installation of 2015 officers and board of...
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METROPOLITAN BUILDERS & CONTRACTORS ASSOCIATION OF NJ MAGAZINE
February 2015
OnSiteDominic Paragano
PresidentEric Metzler
Vice President
Susan Rubright, Esq.Associate VP
Doug Fenichel2nd Associate VP
Bill MellerSecretary
Frank BelgiovineImmediate Past President
KT CatlinExecutive Officer
Josh Mann, Esq.Treasurer
2015EXECUTIVE OFFICERS
Installation of 2015 Officers and Board of Directors
See Inside Front Cover
2015 OFFICERS AND BOARD OF DIRECTORS
Special Thanks to the following Sponsors for their generous support!
President - Dominick L. Paragano / 1st Vice President - Eric MetzlerVP Associate Affairs - Susan Rubright, Esq., / 2nd VP Associate Affairs - Doug Fenichel
VP Treasurer - Josh Mann, Esq., / VP Secretary - Bill Meller
Larry Paragano installing his son, Dominick L. Paragano
as 2015 Metro President
(L-R) Tom Troy, NJBA Officers, Dominick L. Paragano and Larry Paragano
Dominick, Jr., Emcee of Metro Installation of Officers
Naz Paragano presenting NAHB President’s plaque to his father
Gold SponsorsDominick Paragano FamilyLarry and Eileen Paragano
D.L. Paragano HomesPella Windows & Doors
Silver SponsorsBrach Eichler, LLC
Caliber Home LoansQuality Electric & Data, Inc.
Supporters
Royal Building Products
Hammer Sponsors
Program Advertisers Anthony & Company
Professional Fireplace Services, LLCProfessional Stone & Stucco Applicators
LEW Corporation
Gold HammersGeneral Plumbing Supply
Omland Engineering, a Bowman Consulting Group
Silver HammersFerguson Enterprises
NJ Advance MediaPorzio, Bromberg & Newman
Reno’s Appliance
2015 Metro Officers and Board of Directors
Steve Shaw accepting the Founders Award for his father, Robert Shaw
(post-humous) from KT Catlin
Mike Davis receiving the Metro Remodeler of the Year Award
from KT Catlin
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OnSite / February 2015Editor: Sharon BarkauskasDesign: Gregory J. Del DeoPrinted by U.S. Press, Valdosta, GA
Metropolitan Builders &Contractors Association of NJ
39 East Hanover Avenue • Suite C2Morris Plains, NJ 07950Phone: 973-887-2888Fax: 973-887-2926Website: www.MetroBCA.org
Dominick Paragano2015 Metro President
President’s MessageFebruary 2015
Gold Hammer Sponsors
Silver Hammer Sponsors
Here we are in the 2nd month of 2015 already! Our Installation and Awards Banquet was a winner. The programs we put in play last year are still going strong, The Builder Tree and Product Spotlight are just 2 of the programs that have proven the value of membership in Metro by generating business for our Associates. Next month Metro will celebrate 70 years! We have been through a few mergers and name changes but we are still standing strong! I attribute that to all the members who generously give of their time and resources. I want to thank all of you for your support, hard work and dedication!
This year promises some exciting new programs, some of which are at different venues. We will launch a follow up to our highly successful Builder Tree; we were fortunate enough to be able to secure a spot at Ballyowen for our annual golf outing; and, our New Young Professionals Committee, led by Rob Fallone, has promised us a block buster Oktoberfest this year!
There has been a large amount of time put into enhancing the features on our website. It is more user friendly and very informative. There is a “members only “section for our private workings, yet there is a “public area” where we can be a source of information for potential customers. It is a wonderful resource for both our members and the public. The Metro website now has a live calendar updated on a daily basis. Take the time to check the calendar for upcoming events at local, as well as for events at NJBA.
