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NORTH CAROLINA HOME BUILDERS ASSOCIATION 2017 EXECUTIVE COMMITTEE MEETING

RALEIGH, NORTH CAROLINA MAY 23, 2017

1. NCHBA President Gary Embler called the meeting to order at 2:41 p.m. at the Builders First

Center and welcomed the Executive Committee members. Executive Committee members present were Gary Embler, Alan Banks, Mike Carpenter, Kathy Craven-Snodgrass, Phil Warrick,

Buddy Hughes, Hiram Williams, Mark Martin, Wes Carroll, Danny Adams, Jamie Wightman, Cody Byrd, Thomas McClain, Charlene Allen, Cheryl Collins and Jackie Elek. NCHBA staff in

attendance were Maureen Mullen, Robert Privott, Steven Webb, Jeff Turner, Alison Barnes, Deborah Alford and Mike Elledge.

2. The minutes of the 1st Quarter NCHBA Executive Committee meeting, held February 21, 2017, in Raleigh, NC (previously distributed to members via the “members only” section of the NCHBA

website) were reviewed. A motion was made, seconded and passed to approve the minutes without modification.

3. NCHBA Secretary/Treasurer Kathy Craven Snodgrass presented the April 2017 Treasurer’s

Report. Highlights include: Year-to-date Membership Dues Revenue exceeds the budget by $22,973; NAHB Affinity Program has paid a royalty to NCHBA of $41,826 which exceeds the budget ($17,000) by $24,826; Interest and Invest Income exceeds the budget by $7,701; making the YTD Operating Revenue $892,929 (exceeding the budget by $44,882). Year-to-date Operating Expenses are $736,022 which is $37,194 under budget resulting in a Net Operating Profit of $156,907, so for 2017, which exceeds the budget forecast through April by $82,075.

On the balance sheet, Snodgrass noted that Total Assets are $5,877,686; Total Liabilities are $813,548; Total Capital (i.e., reserve) is $5,064,138; and Total Liabilities and Capital is $5,877,686. A motion was made, seconded and approved unanimously to accept the April 2017

Treasurer’s Report. (See Attachment 1)

4. NCHBA Secretary/Treasurer Kathy Craven Snodgrass presented the annual independent

auditor’s report from Thomas, Judy & Tucker for the year ending 12/31/16. She read the

positive official opinion of the auditors (i.e., “In our opinion, the financial statements referred to

above present fairly, in all material respects, the financial position of the North Carolina Home

Builders Association, Inc. as of December 31, 2016, and the changes in its net assets and its cash

flows for the year then ended in accordance with accounting principles generally accepted in the

United States of America”).

Snodgrass made the motion to recommend the approval of the 2016 Auditor’s Report to the

Board of Directors, which was seconded and approved unanimously. (See Attachment 2).

5. All reports were deferred to the 2nd Quarter Board Meeting.

6. Embler asked if there were any committee action requests or old business:

Associate Member Committee Chair, Charlene Allen brought forward a request from the Associate Member Committee to put together videos and an online toolkit. Allen explained this

is in the discussion phase and will relay more information as this idea moves along in the planning process. NCHBA President Elect, Alan Banks requested to be involved in discussions

moving forward. PWB President, Jackie Elek brought forward a proposal for NCHBA Staff to assist with a plan to

expand NC Professional Women in Builder membership opportunities to the NCHBA

Membership. Elek deferred to Nicole Goolsby for further explanation.

Goolsby explained to the committee that there are only 55 Professional Women in Building

members in North Carolina and 3 active councils with a 4th working to become established.

Their goal is to double their membership. This will only affect those who do not have a local

council to join. Their aim is to create awareness of the benefits of PWB with the hopes of more

local councils forming. NCHBA would provide administrative support for a State PWB “at large”

program and assist in collect dues and issuing renewal notices. (See Attachment 3)

Embler thanked PWB for their report and advised it would be considered during the 3rd Quarter Board meeting.

Embler asked if there were any other committee action requests, there were none.

7. All reports were deferred to the NCHBA Board of Directors meeting.

8. Embler reviewed the proposed NCHBA Nominating Committee replacements due to scheduling

conflicts of two members previously nominated. Lee Riddle of the Winston Salem HBA and

Denzel Williams of the Moore County HBA have agreed to serve as replacements on the

Nominating Committee. A motion was made, seconded and passed to recommend these

substitutions to the NCHBA Board of Directors for approval. (See Attachment 4).

9. With no further business, the meeting was adjourned at 3:12pm.

Respectfully submitted, NORTH CAROLINA HOME BUILDERS ASSOCATION Kathy Craven Snodgrass

Secretary/Treasurer

Attachments

NORTH CAROLINA HOME BUILDERS ASSOCIATION 2017 BOARD OF DIRECTORS MEETING

RALEIGH, NORTH CAROLINA MAY 23, 2017

1. NCHBA President Gary Embler called the meeting to order at 3:20 p.m. at the Builders First

Center. Embler welcomed everyone and thanked the Raleigh-Wake HBA for the use of its meeting room and technology. President Elect Alan Banks led the Board in the Pledge of

Allegiance and gave the invocation.

2. The minutes of the 1st Quarter NCHBA Executive Committee meeting, held February 21, 2017, in Raleigh, NC (previously distributed to members via the “members only” section of the NCHBA website) were reviewed. A motion was made, seconded and passed to approve the minutes without modification.

3. NCHBA Secretary/Treasurer Kathy Craven Snodgrass presented the April 2017 Treasurer’s

Report. Highlights include: Year-to-date Membership Dues Revenue exceeds the budget by

$22,973; NAHB Affinity Program has paid a royalty to NCHBA of $41,826 which exceeds the

budget ($17,000) by $24,826; Interest and Invest Income exceeds the budget by $7,701; making

the YTD Operating Revenue $892,929 (exceeding the budget by $44,882). Year-to-date

Operating Expenses are $736,022 which is $37,194 under budget resulting in a Net Operating

Profit of $156,907, so for 2017, which exceeds the budget forecast through April by $82,075.

On the balance sheet, Snodgrass noted that Total Assets are $5,877,686; Total Liabilities are $813,548; Total Capital (i.e., reserve) is $5,064,138; and Total Liabilities and Capital is $5,877,686. A motion was made, seconded and approved unanimously to accept the April 2017

Treasurer’s Report. (See Attachment 1 to Executive Committee Minutes)

4. NCHBA Secretary/Treasurer Kathy Craven Snodgrass Snodgrass presented the annual independent auditor’s report from Thomas, Judy & Tucker for the year ending 12/31/16. She

read the positive official opinion of the auditors (i.e., “In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the North

Carolina Home Builders Association, Inc. as of December 31, 2016, and the changes in its net assets and its cash flows for the year then ended in accordance with accounting principles

generally accepted in the United States of America”). Snodgrass made the motion to approve the 2016 Auditor’s Report, which was seconded and

approved unanimously. (See Attachment 2 to Executive Committee Minutes).

5. Executive Vice President’s report, Mike Carpenter thanked everyone for coming to the

legislative conference and tomorrow’s visits at the Legislative Building. He noted that your

presence here sends a clear and unmistakable message to the members of the General

Assembly that NCHBA’s legislative agenda is important to you and your fellow members back

home. What you do is critical to the state. Housing is the engine that drives our economy.

Housing = Jobs for every home built, three jobs are created. We’re only half way back from

where we were in 2007. The message to be delivered is that the state’s full economic recovery

depends on the success of the residential construction industry.

6. Alan Banks was recognized to give the NCHBA President Elect and NCBI report. He shared that education and professional development is very important to protecting the American Dream of Home Ownership and pressed all those in attendance to share with someone they know who

would benefit from NCBI Courses. He called on Region 9 Vice President, Cody Byrd to share his own experience with NCBA. Byrd went on to explain that it provided a way for him to be a step above his competitors, bottom line growth and net profit growth increase. Banks went on to share that the new class schedule is online. Banks also recognized the following recent NCBI Graduates: Accredited Builder Graduates:

Gus Adams; Asheville HBA Mike Carpinelli; Greater Charlotte HBA Sandy DeWeese; HBA of Durham, Orange and Chatham Counties

Marc Masotti; Raleigh-Wake HBA Chalmers McCombs; Fayetteville HBA

Lea Ricks; Raleigh-Wake HBA Ronnie Wright; Raleigh-Wake HBA

Accredited Master Builder Graduates:

David Foard; Greater Charlotte HBA Chalmers McCombs; Fayetteville HBA

Mike Mehringer; Raleigh-Wake HBA

Mark Merrell; Carteret County HBA Bruce Rogers; Carteret County HBA

Stoney Story; Western Piedmont HBA Dudley Williams; Vance Granville HBA

Accredited Remodeler Graduate:

Mike Carpinelli; Greater Charlotte HBA

Accredited Residential Superintendent Graduate Lea Ricks; Raleigh-Wake HBA

7. Charlene Allen was recognized to provide the National Associate Member Committee Report.

She stated that they are looking for nominees for NAHB Awards and STARS Associate Awards.

