Builders Outlook 12.2011 by Ted Escobedo

EL PASO

ASSOCIATION

years

BUILDERS www.elpasobuilders.com

B U I L D I N G E L PA S O ’ S F U T U R E S I N C E 19 4 6

Builders Outlook Issue 12 2011

Building El Paso’s tomorrow today

2012 leadership and Board installed, awards presented Thursday December 8 the El Paso Association of Builders installed the incoming 2012 Executive officers and Board of Directors. A good crowd of over 200 witnessed the installation at the Centennial Club located at Biggs Field, Fort Bliss, Texas. The room was full of festive and bright colored decorations, women dressed in fine cocktail outfits and guys in suits and ties looking dapper. The installation officer for the evening was past President Mike Santamaria who swore the incoming board first then tackled the incoming executive. Mike reminded the boards to what they were entering into including the responsibility of leadership in all endeavors of and for the association. Outgoing President Greg Bowling gave a farewell address, noting the difficulties encountered by him and the members when two of the previous executive members bolted in October of 2010. Greg assumed the presidency at that time and worked hard to normalize the association and build on it’s strengths. He thanked Del Huit who stepped into the Vice Presidency and remained in that position for six months while Frank Arroyos got up to speed. Greg also thanked his own

contingent of past presidents at home, dad Bob, and brothers Bobby and Randy. Greg was presented with a scrapbook of memories along with a very handsome leather brief case and some Houston Astros items. Greg is a fan of the Astros even though his brothers are more into the Texas Rangers as was noted. After the executive was sworn in it was time for Frank Arroyos to

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Awards The much anticipated awards of the year were given during the installation and awards dinner on Thursday, December 8. Named Builder Member of the Year was Greg Bowling, Tropicana Homes. His award was presented by his two brothers Bobby IV and Randy. Named Associate of the Year for the second time was Sam Shallenberger, Western Wholesale Supply inc.. The award was presented by Burt Blacksher of Bank of the West. The Pat Cox Lifetime Achievement Award went to Kathy Parry, Hunt Communities. The award was presented by Past President Mark Dyer of Winton/Flair Homes. The John Schatzman award for Community was presented to Bob Bowling III, Tropicana

give his talk on what he envisions 2012 to be like under his leadership. It was clear from his remarks that he will continue to build on the business relationships with the Greater Chamber, the Hispanic Chamber, GEPAR and the Association of Associations. Turning to City of El Paso Representative Carl Robinson Frank spoke about his ambition to keep the lines of communication

open and flowing between the EPAB and the City of El Paso. To the military he offered support and prayers and extended a hand of friendship. He gave thanks to those stationed at Fort Bliss and surrounding areas. He will be joined in his journey by his wife Ruth, as she takes on the responsibility of first lady of the EPAB.

Each year the association is pleased to present the best of the best with these prestigious awards. Time, dedication, are just a couple of the criteria that is looked at when choosing the award recipient. Congratulations to each of the winners.

Above: EPAB 2012 Leadership from left to right: 2012 Executive Officers, Associates Chair: Sam Shallenberger, Western Wholesale Supply, Vice President: Edmundo Dena, Accent Homes, President: Frank Arroyos, Cisco Homes Sec/Tres: Frank Torres, GMF Development. The award was Homes, Immediate Past President: presented by Ray Adauto. Greg Bowling, Tropicana Homes A special Star of the EPAB award Executive Vice President: Ray was made to Rudy Guel for his Adauto continuing contributions to the association. The award was More photos of the evening’s presented by Greg Bowling. events can be found on page 9. (above)

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Builders Outlook

President’s Message Greg Bowling President, El Paso Association of Builders

It’s hard to believe that the end of 2011 is already here and with it the end of my year as President of EPAB. In late 2008 I started this journey when I agreed to serve on the Executive Ladder for EPAB. As I think back to where we were as both a Home Building industry and an Association in late 2008 and to where we are now, I’m shocked at how much has changed and all we’ve endured. Three years ago we were still experiencing the tail end of one of the greatest housing markets in the history of our country. Little did we know at the time that the housing bubble was bursting and the “Great Recession” was just beginning. And with this Great Recession was one of the worst and most prolonged down housing markets in the history of our country. As builders we’ve had to navigate this economy while losing instruments such the Texas Residential Construction Commission and to trying to absorb or fend off what seems like an attempt to implement every fee, tax or added cost possible on the building and development industry. Just like our personal businesses, EPAB has also had to navigate this terrible economy. We’ve been stuck trying to offset or absorb the loss of revenue and membership that comes with a bad economy. We’ve had to deal with turnover on our Executive Board, paying for a new building, and most importantly trying to do all we can to serve our members with limited resources.

