Builders Outlook 2016 Issue 5

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  • 8/16/2019 Builders Outlook 2016 Issue 5

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    Builders

    Outlook

    Notably, this record shortage

    comes at a time when new homes

    are being started at a rate of under

    1.2 million a year. In 2005, when

    total housing starts were over 2

    million, the share of builders

    reporting a shortage of lots was 53

    percent.

    “The lack of availability of

    buildable lots has quickly become

    one of the biggest issues facing our

    members,” said NAHB Chairman

    Ed Brady, a home builder and

    developer from Bloomington, Ill.

    “While labor shortages and

    regulatory burdens remain struggles

    as well, lot shortages are preventing

    our builders from responding to

    growing demand for housing.”“We have monitored lot

    availability for the last two decades,

    and it is clear that the scarcity of

    building lots is growing,” said NAHB

    Chief Economist Robert Dietz.

    “Whether due to land use policy,

    geographic constraints or other

    regulatory constraints, the lack of

    lots for residential construction will

    have negative impacts on housing

    affordability in many markets.”

    The survey results varied

    somewhat, based on region of the

    country, size of builder, and type of

    lot. The dearth of developed lots ismost apparent in the Western

    regions of the country, where 39

    percent of builders said lot supply

    was “very low,” compared to 23

    percent in the South and 18 percent

    in both the Midwest and Northeast.

    When referring to premium “Class

    A” category lots, builders in all

    regions reported similar opinions of

    widespread shortages.

    The Study:

    Perhaps most notable is that

    builders reported this record

    shortage at a time when new

    homes are being started at a rate of

    under 1.2 million a year. in 2005,

    when total housing starts were over

    2.0 million, the share of builders

    reporting a shortage of lots was

    “only” 53 percent.

    The percentage varies somewhat,

    based on region of the country, size

    of builder, and type of lot. Although

    the categories are seldom definedprecisely, builders often think in

    terms of A, B and C lots, based on

    the desirability of their location. As

    you might expect, the shortage

    tends to be most acute for A lots. In

    the May 2016 survey, 69 percent of

    the builders said A lots were in short

    supply, compared to 60 percent for

    B lots, and 47 percent for C lots.

    Often, differences show up most

    clearly in the share of builders who

    report the supply of lots in their

    markets is “very low.” For

    example, the 69 percent of builders

    reporting low or very-low lot supply

    in the West is only marginally above

    the 62 percent in the Midwest and

    64 percent in the South, and

    actually slightly below the 68

    percent in the Northeast. But a full39 percent of builders in the West

    characterized lot supply as very low,

    far above the percentages in the

    other three regions.

    Compared to lot supply in

    general, builders are more likely to

    report a very-low share of A lots,

    especially in the Northeast, Midwest

    and South. When the lot supply

    question is restricted to A lots, these

    three regions more closely

    resemble the West.

    Perhaps surprisingly, lot

    shortages were also reported

    somewhat more often by largerhome builders. Overall, 70 percent

    of builders with over 100 starts

    reported a low or very-low supply of

    lots, compared to 65 percent for

    builders with 6 to 99 starts, and 62

    percent of builders with fewer than

    6 starts

    One factor may be that builders

    with fewer starts are more likely to

    build one-at-a-time custom homes

    on land already owned by the

    homeowner, where lot supply in the

    area is less of an issue. Larger

    companies may also be looking to

    build in multiple locations within an

    area, making them more likely to

    run into a shortage if it exists

    anywhere within the broader area.

    In any event, larger builders are

    also more likely to report shortagesfor A lots specifically. In the 2016

    survey, 78 percent of builders with

    100-plus starts reported a shortage

    of A lots, compared to 74 to 75

    percent of builders with 6 to 99

    starts, and 59 percent of builders

    with fewer than 6 starts. Part of the

    reason the percentage is that low

    for small builders is that quite a few

    of them checked “Don’t Know/Not

    Sure” when asked about lots of a

    particular type (A, B or C). NAHB

    includes “Don’t Knows” in the base

    when calculating percentages to

    avoid overstating the shortages.By Paul Emrath, NAHB 

    National, State & Local Building Industry News2016: Issue 5

    www.elpasobuilders.com

    Lot Shortages Worse

    Than Ever ccording

    to N HB Survey

    Lot availability hit a record low according to

    new data from the National Association of

    Home Builders (NAHB). Sixty-four percent of

    builders responding to special questions in

    the May NAHB/Wells Fargo Housing Market

    Index reported that the supply of lots in their

    markets was “low” or “very low”—up from 62

    percent last year, and the highest that

    number has been since NAHB began

    collecting this data in 1997.

    OPEN JUNE 25 JULY 10www.elpasobuilders.com

    of TM

  • 8/16/2019 Builders Outlook 2016 Issue 5

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    2 Builders Outlook 2 16 issue 5

    NATURAL GAS IS

    RIGHT ON THE MONEY.

    Today’s builders need every advantage they can get, and natural gas homes are instantly

    more attractive.

    Natural gas kitchens sell themselves, and natural gas furnaces, water heaters and clothes

    dryers offer greater efficiency and lower operating costs than their electric counterparts.

    For more information:

    [email protected]

    William Nieves: 915-496-6126

    Jorge Sejera: 915-680-7216

  • 8/16/2019 Builders Outlook 2016 Issue 5

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    As most of the world majoreconomies, strapped with recordlevels of debt, are poised to hit thebench to take a breather, it seems thatall is good in El Paso, at least for theforeseeable future.

    It seems that everywhere you turnnowadays, there is a majorconstruction project going on in ElPaso. We have the retail center thatwill house Whole Foods on the westside, which is looking amazing,congratulations to our friends at CGNDesigns on this one. The CaldwellCollaborative Building that just wentup by I-10 and Raynolds is anincredibly nice (and expensive)looking building, serving as atestament to the positive outlook manybusiness groups have of El Paso.

