FOUNDATIONS NEWSLTR FEBRUARY

2022 DECEMBER MEMBERSHIP REPORT

Membership Total: 405

Retention rate: 94.2%

STAFF

John Eischen, Executive Director

John@RochesterAreaBuilders.com

Shelly Bahlmann, Shelly@RochesterAreaBuilders.com

Golf Outing, Sporting Clays, Home Show, Directory, Newsletter, RAB Update, Member Plus App & RAB Events App

Rebekah Fierst, Rebekah@RochesterAreaBuilders.com

Ambassadors, Awards, Builders, Bags & Brews, Commercial Builders Council, Community Relations, Education, Membership, Fashion Show, Program, Remodelers Council, Executive & Remodelers Tour, 40 Below

Elizabeth Sullivan-Burton, Elizabeth@RochesterAreaBuilders.com

Builders Exchange Trustees and Showcase Committee, Website

GOVERNMENT & PUBLIC AFFAIRS CONSULTANT

Rick Dold, Rick@GodwinDold.com

BOARD OF DIRECTORS

PRESIDENT

J ason Scrimshaw, Kimley-Horn & Associates, Inc.

VICE PRESIDENT

Adam Giannini, Knutson Construction

SECRETARY

Jennifer Mitchenll, Edina Realty

TREASURER

Vanessa Hines, Widseth

PAST PRESIDENT

Becky Holmen, Haley Lighting

MISSION STATEMENT

DIRECTORS

Derrick Chapman, Schmidt Carpentry

Adam Kramer, Kramer Contracting

Jarett Jones, Merchants Bank

Aaron Thompson, The Design Connection

Austin Ryan, Ryan Windows & Siding

Kelsey Vaszily, Kraus-Anderson Construction

Melissa Barbour, TLS Companies, LLC

Joe West, Valor Mechanical

Julie Herrera-Lemler, Rochester Area Economic Development, Inc. (RAEDI) / SBDC

BUILDERS EXCHANGE COUNCIL CHAIR

Katie Reinhart, Kraus-Anderson Construction

COMMERCIAL BUILDERS COUNCIL CHAIR

Keith Kranz, LVC Companies

DEVELOPMENT COUNCIL CHAIR

TBD

REMODELERS COUNCIL CHAIR

TBD

40 BELOW CHAIR

Adam Giannini, Knutson Construction

NATIONAL LIFE DIRECTORS

Steve Buss, Cornerstone Builders & Real Estate, Inc.

NATIONAL DIRECTORS

Dana Hlebichuk, Widseth

Levi Kaiser, Benike Construction (Rep)

Todd Severson, TLS Companies, LLC

STATE DIRECTORS

Mike Allen, Mike Allen Homes, LLC

Jay Burke, Heartwood Homes

Jean DeWitz, DeWitz Home Builders, Inc.

Kathy Einck, Maplewood Homes, LLC (Rep)

John McGuine, JM Consulting

John Eckerman, RSP Architects

Kenneth Bush, Bush Companies

The Rochester Area Builders, Inc, chartered in 1953, is a professional organization of commercial & residential builders, remodelers, developers and associated businesses dedicated to advancing the building industry in Southeast Minnesota.

We are the trusted voice of the industry, providing leadership, education, networking, and information resources to our members, community and government officials.

WELCOME NEW MEMBERS JANUARY 2022

Minnesota Building Contractors

COMMITTEES & COUNCILS

With over 20 committees and 5 councils, there is no shortage of opportunities to get involved with the Association. From planning events, to awarding students scholarships, to participating in community projects, there are many options to choose from. As is often said, “You get out what you put into the Association”.

40 BELOW COUNCIL

This is an active, connected and engaged group of young professionals in the building industry. Through community involvement, professional development and networking events, this group is creating a welcoming atmosphere to cultivate long-term connections both

COMMERCIAL BUILDERS COUNCIL

The members of this Council are interested in all aspects of commercial and industrial construction. They support one another and provide information to the community.