To say it has been a challenge to us all both professionally and as an Association would be an understatement. Yet somehow, through all this our Association has not only survived but it has also found ways to thrive. Let’s look back at just a few of the things we’ve still managed to accomplish over the last few years: On the national level the National Association of Home Builders remains one of the largest lobbying associations in the country today. Through NAHB’s lobbying efforts FHA loan limits have been raised, they’ve fought to keep the mortgage interest deduction for home owners, and they are currently working on improving the appraisal process for all of us. They do all this nationally while constantly working with agencies like OSHA and the EPA for a more beneficial relationship. A relationship that works towards accomplishing the things those agencies are established for-things like jobsite safety and environmental protection, rather than just using their power to exert fines to raise money to fund their bloated agencies on the backs of our homebuilding and development industry. On the State level the Texas Association of Builders (with the help of many of our local members taking the time to travel to Austin on their own dime) has helped lead the way in keeping Texas the most builder friendly and business friendly state in the country. TAB has worked in recent years to keep things like fire sprinklers as an option in single family housing rather than making it mandatory in Texas. TAB has been instrumental on limiting the government eminent domain powers for public use projects only, and has helped back many of the Tort reform laws that have been passed in Texas like our new loser pays law. Lastly, TAB has helped stop county ordinance making authority which we fear will only

impose more fees and unnecessary costs on builders and developers. We’ve given the builder’s perspective that enforcing existing laws to stop bad building practices is always better than establishing more government agencies and bureaucracy. Finally on the local level, our Association members represent our interests on numerous Council and Advisory Committees to make sure our voices are heard. We were instrumental in keeping impact fees reasonable and making sure state laws are followed in the enforcement of these fees. We’ve worked with the City to allow 3rd party plan review and inspections for our homes, and we continue to work with them on how to make the ordinance better for both the City and our industry. We participated in the review of the new 2009 Residential Building Code before it was put into place and worked with the City on local enforcement policies and local amendments to this code. We have worked to keep government imposed costs from affecting housing on all levels such as keeping sidewalks at 5 feet rather than 6 feet, and working with City planners to not make almost every floor plan built in El Paso obsolete by requiring the front door to be the furthest thing forward on a house. Our Land Use Council has put in countless hours working on the subdivision rewrite committee and working with the new FEMA maps to help make sure that building and development in certain areas of El Paso is still possible. We shed light on the negative effects of the recently imposed $50,000 surety bond for builders in El Paso and got the City to agree to reduce it to $25,000 and to exempt contractors for many smaller jobs. We have provided education for our membership, webinars, networking opportunities, and fun events that benefit our community such as participating in the Sun

Bowl Parade and sponsoring the Adams Golf Tour Desert Classic which is the only professional golf event in El Paso. Lastly, we held our first ever local Rally Day where together with that event and through our Political Action Committee (Build PAC) for the first time in a long time, we helped make sure that this most recent local election affected our industry and all business in a positive way rather than negative. As you can see whether you’re a builder, developer, or one of our associates you only have to start putting dollar amounts to all that’s been accomplished the last few years to see just how much EPAB does to keep home construction a viable industry. Can you imagine what the home building industry would look like today without NAHB, TAB, and EPAB to advocate for it? The industry as we know it simply would not exist. Unfortunately as we all know, some in our industry choose to take a free ride and not be members of our Association. Luckily for them, they have all our members who choose to carry the load and pay the bill for everyone. So in my last monthly article, if I could ask one last thing of everyone going forward: I ask that you please support our association, support our members, and make it a policy to only do business with members of EPAB. Because without our Association the single family housing industry that we all know and depend on simply would not exist in the fashion it does. Lastly, I want to thank all of our Board members, Executive Board, Past Presidents, financial supporters and EPAB staff for 2011. You served our industry and your Association well and made this an incredibly successful year. I feel confident that we’ve left this a stronger and better housing industry and EPAB than we found it and I thank you all for that. Now on to bigger and better things in 2012!

