Builders
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2014: issue 9
Investors leaving housing high and dry For the better part of this year, investors have been slowly trickling out of the home buying market, but in August they apparently cut off the cash flow in a big way. Sales of existing homes fell an unexpected 1.8 percent from July, according to the National Association of Realtors (NAR), but more dramatic was the drop in investor sales. Investor activity in 2012 and 2013 was the main driver behind double-digit price gains. Just 12 percent of August purchases were by individual investors, down from 16 percent in August; investors had been making up nearly one-third of home purchases during the worst of the housing crash nationally, and in some markets they accounted for well more than half. "Investors are concerned with a potential rise in interest rates," said Lawrence Yun, chief economist for NAR. "It makes it less attractive in a rising interest rate environment." The drop has been long expected. Home prices jumped dramatically last year and are still higher by nearly 5 percent from a year ago, while the supply of cheap, distressed properties fell. When calculating for potential returns, the math simply doesn't work as well anymore for investors. "The reduction in appetite from investors has put a temporary lid on home sales that has yet to be offset by the first-time home buyer, which is more interested in renting than buying," wrote
Peter Boockvar, chief market analyst with the Lindsey Group. "Faster income growth, slower home price gains and more of an easing in credit standards is what is needed to bring them back." First-time home buyers made up just 29 percent of August buyers and do not appear to be picking up any of the slack of investors. The first-time buyer share is historically around 35 to 40 percent of the market, and it usually increases in the fall, when large families move out of the market. First-time home buyers tend not to have children yet. Realtors are hoping the decreased competition from investors will bring first-time buyers back to the market, but this younger cohort is still facing high levels of student debt, weak employment and income growth and soaring rents, which keep them from saving for a down payment on a home. Some of those who are more fiscally sound are still choosing to rent, especially as the single-family rental market has become more popular. This is why investors, while not buying many more homes, are not rushing to sell the ones they already have, either. Rents are up over 3 percent from a year ago nationwide. "We are really happy with our portfolio of homes," said Aaron Edelheit, CEO of Atlanta-based The American Home, in a July 2014 interview with CNBC. "Our demand for rental properties is strong. We have 95 percent rented." American Home invested in distressed properties.
Edelheit, who operates mainly in the Atlanta and Charlotte, N.C., markets, said he is not buying any more homes. The company currently owns about 2,400 single-family rental homes, which it manages through an in-house network of property managers, rental agents and technicians. "This is maturing into every other type of industry," noted Edelheit. "You will have consolidation. Business is going to be about execution and operations. It will be all about operations. We have an attractive company with attractive assets. Like anything else, it's about
operating and running this business." Others, however, are still buying, albeit shifting their strategies. Justin Chang, CEO of Colony American Homes, which was a huge player early on in the Phoenix and Southern California housing markets, said his company continues to buy, although at a reduced rate. "The contours of the buying and the geographies are shifting, as one might expect," said Chang. By Diana Olick CNBC.com
The question is: are we building too many houses? Construction of single family homes and multifamily apartments fell by over 14 percent in August from July, a far more striking plunge than analysts expected. Single family housing starts are running at about half the normal, prebubble pace, and single family building permits, an indicator of future construction, are flat. So how is it that some claim we are building too many houses? "We're still building single family homes faster than we can fill them," argues Trulia's chief economist Jed Kolko. Using new numbers released this week from the U.S. Census, Kolko makes the following points: • The vacancy rate for single-family homes was 10.7 percent in 2013, up from 10.6 percent in 2012 and near its 2011 peak of 11 percent. That's far above the vacancy rate during the bubble (8.6 percent in 2005) and before (7.4 percent in 2000). • In 2013, household formation was just 321,000, much lower than the 1.2 million baseline implied by current population growth. The number of owner-occupied single-family homes actually fell by 184,000. • At the same time, the multi-unit vacancy rate continues to normalize,
dropping for the third straight year to below its 2006 level. Despite all the new multi-unit construction, apartments are filling up. To put it simply, there are plenty of vacant homes, no new owner households are being formed, and there's not enough demand to necessitate building more new homes. Why then do real estate agents claim there is not enough supply to meet demand, and why are home prices continuing to rise? The answer is that certain segments of the market are thriving while others are stalled and certain locations are thriving while others are stalled. "There are always people who want new. Also, income growth at the high end helps boost demand for the larger new homes now being built," Kolko acknowledged. "But if new construction weren't keeping up with demand, and household formation were strong, more of the vacant homes out there would get occupied—but they're not." On the flip side, multifamily rental construction, while down for the month, is running at quarter-century highs, and the units are filling up fast. At the same time, there are 14 million single-family homes currently occupied as rentals, and those renters appear to be staying. There were just 11 million single-family
rental homes as recently as 2007. "It's proving that households are finding renting to be much more appealing than they ever thought it might be, and they're sticking with those rental homes longer than we expected," said Buck Horne, an equities analyst at Raymond James. Horne added that Kolko "makes a fair point." Horne, however, focuses on particular markets, particular builders and price points. "If you look at the big job producing markets like California, Texas and Florida, [housing] demand there is very strong," he said. "If you're looking for first-time buyers, you'll find them in Texas." First-time buyers nationally, however, are the weakest segment of the market, as younger millennials were hardest hit during the recession. That is why some builders, like Lennar and Pulte, are focusing on move-up models rather than cheaper, entry-level homes. Lennar reported strong third quarter earnings this week, but the Miamibased builder has been focusing on prime locations, higher-priced homes, and did not overestimate demand. DR Horton, however, announced it would have to use incentives to sell its homes. It last reported it had 10,000 unsold homes, 3,100 of those already finished.