Please see her with any questions or recommendations. Allen also shared that the Associate Committee is discussing creating videos and an online toolkit and that she will keep the Board

informed. Lastly Allen shared that today’s 2nd Quarter “Food Truck Rodeo” raised a grand total of $1,400 in donations to NC BUILD PAC. Allen thanked the sponsors, those who participated

and Tracie Garrett for her help in coordinating this event.

8. NAHB Executive Committee Representative Buddy Hughes was proud to represent NCHBA at the NAHB Executive meeting on March 29th. Among the items discussed was one to reduce the

size of the NAHB Executive Committee and Board of Directors. As well, there is still much discussion over making changes to the membership dues model from the present system to

one based on a set amount. Hughes encourages members to attend the board meeting and voice their concerns. Further, to ensure that your Local HBA has all its National Director

positions filled as both of these topics may come up for a vote at January’s IBS. Hughes also covered that NAHB had discussed adding back in a 3rd meeting which would not be a

destination meeting as it was in the past but this will not be added until the NAHB budget can be put back in the black.

9. In the Builders Mutual Insurance Company report Katie Mariani noted that BMIC was working on safety initiatives with OSHA and their “Stand Down” program. There have been 1,134 workers visited by Risk Managers showing a 200% growth in this program. They are using a “tailgate talk” approach to educate on safety issues with BMIC coming to the jobsite to provide training and a cookout for the workers.

10. First Vice President Phil Warrick asked each Regional Vice President for a short report:

a. Hiram Williams, Region I VP: All good.

b. Mark Martin, Region II VP: Rocky Mount is working on reviving the 2nd oldest cotton mill in the state to house 5 breweries and over 100 mill homes nearby being renovated.

c. Wes Carroll, Region III VP: All good in Region III. d. Gary Hill, Region IV VP: Greensboro Builders Association is celebrating its 60th

Anniversary. High Point HBA has a new EO, Emily Pyron and also just had a successful membership drive.

e. Danny Adams, Region V VP: Region 5 doing fine. Moore County HBA has a new EO,

Warren Wakeland. f. Jamie Wightman, Region VI VP: Roane County had their first masonry competition that

was a success. Cabarrus County is in the 6th year of their masonry tournament and the winner of this competition, State and National competitions. Greater Charlotte too 1st,

3rd, 4th and 5th place in the State Competition. g. Phil Warrick for Michael Enscore, Region VII VP: Asheboro/Randolph HBA held their

masonry competition and have multiple students move on to NC Skills USA. Davidson County HBA sponsored three local students to attend Skills USA event. Winston Salem

has a successful parade of homes in April with 25 homes being entered. h. Gary Witherspoon, Region VIII VP: no report

i. Cody Byrd, Region IX VP: High Country HBA has successful golf tournament and hosting several Lunch and Learns which have shown great attendance and working on forming a PWB Council. Cleveland County has a rebuild event that was successful with great

attendance. Caldwell County had their 6th annual masonry tournament that gave away over $6000 in prizes and also had an electrical portion for the first time. The NC Schools

Superintendent Mark Johns was in attendance. They have a NC Skills Plumbing Champion from Caldwell County.

j. Thomas McClain, Region X VP: All good.

11. Local HBA President Dave Stormont reported the Local HBA Presidents’ meeting had about 15 in attendance for its “no agenda” open forum meetings. The discussion covered many topics

including how to develop a strong Board of Directors and keep them; also discussed how to remove those who are not beneficial to the HBA by being on the board; discussed a two-year

term versus a one year term at the local level; how to keep Past Presidents involved at the local level and use their wealth of knowledge; EO travel was a big topic of discussion and urging local

to have EO Travel in their annual budget so their EOs can come to State and National meetings if possible. Exposing them to more of the membership and EO Council is beneficial and having

an active and involved EO will benefit the Local HBA immensely. Encouraged RVPs to make this a topic of discussion for when they visit locals.

12. Erik Anderson gave the Past President’s Council and NAHB State Representative Report on

behalf of Brian Pace, NCHBA Past Presidents Council will meeting quarterly as a forum for the past president of NCHBA to provide an opportunity to discuss emerging issues and offer insight an assistance to future leaders and prepare the ladder for NCHBA. Embler pointed out this is a great option for Local HBAs to consider.

13. Alan Banks presented the NCHBECF President’s Cup and Golf Check on behalf of Brian Pace, the annual North Carolina Home Builders Education Charity Foundation golf tournament was held in April at the Lonnie Poole course in Raleigh, NC. Funds raised are used as scholarships for students going into a construction related program at a two or four year program. This year

$10,163.60 were raised at the golf tournament.

14. The NC Professional Women in Building report was given by Jackie Elek shared that High Country HBA is establishing a local PWB Council and everyone is excited about that. Elek also shared that PWB will have two fundraisers at the 21CBEC this year. First will be a NCHBA ornament with funds raised being a donation to Build PAC. The second is to raise funds for the PWB scholarship and this will be a wine bottle raffle game.

15. In the EOC Report, Cheryl Collins focused on professional development for Executive Officers and leadership training for local Boards. The EOC Retreat was held yesterday with 20 EOs

participating in an all-day session. The Council is in the process of planning its 4th Quarter Leadership Training. Collins requested input as to topics to be discussed so they can form a

relevant and productive training opportunity. They are forming a sponsorship foundation club to help with the leadership conference and have raised $10,000 from six companies.

16. Embler opened the floor for any Committee Action Requests:

PWB President, Jackie Elek brought forward a proposal for NCHBA Staff to assist with a plan to

expand NC Professional Women in Builder membership opportunities to the NCHBA

Membership. Elek explained to the committee that there are only 55 Professional Women in

Building members in North Carolina and 3 active councils with a 4th working to become

established. Their goal is to double their membership. This will only affect those who do not

have a local council to join. Their aim is to create awareness of the benefits of PWB with the

hopes of more local councils forming. NCHBA would provide administrative support for a State

PWB “at large” program and assist in collect dues and issuing renewal notices. (See Attachment

3 to Executive Committee Minutes)

Embler thanked PWB for their request and advised it would be considered during the 3rd Quarter Board meeting.

17. Embler opened the floor for any Old Business, there was none.

18. Embler reviewed the proposed NCHBA Nominating Committee replacements due to scheduling

conflicts of two members previously nominated. Lee Riddle of the Winston Salem HBA and Denzel Williams of the Moore County HBA have agreed to serve as replacements on the Nominating Committee. A motion was made, seconded and passed to approve these substitutions to the NCHBA Board of Directors for approval. (See Attachment 4 to Executive Committee Minutes).

19. Embler announced that the NC Housing Hall of Fame Board of Governors has nominated Gerald

Kamp and Bob Kucab as the 2017 inductees to the NC Housing Hall of Fame.

20. With no further business, the meeting was adjourned at 4:31pm.

Respectfully submitted,

NORTH CAROLINA HOME BUILDERS ASSOCATION Kathy Craven Snodgrass Secretary/Treasurer