4 ISSUE 12 2011

Builders Outlook

Issue 12 2011

Perspective

# Years get shorter; thoughts about 2011 and more $

Ray Adauto, Executive Vice President EPAB

Time flies and no one escapes. This year we’ve had our ups and downs and our all around. Nothing could have predicted that we would still be in a recession in 2011, but -/& " ,#business !*&00&,+ we are. The new home%"building is 4 still tough and getting tougher. Lots of talk 1:0 +,1 + 6 from politicians and the like, but they# are + doing little or nothing to help. Don’t really know if they can help anymore. Seems like % 1 once again the people doing the work will & end up being the ones to get us out of the recession because we need to work and we "+"/ ) ,**6 need to do for ours. Politics aside for a minute I’d like to take time out to thank our members for sticking " us. (+"4 )) one +! %" (+"4 %" it out with We #,,1 have had of the most ) "+"/ ) / +(0 4"+1 successful 12 months in the history of the1, association thanks to much hard work. Our " )0, success has been really twofold: First(+"4 we are still alive and doing. There was a group of folks who wrote us off about 18 months ago. They forgot that we have winners in this camp, the strongest of the strong with "+"/ work, ) / +(0 0 &! 1% 1 ))"! values of hard professionalism, and % compassion. Secondly, we did well politically. At the state legislature we did well by blocking laws that would have damaged home building in Texas. Locally we held our own in the election of new city

) / and +(0 councilors and in getting in on"+"/ boards 0 councils. We also brought home the issue of jobs to the city leaders, and how those jobs would be affected by poor ordinances and increased fees. The big builders helped the little builders by working to get the required construction bond reduced from $50K to $25K and getting the city to adopt the amended 2009 IRC. The savings to an" $ average home builder is in the thousands, yet we still have people say they don’t know if they got their membership value. , Really? For associates, largest membership group, it’s just as important. Your business depends on builder business in some way or another. By the work we’ve done as a federation the new home-remodelingdevelopment business is going in El Paso. %":!it has ""+to.%So))"+$"! &+ It will get "better, keep up$the support of this organization by your membership and encourage others to do the same. Don’t allow those who freeload on your backs tell you they can’t or won’t join. % 1:0 If they are working here it’s because of %,4 the % work we do here, there and everywhere. " /"*&+!"! 20 1%that 1 &+ The saying is that as one gets older 1 time flies by faster. I can attest to that. Each time that December comes around I 1 % to gather my thoughts and give thanks have 1%&+( for what I have, and I have much. It’s a 1 sentimental time for me as I will always tie in the Christmas-New Year time as one in 1%&0 4my 0 dad *,*"+1 which I lost my /2)6 parents, on 4&)) %"/&0% &(" "+"/ ) ,**6 Christmas day followed in a week by my mother on New Year’s night. It is twelve years ago that I became an orphan after being blessed by God for having given me both of them to me for so long. Alex and Josephine were a love story until death.

Sixty six years of marriage happily for most of those. Alzheimer’s took my mom a full two years before her death and Dad suffered through that until he just got tired. They loved to dance and to have friends and family over. Just like many of that Greatest Generation, they reveled in the simple things like love, family, God. Fitting that my Dad would leave this world on Christmas day. It was the ultimate gift he could give us. As for mom, I’m sure Dad called her to that New Year’s dance one last time and for eternity. I miss them. I will always miss them. Finally thanks to Greg Bowling. I mean

big, fat, juicy thanks to him for doing a really great job as president. He has been all that and more during a rocky time in our history. Thanks to Del Huit for stepping in when others stepped out. Like the Marine he is there was never going to be a moment when he would let us down. Thanks to Kelly Sorenson for holding the title of immediate past president longer than any other. Thanks also to the past Presidents council for their leadership and faith. Most of all thanks to all of you members for sticking it out with us and making us stronger. Watch out 2012. Here we come.