"Other builders are sitting on more than that," Horne noted. "That's a lot to be speculating with, especially after the spring selling season." Pulte, meanwhile, is also steering away from entry-level product and, according to Horne, is willing to give up market share as long as it means optimizing cash returns on a per-house basis. As of last quarter, Pulte had less than 1,000 spec homes in all of its combined communities. "That's one the industry's lowest ratios of spec homes," Horne said. Home builders large and small are having to re-evaluate today's tricky market. Some, like Lennar are diversifying, getting into the multifamily market, while other smaller builders are turning to townhomes in more urban settings. "We're constantly having our expectations pulled out from under us because we think that the market might finally be in a more permanent recovery, and now we go into a slowdown again," Stephen Paul, executive vice president of Maryland-based Mid-Atlantic Home Builders, said on CNBC's "Squawk Box." "It's hard to figure out and plan." By Diana Olick, CNBC
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Builders Outlook
HEAT UP YOUR HOME SALES Football season is here. It’s time to fire up the grill, mix the marinade and enjoy an evening on the patio cheering on your favorite team with friends and family. Natural gas can help. From grills and fire pits to lights and torches, building outdoor living spaces equipped with clean, efficient natural gas gives your customers a chance to enjoy the big game from the comfort of home. For more information on building with natural gas, contact Eduardo Lucero at ealucero@texasgasservice.com or (915) 680-7216.
2014 issue 9
2014 issue 9
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Builders Outlook
President’s Message | Frank Torres
El Paso Disposal
President, El Paso Association of Builders
Housing recovery continues at slow pace, housing permits are down 15 to 20 % from last year and about 60% below 2005 big boom. Home builder confidence has return to its highest level since 2005, near the peak of the housing market, ( this is an article from The National Association Of Builders reported on Wednesday September 17, 2014) but housing starts aren’t even half of the the way back to the late 2005 level. Why are housing starts so Low? What’s the Deal? Are Builders hopelessly optimistic? Here are some of the answers: Typically new home orders decline from July to August as home buyers focus on the start of school year and late summer vacations. Tight mortgage financing, new mortgage regulations are making it more difficult for buyers to qualify, it has reduced the potential buyers by about 20% also higher sales prices and low employment puts purchasing out of reach for more potential buyers. So are we hopelessly optimistic? No! We have to believe in our industry and hope for the best for the rest of the year and 2015. Do we have to change the way we do business? Do we have to offer new products?, Do we have to advertise our companies differently? Here is something to think about, most of the baby boomers are already settle on a house, yes some will upgrade to a newer or bigger home but not a big percentage of them compared to previous years, we have to cater to a new generation, the Milennials (those graduating from college roughly 2003 to 2018 or a person reaching adulthood around the year 2000 also called Generation Y. Millennials aren’t in a rush to buy their own homes. Many of them aren’t in a rush to to move out of their parent’s houses. That doesn’t mean, however, that they’ll remain renters or freeloaders in mom and dad’s basements forever. And the housing and mortgage industries can’t wait. A recent survey found that 92% of people in this age group who don’t have a home want to buy one in the future, and there are some clear preferences in what they want in a home. Millenial buyers like to be close to everything they need, including transportation, work, coffee shops and bars and of course all the modern technology inside the home. Make plans to build for the new generation. Things are changing rapidly at local and state level, if you are not a member of our association now is the time to join we will keep you inform of this new changes, don’t be the last one to be informed. Keep you hopes high and do business with a member.
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Builders Outlook
2014 issue 9
Perspective Ray Adauto, Executive Vice President EPAB
The truth of the matter is that permits are down in the City of El Paso. Down some 18% from 2013, a large percentage given that 2013 was also a down year for permits. So why then is it that the City of El Paso has raised its fees for permits and incorporated a new “technology fee” as a regular charge? It baffles most of us until we return to what the last city administration under John Cook and the Progressives did. Spend like drunken sailors to bring a quality of life to downtown El Paso regardless of what it costs. Implode City hall and scatter departments over all parts of downtown; renovate dilapidated buildings into new city offices and all the while removing all these buildings off the tax rolls. That council also decided to introduce a quality of life bond issue without telling people someone had to pay for it. The bond passed and so the city began its renovation of downtown, spending money left and right on fixing this, fixing that, leasing this and leasing that. Meanwhile buildings downtown who
City increases fees while permits down; non friendly franchise fee owe taxes still own taxes and no one is going after the owners since many of them are owned by powerfully rich people. Certificates of obligation, known to us as money borrowed without voter approval is in the hundreds of thousands of dollars putting the City of El Paso in debt without voter approval. Yeah all these things have caught up to us and each business and each builder or developer are now paying for the sins done by the progressives. Irritatingly giddy about all the changes they’ve brought to El Paso they fail to take the blame for the high dollar amounts we owe collectively. That’s why builders and contractors now have to pay higher fees when taking out a permit. It’ll be the reason our members will have to pass along the fee to customers. Remember this: whenever the cost of a home goes up by $1000 you push at least 647 El Pasoan’s from qualifying for a home according to NAHB. Let that sink in. 647 families can no longer qualify for a home. Nationally NAHB says we’ll lose some 200,000 people
from qualifying when homes go up by $1000. So there’s really a disconnect in El Paso when the cost of the homes go up for no apparent reason other than the city is deep in debt and they’re looking for a way out. Conversations with new City Manager Tommy Gonzalez are addressing issues like this one. Problem is that he’s inherited the mess and has to find a way to pay for what the voters approved. What’s most bothersome is that there are way too many El Pasoan’s who still think the city owes them something. As far as this writer is concerned the city is responsible to provide public safety, public health and a safe environment. Everything else is something the city can do if it can afford it. That includes parks, libraries, art and other “wants”. The city would be wise to let people know if they can’t afford things. This communities mind set is costly to the few who actually pay taxes. If the city can’t afford to employ someone, then they shouldn’t. If the city can’t afford a park then they should say so. So many
things are wants, not necessities and it would be good if the citizens would understand that. It would be better if politicians understood that as well. El Paso is on the cusp of dire consequences if it keeps going down the path of higher taxes and fees. News flash: builders will move out to the county or New Mexico if the customer decides to buy there. Keep increasing fees and taxes and guess what? Welcome to Santa Teresa my friend. Just like the railroad did by moving don’t think the public won’t if there’s a less costly alternative. By the way, look at your water bill if you own a business. There’s a new “franchise fee” that is nothing more than a way for you to help pay the debt. You get nothing new for the fee, just the privilege of paying on the debt. Thank you city council. This is a really friendly way to treat businesses. Let’s see how many decide this is the straw that sends them packing.
