Builders

utlook

www.elpasobuilders.com

2014: issue 6-7

NAHBs Supreme Court Victory Stops EPA in its Tracks

In a major victory for NAHB, the
U.S. Supreme Court ruled that the
Environmental Protection Agency
(EPA) does not have the authority to
require multifamily and commercial
builders to obtain costly preconstruction permits for greenhouse
gasses emitted from the buildings they
construct.
The case against the EPA was
brought by NAHB and its coalition
partners and revolved around whether
the agency has the power under the
Clean Air Act to regulate greenhouse
gas emissions from stationary sources
that could include everything from
factories, refineries and power plants
to apartment and commercial
buildings.
Because of the way the EPA

interpreted the [Clean Air Act] statute,

the agency sought to treat apartment
complexes as if they are power
plants, NAHB Chairman Kevin Kelly

said in an official statement. That

makes absolutely no sense and would
have dealt a major setback to the
housing recovery. Todays verdict
strikes an important blow against
federal agencies overreaching their
authority.
If the EPA had prevailed, it could
have forced many builders and
developers to obtain an expensive
pre-construction permit for
greenhouse gas emissions, which
would severely curtail apartment and
mixed-use development. Some singlefamily and potentially even masterplanned community development
could also have been affected.
Based largely on EPAs own
estimates, the cost of the permit alone
could have been about $60,000 per

multifamily property, with costs due to

delays averaging about $40,000
across all building sizes. For a
property with 50 or more apartments,
costs due to delays could have
reached up to $200,000.
The Supreme Court decision stops
EPA in its tracks and represents a
significant win not only for multifamily
builders, but for all builders that deal
with excessive and unlawful EPA
rules.

levels of student debt and general lack

of confidence in housing as an
investment, at least in the short term.
"We see a number of strong longterm driving forces increasing the
rental population and creating
demand. Employment rates for
millennials draw closer to the national
average; the housing recovery is
gaining traction, which will push home
prices higher; and shorter job tenures
create a need for housing mobility,"
notes Kevin Finkel, an executive vice
president with Philadelphia-based
Resource Real Estate, an investment
firm.
"On the supply side, increasing
building material costs will put
pressure on the construction of new
properties. If interest rates start to
trend with economic recovery, added
borrowing costs will also inhibit new
construction."
Strength in the rental market is
fueling a flood of new apps and
websites. Swapt, deemed by its
creators as the Yelp of apartment
rentals, will likely launch out of beta
this month. It combines property

listings with reviews from renters in a

rental search system. It comes on the
heels of start-ups like RadPad,
PadMapper, HotPads, Apartment
Finder, Comfy Rentals and Lovely.
All aim to simplify the rental
process, giving landlords and tenants
easier access to listings and offering
the ability to pay monthly rent on a
mobile device.
"If you look at the rental market, it's
the most competitive it's been ever,"
said Eric Wolfe, CEO of Swapt and a
former multifamily analyst at Citi. "The
reviews are designed to give people
the confidence they need to rent and
rent quickly. There is a good amount
of money to be made on lead
generation."
Wolfe, 31, and a renter himself,
does believe demand will soften as
the echo boom generation ages into
its late 30s and turns to homebuying.
He also believes new supply will
soften rent growth.
"Demand is still going to be there,"
he added. "I do think there is room for
more unique sites in the space."

Apartments
fill as rental
demand
keeps on
surging

Diana Olick
CNBC
Look up into any window of the
closest apartment building and odds
are you'll see someone living there.
National apartment occupancy in May
soared to the highest level in at least
six years, according to Axiometrics, an
apartment data and research
company. Ninety-five percent of all
units are filled, even as thousands of
new units are becoming available.
"It's a pleasant surprise because it's
coming at a time when new supply is
flooding the market," said Stephanie
McCleskey, Axiometrics' director of
research. "One reason occupancy is
rising is that, not only are people
moving into these new units, but
they're also moving into Class B units
at a lower price point."
It is especially a surprise to
investors, who pulled out of multifamily
real estate investment trusts (REITs)
last year, as all eyes focused on
surging home sales. The S&P index of
residential REITs is now up nearly 14
percent from a year ago and up nearly
20 percent year-to-date. Some of the
top performers in the sector: Preferred
Apartment Communities, Essex and
AvalonBay. Weakening affordability in
the homebuying market is clearly
favoring rentals.