    In speaking to city officials, theyestimate there at currently $1.6 Billionin outstanding construction permits inthe City, which is a figure that seemsto be a record in recent times. This isobviously great for the economy as itcreates high paying jobs, injectsmoney into our economy and is settingthe foundation for our city’s future.

    There are also messages inbetween these lines, for example, the22 story apartment, hotel office andretail tower that is being proposed forthe west side on the corner of Mesa

    and Shadow Mountain, represents ahuge investment. Projects like these,costing up to $400 and $500 per footin other US Metropolitan areas, tendto have low market cap rates (below5%), but have long term upside value

    because of asset appreciation,yielding internal rates of return in thehigh teens.

    What this means is that largerbusiness groups are looking to ElPaso to park/invest large amounts ofmoney for the long term. Rest assuredthat these investments come with a lotof study and analysis of the localeconomy. Locally, all of the majordevelopers seems to be heavilyinvesting in El Paso, which is also avery good sign.

    I often speak of the economicsynergies that are formed when a USCity reaches the 1,000,000 populationmark, which seems to be the tippingpoint of greater economic momentumfor a community, there are of coursemany factors in play here, but at anestimated count of 835,593 for ElPaso County as of July 1, 2015 (perUS Census), it suddenly feels likewe’re approaching this monumentalmark in our community. This wouldmean quicker growth, more jobs,better infrastructure, more privateinvestment and larger budgets for ourcity government to work with, all ofwhich are very positive for ourcommunity.

    Last but not least, please join us forour Parade of Homes 2016 happeningat Enchanted Hills (across from the

    Outlet Malls) off of Transmountain andI-10. Kick-off party is June 24, please join us to support this great event.

    32016 issue 5 Builders Outlook

    Carlos

    VillalobosPresident,El Paso Associationof Builders

    Growth good for l Paso

    President’s

    Message

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  • 8/16/2019 Builders Outlook 2016 Issue 5

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    This month I’ve received parcels inthe mail containing consumercomplaints about contractors, somemembers, some not. We often getcalls asking about a builder and thecaller normally wants to complain

    about something. We politely letthem know that we are not anenforcer, nor do our bylaws call for usto be. The association representsbuilder and associates interests morethan not in the political arena. Notlike Democrat or Republican but likein front of some political subdivisionlike the City of El Paso or the State ofTexas. We do not have an arm thatcan do a systematic dress down forissues related to a home builder andby the same token we have none todress down a consumer. We used tobut attorneys that made a business ofsuing builders forced the legislature

    to sunset the agency that hadpotential to regulate and allowbuilders to defend unjust claimswithout having to stop the world andget off to fix a problem.

    What concerns me when I get a

    letter, call or package is thatsometimes I wonder to myself aboutwhat could have caused themeltdown in communication. I will tellyou that there are always three sidesto a story: the consumer, thecontractor and the truth. The onething that really bothers me is when athird party gets involved, either afriend, relative or a representative.I’ve had to warn folks that if theyaren’t either one of the two partiesdirectly involved then they shouldback off or suffer potentialconsequences. Most often it’s anagent trying not to lose a commission

    or maybe trying to cover their behindsbecause they didn’t do their ownhomework. Yes it happens.

    Something old is something new aswell. Customers who ask a builder todesign a plan then think its ok to give

    that plan to another builder. Thebuyers think it’s easy to just giveideas to another builder and manytimes that builder doesn’t know it iscoming from another builder. Some ofyou take pains to draw up plans andbuild an idea. It’s not right forsomeone to steal that idea. I thinkeveryone borrows a little here orthere even on the multimillion dollarmansions you see on TV. What I’dlike to ask each of you is to be carefulnot to get caught up in wanting toplease a customer without askingwhere that customer got the plans. Ifthey can’t tell you then do all you can

    to dissuade them from using the onethey brought you and remind themthat they may be at risk by askingyou to violate the trust.

    Finally I want to thank all of ourveterans who now are in the building

    trades as a builder or associate. Yoursacrifice is tested each day by peoplewho don’t understand what you didfor our country. The only way we canprotect what you did is to ensure thatour democracy is protected fromenemies foreign or domestic. Youhave to stay vigilant, and teachothers how to. We’re just a few daysaway from the 2016 Parade ofHomes™. Hope to see all of youthere sometime during the event.

    Ray Adauto,

    Executive

    Vice PresidentEPAB

    4 Builders Outlook 2 16 Issue 5

    Understanding underlying problems key to

    handling consumer complaints

    Executive’s

    Message

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     GINDILB

    El P 

    soSIN 0951E

    5  16 issue 5 Builders Outlook

    NAHB, OSHA SettleLitigation on ConfinedSpaces Rule Ed Brady, chairman of the National

    Association of Home Builders (NAHB) anda home builder and developer fromBloomington, Ill., issued the followingstatement regarding the settlement with theOccupational Safety and HealthAdministration (OSHA) on NAHB’schallenge to the agency’s Confined Spacesin Construction final rule:

    “After months of negotiation, we arepleased to announce that we have reacheda settlement to our legal challenge withOSHA on its final rule regarding confined

    spaces in construction. The settlementclarifies that the rule has very limitedapplication in the residential home buildingindustry.

    “Since the final rule was published,NAHB has maintained that it was not onlyconfusing, but also excessivelyburdensome on builders and tradecontractors in the residential constructionindustry. This settlement addresses manyof our concerns and provides better clarityon how our industry is impacted by therule.

    “As part of the settlement, OSHA haspublished a detailed Q&A to explain howthe rule applies to spaces such as attics,basements and crawl spaces in residentialhomes. The Q&A states that the vastmajority of the rule’s requirements only

    apply to permit-required confined spaces,and that these areas in a residential homewill not typically trigger the confined spacesrequirements. The Q&A document is amuch needed addition that will give ourmembers better guidance on how the ruleimpacts their businesses.”