2014 issue 9
Builders Outlook
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Industry News Builder Confidence Hits Highest Level Since November 05 Builder confidence in the market for newly built, single-family homes rose for a fourth consecutive month in September to a level of 59 on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI), released today. This latest four-point gain brings the index to its highest reading since November of 2005. “Since early summer, builders in many markets across the nation have been reporting that buyer interest and traffic have picked up, which is a positive sign that the housing market is moving in the right direction,” said NAHB Chairman Kevin Kelly, a home builder and developer from Wilmington, Del. “While a firming job market is helping to unleash pent-up demand for new homes and contributing to a gradual, upward trend in builder confidence, we are still not
seeing much activity from first-time home buyers,” said NAHB Chief Economist David Crowe. “Other factors impeding the pace of the housing recovery include persistently tight credit conditions for consumers and rising costs for materials, lots and labor.” Derived from a monthly survey that NAHB has been conducting for 30 years, the NAHB/Wells Fargo Housing Market Index gauges builder perceptions of current single-family home sales and sales expectations for the next six months as “good,” “fair” or “poor.” The survey also asks builders to rate traffic of prospective buyers as “high to very high,” “average” or “low to very low.” Scores from each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view conditions as good than poor. All three HMI components posted gains in September. The indices gauging current sales conditions and traffic of prospective buyers each rose five points to 63 and 47,
respectively. The index gauging expectations for future sales increased two points to 67. Builder confidence also rose across every region of the country in September. Looking at the three-month moving average for each region, the Midwest registered a five-point gain to 59, the South posted a four-point increase to 56, the Northeast recorded a three-point gain to 41 and the West posted a two-point increase to 58.
New-Home Sales Top 500,000 in August Sales of newly built, single-family homes increased 18 percent in August to a seasonally adjusted annual rate of 504,000 units in August, the highest level in six years, according to newly released data by the U.S. Department of Housing and Urban Development and the U.S. Census Bureau.
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“This jump in sales activity is in line with our latest surveys, which indicate builders are seeing increased traffic and more serious buyers in the market for singlefamily homes,” said Kevin Kelly, chairman of the National Association of Home Builders (NAHB) and a home builder and developer from Wilmington, Del. “This robust level of new-home sales activity is a good sign that the housing recovery is moving towards higher ground,” said NAHB Chief Economist David Crowe. “Historically low mortgage rates, attractive home prices and firming job and economic growth should keep the housing market moving forward in 2014.” Regionally, new home sales rose 50 percent in the West, 29.2 percent in the Northeast and 7.8 percent in the South. Sales were unchanged in the Midwest. The inventory of new homes for sale edged up to 203,000 in August, which is a slim 4.8-month supply at the current sales pace.
NAHB Chairman Kevin Kelly on House Passage of H.R. 5078 Kevin Kelly, chairman of the National Association of Home Builders (NAHB) and a home builder and developer from Wilmington, Del., today issued the following statement on House passage of H.R. 5078, the Waters of the United States Regulatory Overreach Protection Act: “NAHB commends the House for passing bipartisan legislation championed by Rep. Steve Southerland (R-Fla.) that would prevent federal overreach by EPA and the U.S. Army Corps of Engineers that would harm individual landowners and home buyers and impact economic growth. “H.R. 5078 prohibits the EPA and Corps from finalizing a proposed rule that would dramatically increase their authority over ‘waters of the U.S.’ to include almost any body of water, such as ditches, mudflats, prairie potholes and other water features. “Allowing these agencies to radically increase their jurisdiction under the Clean Water Act would impede the fledgling housing recovery by greatly increasing the number of construction sites required to obtain permits, which would also delay and raise the cost of home building projects. Moreover, many American families would be priced out of the housing market if this rule is finalized in its current form. “Today’s House vote sends a strong message to the EPA to go back to the drawing board to find a common-sense middle ground plan that will maintain environmental safeguards and protect landowners from unnecessary regulation.”