"The rent-buy math remains

generally favorable for our Apartment
coverage universe," wrote researchers
at Deutsche Bank in a recent report.
"Though pending supply remains a
concern for certain apartment markets
in 2014 and 2015, recent revenue
growth trends were better-thanexpected suggesting that strong
demand, buoyed by improving rentbuy dynamics, is helping to offset
increases in supply."
About 180,000 new apartment units
have become available throughout the
U.S. in the past 12 months, according
to Axiometrics. Still, growth in rental
prices in May was the strongest it's
been in 16 months, at 3.5 percent.
"The year-to-date effective rent
growth numbers portray an apartment
market that may be having its
strongest year since the Great
Recession ended," said Jay Denton,
vice president of research at
Axiometrics.
Despite the slow recovery in home
sales, several factors still fall in favor
of renting. Younger Americans are
faced with weaker employment, high

Builders Outlook

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2014 issue 6/7

2014 issue 6/7

Builders Outlook

Presidents Message |
I hope this massage finds everybody in
good health, especially Mr. E.H. Baeza,
Frank
hope you can join us for our next meeting.
I would like to congratulate a lot of
Torres
members this month, especially those
President,
builders that made the top 200 according
El Paso Association
to the Builders magazine for 2013. DR
of Builders
Horton, Carefree Homes and Tropicana
Homes, Hope you can do it again for 2014.
Special thanks to Bob Ayoub president
of MIMCO for his presentation on our June
General Meeting, it was very interesting to know where and what is developing
around the different parts of our city. To all the associates and builders that
participated on the speed network, it was a success; we need to do it again.
Congratulations to the winner of the Young Designers competition, Juan Carlos
Gutierrez a junior from El Dorado High School and to his teacher Luisa Valenzuela,
keep up the good work.
Sam Shallenberger will be stepping down from the Associates council chair at
the end of this term. We would like to keep him forever but he needs some time
off. We have some members in mind to replace him even though it is the
presidents decision on who will be the next Associate council chair I will discuss it
with the Executive Board. Thanks in advance to Sam Shallenberger for everything
you have done for the Association. Heres the bad news, he is stepping down but
he is not leaving the Association. Just kidding Sam, just kidding. This association
wouldnt be the same without him. By the way hes staying on as the Golf
Chairman, something hes done so well for so long.
Make plans for the Sunbelt Show in San Antonio July 23-25 San Antonio Hill
Country Resort and Spa. But most important make plans to participate in the Home
Show sponsored by our association at the Civic Center October 17, 18 and 19Th.
For more information call Ray Adauto or Margaret at 778-5387 or Pamela Rogers
at 210-408-0998. Your participation will be good for your business and for the
association. We will NOT have a spring show due to the event at the civic center.
Were looking for a builder to construct a house inside the center. I hope you can
do that for us. It will be a big job but theres big rewards doing it.
Finally thanks to the Winton group for the opportunity of having a winter Parade
of Homes, presented at the upper valley Rio Valley Estates sometime late
November, early December. We have eight builders committed; I would like to
have at least twelve. If you are interested call us ASAP this will move fast. Thanks
and enjoy your vacations, and dont forget to do business with a member.
Just a remainder no meetings for the month of July. See you in August.

