In a letter to members, Recreation Vehicle Industry Association (RVIA) President Richard Coon outlined recent efforts to “explore various programs and legislative/regulatory initiatives that the association could undertake to lessen the current economic crisis.”
In the legislative/regulatory arena, Coon said RVIA has focused on four specific opportunities: Department of Treasury Term Asset-Backed Securities Loan Facility (TALF), the Small Business Administration (SBA) loan provision, adding a retail sales incentive to the stimulus bill and miscellaneous business tax provisions through the Net Operating Loss (NOL).
Credit Availability
With regard to credit availability, a major step forward came on Feb. 6 when RV consumer and business floorplan loans were included in TALF.
Efforts involved working with key legislative members, including House Financial Services Chairman Barney Frank, Rep. Joe Donnelly, D-Ind., Rep. Peter DeFazio, D-Ore., to modify legislation regarding “the authority to increase the availability of loans to include RV loans.”
Coon said that due to those efforts, Frank’s TARP 2 legislation, HR 384, included a modification to clarify inclusion of vehicle loans for RV retail and wholesale loans in TALF.
SBA Loan Provision
Coon said RVIA’s objective concerning the SBA was to permit RV dealer floorplan loans in its loan program, adopt an emergency size standard for RV dealers that allows more to qualify for SBA loans and increase the maximum loan amount.
The result is that monies secured by small businesses cannot currently be used for dealer floorplan loans, and SBA opposes a change in this policy. In addition, SBA size standards for RV dealers are inadequate and maximum loan amounts are too small.
In response, RVIA has targeted Senate Small Business Committee staff and members to “encourage a change in SBA policy or short term emergency rule.”
Buyer Incentive
RVIA is lobbying to be included in the congressional stimulus legislation, which would make sales and excise tax deductions on new vehicle purchases applicable to RVs, as well as automobiles.
Coon said RVIA has recruited and engaged Sen. Evan Bayh, D-Ind., to support a modification to Sen. Barbara Mikulski’s, D-Md., auto sales deduction language in the Senate and obtained Republican and Senate Democratic support with the Senate Finance Committee Chairman Ron Wyden, D-Ore., and ranking member Sen. Chuck Grassley, R-Iowa.
Coon noted: “Excellent progress has been made on the RV buyer incentive. While the Bayh amendment was not included in the stimulus package that passed the Senate, we are preparing a strategy to push for inclusion in the House/Senate conference that will reconcile differences in the House and Senate stimulus bills.”
Miscellaneous Business Tax Provisions
Coon reported that provisions calling for an extended NOL carry-back from the current two years to up to 5 years for tax years beginning or ending in 2008 or 2009 were included in both House and Senate stimulus legislation.
Coon said the NOL provision “looks solid for the final bill, however, the House-passed version includes an arbitrary, permanent 10% reduction on the NOL amount a company can carry-back beyond two years.”
“In other words, a portion of the losses would be permanently lost as a condition of obtaining a carry-back of those losses beyond the two-year period of current law,” he said, adding, “The Senate bill does not have this provision.”
Both bills temporarily lift the 90% limitation in NOL amount for alternative minimum tax filers (AMT provision).
In addition to the items discussed above, RVIA is pursuing several initiatives that do not require legislative or regulatory intervention.
Credit Unions
RVIA is trying to determine if credit unions can play a more active role as a source for credit relief.
Following a meeting with the Credit Union National Association (CUNA), Coon said “it became clear that the credit unions are already doing some recreation floorplan and retail lending and have a lot of interest in doing more.”
Accordingly, RVIA mapped out seven action items, including working with CUNA to develop a pilot program for dealer floorplan financing.
Coon noted: “Credit unions make what they refer to as member business loans, but these loans are limited to 12.25% of their total assets. The plan is for the RV and marine industries to identify two or three prospective dealers who are going to survive the economic downturn but currently have a floorplan financing problem.
“CUNA will match up a large credit union in the geographic area of these dealers and work to bring the dealer and credit union together to maximize the likelihood that the floor plan financing would be made available… Once the program is deemed successful at the pilot level, CUNA would promote this case study to the credit union industry.”