BUILD Maryland September/October 2017 by Maryland Building Industry Association

September/October 2017 The exclusive magazine of MBIA

E D O C Y G NCE R E EN PLIAIGHT PATH M O COOSING THE R

FINDING THE RIGHT PERSON FOR THE JOB

MBIAâ&#x20AC;&#x2122;S GOLF TOURNAMENT

FUNDAMENTALS OF LAND DEVELOPMENT PART 6

New fangled stuff. Old-fashioned service. Vintage provides innovative technologies to make homes safe and enhance lifestyles. Call us for security systems, home theatre, whole house music systems, home automation, and structured wiring.

Contact Kevin Price 1-877-767-1800 BUILD MARYLAND September/October 17 OďŹ&#x192;ces in Jessup, MD, Prince Frederick, MD and Chantilly, VA

IN THIS ISSUE

10 FEATURES COVER FEATURE

ENERGY CODE COMPLIANCE CHOOSING THE RIGHT PATH

ASSOCIATE APPRECIATION MONTH Do Business with a Member

MBIA’S GOLF TOURNAMENT Hitting the Links at Lake Presidential

THE RIGHT PERSON FOR THE JOB

IN EVERY ISSUE 2

EVENTS CALENDAR

28 NEW MEMBER SHOWCASE

PRESIDENT’S MESSAGE

30 NEW MEMBERS

CEO’S MESSAGE

30 DID YOU KNOW?

LEGAL BRIEF

32 STARS CLUB

22 ENGINEER’S TOOLBOX

32 THE BUILDER’S BOOKSHELF

24 STATS & FACTS

32 ADVERTISER INDEX

How to Screen, Hire and Keep the Best Candidates

FUNDAMENTALS OF LAND DEVELOPMENT PART 6 Secrets of Successful Site Selection

26 NEW PRODUCT SPOTLIGHT

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EDITOR

R C O M ME

E M I D -AT

T I C B U I L CALENDAR NEVENTS DE

Kristin Josephson Hogle, Communications Director communications@homebuilders.org

ADVERTISING

SEPTEMBER

OCTOBER

Chris Baughan, Advertising Sales Manager 410-265-7400, ext. 121 chris@homebuilders.org

AT I V E I

The PROS Awards

Cooking Demo & Networking Event

Smokey Glen Farm Gaithersburg, MD September 7

MBIA’s 3rd 4 Past Presidents 30 Birthday Open House of HBAM 8 A Photo Tour MBIA Builder Mart Fulton, MD Events September 13 Awards Publications Staff

Upper 28 Mid-Atlantic Builder sat down with past Chesapeake members to hear a bit about our history and garner advice about theCrab Chapter

Appliance Distributors Unlimited Gaithersburg, MD September 19

Builder’s Story

Building relationships that last a lifetime.

Eastern Shore Chapter Makeover 34 Extreme Meeting on A look at HBAM members& featured the hit television show. Networking Event Also Tall Tales Brewing Company President’s Message Parsonsburg, MD 44 September Ad List 19

Q&A

Happy Hour at Hudson Coastal

Center Bel Air, MD September 14

Hudson Coastal Grille Fulton, MD September 28

Looking Ahead

Harbor Highlights Cruise

Our future. A closer look at the Maryland Building Industry Association

40 Foundations Merger

MBIA will continue to make a positive impact in our communities through charitable foundation.

Aboard The Raven Baltimore, MD September 19

MID-ATLANTIC BUILDER NOVEMBER/DECEMBER 2014

*Changes in dates and locations of events listed on our calendar do occur. Please visit www. marylandbuilders.org for the latest information.

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MGM National Harbor Event

Heather Winkel, Art Director Corinne Thompson, Graphic Designer Network Design Group ndg@networkmediapartners.com

MGM Tap Sports Bar National Harbor, MD Linowes and Blocher October 3 HBAM LEGAL COUNSEL

MID-ATLANTIC BUILDER

is a publication of HBAM Member Services, Inc., a subsidiary of the Home Builders Association of Maryland, Inc., 6030 Daybreak Circle #A150 PMB 362 Clarksville, MD 21029 410-265-7400, www.homebuilders.org.

Chef “Fright” Night & Auction Postmaster: Send address changes to

T p e c

HomeMartin’s Builders Association of Maryland, Crosswinds Inc., 6030 Daybreak Circle #A150 Greenbelt, MD PMB 362 Clarksville, MD 21029

October 18

ECO BOX Mid-Atlantic Builder text and cover pages are printed on SFI certified Anthem Plus Gloss using soy ink.

• The Sustainable Forestry Initiative® program promotes sustainable forest management. BUILD Maryland text and cover pages are

path for our future. Harford County Equestrian

38 Merger

DESIGN

H 2 R C

September/October 17

Maryland Housing Conference Martins West Baltimore, MD September 20

printed on SFI certified Anthem Plus Gloss using soy ink. The Sustainable Forestry Initiative® program promotes sustainable forest management.

BUILD Maryland is published bimonthly by MBIA—the Maryland Building Industry Association, 11825 West Market Place, Fulton, MD 20759. The statements and opinions expressed herein are those of the individual authors and do not necessarily represent the views of MBIA. The publisher reserves the right to accept or reject any editorial or advertising matter at its discretion. The publisher is not responsible for www.homebuilders.org

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PRESIDENT’S MESSAGE

The exclusive magazine of MBIA

FALL BACK TO BASICS

ard to believe the fall is here and it’s time for another fascinating president’s message. For those of you waiting up nights, it’s finally here! HA! Every year, it seems that after a brief summer hiatus, we try to pack as much as possible into September and October. One friend says he equates our lives to someone holding up a ceiling. When we go away it immediately starts to fall and we need to push it up again when we return. Our hard working MBIA staff, however, continued to hold the ceiling up on many events throughout the summer, including MAX, the Golf Outing at Lake Presidential Golf Club, our exclusive skybox event at an Orioles Game, a site tour of Anthem House, a new multifamily project in Baltimore, and the MACO Golf Outing, including an elected official reception at Seacrets In Ocean City. Now that the kids are back in school, it is time for those of us long out of school to focus on our work as well, including working to be active members of our association. Want an easy way to do that? Attend some events! Check out the September/October Events Calendar on page 2 and be sure to visit marylandbuilders.org for events throughout the rest of the year. These events are in addition to the many monthly chapter and council meetings serving our 1,000 plus member firms, which you, our members support so strongly. This year we have focused on our ability to make positive impacts on the lives of our members through various programs. • We have focused on wood frame construction above three stories. It’s the only way to make most large buildings financially feasible, so it is necessary that we all keep working to insure that this building technique is not taken away from us. • Our Proactive Policy task force has been focused on issues including, making a Watershed Implementation Program (WIP) that works for our industry, revision of the Stormwater Management regulations, improvement in the SHA access permit process where needed, improving the business climate in Maryland, added flexibility in the energy codes, removal of the 20 acre maximum grading rules in all jurisdictions, and more flexibility in wetland and tree mitigation/banking. As you can see, your MBIA has been busy making clear progress in many areas! With all of our continued hard work we will do an even better job of Making Homes for Marylanders.