Attachments

NORTH CAROLINA HOME BUILDERS ASSOCIATION

TREASURER'S REPORT

April 2017

2017 YTD YTD OVER/

OPERATING REVENUE BUDGET BUDGET ACTUAL UNDER

1 Membership Dues 1,037,000.00 356,637.00 379,610.00 22,973.00

1A Transfers from IMF 118,000.00 0.00 0.00 0.00

2 Royalty-BMIC 1,286,969.00 428,990.00 428,989.68 (0.32)

3 Royalty-NAHB Affinity Program 17,000.00 17,000.00 41,826.45 24,826.45

4 21st Century Building Expo Profit 160,000.00 0.00 0.00 0.00

5 NCBI Profit 10,000.00 10,000.00 8,274.65 (1,725.35)

6 NCHBA Sponsor Club 22,000.00 0.00 0.00 0.00

7 NCHBA Advocacy Fund 50,000.00 16,500.00 4,200.00 (12,300.00)

8 Interest and Investment Income/(Loss) 36,100.00 10,920.00 18,620.75 7,700.75

9 Member Rebate Program 3,000.00 750.00 0.00 (750.00)

10 Builders First Distribution 29,000.00 7,250.00 9,345.70 2,095.7011 Other Income - - 2,061.34 2,061.34

TOTAL OPERATING REVENUE 2,769,069.00 848,047.00 892,928.57 44,881.57

OPERATING EXPENSES

12 Salaries 1,421,996.00 435,625.00 436,898.03 1,273.03

13 Payroll Taxes & Insurance 232,873.00 83,884.00 73,166.44 (10,717.56)

14 Retirement Benefits 105,000.00 35,000.00 35,000.00 0.00

15 Issues Mobilization Fund 118,000.00 40,880.00 42,340.00 1,460.00

16 Advertising & Publicity 1,625.00 1,205.00 1,055.73 (149.27)

17 Dues & Subscriptions 6,600.00 2,288.00 1,166.82 (1,121.18)

18 Gifts & Plaques 3,400.00 340.00 362.95 22.95

19 Vocational/Assistance Fund 5,000.00 1,500.00 0.00 (1,500.00)

20 Membership/Retention 11,000.00 1,500.00 0.00 (1,500.00)

21 Supplies 25,330.00 8,535.00 8,706.45 171.45

22 Postage 9,000.00 3,100.00 1,531.11 (1,568.89)

23 Telephone 18,450.00 6,140.00 5,623.39 (516.61)

24 Vehicle Expense 11,890.00 3,830.00 3,393.16 (436.84)

25 Maintenance 40,000.00 13,023.00 11,226.18 (1,796.82)

26 Annual Audit 11,000.00 7,000.00 7,000.00 0.00

27 Legislative Expense 10,250.00 6,080.00 2,796.02 (3,283.98)

28 Taxes-Property & Sales 750.00 50.00 0.00 (50.00)

29 Insurance-Liability/Officer 8,400.00 2,800.00 2,710.00 (90.00)

30 Meeting Expense 61,000.00 21,300.00 16,815.01 (4,484.99)

31 Staff Travel 61,000.00 21,785.00 16,306.34 (5,478.66)

32 President Travel 18,000.00 6,500.00 3,696.73 (2,803.27)

33 President-Elect Travel 14,000.00 5,000.00 4,810.56 (189.44)

34 First Vice-President Travel 13,000.00 5,000.00 3,998.01 (1,001.99)

35 Regional Vice Presidents Travel 30,000.00 8,500.00 3,750.12 (4,749.88)

36 Secretary/Treasurer Travel 11,500.00 4,500.00 3,851.50 (648.50)

37 Immediate Past President Travel 11,500.00 4,500.00 4,974.87 474.87

38 NAHB Exec Comm Appointee Travel 9,000.00 3,250.00 3,825.51 575.51

39 Associate National Director Travel 6,000.00 3,000.00 1,448.17 (1,551.83)

40 Hall of Fame 3,000.00 0.00 266.08 266.08

41 Builders First Rent 89,102.00 29,700.00 31,556.80 1,856.80

42 Legislative Day 23,000.00 0.00 0.00 0.00

43 Bank/Credit Card Charges 31,500.00 7,400.00 7,745.52 345.52

44 Miscellaneous Expense 0.00 0.00 0.00 0.0045 Contributions to HBEF 200,000.00 - - -

TOTAL OPERATING EXPENSES 2,622,166.00 773,215.00 736,021.50 (37,193.50)

NET OPERATING PROFIT/(LOSS) 146,903.00 74,832.00 156,907.07 82,075.07

NC Home Builders AssociationComparative Balance Sheet

April 30, 2017 April 30, 2016

CURRENT ASSETS: Cash 610,590.11$ 785,032.05$ Investments 4,232,062.31 3,712,049.53 Accounts Receivable 22,680.65 26,287.64

Accounts Receivable-Volume Builder Dues 27,500.00 45,000.00 Prepaid Expenses 34,389.58 24,205.48 Prepaid Expenses - 21st Century Expo 2017/2016 40,814.89 35,098.67

TOTAL CURRENT ASSETS 4,968,037.54$ 4,627,673.37$

FIXED ASSETS: Investment in Builders First, LLC 859,302.17 893,801.17 Leasehold Improvements 43,980.93 43,980.93 Furniture & Equipment 231,104.04 215,011.48

Software 13,410.00 13,410.00 Accumulated Depreciation (238,148.83) (226,466.83)

TOTAL FIXED ASSETS 909,648.31 939,736.75

OTHER ASSETS:- -

TOTAL OTHER ASSETS - -

TOTAL ASSETS 5,877,685.85$ 5,567,410.12$

CURRENT LIABILITIES: Accounts Payable Trade 18,335.72$ 10,458.84$

Accounts Payable-Other 3,620.00 4,800.00Credit Card Payable 3,673.76 3,663.43 Accrued Expenses - 416.69 Volume Builder Dues Prepaid Deposits 157,500.00 150,000.00 Prepaid Deposits 27,140.21 26,569.42 Flex Spending Account Payable (2,564.60) (3,460.72)

21st Century Expo Deposits 2017/2016 184,742.50 183,688.50

TOTAL CURRENT LIABILITIES 392,447.59$ 376,136.16$

OTHER LIABILITIES: Unearned Membership Dues 421,100.00 360,236.00

TOTAL OTHER LIABILITIES 421,100.00 360,236.00

TOTAL LIABILITIES 813,547.59 736,372.16

CAPITAL Fund Balance 4,907,231.19 4,820,196.30 Excess of Revenue Over Expenses 156,907.07 10,841.66

TOTAL CAPITAL 5,064,138.26 4,831,037.96

TOTAL LIABILITIES & CAPITAL 5,877,685.85$ 5,567,410.12$

Prepared by Mike Elledge

Caroline P. AbbottJeffrey A. BrovetThomas R. CrawfordKristen T. HoyleDavid A. Johnson

Chris P. JudyGeri H. Lail

James K. TillerDavid W. Tucker

April 14, 2017

To the Board of Directors North Carolina Home Builders Association, Inc. Raleigh, North Carolina

We have audited the financial statements of North Carolina Home Builders Association (the “Association”) for the year ended December 31, 2016, and have issued our report thereon dated April 14, 2017. Professional standards require that we provide you with information about our responsibilities under generally accepted auditing standards, as well as certain information related to the planned scope and timing of our audit. We have communicated such information in our letter to you dated December 19, 2016. Professional standards also require that we communicate to you the following information related to our audit.

Significant Audit Findings

Qualitative Aspects of Accounting Practices

Management is responsible for the selection and use of appropriate accounting policies. The significant accounting policies used by the Association are described in Note 1 to the financial statements. No new accounting policies were adopted and the application of existing policies was not changed during 2016. We noted no transactions entered into by the Association during the year for which there is a lack of authoritative guidance or consensus. All significant transactions have been recognized in the financial statements in the proper period.

Accounting estimates are an integral part of the financial statements prepared by management and are based on management’s knowledge and experience about past and current events and assumptions about future events. Certain accounting estimates are particularly sensitive because of their significance to the financial statements and because of the possibility that future events affecting them may differ significantly from those expected. The most sensitive estimates affecting the financial statements were:

Management’s estimate of the investments is based on fair market value. We evaluated the key factors and assumptions used to develop the value of investments in determining that it is reasonable in relation to the financial statements taken as a whole.

The Association has an interest in a limited liability company joint venture, which is accounted for using the equity method. We evaluated the audited financial statements of the joint venture and the related accounting estimates such as depreciable lives and evaluation for impairment of long-lived assets. These estimates impact the earnings or losses of the joint venture, which in turn affects the Association’s carrying value of its investment in unconsolidated joint venture or proportionate share of the earnings or losses. We reviewed management’s estimates and deem them to be reasonable in relation to the financial statements taken as a whole.

The financial statement disclosures are neutral, consistent, and clear.

North Carolina Home Builders Association April 14, 2017 Page 2 Difficulties Encountered in Performing the Audit

We encountered no significant difficulties in dealing with management in performing and completing our audit.

Corrected and Uncorrected Misstatements

Professional standards require us to accumulate all misstatements identified during the audit, other than those that are clearly trivial, and communicate them to the appropriate level of management. Management has corrected all such misstatements. In addition, none of the misstatements detected as a result of audit procedures and corrected by management were material, either individually or in the aggregate, to the financial statements taken as a whole.

Disagreements with Management

For purposes of this letter, a disagreement with management is a financial accounting, reporting, or auditing matter, whether or not resolved to our satisfaction, that could be significant to the financial statements or the auditor’s report. We are pleased to report that no such disagreements arose during the course of our audit.

Management Representations

We have requested certain representations from management that are included in the management representation letter dated April 14, 2017.

Management Consultations with Other Independent Accountants

In some cases, management may decide to consult with other accountants about auditing and accounting matters, similar to obtaining a “second opinion” on certain situations. If a consultation involves application of an accounting principle to the Association’s financial statements or a determination of the type of auditor’s opinion that may be expressed on those statements, our professional standards require the consulting accountant to check with us to determine that the consultant has all the relevant facts. To our knowledge, there were no such consultations with other accountants.

Other Audit Findings or Issues

We generally discuss a variety of matters, including the application of accounting principles and auditing standards, with management each year prior to retention as the Association’s auditors. However, these discussions occurred in the normal course of our professional relationship and our responses were not a condition to our retention.

