Following a record-low year, a housing developer sees residential real estate taking wing in 2012
In tandem with her brothers Gerald and Marc, Elizabeth Verna runs Wallingford-based Verna Properties, a real-estate development firm started by their father, Vincenzo Verna, in 1967. The firm’s most recent project is the Willows, a Wallingford subdivision of new traditional and Craftsman-style homes priced in the low to mid-$400,000 range. Verna is also chairman and president of the Home Builders Association of Connecticut Inc. (HBACT), a construction industry trade group with some 1,000 visit us.
Last year home construction fell to its lowest level ever in Connecticut, with just 2,967 building permits issued statewide. Why?
2009 through 2011 were our worst three years for housing starts. There are many factors. Typically housing and automobile manufacturing will pull people out of a recession. But for some reason that’s not happening this time. I am mystified by it. Our industry as usually an indicator [of the health of the larger economy], but we’re totally lagging.
Here in Connecticut, I would rate our regulatory environment an F-minus, if that grade even exists. If you look at agendas for [municipal] planning & zoning or inlands & wetlands [commissions], no one is applying for traditional subdivisions. The regulatory environment is not consistent [between and among municipalities]. It’s difficult for [developers] to get acquisition and development financing. Banks are not lending money for us to start new projects. I think we’ve hit the bottom. There are buyers out there. Interest rates are great. Prices are great.
When you cite the regulatory environment, are you referring to state or municipal governments?
Both. On the state level, we need [laws] that are simple to understand and to follow. And [approvals] have to happen more quickly. If you apply for a project in 2011 and you’re not going to get your approval until 2014, what you’re applying for may no longer meet the market need [three years hence]. There’s no certainty to what we do as an industry. Let’s say you want to build 40 single-family homes at this price range. Then, you go through the whole regulatory process and [the application] gets knocked down to 32. Your land price is still the same. So, three years later, after [incurring] costs that we didn’t intend to absorb — attorneys fees, engineering fees, environmental-impact fees — the market may have changed. so, all of a sudden, we bought the raw material at this [price], but now we’re making 20 percent less. That is all volatile to us. So it would be great on both a local and a state level if things were swifter and simpler. Because land prices aren’t going down. Infrastructure costs aren’t going down.
By ‘infrastructure’ you mean…
Roads. Utilities. Just to get utilities to a site, the costs are incredible. And you never know what you costs are going to be until you put your shovel in the ground. So there’s a lot of uncertainty. As an industry we’re definitely hurting.
Is there an anti-development bias generally in Connecticut?
There’s this attitude of ‘Not in my back yard.’ But then those same NIMBYs complain that there are no houses their children can afford [to buy]. Or that their children are leaving Connecticut not because they couldn’t find a job, but that the job doesn’t pay enough to allow them to afford [to buy] a house to live in. That environment valium generic to change. Density seems to be a very bad word. People think that housing can’t be done creatively to preserve open space by keeping the housing clustered and maintain buffers.
What do home-buyers want, and has it changed?
No. They still want buy valium online no prescription American Dream. They generic xanax a house. They want a yard. They don’t like apartment living. They want to be able to park their cars. They don’t want to have to walk too far. The consumer wants their plot of land with sidewalks and streetlights and trick-or-treating. That’s part of the American Dream.
How is the banking environment now for real-estate development?
Banks are writing end loans to consumers [to purchase real estate]. But not to developers.
Do you think sales will pick up in 2012?
Absolutely. I think a lot people are ready to jump in. They know it’s a good time to buy. I really think 2012 is going to be great. People can buy more for less, and there’s a lot of pent-up demand. Whoever has product right now is going to be in a good position in 2012.
On a personal level, you have a 45-year-old family business to run, but you made it a priority to assume the chairmanship of your statewide industry trade group. Why?
The Home Builders Association ha five local chapters in Connecticut. I became involved in the New Haven chapter. Some of my best friends are builders. People may think we’re competitors, but we actually collaborate a lot together. I think it’s important to invest in the industry that you work in. The Home Builders is a good vehicle to do things philanthropically — Habitat for Humanity, Homes for Our Troops. Plus, the networking [opportunities] — getting to know subcontractors and banks and vendors and other builders. Also, the lobbying and advocacy for our industry. If you are in an industry that’s creating a livelihood for you, it’s your duty, almost, to give back to that industry.
Speaking of which, what is the regulatory environment like in Hartford now?
For some reason, when you say [to a legislator] that you’re a home-developer, there’s a negative connotation — you’re ‘bad.’ Instead of, ‘Wow — you’re a job-creator.’
Can you quantify that?
Nationally, the construction of 100 single-family homes creates [on average] 300 new jobs. Home construction also generates local and state taxes. Plus, we generate revenue [for] architects, title-insurance companies, electricians, plumbers — the list goes on and on.
What are some of your group’s legislative priorities?
We very aggressively lobbied for a $10,000 new homebuyer tax credit, but that got shot out of the water. You know, the governor has this ‘First Five’ plan? If you looked at our industry as one of the First Five, he wouldn’t even have to give us money. Give your constituents the $10,000 tax credit. We as an industry do not believe in government incentives. We believe in free markets. Untie our hands, and let us go.
What would you like other business people to know about the home-building industry generally?
The housing industry is a great job-creator for the state, and it also provides a really valuable service. But we had less than 3,000 [new housing] permits last year. That needs to change.
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