STEVE BREEDEN President, MBIA

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September/October 17

2017 MBIA LEADERSHIP EXECUTIVE COMMITTEE President, Steve Breeden 1st Vice President, Jeff Caruso Vice President Advocacy/ State, Mike McCann Vice President Advocacy/ Washington Market, Jude Burke Vice President Advocacy/ Baltimore Market, Tim Morris Vice President, Associates, Peggy White Treasurer, Kimberley Palmisano Secretary, Mike Schueler Life Director, Mark Bennett Immediate Past President, Dave Lunden Legal Counsel, Jack Orrick

CHAPTER PRESIDENTS Advocacy/Anne Arundel County, Marilee Tortorelli Advocacy/Baltimore City, Sean Davis Advocacy/Baltimore County, Jennifer R. Busse, Esq. Advocacy/Carroll County, James Mathias Advocacy/Charles County, Doug Meeker Advocacy/Eastern Shore, Paula Bahler Advocacy/Howard County, James Fraser Advocacy/Montgomery County, Vacant Advocacy/Prince George’s County, Ken Dunn Advocacy/Southern Maryland, Tom Thomas Advocacy/Upper Chesapeake, Michael Charlton Advocacy/Washington DC, Andrew Bolton

COUNCIL CHAIRS Builder Mart, Joe Fleury Custom Builders Council, Larry Cafritz Future Industry Leaders Council, Alex Villegas Green Building Council, Thom Marston Land Development Council, Robb Aumiller Multifamily Housing Council, Jeff Kayce Professional Women in Building Council, Maggie Witherup Remodelers Council, Rich Lang Sales & Marketing Council, Pete Baxter

MEMBERS AT LARGE Phil Hughes Cindy Plackmeyer Barbara Richman Dusty Rood Steve Rubin

Jeremy Rutter Michael Schonfeld Robert Spalding David Winstead

SUBSIDIARIES Builders Development Guaranty Group/President, Scott Nicholson Home Builders Care Foundation/President, Chris Rachuba PUBLISHER Lori Graf, CEO lgraf@marylandbuilders.org EDITOR Kelly H. Grudziecki Director, Internal Communications kgrudziecki@ marylandbuilders.org

ADVERTISING Chris Baughan Sales Manager cbaughan@marylandbuilders.org DESIGN The YGS Group Creative Director, Serena L. Spiezio Graphic Designer, Zon Buckley Account Manager, Tamara Smith

Maryland Building Industry Association 11825 W. Market Place Fulton, MD 20759 Ph: 301-776-MBIA www.marylandbuilders.org Info@marylandbuilders.org

CEO MESSAGE

PLANNING MARYLAND’S HOUSING FUTURE

his month, MBIA is thrilled to again partner with the Maryland Department of Housing and Community Development to present the Maryland Housing Conference on September 20th along with the Community Development Network of Maryland, the Maryland Affordable Housing Coalition and the Maryland REALTORS. The Conference is the largest and most comprehensive housing forum in the state, convening housing advocates, community development leaders, housing authorities, home builders, developers, lenders and legislators to discuss solutions and opportunities for home ownership in Maryland. We are proud to have hosted the Conference for more than 15 years. Bringing together stakeholders to map the future for housing in Maryland makes a difference in the strength and vibrancy of our communities and plays a critical role in our economy. We’re expecting over 400 people to join us at Martin’s West in Baltimore as we start the day with a Federal Legislative Roundtable featuring Jamie Gregory, Vice President and Deputy Chief Lobbyist from the National Association of REALTORS and Jim Tobin, Executive Vice President and Chief Lobbyist from the National Association of Home Builders. The Conference features breakout sessions where participants will learn best practices for housing development, organizational management, resource development and innovative approaches to housing and community planning. One session will look at how and where Low Income Housing Tax Credits are being used across the State. Developers will share case studies of recent projects in areas of opportunity and the challenges they faced. Financing tools available for multifamily development is another topic. We will also address state grants for housing, business development and neighborhood revitalization and how these funds can work with private investment. The upcoming General Assembly session is sure to have a vast array of housing legislation. One of our panels will discuss what is on the horizon and how we can advocate for our cause. This conference also provides an excellent opportunity to network and improve connections with local agencies, organizations, policy makers and experts and should be a starting point for further engagement on how we can advance housing quality and choices in Maryland. Learn more at marylandbuilders.org/maryland-housing-conference.

LORI GRAF CEO, MBIA

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LEGAL BRIEF

DEVELOPER CONTROLLED COMMUNITY ASSOCIATION BOARDS: NAVIGATING CONFLICTS OF INTEREST by JUDYANN LEE, ESQ., MCMILLAN METRO, P.C.

The developer of a residential subdivision or condominium invests large amounts of resources and money into the construction of the project and the marketing and sale of the homes. A homeowners association or condominium association is formed and provisions are built into the association’s legal documents to protect the developer’s investment by allowing it to maintain control over the development, operation and management of the project until a certain number of homes have been sold to consumer purchasers. These developer protections usually include exemptions from payment of assessments, exemptions from architectural and use restrictions, weighted voting rights, the right to unilaterally modify the legal documents during development and the right to appoint the initial members of the association’s board of directors. The developer will typically exercise this last right by appointing its employees to the board, since they are usually involved with the development, marketing and sale of the project. It can also lead to problems for the developer, however, because these employees must wear two different hats and carefully navigate the fine line that often arises between the developer’s interests and those of the association. THE DEVELOPER APPOINTED BOARD MEMBERS’ FIDUCIARY DUTY TO THE DEVELOPER AND ASSOCIATION The board of directors of an association is ultimately responsible for overseeing all aspects of the association, including finances, management, the hiring of a property manager, legal counsel and vendors, enforcing the legal documents, setting policy and ensuring the proper operation of the association. In carrying out these responsibilities a board of directors owes a fiduciary duty to the association, which requires it to act in the best interests of the association and the homeowners. This fiduciary duty includes the duty of loyalty, a duty to act with reasonable care, and to act within their scope of authority. Developer employees serving on an association’s board are held to a higher standard of care than the typical homeowner who volunteers because they are seen as sophisticated business people who were responsible for

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creating the association’s legal documents which, along with state laws, define what the directors can and must do. These employees also owe the same fiduciary duty to the developer, which can lead to a very sticky legal situation if a conflict of interest arises between the developer and association. The developer, however, can successfully control the association, complete its development of the project and turn over control to the homeowners if it uses certain practices. PRACTICES FOR AVOIDING CONFLICTS OF INTEREST The first of these practices is for the developer’s employees to define the actions they are taking and the capacity under which they are acting, and then determine whether a conflict of interest exists. In other words, does the action fall under the developer hat or the association hat and once that determination is made, is there a conflict of interest? Sometimes

September/October 17

it is not very clear and the lines can easily get blurred. For example, if the developer has conveyed common area property to the association and later decides that it wants to grant an easement to an adjacent property owner, it must determine which entity has the authority to grant the easement and then take proper action under that authority. In this scenario, the governing documents may provide a power of attorney for the developer to grant the easement even though the property is owned by the association. At first glance, it seems the action can be taken by the employees under their developer hat, but what if the adjacent property owner is another developer and the developer plans to purchase lots in the adjacent development? Does this scenario now present a conflict of interest? The answer depends on how well the employees wear each of their hats. Under their association hat, if the employees can provide a benefit to the association in granting the easement, they can mitigate any conflict of interest or the appearance of one. Negotiating a reasonable payment from the adjacent property owner to the association for the easement might do the trick. Wearing their association hat, they should also determine if there’s any harm to the association in granting the easement and take reasonable measures to protect the association’s interest in the property. This could be done by requiring the adjacent property owner to indemnify the association, properly insure against general liability claims and

restore the property after its use of the easement. The key is to put on each hat and look at the proposed action from that perspective and figure out if the action breaches a fiduciary duty, and if so, how to mitigate it. The second practice is to properly document board actions. A vote of a majority of the directors at a board meeting is typically required to take action. Alternatively, the board members can take action by unanimous consent without holding a meeting. Any such actions should be properly documented and maintained among the association’s records. If the board members held a meeting, there should be minutes of the meeting and if the action was taken by unanimous consent a board resolution should be prepared and adopted by the directors. For example, in the scenario given above, the directors should document in a board resolution and/ or meeting minutes that the directors determined it was in the best interests of the association to execute the easement because of the monetary benefit to the association. This provides a record that the directors carried out their fiduciary duties, acted reasonably and in the best interests of the association. Thus, even though the developer also stood to gain a benefit, it negates any potential conflict of interest or appearance of one. Along these same lines, the Board should also prepare organizational resolutions to adopt the association’s bylaws and ratify any previous actions that the developer, individual board members or directors took on behalf of the association. The key here is to maintain proper records of board actions and document how such actions are in the best interests of the association. The third practice is to properly maintain association records. In addition to meeting minutes and board resolutions,