    New Home Sales ReachPost-Recession High Sales of newly built, single-family homes

    rose 16.6 percent in April from an upwardlyrevised March reading to a seasonallyadjusted annual rate of 619,000 units,according to newly released data by theU.S. Department of Housing and UrbanDevelopment and the U.S. Census Bureau.

    This is the highest sales pace sinceJanuary 2008.“Builders remain optimistic about thehousing market, and this month’s jump innew home sales is a positive sign thatgrowing demand will keep the housingsector on an upward trajectory through thespring buying season,” said NAHBChairman Ed Brady, a home builder anddeveloper from Bloomington, Ill.“Rising home sales combined with tightinventory will translate into increasedhousing production as we move onward in2016, especially as job creation continuesand mortgage rates remain low,” saidNAHB Chief Economist Robert Dietz.The inventory of new homes for sale was243,000 in April, which is a 4.7-month

    supply at the current sales pace. Themedian sales price of new houses sold inApril was $321,100.Regionally, new home sales rose by 52.8percent in the Northeast, 18.8 percent inthe West and 15.8 percent in the South.Sales fell by 4.8 percent in the Midwest.

    Apartment andCondominium MarketRemains Steady The Multifamily Production Index (MPI),

    released today by the National Associationof Home Builders (NAHB) remainedessentially unchanged in the first quarter of2016 after rising one point to 53. This is the17th consecutive reading of 50 or above.

    The MPI measures builder anddeveloper sentiment about currentconditions in the apartment andcondominium market on a scale of 0 to100. The index and all of its componentsare scaled so that a number above 50indicates that more respondents reportconditions are improving than reportconditions are getting worse.

    The MPI provides a composite measureof three key elements of the multifamilyhousing market: construction of low-rentunits, market-rate rental units and “for-sale"units, or condominiums. The componentmeasuring low-rent units increased fourpoints to 54 in the first quarter, while

    market-rate rental units and for-sale unitsboth dropped one point to 58 and 48,respectively.

    The Multifamily Vacancy Index (MVI),which measures the multifamily housingindustry's perception of vacancies,remained essentially unchanged with adecrease of one point to 39, with highernumbers indicating more vacancies. Afterpeaking at 70 in the second quarter of2009, the MVI improved consistentlythrough 2010 and has been fairly stablesince 2011.

    “Multifamily developers remain cautiouslyoptimistic about the market,” said AndrewChaban, CEO of Princeton Properties inLowell, Mass., and chairman of NAHB’sMultifamily Council. “Market conditions

    remain favorable and demand is stillstrong, so we expect to remain in positiveterritory.”

    “This quarter’s Multifamily ProductionIndex reflects construction at high levels asthe market finds a balance between supplyand demand,” said NAHB Chief EconomistRobert Dietz. “A consistent reading of over50 only bolsters the view that multifamilyhousing starts have recovered to a healthyrate and will remain relatively stablethrough 2016.”

    Historically, the MPI and MVI haveperformed well as leading indicators of U.S.Census figures for multifamily starts andvacancy rates, providing information onlikely movement in the Census figures oneto three quarters in advance.

    National

    Builder News

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    All too frequently the argument ismade that government assistanceprograms subsidize low wageemployers. That is, firms like Wal-Mart, McDonalds and Target, to name

     just a few, are able to pay very lowwages precisely because managementknows that their low paid employeeswill qualify for Medicaid, food stamps(officially known as the SupplementalNutritional Assistance Program) andother such public assistance. As aresult, it’s assumed that these publicprograms allow firms to pay lowerwages than would be possible werethese programs not to exist. To beblunt, this position is completely wrong.

    Rather than subsidizing low-wageemployers, public assistance programsgenerally reduce the supply of low-skilled workers who are willing to workfor low pay and poor benefits. This isbecause in many cases, benefits aremore generous when family incomesare very low or zero. As family incomerises, benefits are frequently cut backor eliminated entirely. By reducing thepool of workers willing to take poorlypaying jobs, Medicaid and most publicassistance programs tend to increase,rather than decrease, wages at thebottom of the pay scale. Were theseprograms not to exist, the unemployed

    would be more eager to work than theycurrently are, and thus more willing towork at a lower wage.

    Again, the availability of healthinsurance, food stamps, and otherassistance when work is not arequirement means that paidemployment is somewhat lessattractive than would otherwise be thecase. Moreover, the fact that in manycases benefits are reduced asearnings rise means that work is

    financially less rewarding to thesehouseholds than it is to unsubsidizedhouseholds. In short, programs thatoffer more generous payments tothose with no earnings than to thosewith higher incomes reduces thesupply of workers willing to work atvery low pay. This is quite theopposite of a subsidy to low-wagepaying firms.

    Two programs that are exceptions tothe above are the Earned Income taxCredit (EITC) and childcare subsidiestargeted at working families with lowincomes. Because benefits are onlypaid to families with a parent who is

    employed, these programs encouragework. By boosting the supply of low-wage labor, these programs increaselabor supply and thus decrease wages.However, these programs are notreally subsidies to low-wageemployers. Rather, they are programsthat offer inducements for low-wageworkers to enter the job market andtake jobs that do not offer adequatepay by making it financiallyadvantageous to do so. The goal of

    the EITC is to improve the standard ofliving of low-income families andencourage work, without fear that as aresult of a rise in earned income,public benefits will be lost. In this waythe EITC makes work pay.

    In conclusion, public assistanceprograms that offer benefits to non-working Americans reduce theincentive to work, thus boostingwages. Similarly, programs thatdramatically reduce benefits ashousehold income rises also boostwages by making work less attractive.There are no subsidies here. Whileprograms that incentivize work, like the

    EITC, increase the supply of workersand thus decrease wages slightly,calling such programs employersubsidies is essentially mistaking thebathwater for the baby.