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Builders Outlook
2014 issue 9
The Economy
The National Debt: Growing but More Slowly The federal debt routinely captures headlines and continually grows but is there a crisis? Should congress fix the debt immediately, or have we made enough progress? Turns out, in the short-run we are fine, but there is heavy lifting that must yet be done if we are to get to a sustainable path. While the debt is huge, it’s the ratio of debt to GDP that matters. Ignoring debt held by government Elliot Eisenberg agencies (such as the $5 trillion in IOUs held by the Social Securitv Administration), and focusing on debt held by households, firms and foreigners and upon which the treasury pays interest, the total amount of money the government has borrowed equals, $12.6 trillion, close to 75% of GDP. To give some perspective, before the Great Recession the debt was 35% of GDP and it was projected to gradually rise to 50% of GDP by 2018 as more Baby Boomers became eligible for Social Security and Medicare and as healthcare cost rose. Then came the Great Recession which resulted in more borrowing as tax receipts fell and more had to be spent on countercyclical social programs including unemployment benefits and food stamps. As a result, debt rapidly rose to 50% of GDP and was projected to rise to 70% within a decade.
Then to fight the Great Recession, President Obama persuaded Congress to pass the American Recovery and Reinvestment Act (aka “The Stimulus”) an $800 billion package of tax cuts and spending increases. That along with the weak recovery pushed the debt to 70% of GDP by 2011 and it was projected to rise toward 100% of GDP by 2021 as the economy returned to health and interest rates rose towards normal levels. At that point things looked grim. Then came some big changes that dramatically improved things. Congress raised taxes on upper income families, cut discretionary spending, and the rate of increase in government spending on healthcare, particularly on Medicare, unexpectedly slowed by 2.25%/year. That improved the projected trajectory of the debt. Now, it is forecast to climb from 75% of GDP today to 80% of GDP by 2024 and it’s projected to climb higher after that. While the debt is high by historical standards, at least it’s getting worse more slowly, at least in the shortrun. The good news, outside of Social Security and Medicare, projected revenues and spending are balanced. The key to balancing the budget is closing the gap between promised future Medicare and Social Security benefits that are actuarially higher than future taxes earmarked for those programs. This can be done by cutting benefits, raising taxes or ideally some of both.
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Moreover, the earlier these changes are made, the less painful they will be. A second way to fix the budget; pass progrowth legislation. This would include reducing tariff and non-tariff barriers via trade reform, reducing marginal corporate and personal income tax rates via tax reform, and enabling illegal immigrants to fully participate in the economy via immigration reform. Collectively these policies would raise annual GDP growth by $80 billion, or 0.5%, which when compounded over time is a huge amount.
Our budget problems now lie largely in the future. That, however, must not distract us from grappling with them soon as time passes all too fast. Moreover, assuring markets that we are solving future budget problems should help promote the current economic recovery. Elliot Eisenberg, Ph.D. is President of GraphsandLaughs, LLC and can be reached at Elliot@graphsandlaughs.net. His daily 70 word economics and policy blog can be seen at www.econ70.com.
2014 ISSUE 9
Builders Outlook
Builders
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utlook on the scene | Bob Bowling III honored by League of Women Voters The honoree was quiet as he sat at the head table waiting to be introduced. He was not as comfortable as some would think because he really isn’t used to this kind of thing. He’s really more used to being out in the open skies of El Paso, looking at land and thinking of how he could change the lives of El Pasoan’s by building homes. But on this occasion Bob Bowling III was being honored for his philanthropy, his giving of himself and his treasure for the betterment of others. Bob Bowling III received the Bravo Award for lifetime achievement from the El Paso Chapter of the League of Women Voters. As the invitation stated “Bob Bowling is revered for his philanthropy: direct contributions of money and labor for people in dire conditions, long running support of UTEP, establishment of benevolent trusts and a lifetime of generous donations to people in need.” Congratulations to Bob and the entire Bowling family. The EPAB was well represented at the event supporting Bob and the League.
Texas Gas meets with builders and developers
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The El Paso Association of Builders welcomed representatives from Texas Gas to a round table discussion on issues related to developers and home builders. Texas Gas has gone through a series of internal changes and this meeting came about as an effort to meet and discuss the relationship between both parties. Texas Gas is the natural gas supplier, and active member of the EPAB, in the county of El Paso. With several key personnel retiring from Texas Gas recently the meeting allowed developers and builders to meet the new team from both El Paso and Austin. Edmundo Dena, President of Accent Homes told the Builders Outlook about the meeting. “I got a real good sense of commitment from Texas Gas, something that is really important to me and to my customers,” he said. The same was echoed by Texas Gas Director of Operations (El Paso) Alejandro Limon. “We appreciate that we can meet with the industry and offer or look for solutions on how we can serve new home builders and developers better,” Limon said. “Clearly we need to have an open line of communication at all times so that we can accommodate each other better,” he concluded.