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6 ISSUE 12 2011

Builders Outlook

TAKE A BOW! The El Paso Association of Builders would like to thank the following comnpanies for their generous support of our 2011 Installation and Awards banquet

EL PASo

ASSoCIATIon

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BUILDERS

B U I L D I N G E L PA S O ’ S F U T U R E S I N C E 19 4 6

Builders Outlook

Guest Perspective

Chente Quintanilla State Representative A very important issue that was addressed in the legislature this past session was redistricting. The House of Representatives and the Senate approved new boundaries for their districts. Many of those districts were contested by several groups. Redistricting is not an easy task. On the one side, political interests come into play. On the other side, certain racial or communities of interest come into play. The basis for the contests that were filed alleged that the maps were drawn in the interest of one political party at the expense of the voting rights of minorities. The courts and the Department of Justice have been reviewing maps and testimony for several months. The federal court hearing the arguments determined that the conflicts were too extensive for a judgment at this time. In other words, after additional months of testimony and submissions of evidence, the court will be in a better position to rule on the legal arguments.

ISSUE 12 2011

Redistricting is not an easy task Last week, the court issued recommended interim maps that, if approved, would contain the boundaries for the primary and general election in 2012. Although it was my feeling that the boundaries in El Paso would be unaltered, the court did find cause to amend the boundaries between districts 77 and 78; districts in central and west El Paso County. The El Paso delegation unanimously, and in the interest of continued harmony, approved five district boundaries that were desired by each member. The court altered the original maps in such a way as to make it more difficult for the incumbent in district 78. The changes were based on a balance of minority voters in both district 77 and 78. In the same process, the districts in other counties were also changed. Apparently the judges had reason to believe that specific boundaries violated the rights of Hispanic communities of interest to elect a candidate of their choice based on shared values. If the recommended interim boundaries remain, many experts believe that the current imbalance in the House membership, 101 Republicans and 49 Democrats, could be reduced immediately with complete parity after subsequent election cycles. The process is of course necessary because of court cases in several states where judgments decreed voting rights violations. There are concerns that several

steps in the last session may result in Hispanic voters finding their right to vote impeded. Whatever the outcome of the court cases and the reviews by the Department of Justice, the 2012 elections are being impacted. Already, the filing period for candidates has been reduced partly because of the redistricting and also because the final filing day was changed to an earlier date. The El Paso County Elections Department has found it difficult to finalize voting

precincts with all of the changes that have occurred in the past 6 months. At one point, the Elections Director, Javier Chacon, presented to the Commissioners a map of voting precincts that culminated many, many hours of work by his staff. Now the interim maps have created the need for even more changes. We should be very appreciative of the director and his staff for their hard work in service to El Paso voters.

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EPAB

ON THE SCENE First Light Federal C U Sun Bowl Parade. We made history. The float going down Montana Avenue on Thanksgiving Day was surrounded by dozens of members and their kids or grandkids. It was the culmination of weeks of work by an army of volunteers who gave time, talent and money to make it happen. The EPAB proudly brought a ray of sunshine to kids of all ages with our “Building Dreams under the Sun” gingerbread house float. The float was conceived by Ray Adauto, and the construction design work was done by Gus Loy of Tropicana Homes. The float decoration was turned over to Ted Escobedo of Snappy Publishing along with help from Tropicana homes. A trailer was secured from Frank Arroyos at Cisco Homes, along with a construction site behind Western Wholesale. Materials for the frame were gotten by Tropicana Homes through Foxworth Galbraith Lumber; paint came from Sherwin Williams; carpeting from Carpets West; pvc pipe and holders from Ferguson Supply; foam board from DWS; foam, wind turbines, paint, utility knife and tape from BMC Select; a cash donation from Mountain Vista Builders; labor and materials for the tow truck build came from Rudy Guel Construction; the tow truck and tow driver was from Western Wholesale Supply, Sam Shallenberger; volunteer help from Winton Homes, Tropicana Homes, Juan Hernandez construction, Rob Tollen (New Era Foam), Eduardo Blanco of Blanco Tile, Ted Escobedo from Snappy Publishing, and staff. We would like to thank Sam, Rudy Guel and his work crew, and Margaret for the last minute OMG moment late Wednesday night before the parade. They stayed to work out in the cold until 1 a.m. and then came back at 6 a.m. to help decorate the EZ Bake oven tow truck. The route of the parade covers about 2.75 miles and over 300,000 people lined Montana Avenue to witness the 75th version of the parade in beautiful weather. On Friday the skies opened up and dumped cold rain for the next 24 hours. Again Rudy’s crew, Ray and Sam dismantled the tow cover on Saturday to ensure that Western Wholesale would have its truck running on Monday. The float won an Honorable Mention and for a first year try the Association was given a lot of praises. The gingerbread house float was so different from all the other floats that it was clearly a favorite of the TV audience as well as the kids at the parade. No final decision has been made about entering next year’s parade.