This year we will place a greater emphasis on providing educational options for our members by offering Morning Educational Seminars and other programs throughout the year. Of course, we will continue to offer networking opportunities at our General Membership Meetings. As this year progresses, we are committed to making sure everyone in our association gets increased value from their membership. If you have not chosen a 2015 committee on which to participate, I urge you to do so right now. There is no better place to grow relationships than through working with other members on committees. Not to mention, our success is due to the involvement of those who give their time. If you are not sure what steps to take to maximize your membership, stop in at the Metro Office to speak to KT, Sharon or Aileen. Any of them would be happy to meet with you to help identify ways to help you get more involved.
I look forward to seeing all of you at our events throughout 2015!
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One of the biggest challenges of membership in any organization is generating return on your investment. There are 2 types of investment,
1st there is the financial and 2nd there is the time. The 1st, financial, is
generally a non-negotiable item. You have to pay to play! The 2nd, time, is the one that tends to produce the results. The big question is where and how much time is necessary. When I look at the individuals (Builders & Associates) that seem to generate the most bang for their buck, they all have 1 thing in common…….They Show Up!
The highly successful individual picks 1 maybe 2 committees and really generates their involvement. They come to the committee meetings, they make the calls, they “work it”. You will see them at most, if not all, General Meetings and Events. They may not be an officer or director, they may not play golf; however, you will see them at the Golf outing. My Dad always told me “KT, you have to put something into the bucket before you can take anything out”. He is right!
We have a variety of Committees. Think about what you like, what you have an interest in and your desired end result. Once you have a general idea of those 3 things, call me. I will help you choose the right committee.Now’s the time, don’t wait! You will always be too busy, going away or some other version of “not right now”. Procrastination won’t get you where you want to go. Jump in now and reap the benefits of membership in 2015!
2014 SPIKE CLUBCLUB MEMBERS:
Anthony Bevilacqua 2David Bossart 2
Rob Fallone 2Roger Hendrickson 3Elizabeth Horvath 2
Eric Metzler 2Dominick L. Paragano 24
Membership in this prestigious Club is for any Metro member who has brought in 2 or more new members during 2014. Thank you for your efforts in recruiting new Metro Members!
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“Building our Future…one member at a time”
BuildersKarl Peterson
Distinctive of Essex141 Hillcrest Avenue, Summit, NJ 07901
973-525-3096 • 908-273-4213 Fax • 973-476-5919 [email protected]
Sponsor: Dominick Paragano
Bio: I build and remodel homes.
Leo WhiteMurph Construction North, Inc.
26 Cottage Place, Westfield, NJ 07090908-654-9098 • 908-233-9588 Fax
Sponsor: Dominick Paragano
Bio: General Contractor doing mostly renovations.
AssociatesGene Fernicola
VSI Distributors, Inc.433 Bloomfield Avenue, Caldwell, NJ 07006
973-226-3769 • 973-226-8659 Fax • [email protected]
www.thevacuumdepot.comSponsor: Dominick Paragano
Bio: We sell, service and install vacuum systems for residential and commercial applications.
Associates (continued)
Angelo GiambattistaPinnacle Consulting, LLC
659 Eagle Rock Avenue, West Orange, NJ 07052973-519-6865 • 973-736-0050 Fax • 973-519-6865 Cell
Sponsor: Roger Hendrickson
Bio: We are providers of professional CAD design support, CAD training, productivity consulting, GIS graphics.
Established 1996.
Samuel M. GussRed Oak Capital Advisors, LLC
101 Woodmont Drive, Randolph, NJ 07869973-402-0244 • 973-809-6174 Cell
Sponsor: Dominick Paragano
Bio: We provide financing services to real estate industry as well as property owners.
Michael IannuccilliGlobal Garage Flooring and Design
174 Flanders Drive, Hillsborough, NJ 08844908-892-4045 Cell
[email protected]/centralnewjersey
Sponsor: Dominick Paragano
Bio: We specialize in garage remodels. We install polyaspartic concrete floor coatings and install garage cabinets and storage devices. We also have a complete
line of decorative concrete finishes.