ElPasoDisposal

772-7495

Showroom:
2131 Missouri
915 533 6045

fax 533 6096

Thomas R. Brown, Owner

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them carefully.There is no guarantee that participation in any retirement plan will result in a profit or that your account will outperform a self-managed portfolio. Please consult with your financial
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Builders Outlook

2014 issue 6/7

Perspective

Ray Adauto,
Executive
Vice President
EPAB

If you know something about home

building you know that its hit or miss. It
really doesnt matter if youre a big time
national, or a local startup the risks are
there. Some companies can be a little
bit more immune to changes out of
their control while others catch the flu
on the first sneeze. In talking with some
of our builders theyre saying that
theyre confused when they read the
national headlines that home building is
booming. Where they ask is the
boom? From what I can tell there are
indeed pockets of action, but is this
really a housing boom? The concern is
whether the boom is fiction or is it
manufactured? Allow me. As I see it
this boom is real in some sectors and
not in others. We are building new
homes at an incredibly low number,
somewhere around 400,000 to 450,000
units a year nationwide. Statistically
this is far below what the market should
be producing or needs.
Some
economists say that housing may
never fully recover to the needs.
Without a doubt the housing industry
continues to emerge from causes that
are old and new.

Myriad of reasons why housing recovery not easy going

Blaming the housing concerns on

one item would not be truthful. The
economy isnt good yet, low marks for
the Executive Branch particularly with
the failure of some political promises.
There is distrust with Congers; distrust
of the federal system and its
overreaching imposition into the private
sector; concerns that too many
alphabet agencies are involved in
businesses with overbearing rules
created by professional government
employees who have never held a
private sector job, much less owned
one. Its about jobs, or lack of them. Its
about Obamacare and the costs
associated with that. Its about how
much it costs to live, keep a business
going or raising kids.
I have heard of people qualifying for
a mortgage only to back out at title
signing because someone close to
them lost a job. I also have heard of
people not qualifying due to the new
mortgage rules. In El Paso a debt to
income ratio of 42% is expecting too
much. First, you have to have the
income and with a large percentage of
the population not making over $40K a

year that becomes a problem.

Secondly I believe that we have a
generation whose student loan debt is
so high that they will continue to live
with mom and dad a long time. Theres
no parental pressure for them to move
out.
In particular there are the
Millennials who seem less concerned
about a house for themselves and
more about living near a Starbucks or
McDonalds. When Millennials refuse
to buy or move out then the future
market is going to suffer. Third is that
more baby boomers are staying put
(see Boomer articles in this issue)
remodeling or accommodating their
homes rather than moving out or
downsizing. In the past age downsizing
would open larger resale homes to
growing families and create markets for
adult living or condominiums and
townhouses.
Fourth and in my opinion one of the
biggest reasons were seeing a
downturn in housing is the banking and
mortgage rules changes in 2014. While
loan rates are near all-time lows the
ability to qualify for a mortgage is
tougher today than it was in 2013 and

people just dont qualify. There is no

wiggle room for the lenders and
therefore we see buyers wanting to buy
shut out from traditional mortgages.
This is putting a premium on rental
units and apartments, raising rents now
making some places out of reach for
the average working family. It has also
reborn the subprime lending market.
Given the current state of housing its
hard to confirm a boom. If this is a
boom then were not well. At some
point housing will have fewer players in
it and less choice for the consumer.
Anyone who thinks housing is a simple
fix just doesnt understand the myriad
of components to it and how one piece
can create a domino effect. Starting
with getting affordable housing back in
the mix would be a great start. The
economy has to rebound. The second
half of 2014 is upon us and in six
months well have a chance to see
what we did to right it.

2014 issue 6/7

Builders Outlook

Industry News
New-Home Sales Up
18.6 Percent
Sales of newly built, single-family homes
rose 18.6 percent to a seasonally adjusted
annual rate of 504,000 units in May,
according to newly released data by the
U.S. Department of Housing and Urban
Development and the U.S. Census
Bureau. This is the highest rate since May
2008.
These numbers are in line with our
recent builder surveys, which indicate that
more consumers are getting off the fence
and coming back into the marketplace,
said Kevin Kelly, chairman of the National
Association of Home Builders (NAHB) and
a home builder and developer from
Wilmington, Del.
This increase is a welcome sign after a
slow start to 2014, said NAHB Chief
Economist David Crowe. As job creation
continues, we can expect further release
of pent-up demand and continued gradual
growth in the housing recovery.