the board should maintain the bylaws and rules and regulations of the association and any policies it adopts. The developer controlled board will also have a duty under Maryland law to turn over certain items to the homeowners when it transfers control of the association, so the board should be cognizant to maintain such items (See Section 11B-106.1 of Maryland Homeowners Association Act and Section 11-132 of the Maryland Condominium Act). The proper maintenance of association records also means keeping association records separate from the developer’s records. The fourth practice is to properly maintain the finances of the association. This means accurately maintaining the association’s financial records among its books and records, creating realistic budgets, funding budget deficits if the developer is obligated to do so, and properly documenting it. Homeowners often accuse developers of manipulating budgets to understate the amount of assessments necessary to fully operate the association in order to keep deficit funding low and promote sales. This is a clear conflict of interest between the developer and association and the employees/directors must be especially careful in balancing the two. The board of directors also has a fiduciary duty to collect assessments and pursue the collection of assessments from any homeowners who become delinquent. Many developer controlled boards are reluctant to deal with the effort and expense of collection enforcement, but the employees/directors must wear their association hats and determine if the failure to enforce collection of assessments from delinquent homeowners is in the best interests of the association. The fifth practice is to develop a plan for transition of control to the homeowners early on and involve homeowners in

the process. This means allowing some limited participation of homeowners and training them along the way to take control of the board. This participation could be in the form of establishing committees and encouraging homeowners to take active roles on the committees. The goal should be to promote a level of transparency on the part of the developer and build homeowner trust. The sixth practice is to know what’s in the governing documents and follow them. An association’s board of directors must follow the governing documents as part of its fiduciary duties, so it is imperative that the employees/directors follow the procedures in the bylaws and covenants. For example, if the bylaws require that an annual meeting be held, hold the meeting. Use it as an opportunity to advise the community on the status of development and involve the homeowners. Last, but not least, if a conflict of interest arises, seek legal advice as soon as possible to determine how it can be mitigated or avoided. Sometimes a conflict of interest can be avoided simply by disclosing it. Sometimes the conflict cannot be avoided but the employees/directors should know the risks and potential consequences and make an informed business decision wearing both hats. Judyann Lee is a real estate attorney with more than 19 years of experience. She counsels builders and developers on the development of residential and commercial projects, including large mixed-use projects. She also counsels community associations on various issues, including board governance. Ms. Lee is admitted to practice in Maryland, the District of Columbia, Virginia, Florida and New York. She can be reached at 301-2511180 or at jlee@mcmillanmetro.com.

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SEPTEMBER IS ASSOCIATE APPRECIATION MONTH

he MBIA has more than 1,200 member companies, all with dozens or hundreds of employees. If you ask any one of them why they joined, you will probably get many answers; social events, professional development, learning best practices, keeping up on industry trends, supporting the organization’s mission, giving back to the community, strengthening business contacts, furthering a career or maybe just finding a few more friends. But, ranking at the top of that list is often networking. That is certainly true for our more than 600 associate members. Since 1981, September has been designated as NAHB’s Associate Member Appreciation Month — an annual celebration of Associate member contributions to the NAHB Federation and the home building industry. It’s also an opportunity for our builder and developer members to recognize the many contributions that Associate members make, and all they do for the MBIA and the businesses of the builder and developer members. Here are just some contributions Associate members provide: • Associates are a major source of revenue through their dues, sponsorship support and advertising and help the association achieve the financial grounding it needs to do its work, at legislative, educational, political and social events and functions. • Associates volunteer their time and talents on the Executive Committee, the Board of Directors, committees, council and chapters. MBIA supports eight councils, 10 committees and 12 chapters, all of which meet monthly for roughly an hour. That is nearly 400 hours of volunteer service a year, much of it given by associate members, all of whom have regular 9 to 5 jobs.

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September/October 17

• Associates are a valuable resource for business and management tips. Engineering and legal members, as well as market research firms, regularly contribute to BUILD Maryland magazine in the form of columns and feature articles. • Associate members help support or fight against legislation and regulations affecting the building industry at the Federal, State and local levels. They are always willing to meet with legislators and government officials to help support an MBIA position or testify at hearings. They are also strong supporters of local and state PACs • Associates recruit their colleagues and business contacts to become members, which are the life blood of the association. We ask our builder members to support MBIA events with which the Associates are integrally involved such as Builder Connections, Chef “Fright” Night (coming up in October) and Builder Mart. There are too many individual Associate members involved in MBIA to list in an article, so throughout September please make a special effort to thank and celebrate our Associate members in a way that will really mean something to them — do business with them!

Hitting the

Links L

at Lake Presidential

ake Presidential Golf Club in Upper Marlboro was the site for MBIAâ&#x20AC;&#x2122;s 2017 golf tournament. The near 100 degree June day did not stop these hard core golfers from swinging and sweating their way through 18 holes of this championship golf course. Thanks to Model Home Interiors for sponsoring the Closest to the Pin contest. The proud winner was Torben Agesen from Dewberry. The tournament wrapped up around 3:00pm when players got the chance to cool off and compare scores over beer, wine and lite fare. Prizes were awarded to the top scoring team and players with the best shots. Taking first place in the tournament with a score of 58 was the foursome from Caruso Homes, which included Tom Baldwin, Gar Edmondson, Alex Estill and Jamison Mullen. Thanks to all those members who participated. We look forward to seeing you on the course next year!

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ENERGY CODE

COMPLIANCE FOR RESIDENTIAL AND COMMERCIAL BUILDINGS

There are multiple ways for the designer to show code compliance under the IECC, the key is to realize which path can strike the perfect balance between energy efficiency, savings and still fulfill the requirements of the customer.

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September/October 17

by TAHIR RIAZ, P.E., PEG LLC

he international energy conservation code offers multiple compliance paths to show compliance with energy code. Each path has its advantages and disadvantages, and as a design engineer it is very important to know what each path can offer. This comparison needs to be presented to the client so they can choose what option dictates their needs better. The energy code has mandatory, prescriptive and performance compliance paths. A compliance path shows that a building design meets the requirements of the code and multiple paths are described in detail, in the compliance path tables under the International Energy Conservation Codeâ&#x20AC;&#x2122;s (IECC), Residential and Commercial chapters. New to the 2015 International Residential Code (IRC) is also the Energy Rating Index (ERI) path. This path still requires the mandatory parts of the energy conservation code to be fulfilled. Trade-offs that are worse than the 2009 IECC envelope requirements are not accepted. The code provides target HERS for every climate zone, and to show compliance via this path, the HERS score for the building needs to match, or be better, than what is provided in the code. Mandatory requirements are requirements that must be met in every building design no matter which compliance path is chosen. Prescriptive requirements are requirements that either must be met by the design, or if the requirement is not met, a tradeoff must make up for it not meeting the requirement. Envelope tradeoffs are tightly defined as tradeoffs that allow trades to be made between various parts of the building envelope. ASHRAE standard 90.1 provides the rules for envelope tradeoffs for commercial buildings. Prescriptive method utilizes the minimum values for thermal resistance, thermal transmittance and solar transmittance, for each component of the building. This method is the quickest compared to the other option but that also makes it more restrictive to what it can accomplish. The requirements are typically based on worst-case assumptions and all of them need to be satisfied for the building to pass energy code compliance utilizing this method. It is important to note, while this path is the easiest way to show compliance it is not the most cost effective. The performance method allows much more flexibility to the point where more energy efficient components can be traded-off with inefficient components. Savings incurred by the model, as assigned points and the total points for the building must meet the minimum total points required to qualify for compliance. This method is more involved than the prescriptive path and can save more money.

The IECC is broken into Commercial and Residential chapters. There is usually some confusion between what chapters apply when doing energy code compliance, especially in the case of multi-family buildings. There are some buildings that are built under International Building Code R-2, R-3 and R-4 buildings. If the model is three stories or less, the residential chapters are permitted, anything other than that, it is classified as a commercial building. Mixed used buildings can utilize two different chapters of the code, and in turn two different softwares to show compliance. If the building is three stories or less, the apartments in a mixed-use building can require residential compliance, while the commercial part of the building can require commercial code compliance. Once the building gets to four stories or more, the commercial chapter is used for the entire building. The envelope trade-offs path utilizes the UA trade-off method, this method lets the designer look at the U-factors of the assemblies for the entire buildings, instead of just the component. REScheck is a great tool provided by the DOE, free of cost, to calculate the UA trade-offs. The software calculates the â&#x20AC;&#x153;budgetâ&#x20AC;? that you get in terms of a U-factor. All the R-values are converted to U-factors, for the whole assembly, and then the software calculates the percentage above or below code based on this budget. The software prints out a compliance certificate that is mandatory in the code as well as the inspections checklists to submit to the code official.

