Q&A w/Scott Smith: Home builders’ point man talks about housing costs, growth control and more
Author: Dan Njegomir - August 28, 2017 - Updated: August 31, 2017
Legislative efforts to reform the state’s laws on construction liability — “construction defects” was the buzz phrase — became one of the dominant themes of the 2017 session at the State Capitol. The seemingly obscure issue also became the focus of intense media coverage. After all, the end game mattered a lot to ordinary Coloradans: to build more homes that first-time buyers and others of modest means actually could afford in the state’s superheated housing market.
What didn’t get a lot of coverage was one of the key players who helped forge the resulting legislation: the point man for the state’s homebuilding industry. That would be Scott Smith, the subject of today’s Q&A. He has been the CEO of the Colorado Association of Homebuilders for the past three years and is a veteran homebuilder himself with over 30 years of experience managing master-planned community development in Colorado Springs. He was the 1995 president of the state association and has served on its Governmental Affairs Committee for several years. So, he knows his way around the legislative world. A Colorado native and a certified public accountant by training, Smith also served as a director of the National Association of Home Builders.
Colorado Politics: Prior to your tenure, there were some challenges at the CAHB, causing some to form another group. What key changes and decisions helped stabilize the association and keep it as the leading voice for the state’s homebuilders?
Scott Smith: The stabilization of CAHB came primarily from solid leadership from the association’s officers. Strong engagement and support from all ten of the local association executive officers (particularly Colorado Springs and Metro Denver), a very supportive and active board of directors and the engagement of two prominent lobbyists were all key. We also had strong support from the individual boards and board members of the local associations from across the state.
CP: Has the organization maintained its base and mission, and how does it look moving forward?
SS: Our mission is taking the lead as the voice of the nearly 2,000-member strong Colorado Association of Home Builders and the housing industry at the state capitol. The Association’s structure is rooted in representation from all ten local associations, including the Metro Denver, Colorado Springs, Northern Colorado and Pueblo HBAs on the Front Range; and the Grand Junction, Durango, Summit County, Grand County, Glenwood Springs and Cortez chapters on the Western Slope. CAHB has not shirked its responsibilities and has actively engaged in legislative policy review and participation through the activities of its Governmental Affairs Committee and the association’s influential lobbying team. There is no shortage of issues ahead, and the Association is positioned and equipped to tackle them. The future CEO will have a solid, functional and supported organization to lead.
CP: We’ve heard you are taking on a new challenge in the private sector and will be leaving CAHB’s executive staff and joining the board. What’s ahead for you?
SS: I will be joining ProTerra Properties LLC, a real estate development, investment and management company based in Monument, with interests across the Front Range. I have been very engaged in the housing industry for the better part of my career in the development of master planned communities in Colorado Springs, but also in leadership at the Colorado Springs HBA, CAHB and at the national level with NAHB. I intend to remain engaged as a CAHB board member and a member of the Governmental Affairs Committee into the future, continuing to lend my knowledge and expertise on key issues and policy development.
CP: CAHB was a major part of the coalition working on construction-defects legislation. What are your thoughts about the process, recent legislation and what it all means for creating more entry-level housing in Colorado?
SS: CAHB has been a member of the Homeownership Opportunity Alliance for the past few years, working cooperatively with other associations and groups, legislative leadership and legislators, and local governments to identify solutions to this vexing problem. The result of past legislation, the evolving litigation environment and investment decision-making all led to a point that condo developers and investors simply avoided developing new projects due to the risk factors. Positive steps occurred in 2017 with the passage of House Bill 1279 and more significantly the Colorado Supreme Court decision on the Vallagio case. Hopefully, these two developments will change risk calculations enough to encourage condo development, particularly at the workforce housing level of the overall housing spectrum. I remain hopeful that these efforts will be successful.
CP: What do you see as the biggest policy or political challenge ahead for the state’s homebuilding industry?
SS: In short, maintaining an environment where the industry can meet the expanding housing demand that is a result of very solid economic growth. The housing industry plays a key role in the economy by increasing the supply of housing to meet this demand. There is not a single challenge ahead, but an array of significant challenges, not the least is complete misunderstanding of homebuilding and the role it plays in the economy. Housing costs have skyrocketed in the past few years as a result of a number of factors including: an ever-expanding set of fees and taxes; regulatory compliance that adds up to 25% or more of the end home cost; increased litigation risks; labor shortages and costs; land availability and costs; building code improvements and the associated costs; and construction-finance challenges. There are also several issues on the national stage that have not helped, including the recent lumber tariffs that have added more than $3,500 in added costs to an average new home. The typical legislative response is to simply add more costs, fees and rules, and regulations to the process—then decry the affordable-housing problem. The Association will participate in the process to find solutions to these problems and to educate decision-makers on the impacts.
CP: Just as Colorado keeps growing, efforts to halt the growth through legislation and the ballot box never seem to be far behind. Most recently, a longtime growth-control advocate filed a statewide ballot proposal calling for a growth cap, and similar measures are afoot in Lakewood. How has the homebuilding industry’s strategy evolved in responding to such challenges? What message will you convey to the public to counter calls for growth control?
SS: Price controls, rationing and limitations are government responses to exasperating problems, ignoring the power and creativity of the private sector. I can’t think of an instance in which artificial limitations have worked or made things better; they are rife with unintended consequences. I mostly think about shortages, cost increases and delays that will lead to bigger problems like economic stagnation, dislocation, homelessness and other housing maladies. I understand the frustration with increased traffic, but we are adding per capita miles traveled at a faster pace than population growth. Colorado has simply not kept pace with transportation needs for a very long time, and the problem is now acute. Population growth is also a hot topic, but don’t forget that nearly 70,000 babies were born in Colorado last year. Back in 2000, 64,000 kids were born in Colorado and are now high school seniors. Approval of limits or moratoriums is telling our own kids that you are not welcome here, move away to earn your living unless you have a very lucrative career. Is that what we want?
CP: You were a prominent homebuilder and land developer yourself for many years in the Pikes Peak region. What would your advice be to someone starting out in the industry today?
SS: Housing is a very important aspect of both the economy and the unique American culture and fabric. In and around “home” is where the important events in our lives occur. Solving the challenges around creating homes for people and families on all points along the housing spectrum has become much more complex. Maintaining quality, value and a sense of place are all very important aspects, but delivering a new home to people no matter what walks of life they are in is a very worthy and satisfying endeavor.