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Member Foxworth Galbraith had their annual customer appreciation golf tournament at Butterfield Trail Golf Course. First place went to Russell and Kevin from METRIE, Mark Winton and Ray. Other members shown celebrating with Bret Thompson (Foxworth Galbraith) included Dan Ruth, Edmundo Dena along with Russell and Kevin. Fun time by all, thanks to Foxworth Galbraith.
el paso development news Mixed-Use Project Set For Union Plaza Development Includes Apartments & Retail with a Sunken Courtyard Construction will soon begin on the transformation of a vacant Downtown El Paso building into a mixed-use structure with retail and apartment elements. The building, located at 513 West San Antonio Avenue, can be found in the historic Union Plaza district on the western edge of Downtown. The long, narrow building will contain retail on the first and basement levels, with apartments on the second and third floors. A sunken courtyard will be created along the back of the building with landscaping and a water feature. According to the architect on the project, Carlos Lievanos of Liev Arch of El Paso, the structure dates to the early 1900’s. The renovation design maintains the historic character of the facade, with plans to restore the brickwork and add only a “Texas canopy” along the retail spaces on the street level. The canopy will help to showcase the retail spaces along San Antonio Avenue, he indicates, helping draw customers to the shops. Lievanos was also the architect on The Mix at Union Plaza project nearby. The only other major change to the front facade will be the addition of retail windows and doors, and the upgrading of windows on the second and third floors. According to Lievanos, the building has historically been used this way, with retail on the ground floor and apartments on the floors above. The idea behind creating a sunken courtyard in the back is to provide
Vacant Franklin Laundromat Transforming Into ‘Cantina’
access to future retail spaces on the basement level. Stairs on either end will take pedestrians to and from the courtyard, with a lift included for those needing ambulatory assistance. Tenants of the basement level retail may be able to lease part of the courtyard for additional seating, if needed. Renderings for the courtyard space show a variety of landscaping and paving elements, seating areas, and a water feature at one end. And, in addition to providing access to the basement level retail, the courtyard will connect to another building owned by the same developer. That building, known as the Coffee Bean Building, will be developed as phase two of the project. The upper floors will have a total of 13 apartment units, according to Lievanos, ranging in size from 400 to 500 square feet. Rates for the small apartments, though not set, should be in the same range as those found at The Mix across the street. Two rear catwalk balconies will be accessible by residents and will hover over the sunken courtyard below. Materials used will include exposed steel columns, beams, and railings that “reflect a modern twist to the historic Union Plaza train district.” Parking availability for tenants has not yet been finalized. A nearby lot may be utilized for this purpose. Adding more housing options to the area is key to making Downtown revital-
A new mixed-use project for Union Plaza in El Paso is getting underway. This rendering shows the building after completion. (Courtesy Liev Arch)
ization successful, according to Lievanos, and this project will help to do that. “We have all this entertainment, but hardly anybody lives nearby,” says Lievanos. “This was an opportunity to take a historic building and revitalize it for that purpose. Residents will be able to go down and get a bite to eat, grab some coffee, and like having that nearby without having to leave the area.” Indeed, the new project is just steps
away from multiple restaurants, bars, and shops that have opened up in recent years as part of Union Plaza’s renaissance. Also nearby: the brand new Triple-A baseball stadium that opened this year, just two and a half blocks to the north. The developer hopes to have the project completed in the first half of 2015, perhaps by March or April. The contractor on the project is Devo Design & Construction of El Paso.
Ground was broken last week on a new multi-million dollar Sierra Providence Health Network (SPHN) hospital in Northwest El Paso that will take shape at the corner of Transmountain Road and Resler Drive. Officials touted their partnership with Texas Tech University Health Sciences Center in making the facility a teaching hospital. The hospital will eventually have 140 beds for patients and will eventually host approximately 75 medical residents in a multi-year program. Once completed, it is expected to generate about 300 jobs. Look for completion in 2016.
Blackbird Cantina transforms a Downtown laundromat. (facebook.com/Blac kbirdcantina)
‘Mandala Sunrise’ Installation Added to UTEP Campus Public Art Piece Highlights Relationship Between the University and Bhutan
The “Mandala Sunrise” public art piece adds color to Sun Bowl Dr. (www.facebook.com/KorynRolstadStudios)
The drive along Sun Bowl Drive on the University of Texas at El Paso (UTEP) campus just got a lot more artistic thanks to a new public art installation along the street. “Mandala Sunrise” will greet drivers at the new roundabout at the intersection of Sun Bowl Drive and Glory Road. The public art piece, designed by Koryn Rolstad of Seattle (www.krstudios.com), consists of dozens of upright pipes towering over the roundabout decorated with hundreds of colorful resin wings. At night, the piece includes special nighttime lighting. According to Rolstad’s Facebook page, the piece “celebrates the unique and remarkable blending of cultures embodied by University of Texas at El Paso’s special relationship and partnership with the Kingdom of Bhutan.” She calls the installation “highly engineered,
yet lyrical,” taking inspiration from the environment of the Southwest. Mandalas are spiritual and religious symbols often represented in different cultures, including Buddhism. The Kingdom of Bhutan is largely Buddhist, and the sculpture continues the tradition of tying UTEP to the Asian country. The relationship began in the 1910’s when the school’s newest buildings were designed using influences from Bhutanese monasteries. The roundabout was constructed earlier this year as part of the Sun Bowl Drive widening project. Another roundabout at UTEP, this one at the Schuster Avenue extension, will also get a piece of public art in the future from New York-based Donald Lipski. The Schuster extension project is scheduled for completion in late spring of 2015.
