Sen. Tester holds economic round table meeting in Billings

Benefiting from one of the state’s healthiest economies, Billings business leaders on Tuesday advised Sen. Jon Tester, D-Mont, against over-regulating banks and one-size-fits-all federal programs.

“We need to make sure we’re not throwing the baby out with the bathwater as we address what caused the financial downturn,” said Jay Harris, Yellowstone Bank president.

Harris and 13 other business and local government representatives met with Tester at Montana State University Billings for a morning roundtable discussion about the federal government’s role in U.S. economic recovery.

Specifically, Harris expressed worry about the 1,139-page regulatory reform bill proposed by Sen. Christopher Dodd, D-Conn. The bill creates a new financial cop for regulating banks of all sizes. The Consumer Financial Protection Agency would scrutinize mortgages, car loans and credit cards and look after consumer interests. Republicans, small banks and credit unions have balked at the new enforcer. In a similar House bill, small lenders were amended out of the proposed agency’s enforcement reach.

Tester agreed, saying reform needed to be focused on larger banks and key causes of the financial crisis, like derivatives. Local banks that know their borrowers and are more familiar with financial risks don’t need the same scrutiny, he said.

Real estate agent Kate Hamlin said home prices have been strong for the last half of the year, particularly the past few months as first-time homebuyers rush to cash in on an $8,000 tax credit included in the economic stimulus passed by Congress earlier this year. Sellers are receiving about 97 percent of their asking price and homes are selling in about 68 days, said Hamlin, who cited sales of three-bedroom, two bathroom homes with garages. In the 2006, a high mark for home sales, sellers in that category received 98 percent of their asking price and homes stayed on the market for 56 days.

However, the number of sales has declined steadily from 990 in 2006, to 690 so far this year, Hamlin said. The average sales price of three-bedroom, two-bathroom homes has slid to $241,000, down $11,000 from 2008.

Earlier this month, President Barack Obama approved a five-month extension of the first-time home buyer tax credit, which was to expire Nov. 30. With the extension, a $6,500 credit for current homeowners who buy a new home after Nov. 6 was also approved. The new tax credits have to be used by April 30.

Tester said he wouldn’t support extending the tax credit again because there’s no motivation to use it if the offer be-comes open ended.

“Once the economy gets going and the housing sector is back on track, I think it has to go,” Tester said.

While home sales have been steady, home construction has not, said Brad McCall of McCall Homes. Billings-area housing starts are off 30 percent and while home sale prices started flattening out in 2008, construction materials took longer to drop off, McCall said.

McCall Homes builds about 35 homes a year, with a focus on affordable, energy-efficient craftsman-style homes in a more traditional neighborhood setting. All of its homes are Energy Star certified, meaning they’re 30 percent more efficient than a typical new home. That distinction should qualify McCall for a $2,000 federal rebate for each house, but criteria for applying for the money are tedious, McCall said. Many builders skip the incentive entirely.

McCall suggested the program might work better if it targeted home buyers instead of builders.

The construction slump has also hit engineering firms hard, said Michael Sanderson of Sanderson Stewart Engineering. Sanderson said he’s had to cut staff and keep others on at less than full time because of the recession.

He was hopeful that business would pick up after lawmakers approved billions in funding for shovel-ready projects.
However, federal requirements that projects be ready to go, did little for engineers involved in the early stages of project planning. Sanderson said the community might have been better served by funding more future thinking projects in need of planning and design before being rolled out.

Only now are private clients with larger projects beginning to talk about development, Sanderson said. However, credit access is still problematic.

“We’re starting to see clients that we haven’t seen in a year or two talking about projects,” Sanderson said. “Now, that’s talk, not action. There’s money available, just not necessarily at the terms they want.”