Wayne IngramEngineering & Land Planning Associates, Inc.
140 West Main Street, High Bridge, NJ 08829908-238-0544 • 908-238-9572 Fax
Sponsor: Elizabeth Horvath
Bio: Engineering & Land Planning is a multidisciplinary engineering firm providing professional consulting
services. We support public and private clients in a wide range of markets.
John P. JosephJohn Joseph, Inc.
695 Westbrook Road, Ringwood, NJ 07456973-839-0669 • 973-839-7837 Fax • 973-390-8045 Cell
[email protected]: Stephen Shaw
Bio: Drilling, Blasting and Hammering Rock
MEMBERSHIP SPONSORS
WELCOME NEW MEMBERS
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Silver Hammer Sponsor
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MEMBER BENEFIT OF THE MONTHTaking a vacation soon??? Check out – Endless Vacation Rentals – 10% discount on over 200,000 vacation rentals worldwide. Destinations include the US, Canada, Mexico, the Caribbean, Europe and more. Call 877-782-9387 and mention you are an NAHB member at time of reservation or go to: www.endlessvacationrentals.com/nahb
Join us at ABC and we’ll pay for your hotel room and registration.
10 GREAT REASONS TO ENTER!!!
• Highlight and Promote your Product or Service• Judging by an Independent Panel of Industry Experts
• Customer Trust & Recognition• Accolades from Industry Peers and Experts
• Press Release Exposure in Local Newspapers• Promotional Photography
• Unlimited use of 2015 Awards “Winner” Logo• Win a great trophy to display in your Office
• Have a great time Networking at the Awards Dinner on June 11th• Be a Winner – enter today!!!
The Call for Entries booklet is available from the Metro Office, in the November/December 2014 and January 2015 OnSite Magazines, and on the Metro website – www.metrobca.org
Awards will be presented on Thursday, June 11th at the Sheraton Parsippany Hotel
AWARDS OF EXCELLENCE – CALL FOR ENTRIESDeadline for Submissions – Friday, February 27, 2015
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Metro Notes...Condolences to the family oF…Leonard R. Sendelsky, who passed on December 6, 2014. Leonard was a legend in the building industry with an enviable record of accomplishments that date back six decades. He was the owner of Lenguy Construction which was formed in 1958. Lenny served as NJBA President in 1973 and deeply committed to the Builders Association at all levels.
Congratulations to…Larry Appel, Appel Design Group Architects, who recently received the Lilly K. Gottlieb Award from Jewish Family Services of Central New Jersey. The Award, given to those who support and embody the ideals of JFS, was presented at the agency’s gala dinner for Larry’s assistance in the renovation of the portion of JFS’s headquarters building that now accommodates a Home Health Aide Training Center.
Get Involved…..It’s Worth It!!
METRO COMMITTEES:
• Awards of Excellence• 70th Anniversary Party • Programming• Golf• Grillin N’ Chillin• Public Relations• Associate Affairs• Membership• Sponsorship• Young professionals
Awards of Excellence:This committee is the committee to be on if you enjoy meeting, interacting, and acknowledging people and
companies. You will sharpen your communication skills, marketing talents and more when you join this committee.
Contact the Metro office to sign up now!
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Silver Hammer Sponsor
Associate SpotlightNick Pietrone, Huston Lumber
Huston Lumber was established in the early 1930’s by the Huston Family in North Plainfield, NJ. The Colson family acquired this facility in 1977, and a second location was added with the acquisition of Felmley Lumber in Oldwick, NJ in 1985.
Nick Pietrone graduated from Monmouth University in 1982 with a BS
in Business Administration, concentration in Accounting. He passed the NJ CPA exam in 1985. Nick started his business career as a bank auditor, and then worked as a CPA in public accounting. He left public accounting in 1987 to become the controller of his favorite client, Huston Lumber & Supply Company, and he was promoted to the company president in 2001.
