then spent Wednesday meeting with members of Congress.

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