Regionally, new-home sales were up

across the board. Sales rose 54.5 percent
in the Northeast, 34 percent in the West,
14.2 percent in the South and 1.4 percent
in the Midwest.
The inventory of new homes for sale
held steady at 189,000 units in May. This
is a 4.5-month supply at the current sales
pace.

Housing Production
Falls 6.5 Percent
Declines in both single- and multifamily
starts pushed nationwide housing
production down 6.5 percent in May to a
seasonally adjusted annual rate of just
over 1 million units, according to newly
released figures from the U.S. Department
of Housing and Urban Development and
the U.S. Census Bureau. However, singlefamily permits, which can be an indicator

of future building activity, rose 3.7 percent.

The dip in single-family production
shows builders continue to move carefully
in adding inventory, said Kevin Kelly,
chairman of the National Association of
Home Builders (NAHB) and a home
builder and developer from Wilmington,
Del. They are also facing supply chain
issues, such as access to lots and labor.
Single-family housing starts were down
5.9 percent to a seasonally adjusted
annual rate of 625,000 units in May.
Meanwhile, multifamily production fell 7.6
percent to a seasonally adjusted annual
rate of 376,000 units.
The encouraging news is that singlefamily permits are up by almost 4 percent,
said NAHB Chief Economist David Crowe.
The modest increase is evidence that
builders expect continued release of pentup demand and a gradual expansion of
the housing market. We are still
forecasting a 12 percent increase in total
housing starts for the year.
Regionally in May, combined single- and
multifamily housing production fell in the

A W A R D E D

TEXAS BUILD E R O F THE Y E AR

2013

We build so you can GROW

Northeast, the Midwest and the West, with

respective losses of 25.2 percent, 16.5
percent and 16.3 percent. Meanwhile, the
South posted a 7.3 percent gain
Issuance of building permits registered a
6.4 percent decline to a seasonally
adjusted annual rate of 991,000 units in
May. This was due entirely to a decrease
in the multifamily sector, where permits
registered a 19.5 percent loss to 372,000
units. Single-family permits increased to
619,000 units.
The Northeast and Midwest registered
overall permit gains of 3.5 percent and 3.8
percent, respectively, while the South and
West posted respective losses of 7.3
percent and 15.2 percent.

Builder Confidence
Rises Four Points
Builder confidence in the market for
newly built, single-family homes rose four
points in to reach a level of 49 on the
National Association of Home
Builders/Wells Fargo Housing Market
Index (HMI) released today. It remains one
point shy of the threshold for what is
considered good building conditions.
After several months of little fluctuation,
a four-point uptick in builder sentiment is a
welcome sign and shows some renewed
confidence in the industry, said NAHB
Chairman Kevin Kelly, a home builder and
developer from Wilmington, Del. However,
builders are facing strong headwinds,
including the limited availability of labor.
Consumers are still hesitant, and are
waiting for clear signals of full-fledged
economic recovery before making a home
purchase, said NAHB Chief Economist
David Crowe. Builders are reacting
accordingly, and are moving cautiously in
adding inventory.
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 for 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 index components posted gains
in June. Most notably, the component
gauging current sales conditions increased
six points to 54. The component gauging
sales expectations in the next six months
rose three points to 59 and the component
measuring buyer traffic increased by three
to 36.
Looking at the three-month moving
averages for regional HMI scores, the
South and Northeast each edged up one
point to 49 and 34, respectively, while the
West held steady at 47. The Midwest fell a
single point to 46.
Editors Note: The NAHB/Wells Fargo
Housing Market Index is strictly the
product of NAHB Economics, and is not
seen or influenced by any outside party
prior to being released to the public. HMI
tables can be found at nahb.org/hmi. More
information on housing statistics is also
available at housingeconomics.com.