Huston Lumber & Supply is focused on providing premier customer service to renovation and remodeling contractors and custom home builders. We have developed our product and service offerings to meet the needs of these customers, and we have a keen focus on flawlessly executing the details of sales and supply transactions for our customers. We want to be the most reliable supplier in the marketplace. Huston has a highly skilled team of 18 customer service and sales personnel, and offers same day and next day free delivery on its fleet of 16 trucks including moffets and dump flatbeds.
While offering a wide range of standard building products, Huston takes particular interest in providing expert advice and experience with Andersen, Marvin, and Jeld-Wen windows; interior and exterior doors; and all types of millwork and custom
millwork products. Huston’s custom millwork shop can design and fabricate an unlimited variety of wood and PVC products including hardwood doors, shutters, mouldings, trim, columns, and window surrounds to meet the most sophisticated and demanding client wishes. Do you need curved PVC decking, railing systems or window surrounds? We can do it on our premises!
Huston also offers private custom kitchen design services at its kitchen showrooms at each of the stores in Watchung and Oldwick. And if you are working on a LEED job requiring FSC certified Chain-of-Custody building products, Huston is one of the few lumber dealers in the state of NJ that is FSC certified.
Huston is pleased and proud to have been an Associate Member of the Metropolitan Builders & Contractors Association since 1986. Huston is also a member of the NJBMDA, NRLA, NLBMDA, NJBA, NAHB, NKBA, NFIB, NJBIA, Gateway Chamber of Commerce, and the US Chamber of Commerce. Nick maintains memberships in the AICPA & NJCPA. For more information, please visit us at www.hustonlumber.com.
Metro Member AnniversariesJanuary 2015
Company # of YearsC. Mannion Construction, LLC 43Forst Contracting & Development Corp. 42Maione Homes 36D.L. Paragano Homes, Inc. 33Cerdel Construction Co., Inc. 25Weichert New Homes – John Udell 23Giovan Realty & Development Corp. 23Welsh, Chester, Galiney & Matone, Inc. 19PC Richard Builder Division 19Appel Design Group PA Architects 17Far Hills Design Build, LLC 16French & Parrello Associates, PA 13Mill Creek Residential Trust, LLC 10BNE Real Estate Group – Seth Cohen 10Lakeland Bank 9RPI Design Build, LLC 9LEW Corporation 5K. Hovnanian Homes – David Fisher 5UFP Berlin, LLC 5Omland Engineering Associates,
a Bowman Consulting Group 5Geiss Custom Builders Corp. 4Morris Habitat for Humanity 4Prestige Wood, Tile & Stone, Inc. 2Spring House Builders, Inc. 2K&S Construction Group, LLC 2ProActive Healthcare Communications 2Legacy Home Builders, LLC 2Beach Construction 1General Plumbing Supply 1Panetta Companies, LLC 1
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Keep Your Communications Effective By Performing A Quick Checkup
By Doug Fenichel, In-House Public Relations, LLC
Telling your story to achieve your business goals is more important than ever. Whether “winging it” or executing a strategic communications plan, you should review your efforts regularly. How people gather information may evolve, but some things never change. Your communications efforts must pass three checks:
• Is your message current and compelling? • Is your message being delivered to the right people over the right media? • Are all of your communications efforts sending the same message?
Current and CompellingCompelling messages not only set you apart from your competition, they keep readers engaged and make them want to do business with you. You’ve likely added projects, products or experience to your portfolio in the last year. Perhaps you’re using new technology or you’ve adapted to new regulations. Your messaging should reflect that and explain how that benefits customers.
Right message, right media, right timeAppeal to your potential customer emotionally, logically or both. It takes a little effort, but it might get someone to listen. Your customers likely use a mix of social and traditional media. So should you. When you use a carefully chosen mix of media with a carefully crafted message, your customers see you in several places at different times. Messages reinforce your presence and expertise. Eventually, you’ll get that phone call.
The content and the mechanics of your website need to be part of your communications check-up. New content gives humans and search engines a reason to return to the website and assures visitors that you’re engaged. And with 63 percent of adults using their phones to go online according to the Pew Center, websites must work on cell phones as well as on computers.