    Elliot Eisenberg, Ph.D. is President of GraphsandLaughs, LLC and can be reached at 

    [email protected]. His daily 70 word 

    economics and policy blog can be seen at 

    www.econ70.com.

    6 Builders Outlook 2 16 Issue 5

    Financial

    Perspective

    Elliot EisenbergEconomic & Policy

    Blog

    Government Assistance Increases Wages

    EconomicGrowth Slowedby tight lending

    condition

    The second half of 2015 experiencedtighter lending conditions and, as aresult, economic growth within the U.S.slowed, according to a Liberty Streetblog by Marco Del Negro, MarcGiannoni and Micah Smith, analysts forthe Federal Reserve Bank of New York.

    Using a model called the FRBNYDSGE model, the bank determined thatthe quantifiable economic slowdownwould be much greater if the FederalReserve didn't delay liftoff in the federalfunds rate.

    This chart shows that the evolution incredit conditions did not follow theforecast put forth by the FRBNY DSGEmodel.

    From the article:Increases in credit spreads tend to be

    associated with subsequent slowdownsin economic activity, with the GreatRecession being a salient example. Inpart, such increases reflect investors’concerns about future economicconditions, changes in firms’ leverage,heightened worries about borrowers’

    default, and so on. However, as SimonGilchrist and Egon Zakrajšek andothers have shown in their research,such increases in credit spreads oftencause an economic slowdown. Anatural question is then: Did the rise incredit spreads reflect deterioratingeconomic conditions or did the causalityrun the other way around in thisepisode?

    The FRBNY DSGE model seeks tosort through some of the differentchannels in order to show moreaccuracy. The model combines priorinformation about parameters with

    important macroeconomic data.From the article:How restrictive, then, has this rise in

    credit spreads been on the U.S.economy? The left panel in the nextchart shows actual growth, from2013:Q1 to 2016:Q1, in blue. Afterpeaking at 3.9 percent (annual rate) in2015:Q2, GDP growth slowed markedlyfor the subsequent three quarters,reaching a paltry 0.5 percent in2016:Q1. Part of the slowdown wasanticipated as of mid-2015: The redline, which indicates the 2015:Q2forecast, shows that growth wasexpected to return to just below 2percent. It just ended up being

    significantly lower.For more details from the Federal

    Reserve Bank of New York on how thetightening on of financial conditionscaused a significant slowdown ingrowth, and how delaying the federalfunds rate liftoff offset part of theadverse shocks, click here.

    Source: Federal Reserve Bank ofNew York

    NEW HOME

    WARRANTIES

    FOR THE

    LONE STAR STATE

    Texas Strong for 35 Years! 

    HOMEO F T E X A S

    Linda Hepler 800.683.6833

    [email protected]

    www.homeoftexas.com/ElPasoOutlook 

  • 8/16/2019 Builders Outlook 2016 Issue 5

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    Charlie Wakeem, Guest columnist

    El Paso Times Sunday, April 3, 2016

    In light of the recent revelationsabout the dysfunction andmismanagement in City Hall, I feel it’stime for me to speak about otherissues I’m aware of.

    One only needs to look at thedifference in city government since the2013 municipal election and decisionsCity Council has made since then.Most of the problems are already well-documented, including but not limitedto issues with the city manager andRep. Larry Romero and City Council’slack of vision and transparency.

    I have served on several city boardsand committees during the pastdecade, the latest being the OpenSpace Advisory Board. Among others,I also served on the SubdivisionOrdinance Rewrite Committee, theComprehensive Plan AdvisoryCommittee and the CapitalImprovements Advisory Committee,which makes recommendations to CityCouncil regarding impact fees.

    I was formerly chairman of the Open

    Space Advisory Board, which advises

    City Council on the Open SpaceMaster Plan. I was term-limited fromthe board last summer.

    OSAB accomplished a great deal inthe first few years of its existence.

    However, things started to changeafter the 2013 municipal election.

    City staff began to keep boardmembers from having a say in settingthe agenda and posting items forineffective and useless information anddiscussion only instead of action,thereby limiting the collective voice ofits citizen board members.

    I can only surmise that it’s thepeople with political and financialinfluence that are behind the silencing,since OSAB is unpopular with thosepeople.

    The city spent several years at acost of millions of dollars, in large partprovided in grants by the federalgovernment, for Plan El Paso, ElPaso’s nationally recognized, award-winning comprehensive plan.

    It has since been shelved. Proof ofthis is that it is no longer available onthe city’s web site. Once again, it

    seems apparent that some people with

    influence have convinced the city toignore it, because Plan El Pasodiscourages urban sprawl.

    Impact fees are strictly regulated bythe state and are designed so that newgrowth pays for itself, instead of thetaxpayers or ratepayers subsidizingthe new growth. El Paso has imposedimpact fees on new growth for waterand wastewater infrastructure since2009.

    Impact fees are calculated byanticipating how many new housingunits will be built in new growth areasover a 10-year period and the cost ofinfrastructure to extend water andwastewater service to those new units.

    The calculation was originallyroughly $2,000 per new water meter(unit) in the city’s three new growthareas when the impact fees wereimposed in 2009. City Councilapproved 75 percent of that amount inimpact fees. That left the rest of us stillsubsidizing new growth for about $500per unit.

    Every five years the state requiresimpact fees to be recalculated. In 2014

    the El Paso Water Utilities calculated

    about $35 million more forinfrastructure to serve the East andNortheast new-growth areas with aslight increase in the West.

    I had term-limited off the CapitalImprovements Advisory Committee bythen. The East and Northeast newgrowth areas are now approximatelyas much as $4,000 per unit.