REMODELERS COUNCIL

The goals of this Council are to provide education for themselves in various areas of remodeling and to promote their expertise to the consumer.

DEVELOPMENT COUNCIL

The members of this Council are interested in the areas of industrial, commercial and residential development. They support one another and provide information to the community.

BUILDERS EXCHANGE COUNCIL

This Council provides access to commercial projects currently out for bid in our area. Members can view plans and specs in our office and also online at their office if they subscribe to the Plans Online Service. Members also receive the Weekly Bulletin and access to the website, giving them information on posted projects.

Contact Rebekah if you are interested in joining a council or committee.

FROM THE PRESIDENT

the dog days of winter is right around the corner, with the Home Show scheduled for February 3-5 at the Mayo Civic Center. There are a number of fun activities planned that are sure to make this year’s Home Show another huge success. Friday night is Date Night and will feature a cooking demonstration from celebrity chef Shari Mukherjee from MasterChef and The Spiced Up Mom. In addition to the tips and tricks that Shari will be teaching, LTS Brewing Company will be providing complimentary samples of beer pairings to accompany the creative cuisine.

attended our General Membership Meeting, and to Knutson Construction for being a sponsor. And congratulations to all of the recipients of our annual awards!

Distinguished Service Award (Builder)

Adam Giannini

Distinguished Service Award (Associate)

Deb Muench

Cornerstone Award

Kraus-Anderson Construction Rising Star

Katie Olson

Hello again! 2023 has gotten off to a busy start for me and many members that I’ve talked to. It feels like we’re in middle of the dog days of winter, but I’m seeing projects ramping up their transition from design to construction and it feels like we’re headed for another busy construction season! I can’t say I love the detours and road closures, but it’s a sign of an active and vibrant local market, and I’m always grateful for that.

I know when things are busy, it can be challenging to dedicate time to networking, marketing, and expanding our relationships in our community, but I encourage you to take advantage of the numerous opportunities available to our members. A great opportunity to network or volunteer and break up

Saturday’s activities will include a career fair oriented towards careers in the construction trades. If your son/daughter/niece/ nephew etc. is interested in a career in the construction industry, please let them know about the career fair. Our industry always needs more bright and passionate professionals, and the career fair will be a great opportunity to learn more about the opportunities available to them. Saturday will also feature a skills competition for anyone ages 15-19 interested in showcasing their building skills. In addition to serious bragging rights, there will be a prize package to the winner, sponsored by Farrell Equipment & Supply and Thomas Tool! Last but not least, Sunday will be Family Fun Day, which will include a number of fun activities for the whole family. Come on down!

Thanks to everyone who

Spring is right around the corner, and registration is open for the Spring Showcase of Homes. If you’re interested in exhibiting, the deadline is March 16th (and there’s a discount if you register by February 16th), so don’t wait!

Lastly, there are several continuing education classes available in February for licensed builders, remodelers, roofing contractors, and building officials. Both in-person and online options are available, so be sure to check them out!

Jason Scrimshaw, P.E. Kimley-Horn 2023 RAB President

JASON SCRIMSHAW President

Rochester Area Builders, Inc

FROM THE EXECUTIVE DIRECTOR

When I sat down to think about 2022, I looked back at a few of my previous “Year in Review” columns. My 2019 review included the following sentence: “I predict 2020 will bring some monumental events...” Yikes, did I hit that nail on the head!

We accomplished a lot in 2022. We worked with the City of Rochester on finalizing the Unified Development Code. After numerous meetings with questions asked and answered, RAB leadership sent a letter to the City Council supporting its passage. We had discussions with the City of Rochester regarding the requirement for a Certificate of Survey on single family homes which led to that

requirement changing to using the recorded plat (if it was legible). We raised the question about the local utility allowing only copper supply lines to residential homes and after working with BAM, DLI, and Rochester’s “Interim” Code Official, residential builders can now use all code approved materials for water supply lines. (The last two changes will save homeowners over $1,000. That $1,000 may not seem like a large amount but, in Rochester, for every $1,000 increase in the price of a new home 136 households are priced out.)