REScheck Energy Certificate

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The REScheck report can also be compared to the Manual J load calculation reports to make sure the designer chose the right component assemblies for their Manual J calculations and to verify the R-value and U-factors for the windows and doors. REScheck is limited to the UA path and does not deal with mechanical or lighting components of the building. REM/Rate and Ekotrope are some softwares that can be used to utilize the performance path for project. These softwares can calculate the actual cost usage for the lights, mechanical system and other things. It tells the designer what the mandatory requirements of the energy code are, and if the building is meeting or exceeding them. REM/Rate and Ekotrope reports show the duct leakage results for the envelope and includes extensive information like blower door results, ventilation requirements and the kind of ventilation strategy that was used for the building. The report also shows the heating and cooling efficiencies of the mechanical system, among various other technical information.

Ekotrope Certificate

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September/October 17

❚ Land Use/Zoning ❚ Condominium Development and Community Associations IECC compliance for Commercial buildings comes in different paths as well. ASHRAE 90.1 can be used to comply with IECC. This protocol can be used for the entire building, meaning the envelope, mechanical, water heater and the lighting. There is no mix and match allowed under this protocol. Just like Residential there is also a prescriptive path, in which the building must comply with the minimum envelope, mechanical, water heating and lighting requirements and then also choose an additional efficiency package option. The R-value and U-factor tables can be found in the commercial chapters of the energy code. There are six additional efficiency package options, under IECC 2015, which the designer must choose one of. These packages vary between mechanical, electrical and renewable energy options. The Commercial chapters of the code allows for U-factor, F-factor, C-factor paths that the designer can choose to show compliance, this is where COMcheck comes in. COMcheck is a free software provided by the DOE that allows trade-offs within the envelope only, the mechanical and lighting portions are compliance reports only and do not allow trade-offs within them. There is also a performance path for commercial buildings that is based on annual energy costs. Computer modeling software is used to determine the annual energy costs. The code has stringent requirements on what that software must do and what the reports should say. The mandatory requirements of L&B_07152016.indd the code must still be met. For showing compliance using this path, the building must cost less in annual energy than the same building built to the prescriptive requirements. The use of performance path isn’t as abundant as it should be, this is due to the complexity of the softwares that utilize this path. The cost associated with this kind of modeling is also high. There are multiple ways for the designer to show code compliance under the IECC, the key is to realize which path can strike the perfect balance between energy efficiency, savings and still fulfill the requirements of the customer. Evaluating the various compliance paths also provides builders with the opportunity to collaborate with their designer on Value Engineering, by means of associating costs with the optional compliance methods. M. Tahir Riaz, P.E. graduated from Oklahoma State University as a Mechanical Engineer and works for PEG LLC, in Fairfax, VA as the company’s design lead. He leads the company’s large and small scale design projects spanning mechanical, electrical and plumbing design fields. He can be reached at triaz@pegenv.com

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HOW TO SCREEN, HIRE, AND KEEP 14

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September/October 17

THE MOST

COVETED CANDIDATES

IN THE MARKETPLACE

by MIKE WARANCH, JUPITER RECRUITING SERVICES

he construction industry is booming and with any booming industry, comes growth. Trying to find the perfect candidate to hire for your company’s newest open position can be a very frustrating and time-consuming process. Not only do you need to ask yourself questions like who puts together the job description? Where do we post the ad? What is our screening process? But also questions regarding the candidates’ reliability, professionalism, and ensuring they turn out to be the type of employee that you see during their interviews. How do you choose the right hire? And of equal importance, once you hire the right person, how do you keep them long term? In my humble opinion, reliability is of the utmost importance. If an employee isn’t going to show up for work, they aren’t much of an employee. The best way to screen for reliability is to make the candidate jump through time sensitive “hoops.” For example, after your first phone interview, ask them to send you their updated resume by a certain time on a certain day. Do they send it prior to the time you requested? Do they send it later than you requested? Do they send it at all? This is the first of several tasks the candidate should have to complete in-order-to prove their reliability and how serious they are about becoming part of your team. Assuming they send their updated resume prior to the set deadline, I’d recommend setting up an additional phone interview to go more in depth regarding their qualifications for the position. When you schedule this second phone interview, set it up so the candidate must call you at a specific time. Again, allowing the candidate to prove to you they are punctual, reliable, professional, and interested in the opportunity to work with you.

Once the second phone screen is completed, set up a face-toface interview to get a better feel for how well they will align with the culture at your company. While scheduling the face-toface, be specific about appropriate attire for the interview, exact timing, and who to ask for when they arrive. I always recommend the candidate meets more than one person during their interview. Ideally it will be another person on the team for which they are interviewing, another supervisor in that department, or the company owner. The more people they meet, the better. Everyone this candidate meets during their interview process will have a different opinion, and different concerns, about the candidates’ ability to do the job and to fit with the team. Let’s say the interview goes well and everyone who meets the candidate likes them. Ask for a list of professional references and be specific about the information for which you are looking. I ask my candidates to send over the name, company where they worked, phone number, and email of three previous supervisors. Again, I am asking for this information by a specific deadline. Once you receive the references from them, you will now have completed two phone interviews, received an updated resume within a specific time frame, had them arrive with the correct attire, and timing, to meet yourself and a few team members in person to assess the culture fit, and will have received their references, also within a specific time frame. The candidate has proved his/her reliability, punctuality, professionalism, and interest in the position. At this point, the final step of your screening process is to check references. The reference check process is not something that should be rushed through simply to check it off of the list. The purpose of a reference check is to answer any questions that still remain regarding this candidate now that they have jumped through all of our “hoops.”

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Of course you will always ask the standard reference check questions such as “Can you verify the dates of employment and their job title,” “What were their day-to-day responsibilities,” and “Do they work better as part of a team or independently?” But dig deeper. Ask for an example of how they handled themselves in a difficult professional situation, are they a “punch the clock” kind of employee or are they more focused on ensuring their job is completed, what are their strengths, where could they use improvement, did they receive any promotions while employed by you, how would you rate their communication skills, and of course, why did the candidate leave your company. I would also recommend you tell the previous supervisor about the candidate’s potential day-to-day responsibilities and ask for their opinion as to how effective the candidate would be in a position like the one for which they interviewed. Now that the screening process is completed, and the person has been hired, it’s time to begin on-boarding your new employee. The on-boarding process is a perfect opportunity to make a great first impression as a company. The goal is to have an organized, efficient, and professional on-boarding process. A while back, I joined a new company and the on-boarding pro-

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cess turned me off so much I almost walked out my first day. The woman at the front desk had no idea I was coming in to start that day, I had to see two different people to get all of the required documents for my tax paperwork, I had to see a third person to fill out my direct deposit form, and then was directed to a fourth person to receive my employee handbook. After seeing four different people during my on-boarding process, still no one could tell me my new email address or what my password would be to login to my computer for the first time. Luckily, I was going to be managing their HR Department so I figured I could implement some new policies and processes to right the ship. This is a perfect example of what not to do. The ideal process should start with a welcome email to your new employee detailing their date and time of arrival for day one, proper dress code, and who will be assisting them with their new hire paperwork. Ideally, you will have one person designated to provide the “orientation” for the new hire. This designated person will have all of the required paperwork ready to go before the new employee arrives and will be qualified to answer all questions that the new hire may have regarding their paperwork.

Also, part of the on-boarding process is training. No matter how qualified a new hire is they will still need some sort of training. Whether it is on your company’s processes and procedures, your internal software, or more hands-on training for their new position. Every new hire should receive some sort of training. This is imperative. The whole purpose of the on-boarding and training process is to make the new employee feel they are being set up for success. Ideally, this new hire will feel that being successful at this new company is not only an attainable goal but if they are struggling, they will have a support system and know exactly who to go to and for what. Having that “first class” first impression will allow a new hire to feel that your company is professional, organized, and sets them up for success. This feeling goes a long way and lasts a long time and has proven to help with keeping new employees committed and invested in your company’s success for the long haul.