Keep your messages consistentWhat are your two or three main messages? You can express them in different ways, but keep your messages in mind in all your communications – written, online and spoken. There’s nothing wrong with posting a cartoon on Facebook, but if it doesn’t reinforce the image you’re building, what good does it do?
A final note: Don’t be shy about getting some outside help. You wouldn’t run your business without a lawyer and an accountant. Your reputation and how you present yourself to the world is just as important as your business papers and your finances. Consider seeking communications counsel to point you in the right direction.
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Gold Hammer Sponsor
Thursday, February 19General Membership Meeting
Economic ForecastBridgewater Manor – 6pm
Thursday, March 19Metro 70th Anniversary Celebration
Bridgewater Manor – 6pm
March 5 -Part 1 * April 2 -Part 2Redevelopment Finance Seminar
Raritan Valley Country Club – 8:30am – 12noon
March 24-26NJBA – Atlantic Builders Convention (ABC)
Atlantic Citywww.ABConvention.com
SAVE THE DATES
* CALL FOR ENTRIES *AWARDS OF EXCELLENCE
Deadline for Submissions:Deadline – February 27, 2015
Visit our website for more information www.MetroBCA.org
Homeowners have lots of options when selecting the right Builder or Remodeler for their construction project. If you were looking for a doctor, you would check his/her credentials and if looking for an accountant, you would want one with a CPA after their name.
NAHB offers Professional Designation programs for Builders, Remodelers and Associate members. Surveys taken prove that builders and remodelers with NAHB Professional Designations experience increased revenues over their competition. Something to consider - some examples as follows:
CGA - Certified Graduate Associate CGP – Certified Green ProfessionalCGB - Certified Graduate Builder GMB – Graduate Master BuilderCGR - Certified Graduate Remodeler GMR – Graduate Master Remodeler
Metro provides the NAHB Education courses that are required to fulfill the requirements. We may it easy for you to attend with classes from 3pm to 10pm so you don’t miss a full day of work.
2015 Spring Course Schedule :Business Management for Building Professionals February 4Diversification: Capitalizing on New Business Opportunities March 10Business Accounting & Job Cost March 11Land Acquisition & Development Finance April 14Construction Contracts & Law April 15Profitable Business through Quality Practices May 5Basics of Building May 6Estimating June 2Project Management June 3
Contact Sharon at the Metro Office to discuss how to get started. All Courses are open to Members and Non-Members for the information content presented.
Increase your Income Potential with an NAHB Professional Designation
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Silver Hammer Sponsor
New Year, New Tax Questions and ChallengesBy Stuart Berger, Partner, SaxBST LLP
We rang in the New Year once again with a tone of uncertainty in the tax arena. While we finally saw Congress pass the 2014 “Tax Extenders” legislation in December, those retroactive tax breaks have no bearing on tax year 2015. However, you can count on an ongoing dialogue over other important tax reform issues, including some that will directly impact the homebuilders industry.
With the new congressional year starting, these issues will
range from modest changes to drastic overhauls of the tax structure. One of the more significant discussions we are watching involves the special exemption that homebuilders currently enjoy through the “percentage of completion” accounting method. The NAHB continues to fight hard to maintain this benefit as we await a final decision on its fate.
Additionally, there continues to be speculation that the home mortgage deduction, which is vital to our industry, may be further limited this year. On top of that, we will continue to feel the impact of changes on the local level with the state income tax levy and ever-increasing real estate taxes. More immediately, there are 2014 taxes to be filed and some complicated challenges to address before you do. Last year, after several years of deliberation, the IRS completed its “repair regulations” project along with the closely related depreciation rules known as Modified Accelerated Recovery System (MACRS).
These new regulations will impact every business, as we all have tangible assets that are maintained and depreciated for tax purposes. Be sure to consult your tax advisor about new elections and accounting method deadlines relating to these rules that must be made prior to the filing of 2014 returns.