Content provided by El Paso Development News visit: elpasodevnews.com
Builders Outlook Issue 9.2014 Details Emerge on East El Paso’s ‘Montana Commons’ Shopping Center Plan Replaces Former ‘El Cruzero’ Smart Growth Layout A detailed site development plan is offA A prime corner in Far East El Paso will be home to a 500,000 square foot shopping center in the coming years, and details are emerging regarding its layout and possible retail tenants. Montana Commons will begin construction in 2016 at Montana Avenue and Joe Battle Boulevard on land that was previously slated for the El Cruzero smart growth development. The shopping center will be laid out in a traditional power center fashion, as indicated by the site plan, with large box
stores along the back of the development and smaller shop and restaurant buildings closer to the street. Large parking lots will be located in front of the stores. The site plan shows that the largest tenant may be a 140,000+ square foot Sam’s Club location, which includes a fuel island near Montana Avenue. Two other possible stores include an Academy Sports & Outdoors location and a Burlington discount store. Like other tentative retail centers, the list of possible tenants is dynamic and may change before ground is even broken. The 60-acre site was formerly part of the El Cruzero smart growth community that was canceled last year when the land was sold to River Oaks Properties of El Paso, the company that is now developing the Montana Commons project. El Cruzero envisioned a hotel block, mixed-use buildings, residential homes, and a town center for the area now being developed as Montana Commons. When River Oaks purchased the property last year, the developer told El Paso Inc. it might develop a portion as “Town Center on the Loop,” though there were no official plans on the drawing board. Last week, in an El Paso Times story
The Montana Commons site plan has been modified to show possible retailer locations within the center. (Original site plan: LoopNet)
revealing the Montana Commons shopping center, there was no mention of “Town Center on the Loop,” though River Oaks did indicate it plans to sell off the remainder of the former El Cruzero acreage to other developers and home-
builders. Construction of Montana Commons will begin in 2016.
Officials Break Ground on New Northwest El Paso Hospital Ground was broken last week on a new multi-million dollar Sierra Providence Health Network (SPHN) hospital in Northwest El Paso that will take shape at the corner of Transmountain Road and Resler Drive. Officials touted their partnership with Texas Tech University Health
Construction Update: San Jacinto Plaza Renovation Project Work Begins on Central Shade Structure that will Protect 'Lagartos' Sculpture The location for a new Corner Bakery restaurant in East El Paso has been selected, according to an item on the City Plan Commission’s (CPC) agenda. The new eatery will be built at 1311 Airway Boulevard, at the intersection with Edgemere Boulevard. The restaurant will be built at the site
of a former golf shop in front of a relatively new TownePlace Suites by Marriott. The GECU headquarters building is located across Edgemere. It will be the fourth Corner Bakery location in El Paso, with two also located on the East Side and another located on the West Side. In the Northeast part of town, a CVS could be coming to a property near the corner of Dyer Street and Diana Drive. An item also set for consideration by the CPC has a label titled “CVS Subdivision,” though the site plan does not show the actual store. The application includes two commercial lots totalling 1.97 acres, across Diana Street from the future Northgate Transit Oriented Development being advanced by the City of El Paso. Officials have remained mum on that project since the bidding period closed last year. CVS has been steadily expanding in the city after opening its first store in Downtown El Paso in early 2013. Since
Sciences Center in making the facility a teaching hospital. The hospital will eventually have 140 beds for patients and will eventually host approximately 75 medical residents in a multi-year program. Once completed, it is expected to gen-
then, it has opened a store on Zaragoza Road in the Lower Valley and has plans for a store on Mesa Street near UTEP and another on the East Side at McRae
erate about 300 jobs. Look for completion in 2016. At left: Rendering of the new SierraProvidence Hospital building in Northwest El Paso. (SPHN)
Boulevard and Wedgewood Drive. No word on the timeline for either project. The CPC will consider both items at its July 31, 2014 meeting.
Onix Apartments Take Shape on West Side A unique, new condominium apartment building is going up in West El Paso. The Onix Apartments will bring a 58,000 square foot, four story structure to a vacant property off of Onix Drive near Sunland Park Mall. Renderings of what the finished project will look like show a single building that surrounds a central courtyard which will include a swimming pool and water feature. Balconies will overlook the courtyard area, located at different levels throughout the building. According to the project’s architect,
Carlos Lievanos of Liev Arch of El Paso (www.lievarch.com), the courtyard is “strategically located based on building orientation, site exposure and views to integrate light and privacy in response to the desert environment.” Initial plans included a Phase II that would construct three more condominium buildings, a clubhouse, and a small retail space. However, only the current building under construction will be realized, as of this point. No word yet on rental rates or availability for the apartment units.