Other Matters

With respect to the supplementary information accompanying the financial statements, we made certain inquiries of management and evaluated the form, content, and methods of preparing the information to determine that the information complies with U.S. generally accepted accounting principles, the method of preparing it has not changed from the prior period, and the information is appropriate and complete in relation to our audit of the financial statements. We compared and reconciled the supplementary information to the underlying accounting records used to prepare the financial statements or to the financial statements themselves.

North Carolina Home Builders Association April 14, 2017 Page 3 This information is intended solely for the use of the Board of Directors and management of the North Carolina Home Builders Association, Inc. and is not intended to be, and should not be, used by anyone other than these specified parties.

Very truly yours,

THOMAS, JUDY & TUCKER, P.A.

NORTH CAROLINA HOME BUILDERS ASSOCIATION, INC.

Financial Statements

December 31, 2016

(with Comparative Totals as of December 31, 2015)

CONTENTS INDEPENDENT AUDITORS' REPORT 1 - 2 FINANCIAL STATEMENTS Statement of Financial Position 3 - 4 Statement of Activities 5 - 6 Statement of Cash Flows 7 - 8 NOTES TO FINANCIAL STATEMENTS 9 - 16 SUPPLEMENTARY INFORMATION

General and Administrative Expenses 17 - 18

Caroline P. AbbottJeffrey A. BrovetThomas R. CrawfordKristen T. HoyleDavid A. Johnson

Chris P. JudyGeri H. Lail

James K. TillerDavid W. Tucker

INDEPENDENT AUDITORS’ REPORT To the Board of Directors North Carolina Home Builders Association, Inc. Raleigh, North Carolina

We have audited the accompanying financial statements of North Carolina Home Builders Association, Inc. (a nonprofit organization), which comprise the statement of financial position as of December 31, 2016, and the related statements of activities and cash flows for the year then ended, and the related notes to the financial statements.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of North Carolina Home Builders Association, Inc. as of December 31, 2016, and the changes in its net assets and its cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America.

Report on Summarized Comparative Information

We have previously audited North Carolina Home Builders Association, Inc.’s 2015 financial statements, and we expressed an unmodified audit opinion on those audited financial statements in our report dated April 26, 2016. In our opinion, the summarized comparative information presented herein as of and for the year ended December 31, 2015, is consistent, in all material respects, with the audited financial statements from which it has been derived.

Other Matter

Our audit was conducted for the purpose of forming an opinion on the financial statements as a whole. The accompanying supplementary information as listed in the table of contents is presented for purposes of additional analysis and is not a required part of the financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the financial statements as a whole.

April 14, 2017

NORTH CAROLINA HOME BUILDERS ASSOCIATION, INC.STATEMENT OF FINANCIAL POSITION

December 31, 2016

2016

General Retirement Legal ActionASSETS Fund Fund Fund

Current Assets:Cash and Cash Equivalents $ 220,424 $ 10,369 $ 17,770 Investments 4,167,776 211,885 Accounts Receivable 22,406 Due from Other Funds 26,800 Accounts Receivable - Related Party 7,237 Accrued Interest Income 5,696 97 Prepaid Expenses 65,011

Total Current Assets 4,515,350 10,369 229,752

Property and Equipment:Leasehold Improvements 43,981 Furniture and Fixtures 244,514

288,495 Less Accumulated Depreciation 238,149

Net Property and Equipment 50,346

Investment in Unconsolidated Joint Venture 859,302

Total Other Assets 859,302

Total Assets $ 5,424,998 $ 10,369 $ 229,752

LIABILITIES AND UNRESTRICTED NET ASSETS

Current Liabilities:Accounts Payable $ 47,789 $ 3,301 $ Due to Other FundsAccrued Expenses 1,764 Unearned Member Dues 436,100 Deposits 32,115

Total Current Liabilities 517,768 3,301

Total Unrestricted Net Assets 4,907,230 7,068 229,752

Total Liabilities and Unrestricted Net Assets $ 5,424,998 $ 10,369 $ 229,752

(With Comparative Totals as of December 31, 2015)

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2016 2015Issues

MobilizationFund Combined Combined

$ 38,952 $ 287,515 $ 652,063310,693 4,690,354 4,210,972

8,090 30,496 19,33626,8007,237 9,450

154 5,947 4,37465,011 65,538

357,889 5,113,360 4,961,733

43,981 43,981244,514 228,421288,495 272,402238,149 226,467

50,346 45,935

859,302 893,801

859,302 893,801

$ 357,889 $ 6,023,008 $ 5,901,469

$ $ 51,090 $ 30,17326,800 26,800

1,764 674436,100 440,23632,115 44,976

26,800 547,869 516,059

331,089 5,475,139 5,385,410

$ 357,889 $ 6,023,008 $ 5,901,469

See Accompanying Notes4

NORTH CAROLINA HOME BUILDERS ASSOCIATION, INC.STATEMENT OF ACTIVITIES

Year Ended December 31, 2016

2016

Retirement Legal ActionFund Fund Fund

Revenues and Gains:Membership Dues and Sponsorships $ 1,006,796 $ $21st Century Expo - 2016 493,841 21st Century Expo - 2015Royalty Fees 1,199,253 Interest Income 39,623 1 1,946Seminars 45,698 Realized Investment Loss (1,063) (160)Unrealized Investment Gain (Loss) 2,901 234Investment Income (Loss) from Unconsolidated

Joint Venture (5,024) Other Income 3,989

Total Revenues 2,786,014 1 2,020

Expenses and Losses:21st Century Expo - 2016 279,32921st Century Expo - 2015Contributions to Education Fund 260,000Seminars 11,735General and Administrative 2,039,914 101,578 510

Total Expenses 2,590,978 101,578 510

Change in Unrestricted Net Assets 195,036 (101,577) 1,510

Unrestricted Net Assets, Beginning of Year 4,820,194 645 228,242

Transfers (108,000) 108,000

Unrestricted Net Assets, End of Year $ 4,907,230 $ 7,068 $ 229,752

General

(With Comparative Totals for the Year Ended December 31, 2015)

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2016Issues

MobilizationFund Combined

$ $ 1,006,796 $ 690,552493,841

468,9931,199,253 1,086,159

3,024 44,594 28,63345,698 47,893

(274) (1,497) (1,096)(156) 2,979 (17,215)

(5,024) 13,839 3,989 3,298

2,594 2,790,629 2,321,056

279,329249,535

260,00011,735 15,112

7,834 2,149,836 1,893,005

7,834 2,700,900 2,157,652

(5,240) 89,729 163,404

336,329 5,385,410 5,222,006

$ 331,089 $ 5,475,139 $ 5,385,410

2015

Combined


NORTH CAROLINA HOME BUILDERS ASSOCIATION, INC.STATEMENT OF CASH FLOWS

2016

General Retirement Legal ActionFund Fund Fund

Cash Flows from Operating Activities:Change in Net Assets $ 195,036 $ (101,577) $ 1,510Adjustments to Reconcile

Change in Net Assets to Net Cash Provided (Used) by Operating Activities:Depreciation 11,682Net Loss from Unconsolidated Joint Venture 5,024Gain on Investments - Realized and Unrealized, Net (1,838) (74)

Changes in Operating Assets and Liabilities that Provided (Used) Cash:Accounts Receivable (3,070)Due from Other Funds (26,800)Accounts Receivable - Related Party 2,213Accrued Interest Income (1,809) 57Prepaid Expenses 527Accounts Payable 20,377 540Due to Other FundsAccrued Expenses 1,090Unearned Member Dues (4,136)Deposits (12,861)

Net Cash Provided (Used) by Operating Activities 185,435 (101,037) 1,493

Cash Flows from Investing Activities:Purchase of Property and Equipment (16,093)Proceeds from Sale of Investments 1,525,000 165,000Distributions from Unconsolidated Joint Venture 29,475Purchase of Investments (2,025,349) (159,614)

Net Cash Provided (Used) by Investing Activities (486,967) 5,386

Cash Flows from Financing Activities:Transfer between Funds (108,000) 108,000

Net Increase (Decrease) in Cash and Cash Equivalents (409,532) 6,963 6,879

Cash and Cash Equivalents, Beginning of Year 629,956 3,406 10,891

Cash and Cash Equivalents, End of Year $ 220,424 $ 10,369 $ 17,770

(With Comparative Totals for the Year Ended December 31, 2015)Year Ended December 31, 2016

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2016 2015Issues

MobilizationFund Fund Combined Combined

$ (5,240) $ 89,729 $ 163,404

11,682 22,8275,024 (13,839)

430 (1,482) 18,311

(8,090) (11,160) 1,788(26,800)

2,213 1,403179 (1,573) (984)