Fortunately, in addition to the complex rules (i.e. definitions of “unit of property” and betterments versus repair and maintenance of properties), the final regulations also provide for some favorable items, including a simplified “de minimis safe harbor” rule for expensing certain betterments, as well a new annual election for smaller tax payers to immediately deduct some improvement costs.
As I prepared for these new regulations last year, I discovered many advantageous reasons for this reform. Prior IRS policies and rules resulted in a wide deviation of practices and business interpretations, which often caused either overreported or underreported income. More importantly, there are many more opportunities for tax savings upon adoption of these new requirements.
Whether filing last year’s taxes or strategically planning for 2015, all businesses need to take the time to understand and comply with these new rules to minimize any negative impact on their tax situation and have a truly Happy New Year!
The following companies spotlighted their products and services at the following General Membership meetings.
September 18, 2014
Pella Windows & Doors / Why Choose Pella® 250 SeriesAnthony & Company / New Homebuilder Insurance Program
Royal Building Products / Celect is the Best Siding in the UniverseProfessional Fireplace Services, LLC / The best looking linear fireplace – Dimplex
October 16, 2014
Unity Bank / Home Mortgages – Low Rates – Fast ClosingsGearhart Chevrolet / Private Offer for Members of NAHB
Miller Landscape Services, Inc. / Award Winning Design/Build Firm Creating Exceptional Beauty for Extraordinary Homes
White House Designs for Life / Leave the Finishing to us
November 20, 2014
Fulton Bank of New Jersey / Turning Blueprints into RealitiesAllied Building Products/Arzee Supply / Full Line Distributor of Residential
& Commercial Roofing – Siding – Windows – DoorsShelfGenie / Transform your kitchen without replacing your cabinets
Tremco Barrier Solutions, Inc. / Protect your next home against moisture intrusion.
Contact the Metro Office to reserve a spot to showcase your Product or Service.
Metro Member Product Spotlights
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Property taxes often represent one of the largest expense items for a property owner in New Jersey. The first decade of the new millennium saw the local tax levy across New Jersey increase by an average of 70 percent. While the rate of growth slowed somewhat over the last few years due to the 2% cap on tax increases, New Jersey taxpayers continue struggle under one of the highest property tax burdens in the nation.
Where can taxpayers find relief? Local property taxes are comprised of two components, the first being the assessment on each property. The second component is the local tax rate. The tax rate is a legislative creature born from the budgets of local governing bodies, school boards and County Freeholders. The closest a property owner can get to appeal the tax rate is in a voting booth.
Fortunately there is a more direct means to attack high property taxes. A successful tax appeal will reduce the assessment, which in turn will result in lower taxes. In some cases, the results could be significant.
The first step in a property tax check up is a basic understanding of the assessment and appeal process. Under New Jersey law, property required to be assessed – based on its fair market value – as of October 1 of the pre-tax year. This means that the assessment on a property in 2015 should reflect market value as of October 1, 2014. The only way to correct an improper assessment is to file an appeal.
The trick, of course, is figuring out whether the assessment reflects fair market value. In addition to knowing the assessment (which is sent by postcard and generally due no later than February 1st) you need to know also the average “equalization” ratio applicable for the municipality and determine what is known as the “Chapter 123 Corridor.”
Knowing the ratio is critical to analyzing the viability of an appeal. For example, an assessment of $500,000 on a property in Cranford (Union County) has an equalized value (i.e., implied market value) of $1,170,100. However, a property owner needs to do more than show that a property is simply over assessed. Municipalities get a statutory cushion of 15% which is establishes the “upper limit” of the Chapter 123 Corridor. In Cranford, this cushion allows the municipality a margin of error which means that a property owner would need to prove that the property assessed for $500,000 is worth less than the upper limit, which in this example is approximately $1,017,500.
In other municipalities, such as Mount Olive (Morris County), the ratio is 100%, which means that the property
owner need only demonstrate a market value less than the actual assessed value.