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Expert Advice
Is it time for a checkup on your 401(k) plan? Joe Bernal Employees Benefits of El Paso
Author Keith R. McMurdy recently presented this information to the professional retirement planners across the country. I thought it would be a good opportunity for our members to read the article and give some consideration on your own plan. If you don’t currently have some sort of retirement plan then by all means check out the members only plan the association offers. I think the article might just awaken some discussion on the topic, but more importantly give you concern on ensuring your plan or new plan meets the important aspects of a well-managed retirement plan for you or your company. -Joe Bernal As we approach the end of the plan year for most plans, now is a good time for plan administrators and plan sponsors to give their 401(k) plans a quick once over to see if everything is properly in place. The IRS even provides a 401(k) plan checklist with some suggested corrective mechanisms that can be taken to bring plans into compliance. A good starting place for a compliance tune up is to see if you can answer some basic questions about your plan: • Who are the trustees? • Who is the plan administrator? • Who are the outside service providers and how often are they contacted? • What are the plan's eligibility rules and who is responsible for verifying them? • How are participants notified of eligibility? • How is plan documentation distributed? • Where are the plan records kept? • Who is responsible for preparing and filing the form 5500? After you get past these, some basic questions about plan administration come into play: • Who keeps track of contributions and limits? • How does the plan define "compensation"? • What is the vesting schedule? • Are there required contributions from the employer? • Who is responsible for the discrimination testing? • Does the plan permit loans and how are they tracked? • Who is responsible for reporting to participants? • How are distributions made and who is the contact person? The reason I bring this topic up is that I was recently working with a client who had one person who was solely responsible for benefit administration. Unfortunately that person passed away suddenly and no other person in the organization could answer any questions about the 401(k) plan. Although it seems like the above information is simple to collect, the
company still spent hours and hours recreating the plan history because they neglected to keep a record of how the answers to these questions had changed over the years. Think of your 401(k) plan as a well maintained car. It needs a check up on a regular basis to keep running smoothly. You have to keep records of what was done and you have to know where the important information is if you need it. Just like your car, you hope your 401(k) plan never breaks down. But in anticipation of a future problem, it is worthwhile to stop and make a record of the responsibility for plan administration and the current status of the plan. That way it will be easier to make repairs if they ever become needed. For more information contact Joe Bernal joe@employeebenefitsep.com 915-542-0900 (c) Copyright 2014 Employee Benefit News. All rights Resrved.
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Builders Outlook
Thousands expected at Convention Center Fall Home & Garden Show opens October 17 The biggest show of the season is coming to the El Paso Convention Center on October 17-19. The 2014 Fall Home and Garden Show transforms the convention center into a showcase extravaganza. From the front door to the backyard of your home this show has something for everyone. You’ll see ways to transform your garden, ways to fix your walls, painting pro’s and deck specialist. This Fall Home and Garden show offers that and much more including “show only specials” from the dozens of exhibitors that will fill the floor. But this year El Paso’s show will feature some really cool stars from Animal Planet’s TANKED show, Wayde King and Brett Raymer. These two businessmen transform customer’s houses and businesses with exclusive Acrylic fish tanks designed to keep real fish enthusiast with beautiful one of a kind tanks. No job is too big, too far, or too outlandish as Wayde and Brett travel the world to make customers happy with their own little ocean. They’ve done casinos (the business is headquartered in Las Vegas), sport hero’s homes, churches and even small mom and pop shops, transforming them into works of art. Come and meet these two stars and owners of Acrylic Tank Manufacturing (ATM) at the Fall Home and Garden Show.
The show will also offer stunning landscapes, pergolas and outdoor living displays. Sunset Gardens, an El Paso favorite, will sell selections of flowers, plants and trees you can take home. Palo Verde Homes will construct a demonstration home filled with all the latest in kitchen appliances, lighting, fixtures, flooring and even an outdoor feature. This Palo Verde Home will welcome visitors to talk about their next dream home. Come by and visit it at the Fall Home and Garden Show. Prices for the show have been announced by Show Technology Productions, the show producer from San Antonio. “We’re really excited about the show in El Paso and we’d like to remind everyone that because the convention center is closed from January through July next year this will be the only show we produce for a year,” said Tommy Mantini, co-owner of Show Technology. “With thousands of square feet of exhibits the show will showcase the latest in products and services for your home, apartment or maybe even your business,” he continued. It’s time for you to exhibit at this show and with the thousands of visitors anxious to see you and your products or service. “Where else can you get thousands of people in one weekend?” asked Ray Adauto. “The
Fall Home & Garden Home will run October 17-19 at the El Paso Convention Center. Headliners will be Animal Planet’s TANKED show, Wayde King and Brett Raymer answer is nowhere else,” said Frank Torres, president of the EPAB. Regular admission is only $7.50, while active military with ID and kids under 12 get in free. A special senior price of $5.50 and children 13-16 pay only $3.00. “We’re affordable for the whole family to come and enjoy the
show and we hope to fill the convention center over this special weekend,” said Frank Torres. For information on getting a booth or exhibit space contact Show Technology Productions by logging onto www.elpasohomeandgarden.com
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2014 issue 9
2014 Issue 9
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Builders Outlook
Membership News
www.elpasobuilders.com www.epbuilders.org
UPCOMING EVENTS | OCTOBER 8 11:00 BOARD MEETING 12:00 GENERAL MEETING EL PASO CLUB CHASE BANK BUILDING DOWNTOWN
OCTOBER 17 – 19 HOME AND GARDEN SHOW COVENTION CENTER
NOVEMBER 5 EL PASO DESERT OPEN GOLF TOURNAMENT PAINTED DUNES 9 A.M. SHOTGUN
RENEWALS | ACME BRICK COMPANY BARON SUPPLY BARRAGAN & ASSOCIATES BELLA VISTA CUSTOM HOMES, INC. BMC SELECT CUSTOM DREAM HOME DECASA TILE & STONE, INC.