527 (16,295)20,917 11,637

26,800 26,8001,090 (1,395)

(4,136) 68,039(12,861) 19,476

14,079 99,970 274,372

(16,093) (22,937)255,000 1,945,000 1,295,000

29,475 36,428(237,937) (2,422,900) (1,934,728)

17,063 (464,518) (626,237)

31,142 (364,548) (351,865)

7,810 652,063 1,003,928

$ 38,952 $ 287,515 $ 652,063


NORTH CAROLINA HOME BUILDERS ASSOCIATION, INC. NOTES TO FINANCIAL STATEMENTS

December 31, 2016 (With Comparative Totals as of December 31, 2015)

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1. Business Operations and Summary of Significant Accounting Policies

Business Operations North Carolina Home Builders Association, Inc. (the "Association") is a trade association whose principal activity is the promotion of the general welfare of home builders in the state of North Carolina through educational activities, legislative and regulatory considerations and the dissemination of financial and economic information. The primary sources of funds are membership dues and royalties. Financial Statement Presentation The Association has adopted and prepares financial statements in accordance with accounting principles generally accepted in the United States of America as they relate to not-for-profit organizations. Under these standards, the Association is required to report information regarding its financial position and activities according to three classes of net assets: unrestricted net assets, temporarily restricted net assets, and permanently restricted net assets. In addition, the Association is required to present a statement of cash flows. The Association has only unrestricted net assets at December 31, 2016 and 2015.

The Association uses four funds as follows:

General Fund This fund represents the portion of expendable funds, which are available for support of the Association’s operations. Retirement Fund The Association established the Retirement Fund in 1984 in the form of a 401(k) plan (the “Plan”) to make contributions to an employee retirement plan and finance the costs of administering the Plan. The Plan covers substantially all employees of the Association and contributions are based upon a percentage of the covered employees’ annual earnings. The Retirement Fund is funded by transfers from the General Fund, and invested earnings thereon. The Retirement Fund paid $89,531 and $75,353 to the Plan in 2016 and 2015, respectively. This amount is included in general and administrative expenses on the statement of activities. Legal Action Fund The Legal Action Fund was established in March 1995 for the purpose of assisting in the payment of litigation costs in legal proceedings, which may substantially affect the vital economic interests of Association members. Issues Mobilization Fund The Issues Mobilization Fund was established in October 1999 for the purpose of collecting and disbursing contributions to support or oppose federal, state, and local issues that impact real property and real property owners in North Carolina.



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1. Business Operations and Summary of Significant Accounting Policies (Continued)

Investments Investments in government securities are presented in the financial statements at fair market value based on readily available market quotes. On January 1, 2009, the Association purchased a 7.88% membership interest in Builders First, LLC, a North Carolina limited liability company, for $1,055,857. This investment is accounted for using the equity method of accounting. The investment was initially recorded at cost, and is subsequently adjusted for the Association’s share of earnings, cash contributions and distributions. Property and Equipment Property and equipment is stated at cost. Expenditures for maintenance, repairs, and other renewals of items are expensed currently. When items are disposed of or replaced, the cost and accumulated depreciation amounts are removed from the accounts, and any gain or loss is included in the results of operations. Depreciation and amortization are provided using the straight-line method over the estimated useful lives of the assets as follows:

Years Leasehold Improvements 15 Furniture and Fixtures 5 - 15

Depreciation expense for the years ended December 31, 2016 and 2015 was $11,682 and $22,827, respectively. Unearned Membership Dues Dues are collected annually as members renew their memberships in the Association and are recognized as income over the term of membership. Unearned member dues as of December 31, 2016 and 2015 were $436,100 and $440,236, respectively. Income Taxes The Association is exempt from income taxes as a not-for-profit organization under section 501(c)(6) of the Internal Revenue Code. The Association has implemented the accounting guidance for uncertainty in income taxes using the provisions of the Federal Accounting Standards Board Accounting Standards Codification (FASB ASC) 740-10, Income Taxes. Using that guidance, tax positions initially need to be recognized in the financial statements when it is more-likely-than-not the position will be sustained upon examination by the tax authorities. As of December 31, 2016, the Association had no uncertain tax positions that qualify for either recognition or disclosure in the financial statements. For the year ended December 31, 2016, there were no interest or penalties recorded or included in the Association’s financial statements. The Association is subject to routine audits by taxing jurisdictions; however there are currently no audits for any tax periods in progress.



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1. Business Operations and Summary of Significant Accounting Policies (Continued) Cash Equivalents The Association considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. Cash equivalents at December 31, 2016 and 2015 were $83,655 and $28,874, respectively. Allowance for Doubtful Accounts The Association has adopted the reserve method of accounting for bad debts. At December 31, 2016 and 2015, no allowance has been provided, because none was considered necessary. Advertising and Publicity Advertising and publicity costs are expensed as incurred. Advertising and publicity expenses for the years ended December 31, 2016 and 2015 were $1,811 and $1,785, respectively. Use of Estimates and Assumptions Management uses estimates and assumptions in preparing financial statements. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. Actual results could differ from those estimates.

2. Concentrations of Credit Risk

The Association occasionally maintains deposits in excess of federally insured limits. Generally accepted accounting principles in the United States of America identify these items as a concentration of credit risk requiring disclosure, regardless of the degree of risk. The risk is managed by maintaining all deposits in high quality financial institutions. Accounts at each institution are insured by the Federal Deposit Insurance Corporation up to $250,000. At December 31, 2016, the Association had cash, cash equivalents, and certificates of deposits in one bank, of which $33,127 exceeded the federally insured limits.

3. Investments

Investments are stated at market value and consist of fixed income U.S. government securities as of December 31, 2016 and 2015, as follows:

Market Unrealized Cost Value Gain (Loss)

December 31, 2016 $ 4,703,763 $ 4,690,354 $ (13,409) December 31, 2015 $ 4,227,360 $ 4,210,972 $ (16,388)

During 2016 and 2015, there was a net unrealized gain (loss) on investments of $2,979 and $(17,215), respectively, and a realized loss on investments of $1,497 and $1,096, respectively.



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4. Fair Value Measurements

The Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 820, Fair Value Measurements and Disclosures, establishes a framework for measuring fair value. The following methods and assumptions were used by the Organization in estimating its fair value disclosures for financial instruments:

Investments: The fair value of investments is based on quoted prices for similar assets or liabilities in active markets.

FASB established a framework for measuring fair value. The framework provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value of investments. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements). The three levels of the fair value hierarchy are described as follows:

Level 1 Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets that the Association has the ability to access.

Level 2 Inputs to the valuation methodology include:

Quoted prices for similar assets or liabilities in active markets; Quoted prices for identical or similar assets or liabilities in inactive markets; Inputs other than quoted prices that are observable for the asset or liability; Inputs that are derived principally from or corroborated by observable market

data by correlation or other means.

Level 3 Inputs to the valuation methodology are unobservable and significant to the fair value measurement.

The methods described above may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while the Association believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine fair value of certain financial instruments could result in a different fair value measurement at the reporting date. As of December 31, 2016 and 2015, all investments are assessed at level 2. The fair values of these investments are based on quoted market prices determined daily from pricing services.



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5. Investment in Unconsolidated Joint Venture

The Association has a 7.88% interest in a limited liability company joint venture formed to purchase a building, which is accounted for using the equity method. The following information summarized the activity of the joint venture through December 31, 2016 and 2015, respectively:

2016 2015 Balance Sheet

Current Assets:

Cash and Investments $ 626,939 $ 630,641 Insurance Claim Receivable 107,420 Other Assets 25,360 20,381 Building, Net 8,183,318 8,516,277 Land and Land Improvements, Net 2,340,523 2,374,878 Leased Property under Capital Lease, Net 540,385 333,907 Total Assets $ 11,823,945 $ 11,876,084

Liabilities and Members' Equity: Current Liabilities: Obligations under Capital Lease $ 77,418 $ 39,181 Payable to Member 89,054 5,502 Accrued Expenses – Property Damage 107,420 Member Distributions Payable 91,838 120,410 Total Current Liabilities 365,730 165,093

Noncurrent Liabilities: Obligations under Capital Lease, Net of Current Portion 481,764 296,729 Total Noncurrent Liabilities 481,764 296,729 Total Liabilities 847,494 461,822 Members' Equity 10,976,451 11,414,262 Total Liabilities and Members' Equity $ 11,823,945 $ 11,876,084



