The National Association of Home Builders got on track for the new century recently by installing a former Amtrak chairman as its chief executive officer and executive vice president.
Thomas M. Downs was selected at the fall board of directors meeting in Seattle, ending a 16-month search. He succeeded Kent W. Colton.
The appointment of Mr. Downs from outside the building industry underscored the association's evolution from a group of small developers into a major industry trade group.
"I think when the board voted on me ... it was just a reaffirmation that management skills are at the top of the list, rather than knowledge of the building industry," Mr. Downs said. "I am a firm believer that if you are in a business, you have to be-or at least perceived to be-in the top one or two in that industry."
As his appointment was being ratified at the association's convention last weekend in Dallas, Mr. Downs said he plans to run the group as a business, not letting emotions or industry loyalty impede growth.
The association "is first and foremost a large, $56 million-a-year business with 350 employees that have to deliver a specific set of services to 197,000 members," Mr. Downs said. He has been part of the organization's staff since his selection so that he could work with Mr. Colton to ensure a smooth transition.
Among the association's priorities as the new century approaches, he said, will be dealing with increased pressure for open space along with developments and responding to the threat posed by high loan-to-value lending, a popular form of financing he said could drain money away from home builders.
Lending consumers up to 125% of a home's value, he suggested, "ultimately means a bigger risk because, if there is a downturn in housing, that greatly tightens credit."
"Builders are always nervous when they see housing at risk," Mr. Downs said. "This type of thing is just taking money out of the housing market and putting it into consumable goods because people have that extra cash."
Association executives argue that tax deductibility on high loan-to- value mortgages could ultimately be disruptive to the housing industry.
Mr. Downs was Amtrak chairman from 1993 to 1998, leading the railroad back from the brink of insolvency. Before that he was chairman of the New Jersey Transit Corp., Commissioner of Transportation of New Jersey, president of the Triborough Bridge and Tunnel Authority in New York City and the city administrator for Washington.
He said he plans to apply his political and management experience to the business of running his new corporation.
"Our members are very aggressive about what they want in the public policy arena," Mr. Downs said. "My job is the planning of how and when we expend resources to get our issues on the table and resolved in our favor."
At the cusp of the new millennium, nontraditional growth inititatives are a major issue for home builders, said Charles J. Ruma, who is stepping up to the position of association president, from first vice president.
In a speech last September to the Brookings Institution, the association executives noted, Vice President Gore announced a series of federal initiatives "to encourage smarter growth and more livable communities all across America."
This plan included a $10 billion bond proposal to revitalize urban areas and preserve 50,000 acres of farmland and open space.
The association has set up a Sensible Growth Working Group comprised of home builders, planners and local officials. The group hopes to encourage compact development, preservation of open space, financing and construction of infrastructure, and building of a variety of housing choices that meet diverse consumer demand.
Mr. Colton, the association's former executive vice president, said 1.3 to 1.5 million housing units must be built per year to meet demand in the next few years.
Home builders said Mr. Gore's remarks fell short of providing tangible solutions to improve roads and transportation, expand schools, and provide other public services required to meet the needs of a growing population.
Mr. Ruma said the association's main focus in the next two years will be in neighborhood planning.
"Builders will build 200 houses on 50 acres rather than on 100 acres, and leave 50 acres open to create open space for conservation, parks and things like that," Mr. Ruma said. "The houses won't be smaller-they will just be closer together."
Mr. Ruma said the association recognizes that about 82% of people who buy houses want private open space, usually in the form of an enclosed yard. But he predicted that would change.
"People are looking for a more sophisticated way of living. Buyers are getting older and you have a lot of empty-nesters who just don't need that much space around their home," Mr. Ruma said. "We are going to see inner cities develop a lot more in places like Boston and Dallas-in places where the downtown area was traditionally solely for businesses and offices."
Mr. Ruma pointed to the urban growth boundary that has been set up in Portland, Ore., as an example of things to come.
"I do not necessarily promote this, because it has driven up costs in that area and taken the residents' choices away of what housing they want," Mr. Ruma said. "But it is a small example of what one community has done to try and create open neighborhoods."
The convention attracted about 70,000 people from more than 90 countries and about 1,000 exhibitors. The association said attendance was about 15% higher this year than last, generating around $30 million for Dallas' economy in four days.
Key speakers included Texas Governor George W. Bush; Housing and Urban Development Secretary Andrew Cuomo; Sen. Kay Bailey Hutchison, R-Texas, and Rep. Martin Frost, D-Texas.
The Washington-based builders association says its member firms will build about 80% of the 1.6 million housing units projected for 1999. The group said that during a typical year housing construction and remodeling accounts for nearly 5 cents of every dollar spent in the United States.