The next step is determining the market value of the property. If the value is less than the upper limit value, then an appeal is warranted. If not, then an appeal would have no merit, regardless of the actual tax bill. Remember, the only issue is market value.
Often times, property owners do not have a realistic view of the value of their property, if any. That is where the owner may benefit from the advice of a real estate tax appeal attorney and/or real estate appraiser.
In addition to the valuation issues, there are numerous procedural pitfalls along the way that need to be identified and avoided. These include the requirement to be current on your taxes at the time the appeal is filed; responding to municipal requests for information; and making sure the appeal is filed on time and knowing where to file.
Any appeal may be filed with the Board of Taxation in the county in which the property is located. For any property with an assessment in excess of $1 million, an appeal may be field directly with the New Jersey Tax Court.
The filing deadline is, generally, April 1. The exception to this deadline is where a municipal-wide revaluation has been conducted, in which case the deadline will be extended until May 1. Also, under a pilot program, the deadline to file appeals with the Monmouth County Board of Taxation was January 15, although for an appeal of an assessment in excess of $1 million, an owner of property located in Monmouth County is still April 1 to file directly with the New Jersey Tax Court.
Whether an appeal is worthwhile depends on many factors. It is important to understand the process and to check your assessment every couple years.
Anthony Della Pelle is a partner with the law firm of McKirdy & Riskin in Morristown (www.mckirdyriskin.com) and specializes in property tax appeals. Anthony is a Member of the Metropolitan Builders & Contractors Association of NJ. Richard De Angelis is an attorney with McKirdy & Riskin who also specializes in property tax appeals. Both Anthony and Richard author the NJ Property Tax Law Blog, www.realestatetaxappealsnj.com. They may be reached at 973-539-8900 or by email at [email protected] and [email protected].
Quarter Notes
Real Estate Tax Appeal Basics Should You Consider Filing an Appeal in 2015?
By Anthony DellaPella, Esq. and Richard De Angelis, Esq.
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Gold Hammer Sponsor
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Tracking Progress on the Housing RecoveryBy David Crowe, NAHB Chief Economist
The economy and the housing market continue their gradual march back to normal. The national NAHB/First American Leading Markets Index (LMI) rose to .90 in the third quarter from .89 in the second quarter. The index measures how close every metropolitan area is to its last normal level of single-family housing permits, employment and house prices.
The LMI has three components, and two of them
were responsible for the increase. The single-family permit index rose from .43 to .44, meaning total permits issued in the past three months were at 44% of the last normal period, which was 2000-2003. Home prices also rose to 1.3 from 1.27, which means house prices are 30% higher than the average in 2000-2003.
Employment was the only component that did not change: It remained at .95, meaning the last 12 months’ average employment was at 95% of the peak employment levels of 2007.
Of the 350 metro areas with their own LMI, 59 have a value at or over 1, meaning they have recovered and moved on from their last normal state. Seven metro areas were added to this list in the last year. The recovered markets are dominated by energy-producing areas, with 15 in Texas, 8 in Louisiana and 3 in North Dakota. Smaller metro areas with universities or military bases have also done well.
While the employment component of the LMI did not change, recent job news has proved positive for housing. According to the most recent BLS data, total non-farm payroll employment grew by 214,000 on a seasonally adjusted basis in October. After upward revisions for September and August, the economy added 673,000 positions over the last three months. In the separate household survey, the national unemployment rate fell from 5.9% to 5.8% in October. However, real wage growth continues to lag, posting only a 0.1% pickup in October after a 0.2% decline in September.
In October, home builders and remodelers added 8,000 jobs to the residential construction sector on a seasonally adjusted basis. Over the last 12 months, the industry has created 131,000 jobs. Employment growth for the sector has been steady recently, adding on average just a little more than 10,000 jobs per month over the last six months.