14

5. Investment in Unconsolidated Joint Venture (Continued) 2016 2015 Statement of Operations Revenue: Rental and Other Income $ 1,135,809 $ 1,135,390 Expenses: Depreciation Expense 403,522 362,581 Operating Expenses 559,559 385,934 Loss on Disposal of Asset 54,932 71,241 Property Taxes 137,402 122,984 Miscellaneous 64,798 14,185 Total Expenses 1,220,213 956,925 Net Income (Loss) (84,404) 178,465 Other Comprehensive Income (Loss): Unrealized Gains (Losses) 20,643 (2,827) Total Comprehensive Income (Loss) $ (63,761) $ 175,638 Association's Interest: Beginning Equity in Joint Venture $ 893,801 $ 916,390 Share of Net Income (Loss) (5,024) 13,839 Distributions from Joint Venture (29,475) (36,428) Ending Equity in Joint Venture $ 859,302 $ 893,801



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6. Leases

The Association leases the offices it occupies from a related party (see Note 7). This lease became effective January 1, 2009. The terms of this lease call for monthly payments of $7,735, increasing 3% each year. Base operating expenses are paid monthly in the amount of $4,022, which is reevaluated each year. Monthly rent payments will be reviewed on an annual basis to determine if an adjustment for the scheduled payments is required. In January 2014, the lease was modified so that for the year ended December 31, 2016 and 2015, monthly payments would be $7,425. The initial lease term is five years, but there are two five-year options to renew, which have been included in the table below as the Association plans to exercise the renewal options. The Association also leases two copiers. Monthly payments are $550, and the lease expires on August 30, 2020. The Association also leases a postage meter. Monthly payments are $88, and the lease expires on September 8, 2019. The Association also leases an automobile. Monthly payments are $635 and the lease expires November 30, 2018. The minimum payments under these leases are as follows:

Years Ending December 31, 2017 $ 184,499 2018 189,607 2019 187,249 2020 190,468 2021 191,650 Thereafter 778,439 $ 1,721,912 7. Related Party Transactions and Royalties

Builders Mutual Insurance Company makes monthly payments (based on a percentage of premiums collected) to the Association for the right to use the Association's name and logo. In 2016 and 2015, these payments totaled $1,182,842 and $1,071,137, respectively, and are included in revenues as royalties. The Association leases office space from Builders First, LLC. The Association owns 7.88% of Builders First, LLC. Total lease payments for the years ended December 31, 2016 and 2015 was $89,100. Distributions receivable from Builders First, LLC at December 31, 2016 and 2015, were $7,237 and $9,450, respectively. During the year ended December 31, 2015, the Home Builders Education Fund, Inc. (the “Fund”) was created (see Note 8). Total contributions made by the Association to the Fund were $260,000 during the year ended December 31, 2016. The Association paid $1,983 and $9,099 in legal fees on behalf of the Fund during the years ended December 31, 2016 and 2015.



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8. Home Builders Education Fund, Inc. The Home Builders Education Fund, Inc. (the “Fund”), an IRC Section 527 political organization, was organized to carry on expert political functions and to promote and educate the general public as to the importance of the home building industry in North Carolina and to advocate for candidates who appreciate the importance of the homebuilding industry. The Fund’s assets and activities as of and for the year ended December 31, 2016 were:

2016 Cash $ 4,435 Total Assets $ 4,435 Capital $ 4,435 Total Equity $ 4,435 Revenue: Contributions from NCHBA $ 260,000 Interest Income 2 Total Revenue 260,002 Expenses: Campaign Advertising 255,361 Administrative Expenses 206 Total Expenses 255,567 Net Income $ 4,435

9. Subsequent Events

Management evaluates events occurring subsequent to the date of the financial statements in determining the accounting for and disclosure of transactions and events that affect the financial statements. Subsequent events have been evaluated through April 14, 2017, which is the date the financial statements were available to be issued.

SUPPLEMENTARY INFORMATION

NORTH CAROLINA HOME BUILDERS ASSOCIATION, INC.GENERAL AND ADMINISTRATIVE EXPENSES


General Fund

Salaries $ 1,352,316 $ 1,159,399Travel:

President 12,627 12,837Immediate Past President 9,536 11,655Staff 52,138 45,222First Vice-President 9,295 8,041Regional Vice-Presidents 27,516 23,060President - Elect 8,572 10,515NAHB Executive Committee Appointee 8,655 8,747Associate National Director 2,195 4,098Secretary/Treasurer 7,278 7,171

Payroll Taxes 73,069 70,817Insurance 132,274 114,186Advertising and Publicity 1,811 1,785Dues and Subscriptions 5,638 4,731Gifts and Plaques 4,577 3,052Hall of Fame 470 1,437Assistance Fund 6,798 5,051Membership Retention 1,717 1,758Supplies 23,331 21,184Postage 7,534 7,038Telephone 18,109 16,666Vehicle Expense 11,934 11,361Repairs and Maintenance 38,969 28,398Accounting Fees 10,100 9,700Legislative Expense 5,996 9,005Rent 89,102 89,102Property Tax 713 607Insurance - General Liability 8,107 8,124Directors' Meetings 47,821 24,230Legislative Day 21,811 20,850Depreciation 11,682 22,827Bank and Investment Fees 28,223 27,192

Total General Fund $ 2,039,914 $ 1,789,846

Retirement Fund

Retirement Plan Contribution $ 89,531 $ 75,353Administrative Fees 12,047 12,084

Total Retirement Fund $ 101,578 $ 87,437

2016 2015


17

NORTH CAROLINA HOME BUILDERS ASSOCIATION, INC.GENERAL AND ADMINISTRATIVE EXPENSES


Legal Action Fund

Legal Expense $ $ 2,214Bank Fees 510 521

Total Legal Action Fund $ 510 $ 2,735

Issues Mobilization Fund

Contributions $ 5,000 $Legal Fees 1,983 9,099Administrative Fees 851 3,888

Total Issues Mobilization Fund $ 7,834 $ 12,987

Total General and Administrative Expenses $ 2,149,836 $ 1,893,005

(Continued)

2016 2015


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Nominating Committee 2017

President (Chairman) Gary Embler HBA of Greater Charlotte Immediate Past President Brain Pace HBA of Greater Charlotte Past President Buddy Hughes Davidson County HBA Region I Appointee Richard White Hiram Williams Craven-Pamlico HBA Region II Appointee Duke Geraghty Mark Martin Outer Banks HBA Region III Appointee Rob Weintraub Wes Carroll HBA of Raleigh-Wake Region IV Appointee Mark Disney Gary Hill Greater Greensboro BA Region V Appointee Densel Williams* Danny Adams Moore County HBA Region VI Appointee Chad Little Jamie Wightman HBA of Greater Charlotte Region VII Appointee Lee Riddle* Michael Enscore HBA of Winston-Salem Region VIII Appointee Larry Adams Gary Witherspoon HBA of Hickory-Catawba Valley Region IX Appointee Clyde Lackey Cody Byrd Caldwell County HBA Region X Appointee Brandon Bryant Thomas McClain Asheville HBA

North Carolina Home Builders Association Associate Members Committee Minutes

Builders First Center, Raleigh, NC May 23, 2017

I. The meeting began at 1:10 p.m. and introductions were made around the table of our meeting attendees. II. A motion was made and seconded for the approval of minutes from February 21, 2017. Minutes had been

previously emailed to all AMC attendees. III. Chair Allen reminded everyone about the availability of the Thank You Letters they can take advantage of to

have sent to their bosses in appreciation of their involvement with the AMC. IV. The sponsors from the NCHBA BuildPac fundraiser were recognized. Peter Moratore with PHWS gave

testimony about the benefit they received from their sponsorship. V. Chair Allen went over the various awards opportunities open for Associate Members and asked if anyone

had any recommendations for nominees. VI. Discussion began about ways to raise money for NCHBA BuildPac?? One idea presented way an excess

inventory yard sale. VII. Chair Allen asked the attendees what they felt they would benefit from during the AMC meetings. What

would make attending the AMC meetings worthwhile? Ideas presented: • Fundraising ideas for local associations • Finding potential members • Finding ways associates can best help builders • Highlighting a builder member each quarter who does business with members

VIII. NCHBA EVP Mike Carpenter and President Gary Embler came in at this time to speak to the Associate Members. Gary thanked them all for being here and being active

IX. Someone brought up the idea of making short videos that could be posted on the NCHBA website on various topics such as membership or fundraising that would benefit the member. Topics included: NCHBA Food Truck Rodeo BuildPac Raffle video “How To” about filing for the Member Rebate Ways to get your membership free How to get a sponsorship to attend a meeting Value of NCHBA membership How to form a committee and get membership active in it Getting the most out of your sponsorship Where to turn for legal advice

XII. Tracie Garrett announced the AMC had raised $1400 towards NCHBA BuildPac with the food trucks onsite that day for the 2nd quarter board meetings.

There bring no further discussion, the meeting was adjourned at 2:15 p.m.

