A breakaway group of homebuilders is mounting its own lobbying campaign — and working around the powerful National Association of Home Builders — to secure passage of a tax provision that would help its members write off billions of dollars in losses.
The new entity, the Homes for America Alliance, includes about 75 big and small builders.
The alliance will focus on passing a net operating loss (NOL) measure that was included in the House and Senate stimulus packages earlier this year but was removed in conference.
Finance Chairman Max Baucus (D-Mont.) and Sen. Olympia Snowe (R-Maine) are sponsoring the legislation in the Senate, and backers hope it will be included in major tax legislation expected to emerge in the House Ways and Means Committee.
The legislation would extend to five years the period that companies can use to offset revenue losses. Under current law, companies can usually only carry back tax losses for two years.
“We’re supporting the broad NOL legislation that’s out there and ... are organized to support the larger NOL coalition working on this,— said Ken Gear, executive director for the organization.
The decision to form their own group follows a public fight in February between the chief executives of the big builders and their trade association, triggered by a letter that NAHB President Jerry Howard wrote to Speaker Nancy Pelosi (D-Calif.) questioning the NOL provision. Howard argued that the tax measure could allow bigger builders to offload excess inventory for a tax benefit.
Howard’s letter caused an uproar among big and smaller builders because members of the trade association were not consulted before it was sent, according to several lobbyists familiar with the incident.
In March, a group of the big builders considered leaving the trade organization if Howard refused to resign.
Since then, executives from the big builders, led by Tim Eller, CEO of Centex and head of the High Production Home Builders Council, have held several meetings with NAHB senior officials to try to repair their relations.
Most recently, the parties met Monday to discuss their relationship.
Though they will continue their membership in the NAHB, the big builders decided to go out on their own to push for the NOL.
“I think it’s just a question of some of the builders wanting a little more direct control over the lobbying efforts,— Gear said.
“But we are working closely with them,— he added.
The NAHB now appears to have gotten behind the big builders’ position, although it is unclear whether the NAHB will actively lobby for the provision.
“NAHB supports the fullest and most robust NOL carryback provision possible in order to avert more costly layoffs in construction and other industries that would take an even worse toll on the nation’s economy,— NAHB Chairman Joe Robson, a Tulsa, Okla.-based builder, said in a statement.
“As part of this expanded NOL carryback, NAHB also supports measures to ensure that an enhanced NOL rule would include wash-sale provisions,— he added.
Tom Crawford of the c2 Group and Bob Van Heuvelen of Van Heuvelen Strategies signed on to lobby for the new alliance.
The group is expected to hire several more outside consultants, Gear said.
In particular, the association is looking to beef up its House Democratic bench, according to lobbyists familiar with the group.
“We’re getting ourselves organized,— Gear said of the alliance’s activities so far. “We’ve been working to support the broader coalition, and our members have been contacting Members of Congress.—