    The Capital Improvements AdvisoryCommittee, the majority of whosemembers belong to the El PasoAssociation of Builders, convinced CityCouncil to withhold any increase. Youand I are now left with subsidizing newgrowth for water and wastewater costsat about $2,500 per unit.

    The best way for citizens to makechange is elections. Let’s choose thecandidates with integrity and a visionfor our city, who work for us and notself-serving financial interests.

    Charlie Wakeem is a longtime El Paso 

    businessman.

    7  16 ISSUE 5 Builders Outlook

    Wakeem:City backslides on development issues

    Editor’s Note: This column first appeared in the El Paso Times, April 3 Edition it is reprinted in its entirety forreaders of the Builders Outlook who may not have read it upon initial publication.

    El Paso Association of Builders Executive Vice President, Ray Adauto responded to the article which was also published by the El Paso Times.

    The building industry is a vitalbusiness component of El Paso and isunique in that it creates homes to live in,commercial property for businesses,thousands of jobs and property taxes tosupport city services. The job of doingall these things is complex and comeswith high financial risk. At some point intime every area of town was “newdevelopment” . There’s dozens ofreasons people live in El Paso, and it isthe job of the builders to provide anopportunity for growth even though wecontinue to hear from the people whothink its ok to stop growth. With agrowing population there’s really nochoice, grow or die as a community.

    One of the things that makes ourcommunity special is the ability to findaffordable housing no matter whatincome level you are at. Part of the riskof doing so is finding land that isreasonably priced, accessible, and in anarea where people want to live. Suchland is getting harder to find as

    development faces rules that make itharder to build on. Such is the case withland inside the City limits of El Paso. Thelargest open land inside the city limits isowned by the Public Service Board(PSB) otherwise known as the WaterUtility. In the early 1950’s communityleaders knew that land would be aprecious resource if the city was to grow,and it also knew that water would be acommodity needed to grow. That’s whythe PSB purchased thousands of acresof desert back then to have land to sellto keep the cost of water and sewerservice down. Proponents of impactfees, like Charlie Wakeem, keepespousing the notion that if you raisefees then you can keep growth out. Withthis rational we should have a separate,significantly lower rate structure for thosethat pay an impact fee. We don’t so ourcurrent impact fee is imminently fair. Theidea of one class of El Pasoans"subsidizing" another group of ElPasoans is real red-herring thrown out

    by anti-growth forces that want to hold ElPaso back. Surprisingly it isconveniently never explained that a largeportion of the monthly water/sewer rate anew homebuyer pays goes towardsubsidizing replacement of older,outdated infrastructure. If we want tomove El Paso forward, we need growth.However if we penalize growth withexorbitant taxes and fees then we holdEl Paso back and we don't moveforward. Growth then moves outside ofthe City limits and takes its tax basethere. With impact fees the mayor andcouncil made a rational, measureddecision to impose fees, but keep themfrom increasing beyond the range thatthey are right now, about $1500 per lot.They followed the rules in Chapter 395of Texas Local Government Code as didthe industry.

    Everyone in the water utility districtpays a flat stormwater fee, whether youlive at the edge of a west side arroyo likeMr. Wakeem or in the flat part of

    northeast, central or the east side. It'sthe same community we all live in andwe need to work together to keep ElPaso moving forward. El Pasoans shouldknow that there are good hard workingpeople at the PSB includingPresident/CEO John Balliew. He and hisstaff understand that the taxpayers cancount on a fair system of rate hikes andimpact fees to proportionately share theburden of new infrastructure replacingold infrastructure and paying for the costof building new infrastructure.

    Ray AdautoExecutive Vice PresidentEl Paso Association of Builders915-778-5387Disclosure: I was a member of the City 

    of El Paso Capital Improvement Advisory Committee and chaired that committee 

    when the previous chair termed out until 

    my term expired early in 2014. Additionally 

    the CIAC is governed by Texas Local 

    government code chapter 395, a Texas 

    code, which specifies the composition of 

    the committee.

    Growth vs. Impact fees

    Opposing views:Columnists square offregarding developmentin El Paso

    We welcome your feedback. Please e-mail [email protected] with your comments.

  • 8/16/2019 Builders Outlook 2016 Issue 5

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    Buildeers Outlook

    On the Scene

    Issue

    Young Designerscholarships

    awardedJohn Chaney, Chairman of the EPAB

    Young Designer Scholarship challenge,announced the results of this year’scompetition. Members of the EPAB

     judged each entry over a five dayperiod. Students were required tosubmit completed plans and a 3 Dmodel of the home they designed. Ofthe potential 600 points the differencebetween first and second place was a

    mere 2 ½ points, and between first andthird only 12 points. All three studentsare from the EPISD Advanced &Practicum Architectural Design Dual-Credit Instructor Center for Career &Technology Education, aka CCTE.

    1st EP 2 Angel Lopez, Jefferson HighSchool $1,500.00 scholarship

    2nd EP8: Isaac Galvez Torrecillas,Irvin High School $1,000 scholarship

    3rd EP10: Isamir Ramirez, El PasoHigh School, $750 scholarship

    All three students are graduatingseniors. They are now given theopportunity to go get a next leveldegree or accreditation and use thescholarship money for books, tuition, orcomputers. The El Paso Association ofBuilders has been offering the YoungDesigner Scholarships for about 20years and each year the judging getstougher and tougher. This award is aculmination of work done throughoutthe 2015-2016 school year.

    Chaney told the Outlook that this isthe one event that he wishes couldgrow and grow. “It’s so great to see thework done by both the students and theinstructors end up with scholarship, butI wish we could hand out more moneysince the costs of education keepsgrowing and growing.” “Maybe one daywe will and our impact will be greater,”John said.