The best way to ensure that your employees will stay long term is to take the time to understand their individual career goals. These on-boarding and training tips will help increase your retention rates, however, the best way to ensure that your employees will stay long term is to take the time to understand their individual career goals. Each of your team members are striving for something different. Some may want growth, some may want more money, some may want better work/life balance, and some may want better benefits. Taking the time to understand each of their goals, setting a clear path of how they can achieve those goals, and following through on your promises when those goals are accomplished, will make certain that they will have no reason to leave. Mike Waranch is a recruiting professional with 15 years of experience. He is skilled in business and corporate development, full life cycle recruiting, retention improvement and analysis, and on-boarding process improvement. He has recruited in a wide variety of industries including construction, engineering, home services, accounting and finance, IT, non-profit and skilled trades and has assisted and educated over 100 companies in Maryland with recruitment, screening and retention. Mike can be reached at 443-986-2619 or MWaranch@JupiterRecruitingServices.com.

Our long standing land planning expertise enables us to infuse past experience and lessons learning into every project A national firm with a local presence Baltimore • Frederick • Lanham • Rockville www.dewberry.com

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6 T PAR

L A T N F E O M ES A D IP L N FU INC PR

D T N E N M P A O L L EL S ITE S L U F ESS C UC S OF S ET R SEC

IO T C E

E V E D

by DAVID S. THALER, PE, LS, F., ASCE, F., NSPE, D.S. THALER & ASSOC., LLC AND JEFF BARBA, MBA, EMERALD BUILDERS

t has often been said that the three keys to real estate success are location, location, location. Some would argue that the three keys are schools, schools and schools. Of course, location and schools are vitally important elements for the success of a real estate project, but the art and science of acquisition and site selection are much more complicated than that. In fact, successful selection of a site is really the effort to answer a simple question: Will the expected financial return on the project be sufficient given expected level of risk? The identification of suitable parcels for development purposes should be an objective process based upon economic,

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market and sales data. While there are subjective elements to the site selection process, like looking in those areas that you would consider home, inevitably, if you were only to rely on your gut, many opportunities would be overlooked. The process of site selection includes the following elements: 1. Prospecting – where to buy and what’s for sale. Identifying suitable submarket and locating prospective sites that might be available. 2. Preliminary Analysis – assessing the site. Performing preliminary engineering and market analyses to determine what density a site might yield and what would be necessary to bring it to market, as well as undertaking a preliminary financial analysis to determine the expected financial return.

3. Negotiations/Offer – structure of the deal. Negotiation to determine the structure of the transaction, price and terms to maximize/meet internal return thresholds. Usually done by way of a Letter of Intent (LOI). 4. Executing a contract – agree on terms. During this process, the high-level details of the LOI are expanded and agreed upon. In the development world, most contracts are contingent on a property being free of any unusual development challenges and contingent upon some level of jurisdictional approval. 5. Due Diligence Study – does the deal work? Prior to deposit funds going hard and becoming non-refundable, a due diligence study is usually undertaken (and strongly advised) to ensure that the project is viable and that the deposit is protected. WHERE TO BUY There are four main objective criteria when selecting sites. These are: • Schools, • Income levels • Employment • Sales Data Schools The importance of schools cannot be over emphasized. Schools are critical to the home buying decision and, in general, it’s a safe bet to look in areas with high performing schools. One must keep in mind, however, the targeted buyer profile when evaluating schools. For example, when building townhouses, elementary and middle schools are typically more important to the buying decision; whereas, middle school and high schools are typically more important when building single family detached homes. This is because townhouse buyers typically have younger kids and single family detached buyers have older kids. The objective quality of schools can be determined from several online resources including: GreatSchools.org and SchoolDigger. com. But don’t forget the subjective aspect of schools – reputation. The school’s reputation is also critically important. Income Generally, the metric considered is household median income. Numerous web based sites rate household median income by area in Maryland and the U.S. Census publishes median income by area on regular basis via its website at Census.gov. Needless

to say, the higher the median household income in the area, the more resources potential buyers have to purchase homes. Employment Simply put, buyers need a source of income to purchase a home, and so it is important to know the level of employment in an area and to ensure that there are employment centers within commuting distance. The U.S. Department of Labor routinely publishes data on its website at BLS.gov including statistics on inflation, employment, unemployment, projections, pay/benefits and more. In addition, for Maryland specific insight, one should review data published on Maryland’s Department of Labor at dllr.state.md.us and Maryland Department of Commerce at commerce.maryland.gov.

As a buyer’s exposure to risk increases, the less the buyer is willing to pay for the lot. And vice versa, as buyer’s exposure to risk decreases, the more the buyer is willing to pay for the lot.

Sales Data Success leaves clues, and proven sales in a submarket mitigate market risk. Are other builders in the general area doing well? If they are, your probability of success typically increases. The pricing trend for new and resale home sales is another important factor to consider. Are they appreciating, flat, or decreasing? Of course, it is best to be in an appreciating market. On the other hand, be aware of a decreasing market as that tends to indicate that there is an oversupply or another problem that you may have to overcome. Subscription services are a great source for this information and include Metro Study, Xonda and the MLS. For free services, search for current listings and sold records at Redfin.com (or other similar websites) and review market data available on Long and Foster’s Market Minute website at marketminute. longandfoster.com and the Maryland Association of Realtors’ at mdrealtor.org.

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SCHEMATIC SUB-MARKETS

$800,000 HOUSES • • • • •

Above average schools Mixed-use community Pool/Clubhouse on-site Accessible highway Proven top selling submarket

FINDING THE OPPORTUNITY – WHAT’S FOR SALE Perhaps unsurprisingly, the most effective technique to finding good opportunities is networking, for life is, as they say, a network. You will find that the most productive source of leads is from developing your professional network. Engineers, landowners and developers are a tremendous source of leads and these tend to be closer to the source of the sale, the landowner. The closer to the source you are, the more likely you are to be able to buy at a good price. MBIA provides a vast array of networking opportunities and project leads, and one should take advantage of them. There are many other sources including brokers, real estate listings and subscription services, but as these are public and widely disseminated, the price is likely to be higher. There is no getting closer to the source than contacting the land owner directly. By using SDAT, County GIS websites or other land mapping tools, one can uncover information to contact the owner directly. ASSESSING THE SITE Other elements to be considered include: Engineering Assessment For all properties that require engineering or entitlement, an engineering feasibility study should be undertaken to evaluate engineering and development risks. Just because a property is zoned for a certain number of units, does not, by any means, mean that the maximum permitted density can be actually achieved. The elements of an engineering feasibility study include: open space requirements, wetlands, availability of public utilities, forest buffers, forest conservation requirements, toxic and hazardous waste assessment, zoning requirements, to name but a few. At this stage in the process, a preliminary title report should be undertaken both to verify the actual title ownership, but also to determine if there are any covenants or restrictions on the title affecting the property. These are not uncommon. Also, one should obtain a boundary survey, for often the actual size

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$500,000 HOUSES • • • • •

Below Average schools No pool/clubhouse Walkable urban area Close highway or metro Little inventory of new homes

EMPLOYMENT CENTER

$300,000 HOUSES

$450,000 HOUSES • • • • •

Average schools Pool/Clubhouse on-site Adjacent industrial zoning Peninsula access Proven top selling submarket

• • • •

Below average schools No pool/clubhouse Long commute Slow moving submarket

INDUSTRIAL

Schemtatic Representation of a Target Market

of a property does not match the area of the deed or in the tax records and this affects density. Walk the Site It is also highly recommended that you actually walk the site. It is surprising how many buyers don’t (Google street view doesn’t count). Walking the site will likely uncover much relevant information that was not revealed from a search of the public records. The site must also be assessed for red flags, such as, high tension power lines, landfills, power plants, smoke stacks, crime, etc. Beware of these red flags, as they will likely lead to lower home prices. Architectural Requirements Consider also, any architectural requirements mandated by a subdivision or a jurisdiction, as architectural requirements can greatly increase your costs or limit the house plans you are able to sell. Many localities (such as Honeygo in Baltimore County) have specific architectural requirements that may not fit into a builder’s generic product line, and may add significant costs that are not recoupable from the home buyer. County Fees Not to be overlooked are County impact fees or other exactions which can be very substantial. In Montgomery County for instance, fees can be as high as $40,000 to $60,000 per unit.