The above successes are because of member involvement and the relationship they have built with the Rochester Community Development Team. Members raised the questions. Members attended the meetings. Members met with Rick Dold to work through areas of concern. Members are the lifeblood of our association. Thank you to all the members of Rochester Area Builders! Your support is critical to ensuring that the local environment is one in

which you can be successful. When I told Rebekah about the prediction above, she said I couldn’t make another one. Instead, I will leave this quote from Teddy Roosevelt and ask you, our members, to urge others in our industry who may not belong to RAB, to know the importance of that membership:

“Every man owes part of his time and money to the business or industry to which he is engaged. No man has a moral right to withhold his support from an organization that is striving to improve conditions within his sphere.”

Speaking of Rebekah, if you see her at the Home Show, wish her happy birthday. And look me up too, I’m in the need of a staff lead that can work with the 40 Below Young Professionals group that is under 40…

JOHN EISCHEN Executive Director Rochester Area Builders, Inc

Thank you to all who attended January’s General Membership Meeting where we recognized our 2022 Award recipients! Congratulations Adam, Deb, Katie and KrausAnderson Construction!

It was also great to hear from Scott McLellan, DLI State Building Official, and have the opportunity to view the new Illustrated Field Guide to the MN Residential Code.

Thank you to Knutson Construction for their sponsorship that evening.

Distinguished Service Award - Builder Member ADAM GIANNINI

Distinguished Service Award - Associate Member DEB MUENCH

Rising Star Award KATIE OLSON

Outgoing President BECKY HOLMEN

Going off the Board CHARLIE SWEENEY

Cornerstone Award

KRAUS-ANDERSON CONSTRUCTION

2023 Rochester Area Builders Board of Directors

MATERIAL SHORTAGES EASE, WITH NOTABLE EXCEPTIONS

BY PAUL EMRATH on JANUARY 13, 2023

In May of last year, Eye on Housing reported on historically widespread shortages of building materials. Since then, most of the shortages have eased; the major exceptions being shortages of HVAC equipment and certain categories of ceramic materials (ceramic tiles, clay bricks and cement-based building materials), which have gotten slightly worse.

NAHB has been tracking shortages of building materials and products since the 1990s through special questions on the survey for the NAHB/Wells Fargo Housing Market Index (HMI), most recently in October of 2022. At that time, over 80 percent of single-family builders reported either a serious or some shortage of three categories of building products: appliances (88 percent), transformers (86 percent) and windows & doors (83 percent).

Appliances and transformers are relatively new to the HMI survey, added in response to anecdotal comments fielded by NAHB over the past two years. Shortages of HVAC equipment were also relatively widespread in October, reported by 76 percent of single-family builders. Overall, half or more of all builders reported shortages of 17 of the 25 building products listed in the October 2022 survey.

the last time NAHB collected similar information in May 2021. Between then and October of 2022, the incidence of the shortage fell for 18 of the 24 listed products and materials (transformers were not covered in the 2021 survey). The decline in the share of builders reporting a shortage ranged from 3 percentage points (from 63 to 60 percent) for cabinets, to a massive 59 points (from 92 to 33 percent) for OSB.

Although these shortages may seem severe and broadbased, they are generally not as severe as they were

The HMI survey in general shows the availability lumber products improving markedly since May of 2021, which is consistent with the concurrent declines in lumber prices. As reported in the December 9 post, as of November the seasonally adjusted Producer Price Index for softwood lumber had declined in seven of the previous eight months.