Respectfully submitted by:

Tracie M. Garrett, CEM, CMP NCHBA Staff Associate Liaison

NORTH CAROLINA HOME BUILDERS ASSOCIATION NC BUILD-PAC BOARD OF TRUSTEES MEETING

May 23, 2017

The meeting of the NC BUILD-PAC Trustees was held at the Builders First Center in Raleigh, North Carolina, with Chairman Kevin Hutchins presiding. The meeting was called to order with the following persons in attendance for all or part of the meeting:

COMMITTEE MEMBERS & GUESTS

Danny Adams Douglas Ball Alan Banks

Ken Bernardo Cody Byrd

Mike Carpenter (NCHBA) Mike Cook

Robert Crouch Mike Elledge (NCHBA)

Gary Embler Michael Enscore

Richard Gephart Mike Gurley

Kevin Hackett Deans Hackney

Gary Hill Kevin Hutchins

Bob Inman Gerald Kamp Clyde Lackey Jackie Lang

Mark Martin

Thomas McClain Tim Minton (NCHBA)

Cameron Moore Joe Padilla

Warren Wakeland Phil Warrick

Steven Webb (NCHBA) Hiram Williams

I. Call to Order

The meeting was called to order by Chairman Kevin Hutchins at 11:05 a.m.

II. Old Business

By motion and a second, the minutes of the committee’s February 21, 2017 1st Quarter Meeting were approved.

III. Financial Statements

Treasurer Mike Elledge reviewed the Balance Sheet as of April 30, 2017, the Statement of Revenue and Expenses for the four months ended April 30, 2017, and the Report by Region for the four months ended April 30, 2017. After questions, the financial statements were approved.

IV. New Business A. BUILD PAC Recognition and Fundraising

Steven Webb and Tim Minton made a suggestion that we should recognize large BUILD-PAC donors with a gift of some kind. This was a common practice several years ago, prior to the decline of the housing industry in 2008-2010, but was discontinued due to lack of funds and lack of large donors.

Several ideas were discussed in this regard, followed by a general discussion concerning BUILD-PAC fundraising ideas and efforts, and recognition of such efforts. A motion was made and seconded to look at an inexpensive gift for 2017 donors contributing $1,000 or more. The motion carried.

B. NAHB BUILD-PAC Raffle

Steven Webb noted that the NCHBA would hold their annual raffle for NAHB BUILD-PAC this fall, and mentioned that Jerry Cowan, of Builders Mutual Insurance Company, had recently retired. Jerry was heavily involved in the BUILD-PAC raffles in the past, and his efforts will be missed. Webb stressed the importance of raising BUILD-PAC funds on the national level, and that a lot of effort will be required to be successful with this year’s raffle. A general discussion ensued.

V. Adjournment There being no further business, Chairman Hutchins adjourned the meeting at 11:45 a.m.

MEETING OF THE NORTH CAROLINA HOME BUILDERS ASSOCIATION

LEGISLATIVE COMMITTEE

May 24, 2016

The meeting of the Legislative Committee was held at the Builders First Center in Raleigh, North Carolina, with Chairman Alan Banks, presiding. The meeting was called to order with the following persons in attendance for all or part of the meeting:

Attendees Alan Banks, Chair Cody Byrd Nancy Caggia Wes Carroll, Vice Chair Mike Cook Patty Cook Robin Cooper Bill Daleure Judy Dinelle Mark Disney Teri Edwards Jonathan Elliot Gary Embler, Vice President Duke Geraghty Mike Gurley Mark Hanson Suzanne Harris

Gary Hill Diane Holmes Kevin Hutchins Jessica Jackson Heather Jarman Rick Judson Angela Kalamaras Paul Kane Jackie Long Lori Lowery Jennifer Mackey Mark Martin Cameron Moore Dave Morgan Bill Nesbit Jay Overton Brian Pace, President

Joe Padilla Will Parry-Hill Cindy Presnell Jeff Satterwhite Craig Shoe Cathy Six Jim Spangler Stoney Story Sean Sullivan Phil Warrick Colin Webster Rob Weintraub Richard White Jamie Wightman Hiram Williams

STAFF

Mike Carpenter (NCHBA Executive V-P) Tim Minton

Robert Privott Steven Webb

I. Call to Order

The meeting was called to order by Chairman Banks at approximately 10:30 a.m.

II. Preliminary Matters Approval of Minutes of the February 16, 2016 Meeting

By motion made and seconded, the minutes of the Committee’s February 16, 2016 meeting were approved.

III. Old Business

There was no old business. IV. New Business

North Carolina General Assembly Report NCHBA Director of Government Affairs Tim Minton gave an update on the issues at the North Carolina General Assembly.

1. Enact HB 483 (Land Use Regulatory Changes)

This bill passed the House on 04/29/15 by a strong, bi-partisan vote of 102-17. The Principal Sponsor is Representative Jonathan Jordan (R-Ashe). The bill is currently pending in the Senate and is eligible for consideration this year. If passed by the Senate, it will return to the House for concurrence.

HB 483 has several provisions. It integrates the permit choice language of G.S. 142-755, enacted in the last two Regulatory Reform laws, with statutory vesting protections for landowners. If a rule or ordinance changes between the time an application for a permit is submitted and the time a decision is made, the applicant may choose which version of the rule or ordinance will apply.

Other provisions authorize certain land use regulation challenges (e.g., authority, constitutionality, etc.) to bypass the Board of Adjustment and be filed directly in Superior Court. This streamlined process will also allow landowners to more effectively bring lawsuits asserting the invalidity of ordinances or other similar challenges both affirmatively and as a defense to enforcement actions.

Another provision clarifies when attorneys’ fees and costs may be awarded to a landowner who wins a lawsuit if a local government acts outside the scope of its legal authority. Awards would be mandatory whenever the local government violated a statute or case law setting forth unambiguous limits on its authority.

Other provisions would make refinements to NCHBA initiated legislation enacted last year which reformed local government performance guarantee practices and prohibited the application of aesthetic controls to one and two family housing.

2. Modify Sales Tax Law Which Became Effective March 1, 2016

Last year, the General Assembly enacted changes which imposed sales and use tax on repair, maintenance and installation (RMI) services not previously subject to tax. These changes raised issues for those of our builders who utilize the services of subcontractors who met the definition of retailers under the new law. Those subcontractors are now required to charge sales tax on their labor. In particular, these changes affected a number of our associate members who offer turn-key services to builders in both new construction and remodeling activities. This has created confusion over which services are subject to taxation and the question often turns on who is performing the service, thus, creating an uneven playing field. Over the past several months, NCHBA has worked with key legislators and legislative staff to find a solution. Our goal has been to eliminate any sales tax on installation service labor for both new construction and remodeling activity as well as limit, as much as possible, the sales tax on labor for remodeling repairs. Recently, SB 879 (Refine Sales & Use Tax Changes on RMI) was introduced by the Senate Finance leaders. This bill takes a very positive step toward reaching our goal. For example, new construction labor would continue to be exempt from sales tax. With respect to remodeling activity, no sales tax on labor would be due for either installation or repair services which constitute “capital improvement.” Among the examples set forth in the bill as meeting the definition of “capital improvement” include the installation of tangible personal property that requires the issuance of a building permit ($15,000 for a residential project). Painting, debris removal, and landscaping services are specifically exempt from the definition of repair services. While there are changes and clarifications which still need to be made to this bill, NCHBA appreciates the commitment of both the Senate and House leadership in hearing our concerns and working with us to craft an appropriate legislative solution.

3. Support Budget Provision to Put Building Code On-Line While the N.C. Building Codes are currently available on-line via the Department of Insurance’s website, these provisions are “read only” and are not “searchable”. NCHBA strongly supports ongoing legislative efforts to make the family of codes available to builders and the public in a “user-friendly” format. HB 1030 (Appropriations Act of 2016), which passed the House last week by a strong, bi-partisan vote of 103-12, contains an appropriation of $425,000 to the Department of Insurance to make the N.C. Building Code Registry fully on-line and searchable. NCHBA thanks the House for including this provision in its version of the budget and urges the Senate to do likewise.

4. Continue to Support the Work of the NC Housing Finance Agency NCHBA was a key supporter of the original legislation in 1973 which created the NC Housing Finance Agency (NCHFA), a self-supporting public agency, with a mission to finance housing opportunities for our state’s citizens who are otherwise not adequately served by the market. We have consistently urged legislative support for the agency’s programs and this year is no exception. The House budget (HB 1030) just passed included an appropriation of $7.66 million for the state’s Housing Trust Fund which the NCHFA has administered since 1987 at no cost to the state. Every dollar goes to bricks and mortar and the funds are used to address some of the state’s most difficult housing problems. The fund leverages $5 of housing for every dollar of state investment. Also, HB 1030 includes $15 million for the Workforce Housing Loan Program to provide subordinate loans to build privately owned and managed rental developments for working families and seniors. The budget also includes $3 million in the state match for the HOME program which allows the state to draw down a federal housing block grant of approximately $12 million. NCHBA appreciates the House action in funding these programs and urges the Senate to do so as well. The committee reviewed other issues including building permit clarifications, subdivision street disclosure, process for NCDOT to accept roads and irrigation meters.

