DAVID A. CELESTIN

President, Building Industry Assn. of Orange County

The recession may be entering its second year, but Orange County’s development industry is beginning its third year in the dumps, with little relief in sight. And that presents the industry’s local trade group with a platterful of challenges. David Celestin, vice president for planning and government relations at the Mission Viejo Co. and the Building Industry Assn. of Orange County’s president for 1992, recently discussed industry issues and his goals for the the coming year with Times staff writer John O’Dell.

The building industry has been battered for more than two years. What do the next 12 months or so hold?

I think we are facing more of the same until the issue of the credit crunch is resolved and until people have a better feeling about the economy. What tells me this is that despite the fact that interest rates haven’t been lower in years, people still are not buying homes or making other large purchases. We still have people who are concerned about whether or not they’ll have a job at the end of the year.

The credit crunch seems to be something builders complain about and regulators deny. Whom do we believe?

It is real. The message we get from the bankers is that they have a lot of loans they would like to make to good customers with good credit histories, but the regulators keep coming in and saying, ‘No, you can’t make that loan.’

The BIA is meeting with national legislators to advise them of the problems we are having and to get our message to the president and his economic advisers. We want them to know that there really is a credit crunch because the regulators are over-regulating. They need to separate loans to residential real estate developers and builders from loans to non-residential developers. It is the non-residential loans that really got the savings and loan industry into trouble, but we in the residential industry are being punished. We have had one seminar locally to talk with the regulators, and Sen. (John) Seymour (R-Calif.) was there. He was awe-struck when the regulatory people stood up and said that we don’t have a credit crunch. So we are hoping that will wake up a few people in Washington. At least the President finally has admitted that there is a problem.

Real estate development has operated in a series of boom-bust cycles for years now. Do you think this time around the industry has learned the value of self-control?

I think that we will see things operating at a level pace, with most people being cautious, until the market gets really hot again. But when that happens, you’re going to see all the people who closed their shops in the last two years come back again. And we’ll go through the same boom and bust cycle. It is just a normal thing. Look at car sales. We’ve had a lot of layoffs in the car industry, but as soon as the economy picks up, people start buying again, so you’ll see a lot of people getting rehired, a lot of new cars being made. We’ll overbuild and then we’ll have a down cycle again. That’s the American way of life.

We never learn from history, so we are doomed to repeat it?

That’s right.

What is your agenda for the BIA in Orange County during 1992?

No. 1 is to try to help us through this credit crunch. We also are working with the governor’s office to try to come up with reasonable proposals for regional government planning. It can’t be a new layer of government, so it must be one that the counties can do something with. We envision a state umbrella agency to review all state regulations relating to growth and planning and to eliminate conflicts. Then the state would adopt policy guidelines to accommodate the growth that is inevitable. Those policies would be developed into general plans at the regional level, and cities would prepare their individual general plans to implement those regional systems. We believe there should be incentives for cities to cooperate and financial sanctions against cities that try to block any of these regional programs.

Another major issue is the future of Mello-Roos (the state law permitting special property taxes to be levied on new homes to pay for schools, roads and other infrastructure improvements). We think the state wants to keep it but require more disclosure so home buyers know what their taxes will be and what they are being taxed for.

The BIA already has established a committee which will be developing a better disclosure form.

And we’re going to be working on the endangered-species issue, trying to get people to address preservation on a multi-species basis rather than on a specie-by-specie basis. We recognize the need to protect certain habitat, but we also have to get the government and the environmentalists to understand that there must be consideration of social and economic impact on people when these issues come forth.

What about affordable housing, or is that an impossibility in Orange County these days?

Supervisor Roger Stanton has just established a housing task force that the BIA is well represented on. We are going to be participating enthusiastically on that. And there still are a lot of areas in the county where new homes are being built for the first-time buyer at an affordable level.

But affordable is a relative term. Isn’t first-time housing here is a lot more expensive than in Riverside?

We are definitely at the top end. Part of the reason is that building in Orange County has been slowed down by bureaucracy.

Don’t things like the area’s nice weather, beaches, mountains and job supply also add to housing costs--the law of supply and demand?

Sure. Certain areas are more desirable to live in, therefore it costs more to live in them. It is not entirely regulation. There’s a quality-of-life issue. People want to be in certain areas and are willing to pay for it.

On President Bush’s proposals to jump-start the housing market. . .

“His proposal for tax credits for the first-time home buyer was good. But until the economy stabilizes and people get more confidence and feel that their jobs are secure, all the proposals in the world aren’t going to make anyone buy a home.”

On business failures in the building industry. . .

“We’ve pretty much seen the bottom. This is an election year, and something positive is going to happen.”

On learning from the recession. . .

“The lesson is that you have to be lean and mean, even when times are good.”

On prospects for industry executives who have been laid off. . .

“They’ll all be consultants.”

On the future. . .

“Many builders are just waiting, trying to get money lined up so they’ll be ready when things pick up.”