With respect to construction, total private residential spending in September increased over the revised August estimate to a seasonally adjusted annual rate of $349.1 billion, a 0.4% monthly increase. Single-family spending increased 1.1%, multifamily spending decreased 1.0% while home improvements spending fell 0.3%.
On a three-month moving average basis from September 2013, single-family construction spending increased 9.7% and multifamily construction spending increased 33.8%. In contrast, over the same period private construction spending on home improvements decreased 13.8%.
One area of the market that is doing well is senior housing development. The single-family 55+HMI jumped nine points from the third quarter of 2013, to 59—the highest third-quarter reading since the inception of the index in 2008 and the 12th consecutive quarter of year-over-year improvements. All three components posted year-over-year increases: present sales, expected sales for the next six months and traffic of prospective buyers.
One factor helping explain the continued strength in the 55+ housing market is the slow but consistent rise in home equity, releasing some of the pent-up demand from older householders who had been sidelined due to their inability to sell their existing homes at an acceptable price.
Underlying recent gains for housing has been solid growth in economic output, which expanded at a seasonally adjusted annual rate of 3.5% for the third quarter: down from the 4.6% rate in the second quarter but still respectable. The slowdown is no surprise given the rapid pace in the second quarter, driven in part by a bounce-back from the decline in the first quarter.
The real question is whether the momentum of the third quarter can be sustained. Key drivers of growth—personal consumption expenditures and business fixed investment—slowed, while more volatile sectors—net exports and national defense spending—made outsized contributions to growth.
Household balance sheet gains of recent years plus improvements in the labor market are now helping consumer credit expansion. For instance, over the course of the third quarter, consumer credit outstanding expanded at a seasonally adjusted annual rate of 6.6%. Non-revolving credit outstanding grew faster over the quarter at 7.9%, while revolving credit outstanding rose by 3.0%. Growth in the student loan category remains a concern for first-time home buyers.
Other industry headwinds persist. For example, a new NAHB industry survey indicates remodelers continue to face some labor shortages. Although shortages were apparent in many job categories, they were particularly acute in the three categories of carpenters: 72% of remodelers reported a shortage of finish carpenters, and 30% said the shortage was serious.
Business lending is also a factor determining the pace of the housing recovery. According to the most recent Federal Reserve Senior Loan Officer Opinion Survey, demand for loans secured by multifamily residential properties strengthened on net over the past three months of 2014, particularly at smaller banks. However, lending standards for loans secured by multifamily residential properties, a measure of loan supply, tightened on net over the past three months of 2014 as the multifamily construction expansion continued.
In analysis news, NAHB released a new study examining residential energy use. Among the findings, single-family and multifamily homes built in the previous 10 years accounted for just 3.2% of the energy consumed in the U.S. Newer homes are larger, but over the long run the effects of increased efficiency offset the extra square footage, so that homes built since 1999 tend use the same to slightly less energy than homes built before 1950. The research also finds that energy use is determined by household behavior, including appliance use.
Lastly, NAHB analysis showed that over the past year the rate of house price growth recorded in the U.S. places it in the second quintile globally.
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Silver Hammer Sponsor
New Residential Privately Owned Housing Units Authorized To Be BuiltNovember 2014: New Jersey Counties
County Total Value Total UnitsSingle Family Units
Two Family Units
3-or-4FamilyUnits
5-or-MoreFamilyUnits
Essex County $10,463,689 91 16 12 6 57
Hunterdon County $3,357,687 21 14 0 0 7
Morris County $22,333,839 193 83 0 0 110
Somerset County $8,742,686 86 39 0 0 47
Union County $4,858,552 64 26 0 0 38
Warren County $1,628,116 15 10 0 0 5
Metro Counties $51,384,569 470 188 12 6 264
NJ - All Counties $249,956,370 1,784 816 68 50 850
Source: U.S. Bureau of the Census, Manufacturing and Construction Division.Prepared by: New Jersey Department of Labor and Workforce Development, December 2014.
To See Data for all Counties and Municipalities go to: http://lwd.dol.state.nj.us
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