V. Remarks by Chairman

Chairman Banks thanked everyone for coming and for their participation in NCHBA Legislative Day.

VI. Adjournment

There being no further business, the Committee meeting was adjourned at approximately 11:55 am.

MINUTES NORTH CAROLINA HOME BUILDERS ASSOCIATION

COMMITTEE on CONSTRUCTION CAREERS May 23, 2017

1. In place of Susan Witherspoon, Judy Dinelle called the meeting to order at 1:05 p.m. and conducted a roll call. Others present: Kep Paylor (staff), Robert Crouch, Buddy Hughes, Holly Fraccaro, Gerald Kamp, Mike Gurley, Bruce Rogers, Al Sartain, Darlene Saunders, Ron Folster, Pamela Fincher, Vicki Cochran, Kim Farmer, Kim Allgood, Bev Hayes, Christi Stokes, Jamie Wightman and Brandon Bryant. 2. The minutes were approved as submitted for the meeting held on 2/21/17. 3. NCHBA President Gary Embler stopped by and thanked everyone for serving. He offered to help if folks will let him know. 4. Mr. Paylor let the committee know that the Teacher of the Year nominations have closed and we ended up with three nominees: Von Starnes (Maiden NC), Mike Swanson (Lenoir, NC) and Ramie Robinson (Taylorsville, NC). A sub-committee was set for a final decision due June 15th. Volunteers are Holly, F, Brandon, Vicki, Judy D and Christi. 5. The local HBA interactive kit is still in the works and an updated visual was shown to the committee. It will be used as a tool for locals to find ways to better interact with existing vocational-technical programs in their respective areas. It was decided that we add an idea bank (best practices) that would cover programs that HBA have used successfully. We can do that in a click format and also try to connect NAHB student chapters. Holly F. agreed to meet with NCHBA Jeffrey Turner and Kep on the toolkit to look at this and other suggestions brought forth. 6. Skills USA was held in April in Greensboro. The contest and judging was good and special thanks to 84 Lumber, Carter Lumber Co., Builders Mutual and BMC. The carpentry contest for high school had 45 contestants and the winner (Noah Radcliffe – Holly Springs) will attend nationals in June. He will be supported with $1500 for travel from the NCHBA. 7. The committee was reminded to reach out to teachers and to take the first step in teacher engagement. They and their classrooms need industry help and guidance. Counselors often push kids towards college. 8. Gerald Kamp reported that Hickory has started a committee locally on construction careers. They will do a number of things, including talking to 5th and 6th graders about construction trades. T-shirts were made for speakers from the homebuilding, HVAC and electrical fields. “Every local HBA should have a similar committee,” he said. “Seek out the right person for your local committee – he or she might be a retiree!” 9. Pamela Fincher of Central Carolina Community College urged those in need of training or an education program should reach out to the continuing ed. person at the local college. 10. Darlene Saunders also voiced support of social media to highlight good stories and to spread successes for our industry and training. Respectfully Submitted,

Kep Paylor Construction Careers, NCHBA

North Carolina Home Builders Association Local Presidents Meeting

Builders First Center, Raleigh, NC May 23, 2017

I. Meeting began with our facilitator, Dave Stormont, having everyone introduce themselves and where they were from.

II. Minutes were discussed with all attendees agreeing they would like to receive the minutes after the meeting.

III. 911 issues were the first topic of discussion. a. Two year Presidency’s- pros/cons comments were problems with time commitment

if they started with the Vice-President position but found it made for more effective leadership plus when they were doing one year terms, by the time they figured out what they were doing their term was up.

b. Is there a line item in the budget for the EO to travel to quarterly meetings? Highly recommended since an engaged EO drives membership

c. How can we keep builders active after they have served their time? They are a fountain of knowledge that can benefit the local HBA. One local President mentioned that their HBA holds a Past President recognition night every other year. Another mentioned that their local records were non-existent and needed help figuring that out.

d. What benefit is there to being a Local President? Answers included: great marketing tool and gained confidence in their leadership abilities which gave them confidence in business.

e. No EO- how to get one and how to determine at what point they go from part time to full time. Also, where do they find the money for a full time EO? It was mentioned that the EO be given a goal to reach by increasing membership by X to increase their salary by X. It can also be tied to increasing non-dues revenue.

. IV. As a closing question, Dave asked “What was the biggest surprise they found as they assumed the

leadership role”? Two responses were getting members to attend and the politics from members.

With time running out, the meeting adjourned at 3:30 p.m.

Respectfully submitted by,

Tracie M. Garrett, CEM, CMP

MEETING OF THE NORTH CAROLINA HOME BUILDERS ASSOCIATION

REGULATORY AFFAIRS & LAND DEVELOPMENT/WORKFORCE HOUSING

COMMITTEE

May 24, 2016

The meeting of the Regulatory Affairs & Land Development/Workforce Housing Committee was held at the Builders First Center, Raleigh, North Carolina, with Chairman Rob Weintraub, presiding. The meeting was called to order with the following persons in attendance for all or part of the meeting:

Attendees Tom Anhut, Vice Chair

Douglas Ball Bill Daleure Mike Gurley

Deans Hackney Suzanne Harris

Angela Kalanaras

Steve Leach Mark Martin

Cameron Moore Jay Overton

Brian Pace, NCHBA President

Joe Padilla

Jim Spangler Jodi Tate

Rob Weintraub, Chair Gary Witherspoon

STAFF

Mike Carpenter, NCHBA Executive Executive Vice President Tim Minton, Director of Government Affairs

Steven Webb, Legislative Lobbyist I. Call to Order

The meeting was called to order by Chairman Weintraub at approximately 9:00 a.m. II. Preliminary Matters A. Approval of Minutes of the May 24, 2016 Meeting

By motion made and seconded, the minutes of the Committee’s December 10, 2015 meeting were approved.

III. Special Guest and Old Business

A. Special Guest – Representative Chris Mills (R-16) Representative Millis gave an update on the North Carolina General Assembly. He commented on past regulatory reform legislation and highlighter the stormwater rules process.

B. Stormwater Rules Update Tim Minton gave a brief update on the timeline for the stormwater rules.

IV. New Business

A. Stallings Moratorium Tim Minton reported on a recent issue in the town of Stallings, NC. NCHBA was informed that the town council of Stallings was considering a 15 month moratorium on residential construction. Mike Carpenter contacted the town to inform them that residential moratoriums are illegal in North Carolina. Due to NCHBA’s efforts, the town council tabled its consideration for the moratorium.

B. House Bill 483, “Land Use Regulatory Changes” The committee was informed that HB 483 is currently in the Senate Rules Committee after passing the North Carolina House last year. Our goal was to add some additional items to the bill and request that the Senate consider those items.

C. Disclosure of Subdivision Road Legislation NCHBA is working closely with the NC Realtors Association and Representative Skip Stam’s office on the issue of subdivision disclosure and the process where roads are accepted by the NC Department of Transportation.

D. Other Legislation The committee discussed other important legislation including SB 763, “Prohibit Certain Stormwater Control Measures” and SB 754 “Prevent Squatting in Foreclosed Real Property.”

V. Adjournment

There being no further business, the Committee meeting was adjourned at approximately 10:30 a.m.

NORTH CAROLINA HOME BUILDERS ASSOCIATION

Legislative Committee

MINUTES

I. Call to Order and Roll Call The meeting of the Green Building Council was held May 23, 2017 at the 5580 Centerview Dr. Raleigh, NC 27606. The meeting was called to order at 10:00 a.m. by staff Chair Matt Dobson.

II. Old Business Members approved minutes from the 1st quarter meeting. Each member of the committee introduced themselves and the attendance sheet was circulated.

III. New Business

The meeting consisted of a group discussion concerning the ongoing issue of appraisals. The group discussed Sandy Adomatis, (SRA, LEED Green Associate Adomatis Appraisal Service) education program and determined that that particular program would not be the best practice for what the committee is trying to accomplish. Committee member Ryan Miller of NC Building Performance Association (NCBPA) sought support from NCHBA and their Green Building Council to 1) study the appraised values and sales prices of high performance homes vs. non-in the Charlotte, Triad and Triangle markets ($3,000 needed for 2 years of data) and 2) define best practices for builders to list new high-performance homes in MLS directories in order to make them available for comps needed by appraisers. These activities complement NCBPA’s in-progress work to add more “green” fields and auto-populate high performance home data into NC’s many MLS directories. The grouped discussed the proposal and agreed that this process is worth continued discussion. However, no formal request for funds from NCHBA were considered.

IV. Adjournment

The meeting was adjourned at 11:00 a.m.

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