    Instructors for the students areCecilia Orozco, EPISD CTTE; andLuisa J Valenzuela - Teacher CTEEngineering Design, El Dorado HS.Cecilia told the Outlook that this is oneheck of a program. “My students comefrom different high schools but they getinto this contest because they’ve seenthe results. The seniors this year sawlast years winners and so they know it isfor real, something they can latch onto,” she said. “Thanks to all the EPABfolks for keeping this scholarship going.

    The Young Designer Scholarship isadministered through the El PasoCommunity Foundation by Bonita

    Johnson. Monies were originally placedthere by the late John Schatzman forthe Association.

    The El Paso Association of Builders isa trade association affiliated with theTexas Association of Builders andNational Association of Home Builders.

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    Preview Party June 24Enchanted Hills Subdivision Development by: Southwest Land Development

    Beautiful Homes by:BIC, Pointe Homes, DR Horton, CTU Metro Homes, Pacifica Homes,

    Deal 2 Deal Homes, Trinity Homes and Edwards Homes

    of 

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    www.elpasobuilders.com

    Thank you!We could not build it without you.The El Paso Association of Builders expresses our sincere gratitude to the majorsponsors of the 2016 Parade of Homes. Your commitment to our association andour builders are most valued.

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  • 8/16/2019 Builders Outlook 2016 Issue 5

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    10 Builders Outlook 2 16 issue 5

    Lending

    Three Reasons You Might Not Get An Advertised Interest Rate

    With all the hype about historically lowinterest rates, you may decide that now

    is the right time to start searching for

    homes for sale in Charlotte, NC, orOrlando, FL. And that makes sense: thelower your interest rate on your

    mortgage, the more money you’ll saveover the life of your loan. Just a one-

    point difference can mean savingthousands of dollars over 15 or 30 years.

    So you may be shocked if you prequalifyfor a mortgage and find that your quoted

    rate is much higher than what the lenderadvertised as possible. The reality is that

    the lowest advertised interest rate maynot be anywhere close to the rate forwhich you can qualify.

    The interest rate you’re offered may behigher than the advertised rate for a

    variety of reasons, from your credit scoreto the types of properties you’re hoping

    to buy. Consider the following scenarios,then find out how to score the best

    interest rate advertised.

    1. Your credit score is less than

    excellent

    Unless your credit score is near perfect,a low (or even good) score will be the

    biggest reason you aren’t offered thelowest advertised interest rate. While

    those stellar rates are available, lendersusually don’t quote them to borrowers

    with credit scores below the 800s. Otheraspects of your financial life, such as ahigh debt-to-income ratio or a shaky

    employment history with inconsistentincome, can prevent you from getting the

    advertised interest rate. Ultimately,

    anything that makes a lender feel you’rea higher risk will result in a higher rate.

    2. You’re shopping for a vacation

    home

    Mortgage loans aren’t created equal, and

    it’s not just your information that affectsthe rate the lender quotes. The property

    you want to purchase can also impactthe rate and the terms of your loan. If

    you’re looking to buy a condo, forexample, your lender may quote you ahigher rate than if you were looking to

    borrow money for a single-familyproperty. The same goes for vacation

    homes. In these cases, your quoted rateprobably will be much higher than the

    advertised interest rate, even if yourcredit score is great.

    3. Your lender doesn’t want to get

    competitive

    Did you receive a quote for an interest

    rate from a large, corporate bank and get

    a little bit of sticker shock when thenumbers came back much higher thanyou expected? Remember that lenders

    make profits from the interest they

    charge on money they let people borrow.

    If, for whatever reason, an institution orlender doesn’t feel the need to offer

    competitive rates, your quote may comeback with a much higher number than

    you believe you deserve. Lots of externalfactors influence a lender’s decision,

    such as the economy, currentmarketplace, and the amount ofcompetition in the home loan space.

    How can you get the best interest rate

    on a mortgage?

    Knowing why you didn’t get the best

    interest rate advertised doesn’t make itany less frustrating when the rate you

    see is much higher than you expected.But there is good news: You can take

    action to get a better rate when youapply for a loan if the interest rate you

    were quoted isn’t as good as you

    thought it would (or should) be. Whilesome factors are outside your control,focus on what you can influence, like

    your credit score and the amount of debt

    you carry. You can work to boost our

    score before you apply for a mortgage.Be sure to consistently make payments

    on credit card balances and bills in fulland on time. Don’t open new lines of

    credit right before you apply for amortgage, and don’t go crazy closing old

    accounts either.Finally, repaying current debts before

    taking on more debt to purchase a home

    is a savvy financial decision that willbenefit you — both when you apply for a

    loan and after you get it (when you’llneed to manage that new monthly

    mortgage payment). If you currentlycarry debt, establish a repayment plan

    you can stick with and work aggressivelyto pay down your balances. Building your

    credit and repaying your debt can taketime — and that’s OK. You may need to

    push out your timeline for applying for a

    mortgage and buying a house a littlemore, but it’s well worth doing to get theabsolute best interest rate for which you

    can qualify.

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    11  16 issue 5 Builders Outlook

    El Paso Development News

    Las Palmas Medical Center in West ElPaso will soon undergo a $63 milliondollar expansion across the street fromthe main hospital tower.

    A 90,000 square foot addition will addthree stories above the current intensivecare unit, located at North Oregon Streetand Rim Road.

    The third floor will be home to a 35-bedneonatal intensive care unit, while thefourth floor will add to current labor anddelivery capacity at the hospital. The fifthfloor will be used for future growth.

    A helipad will be constructed atop the

    new floors to allow for direct patienttransfers via helicopter. A new centralenergy plant is also planned.

    The construction is part of the firstphase of the expansion and should becompleted in 2018, according to a pressrelease. Phase two, which includesrenovation of vacant areas and nursingunits in the main hospital tower will followcompletion of the first phase.

    Construction should begin in late 2016.

