Builder speaks out against fickle banks and impact fees

Mick Pattinson, president of the homebuilding company Barratt American, has recently been very vocal about banks which have declined to renew revolving credit facilities (thus potentially putting more builders out of business) as well as cities which became overly reliant on impact fees for new development during the boom, thus driving home prices even higher. Mick was one of the first builders I met when entering the building industry as a consultant, and Barratt is known for building very solid, high-quality homes (and no, they're not a client). As other builders keep mum on these issues, it's ironic that it takes a Brit to speak his mind. From a BuilderOnline.com story:

Exposing the duplicity of lenders and municipalities in the downfall of home builders is the latest crusade for one Southern California-based builder that is fighting desperately to keep his own company afloat.

Barratt American, formerly one of the 200 largest home builders in the country, is for the moment “essentially out of the game” as far as production building goes, says its president, Mick Pattinson. He spoke with BUILDER by phone from London, where he’s been attempting to raise new financing after Bank of America told his company last spring that it would no longer fund Barratt’s $125 million credit facility...

But Pattinson isn’t twiddling his thumbs waiting for the housing market to rebound. He’s focusing more of his energies on calling attention to what he says have been two negative forces that crippled the housing industry: banks abandoning distressed builders, and municipalities squeezing builders for higher impact fees, which in his market can exceed $100,000 per house.

Pattinson doesn’t hide his disdain for Bank of America, or for much of the lending community, either, which he insists pulled the financing rug out from under builders at their greatest time of need. “Builders are mad as hell, but they’ve been reluctant to put out their dirty linen about how they’ve been screwed over.”

So to force banks to “explain themselves” to lawmakers and the public, Barratt is working with the Homebuilders Coalition for Responsible Bank Behavior, a newly formed group that he says now involves 43 builders. Most are located in California, but the Coalition also includes builders from Oregon and Washington D.C. The group is developing a Web site, and plans to lobby in California and nationally. (It is close to hiring a public relations person.) Pattinson isn’t sure how much dust the Coalition can kick up, but he claims it’s already gained some traction with officials in Sacramento, California’s capitol.

Lawmakers there are also weighing builders’ complaints about how municipalities have used residential development as their own piggy banks by imposing impact fees that, during the boom years, “got to the point where the housing industry wasn’t working anymore,” says Pattinson. He’s been railing for years against impact fees, which makes him the perfect choice to chair a fee reform task force that the California Building Industry Association recently formed.

Pattinson is buoyed that several California towns have passed fee payment deferral statutes. And if towns start going bankrupt because the housing downturn is depriving them of fees to which they’ve grown accustomed, Pattinson expects more municipalities will be forced to consider weaning themselves from this revenue stream.