! u o y ank

Installation & Awards Banquet

The El Paso Association of Builders would like to thank the following sponsors, donors and volunteers who helped make “Building Dreams Under the Sun” Tropicana Homes Cisco Homes Mountain Vista Builders Western Wholesale Supply, Inc. BMC Select (El Paso) DWS Sherwin Williams Snappy Publishing Display Services, Inc. Rudy Guel Const. New Era Foam Fernandez Const. Blanco Tile Foxworth Galbraith Special Thanks to: Sam Shallenberger Gus Loy Edmundo Dena Greg Bowling Brock Kaslow Ray Lozano Frank Arroyos Rob Tollen Ted Escobedo Eduardo Blanco Mike Santamaria Margaret Adauto Ray Adauto Chuck Gabriel Juan Hernandez 11395 James Watt, Suite A-11 79936 915-633-8002

10 ISSUE 12 2011 Flawed Appraisals Killing Home Sales, Hampering Housing Recovery One out of three builders are reporting losing signed sales contracts during the preceding six months because appraisals on their homes are less than the contract sales price, according to a recent nationwide survey conducted by the National Association of Home Builders (NAHB). “The inappropriate use of distressed and foreclosed sales as comparables in determining new home values is needlessly driving down home prices, killing home sales, causing more workers to lose their jobs and delaying a housing and economic recovery,” said NAHB Chairman Bob Nielsen, a home builder from Reno, Nev. Too often, due to faulty appraisal practices, brand new homes with sparkling appliances and interior upgrades get compared to a distressed property that has been sitting vacant and in disrepair. The result, in many cases has been that the new house winds up getting appraised at less than the cost of construction. That is precisely what is occurring in today’s marketplace, according to the NAHB survey, where a full 60 percent of respondents reported they were experiencing appraisals coming in below their contract sales price. Of those reporting that they had encountered this problem, 53 percent said the appraisal amount was actually less than the cost of building the home. “This is not only unfair and unreasonable, but it perpetuates the cycle of declining home values, drives more home owners underwater, harms local economic activity and acts as an obstacle to the recovery of the housing market,” said Nielsen. These appraisal practices are a major contributing factor to the current acquisition, development and construction (AD&C) lending crisis that has choked off credit for home builders and threatens to prolong the current housing downturn. Falling appraised values for land and subdivisions under development have led some financial institutions to stop lending to developers and builders, to demand additional equity and even to call performing loans. Since Sept. 2009, NAHB has held four appraisal summits in Washington with representatives of federal banking regulators, the appraisal industry, the housing finance industry, the real estate and housing sectors and others to find solutions that will allow appraisers to develop realistic valuations based on sales that are truly comparable. The need to give top priority to addressing the complexity of property valuations in distressed markets and impediments to the flow of appropriate information on homes between appraisers and interested parties was discussed during the most recent summit, which occurred on Oct. 19. “Major reforms in appraisal practices and oversight are needed to ensure that appraisals accurately reflect true market values and don’t contribute to price volatility or harm aspiring home owners and move-up buyers,” said Nielsen. “We will continue to work with all stakeholders in this debate to find solutions.” With the decline in home prices appearing to have ended or be coming to an end in most parts of the country, resolving the appraisal and credit crunch issues remain a top priority for the association. NAHB’s latest Improving Markets Index has shown modest signs of improvement in scattered housing markets where employment is gaining and distressed properties are not as numerous. New-home construction stands ready to serve as an engine for economic recovery. Building 100 single-family homes creates more than 300 full-time jobs and provides $8.9 million in federal, state and local tax revenues. Resolving inappropriate appraisal practices and restoring the flow of credit to home builders will not only help to put America back to work, it will provide badly needed tax revenues that is essential for local governments to support schools, police and firefighters in communities across the land,” said Nielsen.