    Builders Outlook 2016 Issue5www.elpasodevnews.com

    Helipad Part of $63M Las Palmas Medical

    Center Expansion

    A new La Madeleine Country FrenchCafe is headed to West El Paso,according to City permits. The restaurantwill be located in the same shoppingcenter as a new Whole Foods Market.

    The 4,500 square foot restaurant willbe located in the La Villita shoppingcenter at 6801 North Mesa Street, acurved retail, office, and restaurant area

    leading into the Whole Foods Marketparking lot.

    This will be La Madeleine's second ElPaso location, the first located at theFountains at Farah retail center in EastEl Paso. La Madeleine serves "classicFrench fare" in a casual diningatmosphere.

    No official announcement has beenmade regarding the La Madeleinelocation and no opening date isavailable. La Villita and the adjacentWhole Foods Market are still underconstruction.

    La MadeleineComing to 'La Villita'in West El Paso

    Diana Olick 

    During the housing crisis, being a realestate agent was about as easy as being aswim instructor in the desert.

    That is why so many agents left thebusiness. In fact, membership in theNational Association of Realtors went from1.3 million during the boom years to

    slightly under 1 million in 2012. Now it isback to just more than 1.2 million, andmany of the new members are millennials.

    "The median age of Realtors is youngerthan in the past because more (young)people entered the real estate professionthis year than in past years, with 20percent of members reporting one year orless of experience," said NAR PresidentTom Salomone, broker-owner of RealEstate II Inc. in Coral Springs, Florida.

    A real estate agent opens the front doorto potential home buyers in Washington, Ill.

    In the latest annual survey by NAR, atypical member reported a median of 10years of experience in real estate, downfrom 12 years in last year's report. Themedian age also decreased from 57 in2014 to 53 in 2015, the lowest it has beensince 2008 when the median age was 52.

    Dan Galloway, 24, decided to becomean agent in the Washington, D.C., areaafter he graduated from college. He andhis partner bought a home in 2014, using

    an agent from Redfin, and the processmade him decide to get into the business.He took a course with Redfin, whichhelped him learn the craft. He said therecent, epic housing crash didn't deter him.

    "It's something that I had beenconsidering for a long time. I like theentrepreneurial aspect of it. That'ssomething I think my generation has, avery entrepreneurial spirit. With the newway the economy works, you really have to

    go out and make your own way," saidGalloway.

    Last year, 41 percent of NAR members

    were over 60 years old, while only 2percent were under 30. This year, the over60 group dropped to 30 percent, and thenumber of those younger than 30 yearsrose to 5 percent.

    While the market for agents is gettingmore competitive, and new online businessmodels are making it harder for agentspounding the neighborhood pavement toget big commissions, there is still plenty ofmoney to be made. This is especially trueas home prices rise.

    As with most professions, the moreexperience you have, the more money youmake. The median gross income ofRealtors fell last year, from $45,800 in2014 to $39,200 in 2015; this is likely dueto the age and experience shift. Realestate agents with 16 years or more of

    experience reported a median grossincome of $73,400, up from $68,800 in2014, while members with two years orless of experience had a median grossincome of $8,500, a decrease from $9,100last year.

    "I'm not in it solely for the money. It'ssomething that I enjoy doing. I enjoyhelping people make these financialdecisions. If you're willing to work hard andhone your craft you can make a substantialincome doing this," said Galloway.

    He says he has sold 58 homes so far.

    Millennials may not

    be buying homes,

    but more are

    selling them

    TRENDS

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  • 8/16/2019 Builders Outlook 2016 Issue 5

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    13016 Issue 5 Builders Outlook

    Association

    News Events

    JUNE 8

    BOARD MEETING

    11:00

    GENERAL MEETING

    12 NOON

    MARRIOTT HOTEL

    JUNE 24

    PARADE OF HOMES

    PREVIEW PARTY

    JUNE 25 – JULY 10

    PARADE OF HOMES

    ENCHANTED HILLS

    UPCOMING

    EVENTSNEW MEMBERS

    SODA SPONSOR

    POINTE HOMES

    Connect to the El Paso 

    Association of Builders: 

    www.elpasobuilders.com 

    FRANKLIN BUILDING

    MATERIALS

    CONTACT:

    CRISTINA SHELDON

    1375 PULLMAN DR.

    EL PASO, TEXAS 79936

    915-855-3859

    LENNOX INDUSTRIES

    CONTACT: JULIE BLAKELY

    21415 NORTH 15TH LANE,

    SUITE 100

    PHOENIX, AZ 85027

    602-284-3573

    If you have an event or meeting that you would like to share with 

    EPAB members, please submit your information to: 

    [email protected] 

  • 8/16/2019 Builders Outlook 2016 Issue 5

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    As a professional in the pre wirebusiness I try to offer some insight intowhat the law says about pre wiringhouses. The information in my articlecomes the Texas Department of Public

    Safety forums where they respond tothe question, Information on Staterequirements for alarm prewire.

    Opinions Issued In Response ToQuestions From Industry & PublicFebruary 2006 Through April 2016

    These opinions are advisoryguidelines intended to inform thepublic and the regulated community ofthe department’s position and tofacilitate voluntary compliance. Theyare not binding on the department orany other law enforcement agency,and should not be relied on asauthority in support of or defenseagainst any enforcement action. Theyare subject to modification at thedepartment’s discretion.

