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Just about any time Carlos Beruff runs into a Manatee County commissioner these days, he extends a hand in gratitude.
A politically active homebuilder who generally supports limited government policies and politicians, Beruff doesn't merely hand out idle thanks. His gratitude is for the commission's April 2009 decision to slash impact fees on roads by 50% for two years, a reduction since continued through 2013.
Beruff says the cut in impact fees, which are taxes builders and developers pay to support infrastructure, was the catalyst that saved his company, Manatee County-based Medallion Homes. It was also the boost the business needed to come out of the downturn in growth mode. Says Beruff: “We couldn't have done it without (the cuts.)”
Annual revenues at Medallion, in fact, are up 208%, from $10.66 million in 2009 to $32.84 million last year. New home sales are up 60%, from 87 in 2009 to 140 last year. Beruff projects the firm, now with 50 employees, including 12 in sales, will sell at least 175 homes in 2011.
It's quite a contrast to the lean years of 2006-2008 and most of 2009. Like many other homebuilders, the company's employee base collapsed during that period. It dropped from 48 employees and eight salespeople paid on commission in 2005 to 14 employees and six salespeople in 2008.
Beruff has begun to capitalize on the company's success. He has returned to land development and acquisition, for instance, a market he left in 2006. The firm bought a few hundred lots in Manatee County last year. And in April it expanded outside the local area, to Mount Dora, north of Orlando, where it bought 500 lots previously in foreclosure.
The firm paid about $7.5 million for the lots, which are in the Lakes of Mount Dora, a retirement community. “We want to move into Central Florida to diversify our portfolio,” says Beruff.
There are other reasons the company rebounded, in addition to the impact fee cuts. Material costs, for example, have dropped dramatically, says Beruff. Concrete that cost $100 a yard dropped to $60 a yard. Lumber is down, too.
Medallion Homes also benefited from a shrewd decision in 2005, when it sold five projects, although Beruff admits he had no idea how hard the market would crash. “We didn't do it because we were the smartest guys in the room,” says Beruff. “We didn't understand the dynamics of the (homebuilding) business anymore.”
That decision, in turn, provided Beruff cash for the downturn, which proved fortuitous. “The key to surviving all this,” says Beruff, “is to have a lot of liquidity.”
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