As indicated in the title, shortages of a handful of building products actually became slightly worse between May 2021 and October 2022. The share of builders reporting a shortage of HVAC equipment increased by 8 percentage points (from 68 to 76 percent) over that period, and the shares reporting shortages of cement and ready-mix concrete each increased by 6 percentage points. This is consistent with the rapid increase in the price of read-mix concrete, also reported in the December 9 post

Hanging Up The Hat: Comparing Retirement Saving Options for Your Situation

Whether you are in a small business environment or a sole proprietor, star�ng to plan for re�rement can be a daun�ng task. Join us for an informa�onal session at the Rochester Area Builders office, where we will discuss your op�ons and chat about the best way to get started with your re�rement planning , no ma�er what your current situa�on is.

Please bring any ques�ons you might have, as we want this session to be interac�ve. We will be serving a light lunch .

Presented by Jodi Hruska, MBA, CFP®, CDFA®, APMA® Financial Advisor at Con�nuum Financial Group

Thursday, February 16th, 12-1pm

Rochester Area Builders 108 Elton Hills Ln NW Rochester, MN

Residential Building Contractors & Building O cials

FEBRUARY 9TH

8AM-4PM

DEADLINE FOR REGISTRATION: FEBRUARY 6, 2023

FEBRUARY 16TH

8AM-4PM

*ONLINE ONLY*

DEADLINE FOR REGISTRATION: FEBRUARY 10, 2023

FEBRUARY 24TH

8AM-4PM

DEADLINE FOR REGISTRATION: FEBRUARY 21, 2023

HOST

R O CH E S TE R A R EA B U I LDE R S

SPRING SHOWCASE OF HOMES

Registration information online HERE

Discount Deadline February 16th - $100 off

Final Deadline March 16th

Contact Elizabeth with questions

April 15 - 16 & April 22 - 23, 2023

The 2023 Showcase of Homes will once again feature a Spring Showcase of Homes, Fall Showcase of Homes, and Fall Remodeler’s Tour. The shows will feature new homes, townhomes, and subdivisions as well as remodeling projects. All entries will be showcased by local Rochester Area Builders’ members.

CHANGE DATE

the

Strutting back to April

COMING 4.20.23

MAYO CIVIC CENTER

BROADWAY

Deadline 2.24.23 SPONSORSHIP

FORM

OPPORTUNITY SCHOLARSHIP

GRADUATING HIGH SCHOOL STUDENTS

POST-SECONDARY SCHOLARSHIPS

Go to https://qrco.de/ScholarshipApp for Scholarship application.

CRITERIA:

1. Applicant must be a resident of Dodge, Fillmore, Goodhue, Houston, Mower, Olmsted, Steele, Wabasha, Winona counties; be recommended by a RAB or BER member; or participated in the RAB Youth Sporting Clay Shoot.

2. Applicant must be accepted by a post-secondary program in a construction related field including technical school, trade school, apprenticeship, or college.

Rochester Area Builders, Inc. is proud to announce their 2023 scholarship program. Either $1000 or $500 non-renewable scholarships are available for graduating high school seniors and college freshmen. Scholarships are made available through the Commercial Builders Council, the Builders Exchange of Rochester, and the Youth Sporting Clay Shoot. Scholarships are for attendance in a post-secondary program in a construction-related field including technical school, trade school, apprenticeship, or college. Scholarship recipients will be announced in June 2023. To be eligible for any scholarships, applications must be postmarked by May 8, 2023.

3. Applicant must have a 2.5 or better G.P.A. – High School Transcript Required

4. Applicant must demonstrate financial need.

5. Scholarship will be paid directly to the school.

Rochester Area Builders

108 Elton Hills LN NW Rochester, MN 55901

507-282-7698

Rab@rochesterareabuilders.com

F I N D T H E S C H O L A R S H I P T H A T

F I T S Y O U R C A R E E R P A T H

E a c h y e a r t h e N A W I C F o u n d e r ' s S c h o l a r s h i p

F o u n d a t i o n ( N F S F ) i s p l e a s e d t o a w a r d m o r e

t h a n $ 2 5 , 0 0 0 t o w o r t h y r e c i p i e n t s i n

c o n s t r u c t i o n - r e l a t e d p r o g r a m s .