    Alarm System Installation by

    Builders, and “Pre-Wiring”Feb. 15, 2008

    This is in response to a request forclarification of the department’sinterpretation of Section 1702.328(b)the Private Security Act. Subsection(b) of Section 1702.328 addresses theinstallation of alarm systems bybuilders, (residential or commercial)during construction. This provisionprovides in relevant part:

    2. a person in the business ofbuilding construction that installselectrical wiring and devices that mayinclude in part the installation of aburglar alarm or detection device if:

    A. the person is a party to a contract

    that provides that:i. the installation will be

    performed under the direct supervisionof, and inspected and certified by, aperson licensed to install and certifythe alarm or detection device; and

    ii. the l icense holder assumesfull responsibility for the installation ofthe alarm or detection device; and

    B. the person does not service ormaintain alarm systems, electronicaccess control devices, locks, ordetection devices;

    This provision allows a builder toinstall burglar alarm or detectiondevices under certain limitedconditions, perhaps the mostimportant of which is that the

    installation must be supervised and

    inspected by a licensed alarm installer.The builder’s contract must specifythat the installation is being performedunder these circumstances, and itmust provide that the licenseeassumes responsibility for theinstallation. The department wouldalso interpret this provision asrequiring that the licensee be identifiedin the contract.

    The department would like to takethis opportunity to address a relatedissue that of “pre-wiring” for alarmsystems. There has been someconfusion within the industry regardingwhether the installation of electricalwiring that may be utilized by an alarm

    system constitutes part of that system

    for purposes of regulation. One

    source of the confusion is the statute’suse of the term “wiring” in thedefinition of ‘detection device.’ Tex.Occ. Code §1702.002(6).

    It is the department’s position thatonly the low-voltage wiring that isessential and unique to the alarmsystem constitutes ‘wiring’ forpurposes of Section 1702.002(6). Theresult is that a license is required forthe installation of electrical wiring thatwould not exist but for the alarmsystem, and which is not merelyassociated with the power supply tothe system.

    Builders Outlook 2 16 issue 5

    John DorneyAssociates Council Chair

    El Paso Disposal 

    772-7495

    The law of the land for pre-wiring housesssociatesCouncil

    14

    brought to you by:

    Search No More. The

     Associaion of Builders has a

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    NEEU Homes!

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    homes at:

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  • 8/16/2019 Builders Outlook 2016 Issue 5

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      EXECUTIVE OFFICERS

    PRESIDENT

    Carlos Villalobos

    VICE PRESIDENT

    Don Rassette

    SECRETARY/TREASURER

    Kathy Parry

    ASSOCIATES CHAIR

    John Dorney

    ECECUTIVE VICE PRESIDENT

    Ray Adauto

    PAST PRESIDENT

    Edgar Montiel

    Membership Retentiion

    Patrick Tuttle

    Finance Committee

    Kathy Carrillo

    Henry Tinajero

      ADVISORY TO THE BOARD

    Jay Kerr, Firth, Johnston, Bunn & Kerr

    James Martinez, Law Office of James Martinez

    BOARD OF DIRECTORS

     Antonio Cervantes, BIC Homes

    Leti Navarrete, Dream Homes/Bella Homes

    Robert Najera, Joseph Custom Homes

    Bud Foster, Southwest Land Development Services

    Walter Lujan, Dawco Home Builders

    Fernando Torres, CTU Metro Homes

    Leslie Driggers-Hoard, Homes By Design

    Edgar Garcia, Bella Vista Cutom Homes

    Jason Cullers, Cullers Homes

    Samira Gonzalez, ICON Custom Homes

    Sal Masoud, DRE Development

    Joe Bernal, Employer Benefits Of El Paso

    Linda Troncoso, TRE& Associates

    Bret Thompson, Foxworth Galbraith Lumber 

    Ted Escobedo, Snappy Publishing, LLC

    Patrick Tuttle, Legacy Real Estate

    Sam Trimble, Lone Star Title

    Luis Rosas, HUBInternational

    Gilbert Pedregon, GECU

    Gregg Davis, First Light FCU

     TAB STATE DIRECTORS

    Randy Bowling

    Greg Bowling

    Sam Shallenberger 

      NATIONAL DIRECTORS

    Bobby Bowling IV.

    Demetrio Jimenez

    2015 Builder Member Of The Year 

    Edgar Montiel

    Palo Verde Homes

    2015 Associate Of The Year 

    Interceramic Tile

    2015 John Shatzman Award

    Bradley Roe

    Honorary Life Members

    Mark Dyer 

    Wayne Grinnell

    Don Henderson

    Chester Lovelady

    Cliff C. Anthes

     Anna Gill

    Brad Roe

    Rudy Guel

    E H Baeza

    Past Presidents

    Committed to Serve

    EPAB Mission Statement:

    The El Paso Association of Builders is

    a federated professional organizationrepresenting the home building

    industry, committed to enhancing the

    quality of life in our community by

    providing affordable homes of 

    excellence and value.

    The El Paso Association of Buildersis a 501C(6) trade organization.

    © 2015 Builder’s Outlook

    is published and distributed for the

    El Paso Association of Builders

    by Ted Escobedo, Snappy Publishing, LLC

    [email protected]

    El Paso • Texas • 915-820-2800

    6046 Surety Dr. El Paso, TX 79905

    915-778-5387 • Fax: 915-772-3038

    Greg Bowling

    Kelly Sorenson

    Mark Dyer Mike Santamaria

    John Cullers

    Randy Bowling

    Doug Schwartz

    Robert Baeza

    Bobby Bowling, IV

    Rudy Guel

     Anna GilBradley Roe

    Bob Bowling, III

    Edmundo Dena

    Hershel Stringfield

    Pat Woods

    NATIONAL ASSOCIATION OF

    HOME BUILDERS

    (800) 368-5242

    TEXAS ASSOCIATION OF

    BUILDERS

    (800)252-3625

    For All Your Electrical Needs Residential Specialists

    Tract Homes • Custom Homes

    915-208-9313

    602-708-7560

    Total Customer 

    Satisfaction

    15

    Builders

    Outlook

    2 16

    Issue 5

    Give your customersthe ‘option of the sun’

    Now more than ever,

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    Border Solar can help

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