Robert Baldwin owns R.B. Homes Inc. in Johnston. In October, he became president of the Rhode Island Builders Association. Baldwin recently took time to speak with Providence Business News about his goals during his two-year term and the state of the housing construction industry.
PBN: What’s your largest initiative as president?
BALDWIN: Actually, I’ve got a top three not a big one. One is growth of membership and membership services. Secondarily, is health care reform, because health care is a disaster from a small business standpoint. It’s a disaster for the small businessman. Thirdly, would be to input some common sense into the development regulations and what have you in the state of Rhode Island.
PBN: How do you go about accomplishing those three things?
BALDWIN: The first one is membership and that’s dealing with expanding our knowledge and reach throughout the construction industry and people who are in the industry and making them aware of the services of the association.
The second two involve lobbying and information with legislators and government officials. First of all to open the lines of communication, secondly to inform them of our position and the need for these reforms and thirdly to get some action.
PBN: This has been a challenging time for homebuilders. What do you say to your members looking to you for guidance?
BALDWIN: It’s bottomed out. Last year was the bottom. This year there’s been a very slight uptick. To use an analogy, it’s gone from dead as a doornail to life support. The patient’s still extremely ill but it’s not dead and buried six feet in the ground, which it was. So it’s come back to life but it’s on life support.
In terms of telling the members about the economy, they are chronically aware of it. I hear about it virtually every day. In terms of turning it around, quite frankly improvement in the economy is really not going to happen until people start spending money and banks start lending it. In the last two years was a scenario where not only were the banks not lending but people also just weren’t buying. Everybody just dug in, closed the door and sat tight.
Presently there are people who are coming back into the market looking to buy but the banks aren’t lending.
There’s not a flood of people by any stretch of the imagination, but if you follow a traditional cycle when people hunker down and don’t do anything certain, people can only do that for so long. If you’ve had more children and you need a bigger house, you can wait just so long but then you have to move whether you like it or not. If you are older and you’re in your senior years, and you want to downsize, you can wait for a while, but sooner or later you have to sell and downsize.
What’s happening now is those conditions are being met by various members of the population. And by the same token you have new members coming into the housing market that weren’t there. They were in college or they weren’t looking for housing. They’re getting older, two or three years have gone by and you have to do something.
PBN: Did the floods last March have any meaningful impact on homebuilders this year?
BALDWIN: It had impact on the remodelers. The remodeling did get a little shot in the arm from that.
PBN: Will the building interest in building green help homebuilders?
BALDWIN: The cost of fuel’s only going one way and it’s not down. With that reality technologies to save heat and light are becoming more competitive and more sensible in terms of saving dollars for the owner of the building whether it’s commercial or residential. …
These are going to generate in improvements for builders. Again, it gets back to financing. As long as the banking industry is willing to provide the buyer with these extra funds upfront so they can save over their entire lifespan. Once you put a building up that’s energy efficient … that stays there not only does that generate savings today, that’s going to generate savings for the next 50 to 100 years. So it’s a long-term payback. It’s a perpetrating situation.
The problem is you need the cash upfront to invest in that technology. And right now with the banking industry – and it gets back to them as it all too often does – with them being so leery to loan regardless of energy saving, there’s nothing in the appraisal or underwriting system that will allow them to allocate extra funds to compensate for the extra long-term energy savings.
We are working with Sen. [Sheldon] Whitehouse and some other members of Congress, Sen. [Jack] Reed to get legislation passed that would allow for underwriting standards to be modified to accommodate the long-term savings of the extra investment with green technologies upfront.
We feel confident that within the next term of Congress legislation should clear both houses that will allow the banking industry, underwriters and appraisers to allow for those saving factors, which will be a shot in the arm for the industry.