U n d e r g r a d u a t e S c h o l a r s h i p

F o r f u l l - t i m e s t u d e n t s c u r r e n t l y e n r o l l e d i n a c o n s t r u c t i o n - r e l a t e d d e g r e e p r o g r a m w i t h a t l e a s t o n e t e r m r e m a i n i n g i n a c o u r s e o f s t u d y l e a d i n g t o a d e g r e e o r a n a s s o c i a t e d e g r e e

C o n s t r u c t i o n T r a d e s

S t u d e n t s c u r r e n t l y e n r o l l e d i n a c o n s t r u c t i o n - r e l a t e d t r a i n i n g p r o g r a ma p p r e n t i c e s h i p t r a i n i n g , c o m m u n i t y c o l l e g e , t e c h n i c a l s c h o o l o r e q u i v a l e n t M u s t b e a c o n s t r u c t i o n - r e l a t e d c r a f t o r t r a d e

GOOD NEWS: INFLATION CONTINUES ITS COOLING TREND

BY FAN-YU KUO on JANUARY 12, 2023

Consumer prices in December saw the largest month-over-month decrease since April 2020. While still elevated, inflation experienced the third month below an 8% annual growth rate since February 2022. Moreover, this was the sixth consecutive month of a deceleration.

However, the shelter index (housing inflation) continued to rise at an accelerated pace and was the largest contributor to the total increase. Shelter inflation will primarily be cooled in the future via additional housing supply. While inflation appears to have peaked and continues to slow, inflation in core service (excluding shelter) has not begun to ease. However, real-time data from private data providers indicate that rent growth is cooling, and this is not yet reflected in the CPI data. It will be reflected in the coming months.

The Bureau of Labor Statistics (BLS) reported that the Consumer Price Index (CPI) fell by 0.1% in December on a seasonally adjusted basis, following an increase of 0.1% in November. The price index for a broad set of energy sources decreased by 4.5% in December as a decline in gasoline (-9.4%) offset an increase in electricity (+1.0%) and natural gas index (+3.0%). Excluding the volatile food and energy components, the “core” CPI rose by 0.3% in December, following an increase of 0.2% in November. Meanwhile, the food index increased by 0.3% in December with the food at home index rising 0.2%.

Most component indexes continued to increase in December. The indexes for shelter (+0.8%),

household furnishings and operations (+0.3%), recreation (+0.2%), motor vehicle insurance (+0.6%), education (+0.3%) as well as apparel (+0.5%) showed sizeable monthly increases in December. Meanwhile, the indexes for used cars and trucks (-2.5%), new vehicles (-0.1%), personal care (-0.1%) and airline fares (-3.1%) declined in December.

The index for shelter, which makes up more than 40% of the “core” CPI, rose by 0.8% in December, following an increase of 0.6% in November. Both the indexes for owners’ equivalent rent (OER) and rent of primary residence (RPR) increased by 0.8% over the month. Monthly increases in OER have averaged 0.7% over the last three months. These gains have been the largest contributors to headline inflation in recent months. These higher housing costs are driven by lack of attainable supply and higher development costs. Higher interest rates will not slow these costs, which means the Fed’s tools are limited in addressing shelter inflation.

During the past twelve months, on a not seasonally adjusted basis, the CPI rose by 6.5% in December, following a 7.1% increase in

December. This was the slowest annual gain since October 2021. The “core” CPI increased by 5.7% over the past twelve months, following a 6.0% increase in November. The food index rose by 10.4% and the energy index climbed by 7.3% over the past twelve months. These decelerating measures indicate the Fed’s actions are having a measurable impact on inflation and reinforce the call for the Fed to slow its tightening of monetary policy.

NAHB constructs a “real” rent index to indicate whether inflation in rents is faster or slower than overall inflation. It provides insight into the supply and demand conditions for rental housing. When inflation in rents is rising faster (slower) than overall inflation, the real rent index rises (declines). The real rent index is calculated by dividing the price index for rent by the core CPI (to exclude the volatile food and energy components).