D.S. Thaler & Assoc, LLC

Consideration of the above factors will give you a sense of what submarkets to look at in the site selection process. Don’t be discouraged, however, if you are looking in area with some negative factors, because with proper subdivision design, onsite amenities, quality of submarket retail, quality of schools and access to transportation, objections can be overcome. One can be successful almost anywhere in Maryland if it is possible to commute to jobs and the product is priced right.

STRUCTURE OF THE DEAL – AGREE ON TERMS There are many possible land development deal structures: Will you be buying raw land, engineered and entitled land, or finished lots? Will you be closing at Record Plat, preliminary approval, base paving, or with permits in-hand? Will you be buying in bulk or in phases? How much deposit is required, when is it released, and how is it secured? All factors impacting price, deposit, land type, takedown structure and closing requirements will impact the bottom line. Being flexible in terms can often overcome objections from the Seller. Keep in mind, most buyers are looking to purchase land with the least amount of risk. The more the buyer is able to eliminate risk, the more the buyer is willing to pay for the lot (finished lots obviously eliminate engineering and development risk.) On the other hand, most developers/land owners are looking to sell land as early in the process as possible, but that typically means the buyer will be exposed to entitlement or development risk, and thus, the less likely the buyer is willing to pay for the lot. In either scenario, the buyer is still exposed to market risk, but that’s their job. In summary: as a buyer’s exposure to risk increases, the less the buyer is willing to pay for the lot. And vice versa, as buyer’s exposure to risk decreases, the more the buyer is willing to pay for the lot. INTANGIBLE ITEMS There are also intangible elements to be considered. Is there community or political opposition? In the case of being the first developer in a particular submarket can the risks of an unproven market be overcome? Does the acquisition fit the builder’s brand, or maybe even more importantly, is the type of acquisition in line with the builder’s current market strategy? Finally, there is the gut-check; how does the submarket/community feel; what’s its vibe? Is it friendly; do people say hello to each other? What’s its profile; millennial or baby boomer?

D.S. Thaler & Assoc., LLC

$$$

Lot Comps By now you know the deal works based on your pro forma (backing into price based on costs/perceived value), but is it a good price? There are several sources for this information (similar to those mentioned in the Sales Data section). In Maryland, one of the best sources for this data is Maryland’s MDLANDREC.net website. Use this website to access to all verified land record instruments in Maryland. Finished lot comps are easily searched using this website according to builder or developer name and address.

RISK Schematic Relationship Between Price and Risk

Would you want to live there? At any price? If the answer is no, identify the reasons why and be certain that you are able to successfully overcome those reasons or don’t go forward. David S. Thaler, PE, LS, F., ASCE, F., NSPE is the Managing Member of D.S. Thaler & Assoc., LLC a civil and environmental engineering and surveying firm in Baltimore, Maryland, which has designed hundreds of communities. Repeatedly honored, he is a Fellow of both the American Society of Civil Engineers and the National Society of Professional Engineers, and was Guest Scholar at the University of Baltimore School of Law, where he lectured on land use. He has published more than 250 articles and five books, and has won numerous life time achievement awards including MBIA’s Icon of the Industry. He also holds both the highest professional engineering award in Maryland, now known as the Thaler Prize, and the Maryland Distinguished Service Cross, Maryland’s highest military honor. Jeff Barba, MBA, a partner at Emerald Builders, manages building operations, land acquisitions, and sales & marketing. Previously, Jeff was a land acquisitions manager for Richmond American Homes, a national home building company in Maryland, where he worked for 7 years. While at Richmond American, Jeff held multiple positions including Salesperson, Home Gallery Manager and Options Manager in addition to Land Acquisitions Manager. Jeff is a graduate from Fairfield University and holds an MBA from the University of Maryland.

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ENGINEER’S TOOLBOX

ENVIRONMENTAL SITE DESIGN: PITFALLS AND LESSONS LEARNED (SO FAR…) by BEN DINSMORE, P.E., GEO-TECHNOLOGY ASSOCIATES, INC.

Whatever happened to those big stormwater management ponds that used to be constructed in every development? Since 2010, those large facilities have been gradually phased out of new developments in favor of smaller-scale and non-structural facilities known as Environmental Site Design (ESD) devices. This change is the result of efforts by the Maryland Department of the Environment (MDE) to control stormwater runoff from new developments. Any development that did not receive stormwater management (SWM) plan approval prior to the May 4, 2010 deadline must be designed using ESD facilities to the Maximum Extent Practicable, thus the advent of the phrase “ESD to the MEP.” The goal of this change was to refocus SWM design to mimic the natural runoff characteristics of the site, as opposed to the “old” method of collection and long-term storage of rainwater in larger-scale ponds or infiltration systems. Common ESD devices include micro-bioretention facilities, bio-swales, rain gardens, dry wells, submerged gravel wetlands and pervious pavements. These facilities may incorporate infiltration techniques, if feasible based on the soil conditions. Otherwise, they will include underdrains. It is the opinion of many designers, engineers, and developers that ESD facilities are flawed and the use of these facilities may create more harm than good in the future. One reason for these concerns is that the function of these devices is highly dependent upon proper design and construction. Minor deficiencies in either can result in clogging, saturation of the planting media, and overflowing or failure of the facility. We have observed situations in which excessive proportions of fines (silts and clays) in the planting media, a layer of sediment at the invert of the facility, or overly compacted subgrade soils have impeded drainage in the facility. A related concern is that even properly designed and constructed facilities require more maintenance than the old SWM ponds and the construction of so

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many facilities on large developments will create the need for significant maintenance in the future (maintenance that could be the responsibility of private homeowners and could be relatively invasive or costly). Property owners, HOAs and private residents are not necessarily prepared to handle (or will not know how to perform) this maintenance. This could result in the failure of many of these facilities and significant maintenance costs. ESD facilities that don’t function properly would likely result in the creation of “swampy” areas, which could draw mosquitos and create perched water pockets. Only time will tell if these concerns materialize and a large number of ESD facilities begin to under-perform. In the meantime, the following steps should be taken to reduce the likelihood of these issues:

• Retain a qualified geotechnical engineer to perform a proper evaluation of the subsurface conditions. Many design professionals and County agencies have interpreted the MDE requirements for quantity or locations of explorations differently. In reality, the boring locations should be recommended by the geotechnical engineer based on site geology and other site-specific issues. It is a good idea to run the proposed scope by the appropriate County reviewer to verify compliance with the County’s interpretation of the requirements. If infiltration techniques are being considered, in-situ infiltration testing should be performed and supplemented by laboratory testing as appropriate. • The project designer should understand geotechnical recommendations and other site constraints and incorporate them into the facility design. The function and design of many systems, particularly pervious pavements, are poorly understood or implemented by many designers. Each type of facility has different design constraints and the ESD device selection is highly dependent on the subsurface conditions, such as soil types and depth to water. It may also be appropriate to modify or aug-

It is the opinion of many designers, engineers and developers that ESD facilities are flawed and the use of these facilities may create more harm than good in the future.

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take into account the fact that excavations will periodically be required in the ESD facility for maintenance. â&#x20AC;˘ A qualified engineer (ideally, the geotechnical engineer that performed the subsurface evaluation) should be on-site to observe the construction and test the materials being used in the ESD facilities. The gradation of the planting media should be carefully evaluated prior to placement. We recommend that the silt and clay content of this material be maintained at the lower end of the accepted range to minimize the likelihood of clogging. Also, the contractor should be sure to remove any sediment remaining in the facility excavation prior to construction and should be careful to avoid excessive compaction of the facility subgrade. The on-site geotechnical engineer should evaluate the subgrade prior to construction and, if overly compacted, should recommend that the contractor tills or aerates it prior to construction.

A recently-constructed micro-bioretention facility, which is holding water due to clogging and saturation of the planting media. It was determined that the proportions of the silt and clay within the planting media were at or just above the specified ranges.