NEW MEMBERS | PRIMELENDING CONTACT: LYDIA H. CORDOVA 6044 GATEWAY EAST, SUITE 900 EL PASO, TEXAS 79905 915-630-8845
INDUSTRIAL REALTY GROUP INCORPORATED CONTACT: BRENT D. HARRIS 123 W. MILLS AVE., STE. 600 EL PASO, TEXAS 79901 915-877-4300
SODA SPONSOR | Thanks to our SEPTEMBER SODA SPONSOR: CAREFREE HOMES
GREATER EL PASO CHAMBER OF COMMERCE KWAL PAINT CO. LASER TECH SOUTHWEST DÉCOR EL PASO CORPORATION STEWART TITLE OF EL PASO STRUCSURE HOME WARRANTY WAGNER EQUIPMENT CO.
Jaime’s Courier Service,Inc. 915-549-4533 or 915-478-2404 Bonded, insured for your peace of mind.
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Builders Outlook
2014 issue 9
Associates Council Associates council has much to do soon
Sam Shallenberger Western Wholesale Supply
I’ve been telling you about the upcoming events for months and asking you to get involved. I’m so glad to let you know that you have responded pretty well. The association is having it’s Fall Home and Garden show October 17-19 and those wacky guys from Animal Planets “TANKED� show will be here. Bret and Kevin are the show’s stars, well at least second
bananas to the real star the beautiful acrylic fish tanks these guys create. It’ll be fun and we have booth space for you to showcase your merchandise or service. Show Technologies is our producer and they always put a first class show on. This one will be great. We also announced the 2014 Treasure Tour of Homes and Ray tells me you are responding well to his request for help with prizes and such. We need you to help with advertising
also. If you haven’t gotten some information on that make sure you contact the builders office. We still have a few openings for the Pro Am so if you haven’t gotten a team yet check with Ray as well. Year is almost over and we’ll start our 2015 campaigns soon including a visit to Austin for Rally Day in March. Lot’s to do and little time to get it all done. See you soon. Sam
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www.elpasobuilders.com www.epbuilders.org 6046 Surety Dr. El Paso, TX 79905 915-778-5387 • Fax: 915-772-3038 ■ execuTive oFFicerS Frank Torres – President GMF Custom Homes edgar montiel – vice President Palo Verde Homes carlos villalobos – Secretary Treasurer Palo Verde Homes Sam Shallenberger – Associates chair Western Wholesale edmundo Dena - immediate Past President Accent Homes ray Adauto – executive vice President El Paso Association of Builders Jay Kerr -Attorney of record
■ couNciL/commiTTee cHAirS Associates council Sam Shallenberger Build PAc Randy Bowling Desert Green Building council Javier Ruiz Land use council Sal Masoud Young Designer Award John Chaney remodelers council Rudy Guel membership retention Mike Santamaria, Greg Bowling Finance committee Carlos Villalobos Women’s council Lorraine Huit ■ ADviSorY To THe BoArD J. Crawford Kerr, Attorney, Firth, Johnston & Martinez ■ BoArD oF DirecTorS Beverly Clevenger, Automated Division 6 Builders, Inc. Leti Navarette, Custom Dream Homes Kathy Parry, Hunt Communities Edgar Garcia, Bella Vista Custom Homes, Inc.. Bud Foster, Southwest Land Development Services Juanita Garcia, ICON Custom Home Builder, LLC Walter Lujan, DAWCO Home Builders Joey Najera, Joseph Custom Homes Rigo Mendez, Mission Homes Nick Bombach, Casas de Leon, LLC Lydia Mhouli, Crown Heritage Homes JJ Vasquez, Pacifica Homes Dan Ruth, Millenium Homes Ken Wade, El Paso Building Materials Ruben Orquiz, MTI Ready Mix Kathy Carrillo, Pioneer Bank El Paso Henry Tinajero, WestStar Bank Chuck Gabriel, Carpets West Ted Escobedo, Snappy Publishing John Chaney, Passage Supply Joe Bernal, Employee Benefits of El Paso Linda Troncoso, TRE & Associates Orlando Rodriguez, Mass Media Advertising, Inc. Bret Thompson, Foxworth Galbraith Lumber Chris Worm, City Bank Texas Sal Masoud, Del Rio Engineering
■ TAB STATe DirecTorS Randy Bowling Greg Bowling
■ NATioNAL DirecTorS Bobby Bowling IV. Demetrio Jimenez NATioNAL ASSociATioN oF Home BuiLDerS (800) 368-5242
TexAS ASSociATioN oF BuiLDerS (800)252-3625
2013 Builder member of The Year Edmundo Dena Accent Homes 2013 Pat cox Award Sam Shallenberger Western Wholesale Supply 2013 Associate of The Year WestStar Bank Larry Patton, Burt Blacksher and Henry Tinajero
Honorary Life members Wayne Grinnell Don Henderson Chester Lovelady Cliff C. Anthes Anna Gill Brad Roe Rudy Guel E H Baeza Past Presidents committed to Serve Greg Bowling Kelly Sorenson Mark Dyer Mike Santamaria John Cullers Randy Bowling Doug Schwartz Robert Baeza
Bobby Bowling, IV Rudy Guel Anna Gil Bradley Roe Bob Bowling, III E. H. Baeza Hershel Stringfield Pat Woods
ePAB mission Statement: The El Paso Association of Builders is a federated professional organization representing the home building industry, committed to enhancing the quality of life in our community by providing affordable homes of excellence and value. The El Paso Association of Builders is a 501C(6) trade organization. © 2014 Builder’s Outlook is published and distributed for the El Paso Association of Builders by Ted Escobedo, Snappy Publishing ted@snappypublishing.com El Paso • Texas • 79912 915-820-2800