The Real Rent Index rose by 0.5% in December. Over the twelve months of 2022, the monthly change of the Real Rent Index increased by 0.2%, on average.

MORTGAGE ACTIVITY REMAINS AT LOW LEVELS

BY JESSE WADE on JANUARY 11, 2023

Per the Mortgage Bankers Association’s (MBA) survey through the week ending January 6th, total mortgage activity increased 1.2% from the previous week and the average 30year fixed-rate mortgage (FRM) rate fell sixteen basis points to 6.42%. The FRM rate has remained near 6.4% over the past month.

The Market Composite Index, a measure of mortgage loan application volume, rose by 1.2% on a seasonally adjusted (SA) basis from one week earlier. Purchasing activity decreased 0.5%, while refinancing activity increased 5.1% week-over-week.

Purchasing activity has reached its lowest level since the first week of January 2015 (159.2). While interest rates remain elevated, purchasing activity will likely remain low as buyers wait for rates to decrease further. Refinancing activity continues to see little activity as many homeowners refinanced when interest rates were significantly lower than today.

The refinance share of mortgage activity increased from 30.3% to 30.7% over the week, while the adjustable-rate mortgage (ARM) share of activity remained at 7.3%. The average loan size for purchases was $389,000 for the first week of January after peaking at $454,300 in March of 2022. The average loan size across FRMs, ARMs, purchases and refinances had steadily fallen as we approached the end of 2022.

ROCHESTER BUILDING PERMITS

DECEMBER 2022

TCPA BUILDING PERMITS

OLMSTED COUNTY PERMITS YTD

PINE ISLAND BUILDING PERMITS

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FOUNDATIONS NEWSLETTER ADVERTISING

Rochester Area Builders Newsletter is an unbeatable opportunity to advertise to members and individuals associated with RAB. It is a source of valuable association and industry information, and is published and emailed monthly. Foundations is sent to over 1600 connected industry professionals. Ad sizes are listed under Display Ad Dimensions, and prices are located above. Ads may be changed from month to month.

Our prices are for full color ads. We will gladly work with you to design your ad. Please send digital files for all ad copy, logos, and artwork. We use PC format. We accept Illustrator and Photoshop files. Convert all fonts to outlines. We also accept the following high resolution file types: .tif, .eps and .pdf (with all graphics and fonts embedded). If you have any other formats please contact us.

RETURN TO: ROCHESTER AREA BUILDERS

Shelly Bahlmann

Shelly@RochesterAreaBuilders.com

108 Elton Hills Ln NW

Rochester, MN 55901

507-282-7698

Reach Qualified Customers

Advertise on the RAB Website!

More than 3,000 people visit the RAB website each month, many of them looking for a contractor. Advertise on our site and reach them when they’re primed to buy! Banner ads are available in a variety of locations on the RAB site, from job posts to the contractor directory. Higher tiers come with priority placement in directory search results too. Contact us today to learn how you can start advertising, starting at $299.

Contact Elizabeth Elizabeth@RochesterAreaBuilders.com or 507-282-7698

WEBSITE PROFILE ENHANCEMENTS

Company Name, Address and Phone Number

Links to Website, Address, and Phone

5 Categories

Medium Placement in Search Results

Link to Profile Page

12 Categories

Company Description (200 Characters)

Keywords (240 Characters)

Hours of Operation

Driving Directions

Higher Placement in Search Results

Company Description (1600 Characters)

Keywords (Unlimited Characters)

200 Characters on Search Results

Bulleted List with Hyperlinks

Logo on Profile Page Can Be Added

Search Results Summary (200 Characters)

Profile Page Header Can Be Added

Gold Map Pin

Logo On Search Results Can Be Added

Social Networks Can Be Added

Photo Gallery Can Be Added

YouTube Video Can Be Added

Contact Elizabeth for more information