Of course, the potential for headaches and cost overruns can be reduced by retaining qualified civil and geotechnical engineering consultants to work together to perform an appropriate SWM facility design. A micro-bioretention facility in which the planting media was clogged by runoff from nearby stockpiles and exposed subgrade prior to paving.

ment the standard details by adding underdrains or revising the inflow or outflow features based on site-specific constraints. Details of each proposed facility should be clearly depicted on the plans and all materials to be used, as well as maintenance requirements, should be clearly specified. â&#x20AC;˘ Proper construction sequencing is important to avoid problems. If planting media is placed prior to construc-

tion of adjacent pavements, sediment in the runoff from surrounding soils can clog the media. Furthermore, the construction of houses and nearby ESD facilities should be coordinated such that the construction of footings doesnâ&#x20AC;&#x2122;t impact a previously-constructed facility, or the construction of a facility will not undermine a previously built footing. Design of adjacent retaining walls should also

Ben Dinsmore, P.E., is an Associate in the Laurel office of Geo-Technology Associates, Inc. (GTA), and has 19 years of geotechnical and site engineering consulting services throughout the Mid-Atlantic region, primarily in the Baltimore Washington, DC corridor. GTA provides geotechnical, environmental, drilling and construction observation and testing services. Ben can be reached at bdinsmore@gtaeng.com. www.gtaeng.com.

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STATS & FACTS

STATS & FACTS IS IT SO DIFFERENT TODAY? by JOHN COSTELLO, METROSTUDY, A HANLEY WOOD COMPANY

ifty years ago, the January 1967 cover of Time Magazine displayed a cover with the “Man of the Year” award being not one person but instead a generation, the men and women under age 25. At that time the Baby Boomers, nearly outnumbered all other age groups combined and was considered to be a highly independent and unpredictable generation to their adult peers. This was not just a new age cohort in 1967, it was a new kind of generation. How the baby boomers impacted education, economics, politics, war and culture was going to change the face of the United States and world forever. Fast forward 50 years and it seems we are experiencing a case of déjà vu as a country. Times of course have changed, but like the dawn of the Baby Boomer generation, the Millenial generation is unpredictable in their career choices, dining habits, shopping habits, and seem to be challenging every corner of the United States economy, especially the housing industry. Since the recession at the end of the 2000’s, the question everyone is tired of hearing is, when are these millennials going to stop renting, stop living with their parents, join the real world and buy a house?

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In 1967, baby boomers were getting ready to enter the workforce. The cost of living in 1967 seems like a dream today, but to baby boomers it seemed unattainable. Median new home prices of $23,700, an average new car costing $2,724, a gallon of gas costing 33 cents per gallon, and monthly rent averaging $125. In 2017, current median new home prices are $345,800, the average new car costs $33,560, a gallon of gas is averaging $2.42, and the average monthly rent in Baltimore is $1,460. While converting these standard lifestyle expenses to today’s “real monetary value,” most dining, entertainment, shopping and education expenses are more expensive in today’s economy than in 1967 (hindsight is

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great, isn’t it!). It may be a surprise, however, that new home pricing is one of the industries that actually isn’t as extreme as others, such as education and entertainment. For example, the median new home prices over the last 50 years have increased on average by 5.7% annually. Readers also need to consider that while prices have increased over the years, so have home sizes, which also impact and justify pricing. The National Association of Home Builders reports the average home size in America was 983 sq. ft. in 1950, 1,500 sq. ft. in 1970, and 2,349 sq. ft. in 2004. So, why aren’t Millennials buying houses if the trend seems to be relatively consistent over the last 50

years? Statistically the obvious factor to point out is the staggering increase in the student debt total over the past 10 years. Student debt has almost tripled in the last decade and many students are forced to pay $500 - $1,000 a month on student loans (just for a Bachelor’s Degree). Home values are at a consistent level, but income levels and wages aren’t increasing at the same pace. Average income in 1967 was $7,300, which translates to approximately one third of the average new home price that year. In 2017, average annual income nationally is approximately $75,000 and if you multiply that by three you would end up with a $225,000 home price. Unfortunately median new home prices in 2017 are at $345,800 currently, which makes affording a new home a more difficult dream for Millennials. Historically low interest rates have helped bridge some of this new home price difference, but only a fraction of Millennials have taken advantage of this unique opportunity available today.

The tide seems to be turning around in 2017 as there has been a shift according to the Census Bureau with 854,000 new-owner households being formed in Q12017, which is more than double the 365,000 new-renter households. That is the first time in more than 10 years that new owners have outpaced new renters. Many builders have responded to this affordability issue by creating new product lines specific to affordability and millennial buyers. D.R. Horton, Richmond American, NVR and Toll Brothers just to name a few, have created a smaller and more affordable product line that caters to the entry level buyer market. Reaching out to Realtors to discuss their interactions with millennial buyers I received some interesting feedback. Realtors were describing these millennial consumers as very educated, particular, cautious, frustrating, unpredictable, patient and comfortable in their current situations. These millennials shop online for everything and it is no different in searching for

a new home. Often they compile so much research on their own that when a Realtor is contacted they already have the houses they want to see selected and rarely stray from their path. The Realtor is brought in to help negotiate the deal. Millennial buyers are also not buying their first home in anticipation of it being a forever house. Millennials plan on moving in 10 years and are willing to buy resale fixer-uppers homes as that is in many cases their only option to reside in the most desirable school districts as far as affordability is concerned. This unexpected decision process by millennials has been a big factor in the incredibly active resale market and the reason the new home industry in Maryland isn’t quite hitting the numbers new home builders want to see yet. While the millennials may be slow to impact the new homes market and frustrating with their constant usage of technology, they are the next pioneers of the American economy. Timing is everything and millennials are trending in a positive direction with their impact on the new home market over the past few quarters. This unpredictable, trend chasing, technology-obsessed millennial generation is continuing to grow up, just like the baby boomers did. Good news for home builders! John Costello is a consultant in Metrostudy’s Mid-Atlantic Region. He regularly meets with many of the top homebuilders in the region, as well as with lenders, developers and investors concerning trends in the local economy, acquisitions and housing market analysis. John can be reached at jcostello@ metrostudy.com. For more information, visit www.metrostudy.com.

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NEW PRODUCT SPOTLIGHT

ENGINEERED WOOD’S FRAMEWORK FOR COST SAVINGS It’s no secret that the economic downturn prompted builders to cut costs whenever possible. But it’s been less noted that when many of those builders examined which materials to trim, they refused to drop engineered wood products (EWPs) despite their higher cost. The Engineered Wood Association reports that I-joists rose from 46% of the market for raised wood floors between 2005 and 2007 to account for 52% in 2008 and 2010. “That tells us that builders are sold on new technology,” says Craig Adair, director of market research. I-joists also are pulling along segments like laminated veneer lumber (LVL), Adair says. Although LVL’s 2011 production level of 42 million cubic feet is less than half that of 2005, its share of the beam and header market has held. Housing’s recovery should help increase production by itself, but experts see other drivers as well. They include EWP’s reputation as a green product, lower design values for visually graded lumber and new energy codes. EWP’s green credentials come in part because engineered wood makes more and better use of timber when it’s manufactured. In addition, because joists can be cut to precision by the dealer or manufacturer, there is no construction waste at the building site.

open-web floor trusses or even solid-sawn lumber to take a look again at engineered wood,” he says. Tim Debelius, Trus Joist product manager at Weyerhaeuser, says 2x10s and 2x12s made of the affected pine could lose two to three feet of span rating, giving builders “an opportunity or necessity” to consider engineered wood. But swapping open-web systems for I-joists requires the knowledge and tools to cut through the engineered wood product—particularly for those builders who want to run HVAC systems through conditioned spaces so the homeowner can save big on heating and cooling costs. “With floor trusses, it’s pretty easy to run ductwork through the floors,” Mikkelson says. “You can’t on engineered wood, on I-joists and so forth. You have to facilitate it by having holes cut.”

RE-DESIGNED VALUE This summer’s drop in design values for visually graded Southern pine, and the potential for changes to other species, may provide a boon for engineered wood, says ProBuild’s vice president of forest products, John Mikkelson. “There’s an interest on the part of a lot of our customers who have been using

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CODE RULES New, energy-saving products may see broader application as codes such as the 2012 International Residential Code and International Energy Conservation Code, along with the newly released 2012 International Green Construction Code, begin the lengthy and inconsistent process of nationwide adoption. Mikkelson says this may also push the relative growth of radiant barrier sheathing in some regions. L.P. Building Products’ TechShield radiant barrier sheathing matches the look and installation techniques for regular roof sheathing with an aluminum exterior attached, helping to keep 97% of radiant heat from permeating the roof. The result could cut monthly cooling costs by one-third, the company says. According to L.P.’s OSB marketing manager, Judy Musgrove, the use of radiant barriers as “extremely cost-effective ways to meet increasingly stringent energy codes,” is now a habit for big builders and increasingly common among smaller ones.