Builders Outlook

issue 12 2011

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Builders Outlook

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ISSUE 12 2011

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14 ISSUE 12 2011

Builders Outlook

Industry Reports Associates Council

Sam Shallenberger Western Wholesale Supply It has been a whirlwind of a year for the Associates Council. We have held some really good events and special educational trainings this year and had fun doing it. I have to admit that while business could be better for nearly everyone the clear thing I see is that we just don’t give up. The Associates in this Federation are the backbone of the Association and I hope you feel like I’ve done a good job representing you in 2011. I have been asked to stay on

for 2012 but I can tell you this for sure, I can’t do this alone. It takes a real team effort to put together the meetings and the events, and frankly without your participation none of it could get done, at least not as good as it has been in 2011. We held very successful golf tournaments, the Young Designer Tournament in which our associate John Chaney gets every one excited and moves the game right along. Then John comes along with the Adams Pro Tour Pro-Am and we have another exciting golf game gone right. Thanks to John, Mark Gonzalez and Anthony Below for all the help. I know that at times it was just a couple of us working on this deal but we got it done and had a great time with it. I still think El Paso has to have an event like this and no one

can do it like the EPAB can. Education was available to those who wanted or needed it, and it continues in December as Associate member JDW Insurance will host a seminar for builders. Education never sleeps, especially when you have associates willing to share their knowledge and skills. Finally I want to say thank you to all the Associate members who contributed to the Sun Bowl Parade Float. It was pretty awesome, and since I got to drive the float down Montana street I can tell you that it was interesting, challenging and at times a little stressful. Amazing how people just want to cross in front of a float and not realizing they are not visible to the driver. My Copilot Ray was just super tired after working his butt off on the thing. I’d like to

also say thanks to Margaret, Rudy Guel and his guys, and to Ted and Eduardo. Also all the help from Tropicana, Cisco, and Accent. By the way, Rudy Guel has earned some additional respect from me. He and his guys hung in there on Wednesday night before the parade and constructed the cover for the truck. Rudy and his guys, Margaret and Ray and I stayed until about 1 am getting it done, then back again early to finish before making the appearance in the parade. It was awesome. Finally congratulations to Greg Bowling for doing such a good job as President. I look forward to working with Frank and the executive team for 2012. Get ready, cause we’re going to be busy.

REALTOR/Builder Angela Ochoa GEPAR

Local Real Estate Update With the closing 2011 coming around, we have reached 94% of last year’s total sales with 1,876 closed New Home listings. We are improving with each month and our sales are proof of that persistence. For the 2011, the Average New Home Sale is a 3 bedroom home with 1741 square feet that sold for $154,926 at $91.17 per square foot. This style home was on the market for an average of 99 days. In comparison, for 2010, the Average New Home Sale was a 3 bedroom home with 1704 square feet that sold for $157,264 at $91.68 per square foot. This style home was on the market for an average of 133 days.

This year New Homes contributed 39% of the total residential sales of El Paso County; while resale properties have contributed 61% of the total residential sales of El Paso County. This is a +3% change from 2010 New Home Sales. All of this data came from the Greater El Paso Association of REALTORS® Multiple Listing Service, as of December 5, 2011. Only new homes listed in the GEPAR MLS are included. I want to thank all of our builders who participated in our El Paso Builder University. It was a new and different idea and you all helped make it a wonderful success. I have had many compliments and conversations from El Paso REALTORS who really appreciate the time you give to educate them about different aspects of building a home and learning more about your communities and the features of your building style. This year we learned about the Permitting Process, New Home Inspections, Roofs and Trusses, PEX Piping, Energy Star Building, Green Building, New City Code Changes and more. The expertise and knowledge that you shared made our REALTOR community helped us better to serve our clients. Thank you for taking

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the time and participation. Cynthia Morris, our 2012 REALTOR/Builder Committee Chair, is looking forward to continuing the El Paso Builder University. Also, we are pleased 1st Annual Holiday Lights Contest has started off to a great success. We have 6 model homes competing for the illustrious “1st Annual Holiday Lights Trophy.” The builders who entered are: Tropicana Homes, Zia Homes, Cisco Homes and Saratoga Homes. Right now REALTORS are voting for the best display. The winner of

the contest will be announced at the El Paso Association of Builders Installation Dinner. Also, I want to thank you for the opportunity to serve as your REALTOR/Builder Committee Chair this year. I had a wonderful time and learned a lot from your board about the inner workings of building new homes. I look forward to doing future business with you.

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