While the downturn forced many builders into less expensive products in order to compete, the backlash of costly and timeconsuming repairs is spurring their return to value-added products.

Stability is also a concern. To meet builder demand, Weyerhaeuser added proprietary Flak Jacket protection to its Trus Joist TJI joist line, boosting fire resistance to meet the IRC 2012 fire code in single and multi-family applications, using a single layer of gypsum and no mineral wool. Huber’s Zip System roof and wall sheathing offers an alternative to builders accommodating energy codes, says Matt O’Brien, vice president of commercial operations at Huber. “It’s a complex challenge … [the codes] really require they think about the way they build,” he says. “It doesn’t just entail putting up a new product.” O’Brien adds that the while the downturn forced many builders into less expensive products in order to compete, the backlash of costly and time-consuming repairs is spurring their return to value-added products, including the company’s Advantech premium subfloor. Edge Gold Flooring panels by Weyerhaeuser, too, received an upgrade. Three drainage grooves on one of the narrow ends of each 4-foot by 8-foot panel now protect against clogging and facilitate drainage on the jobsite even if the panels are not properly gapped.

And Ainsworth Engineered upped the value of its pointSIX Durastrand OSB floorboards (Circle 62), doubling its no-sand warranty to one year. TruBoard is a new NAHB “green-approved” OSB structural panel from Norbord; available with either FSC or SFI Chain-of-Custody wood. Nordic’s X-Lam cross-laminated timber panels come in architectural or industrial grades and are designed for low- and mid-rise multi-family and light commercial. HITTING THE FLOOR Interior flooring is also seeing a shift to engineered wood for its installation efficiency and longer lifecycle. Owens’ Plankfloor is warrantied over radiant heat and doesn’t require an additional substrate when gluing. It’s available in three thicknesses, six stain colors and a range of exotic and domestic species including tigerwood, ash and yellow and red birch. Terra Lengo’s engineered wood flooring uses FSC-certified, 100% Russian Birch hardwood sealed with nine layers of coating, each UV-cured. Elsewhere on the envelope, the engineered cedar siding and paneling by Cedar-Lam features a plywood backer

and clear, western red cedar facing in joint-free lengths of up to 16 feet. NEW TECH The new round of interest in EWPs provides opportunities for dealer to provide knowledge at the point of sale. Ainsworth’s “Tips for Seasoned Pros” video series offers a low-tech medium for picking up engineered wood product framing best practices. It is available at TipsForSeasonedPros.com. Boise Cascade’s BC Connect portal goes beyond plain-jane cutting systems to integrate the supply chain on a real-time, whole-house design platform. “It allows one person to do the entire house, which is a huge step forward in efficiency for the retail lumber dealer,” says Denny Huston, Boise’s EWP general sales manager. Estima, Weyerhaeuser’s new take-off software, is designed to smooth the process on the dealer end—something that Mikkelson adds is becoming important for dealers as EWPs grab market share from dimensional lumber and more builders ask for quotes. “Builders, or at least the ones that I’ve been familiar with in our [market], want to take another look” at engineered wood, Mikkelson says.

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Try to come from contribution. Your business will benefit, your community will benefit, those around you will benefit.

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Arelis A. Pérez, Real Estate Professional, Keller Williams Preferred Properties HOW LONG HAVE YOU BEEN WITH YOUR COMPANY AND WHAT IS YOUR ROLE? I’ve been with Keller Williams Preferred Properties for three years and my role is a licensed Real Estate Professional. I’ve been a Realtor for more than 25 years. I love what I do.... you need to have passion, integrity, ethics, honesty and best of all, just have fun. Don’t take yourself too seriously since it is always about the clients you serve. WHY DID YOU JOIN MBIA AND WHAT DO YOU HOPE TO GAIN FROM YOUR MEMBERSHIP? WAS THERE SOMEONE WHO INFLUENCED YOU TO JOIN? I joined with the hope of networking within the industry, keeping abreast of new market/industry trends and opportunities and to garner new productive relationships as I strive to empower women, youth and minorities. Aaron Rice with Keller Williams Select Realtors in Annapolis introduced me to MBIA after participating in the Certified Luxury Home Marketing Specialist course. He’s a good role model

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ARE YOU INVOLVED WITH ANY MBIA COMMITTEES? As I’m a fairly new member, I’m still exploring my options, but presently looking into the possibility of joining the Professional Women in Building and the Sales & Marketing Councils. I would also like to get more involved with the Prince George’s, Montgomery, Howard and Washington, DC, chapters. WHAT’S A FAVORITE MOMENT IN YOUR CAREER SO FAR? I have so many, one moment I recall is helping an illiterate immigrant family purchasing their first home – it was such a rewarding experience. This experience humbled me, it was no longer about the real estate transaction, it was me planting a seed - my contribution to a major life milestone that helped this family grow toward financial independence – life altering for this family. Also, I assisted the family in legalizing their immigration status. HOW OLD WERE YOU WHEN YOU HAD YOUR FIRST PAYING JOB AND WHAT WAS IT? I was 14 as a cashier at McDonald’s. I think I still have that first paystub.

September/October 17

ANY BUSINESS TIPS CAN YOU SHARE WITH OTHERS? Try to come from contribution. Your business will benefit, your community will benefit, those around you will benefit. Old saying, you give, you’ll get back ten folds in unexpected ways. I have always strongly believed that to run a successful business you need to place “God first, Family/Friends/Colleagues second and then Business.” ARE YOU INVOLVED OR ACTIVE IN ANY OTHER CIVIC OR COMMUNITY GROUPS OR ACTIVITIES? Throughout my life I’ve been active in multiple volunteer, civic, community, and charitable groups such as Susan Komen Breast Cancer, Lymphoma Cancer, American Red Cross, Lupus, Purple Heart, Wounded Warrior, March of Dimes, Central Union Mission and Feed the Poor/Hungry. In the past, I served over 10 years for the Governor’s Commission of Hispanic Affairs, YMCA, Meals on Wheels and a few Chambers of Commerce. Currently, I serve as the Treasurer for the North College Park Community Association. WHAT IS YOUR FAVORITE APP OR SOCIAL MEDIA OUTLET? Facebook of course, it helps me stay in touch with my family, friends, colleagues

and clients. Also, LinkedIn is quite useful for the business professionals.

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Civic Works, Inc. Dion Wright 2701 St. Lo Dr. Baltimore, MD 21213 410-366-8533 dwright@civicworks.com

NRP Group, LLC Joseph Torg 9841 Washingtonian Blvd., Suite 200 Gaithersburg, MD 20878 203-258-8009 jtorg@nrpgroup.com

Corporate Office Properties Trust Evan Weisman 6711 Columbia Gateway Dr., Suite 300 Columbia, MD 21046 443-285-5662 eweisman@copt.com

Royal Plus Electric Mark Odachowski 9939 Jerry Mack Rd., Suite 400 Ocean City, MD 21842 410-213-2658 marko@elec-co.com

Casaplex LLC Steph Vaughan 10582 Metropolitan Ave. Kensington, MD 20895 202-558-6519 svaughan@casaplex.com

Lagroom Construction James Lagroom 3540 Crain Hwy., #175 Bowie, MD 20716 202-744-6435 jlagroom@gmail.com

Workshop Development Douglas Schmidt 1010 Fleet St., Suite 300 Baltimore, MD 21202 443-317-3000 dschmidt@workshopdev.com

Dantech, Inc. Dan Uddeme 12149 Park Heights Ave. Owings Mills, MD 21117 410-363-2224 duddeme@dantechsecurity.com

Architectural Design Works Paul Thompson 22 West Allegheny Ave., Suite 301 Towson, MD 21204 410-583-2440 ADW.PThompson@adwincmd.com

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