Builders Outlook

2014 issue 6/7

NAHB:Proposed Clean Water Act Rule is More Federal Overreach

A proposed rule recently released by the
Environmental Protection Agency (EPA)
and U.S. Army Corps of Engineers (Corps)
to expand the reach of the Clean Water
Act could increase the cost of new homes
without a corresponding benefit to
Americas lakes, rivers and other water
bodies, the National Association of Home
Builders (NAHB) told Congress today.
Unfortunately, the proposed rule falls
well short of providing the clarity and
certainty the construction industry seeks,
NAHB Chairman Kevin Kelly, a home
builder and developer from Wilmington,
Del., said during a hearing before the
House Transportation and Infrastructure
Committees Subcommittee on Water
Resources and the Environment.
The rule will increase federal regulatory
power over private property and will lead
to increased litigation, permit requirements
and lengthy delays for any business trying
to comply, added Kelly. Equally
important, these changes will not
significantly improve water quality because
much of the rule improperly encompasses
water features that are already regulated
at the state level.
Expanding federal authority under the
Clean Water Act would greatly increase
the number of construction sites required
to obtain appropriate permits, which would
also delay, impede and raise the cost of
construction projects. Moreover, this would
add to the exorbitant backlog of permits,
which currently range from 15,000 to
20,000.
This proposal would unnecessarily
impose additional regulations that would
make it more difficult for our industry to
provide homes at an affordable price

point, said Kelly. We need to find a

common-sense middle ground that will
protect our nations water resources and
allow citizens to build and develop their
land.
The rule would exacerbate the current
regulatory confusion by adding new,
undefined terms such as floodplain and
riparian area to give regulators
automatic federal jurisdiction over
properties that contain isolated wetlands,
ephemeral streams or any land features
covered under the expansive definition of
tributary.
For any small business trying to
comply with the law, the last thing it
needs is a set of new, vague and
convoluted definitions that only provide
another layer of uncertainty, said Kelly.
The proposed rulemaking also
threatens to discourage the use of lowimpact or green development practices
like rain gardens, swales and even
sediment ponds as the EPAs language

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about whether developers would have to

get a federal permit before installing these
systems is still unclear.
Finally, Kelly said that the proposal is
inconsistent with prior U.S. Supreme Court
rulings that established limits to federal
jurisdiction over isolated wetlands and
ephemeral streams. The proposed rule to
clarify protection under the Clean Water
Act for streams and wetlands fails to
appropriately recognize the states
authority to regulate what have historically
been deemed state waters.
Clearly, this is not what Congress
intended when it enacted the Clean Water
Act or told the EPA and the Corps to clarify
its jurisdictional reach, said Kelly. Rather

than adding new protections for our

nations water resources, this proposed
rule inappropriately shifts the jurisdictional
authority of most waters to the federal
agencies. If the EPA and Corps are
interested in developing a meaningful and
balanced rule, they must take a more
methodical and sensible approach.
At the request of NAHB and other
stakeholders, the EPA yesterday
announced a 91-day extension to the
proposed rules public comment period
from July 21 until Oct. 20, 2014.

2014 ISSUE 6/7 Builders Outlook

Builders

utlook on the scene |

EPAB welcomes
Bob Ayoub to
general meeting
The EPAB general meeting was held at the
El Paso Club on June 11 and we were
fortunate to have Bob Ayoub, President of
MIMCO commercial developers speak. His
topic was an economic overview of what El
Paso is looking like to the commercial
development companies and what direction
the area is moving to with the new
developments were seeing. I have to tell
you that Im honored to come before this
group who understands better than most
what is shaping our future here in El Paso,
Ayoub told the Outlook. I have concerns,
just like every business person does, that our
area must be competitive in jobs as well as
offerings, he continued. He is President of
the Realtors Commercial Alliance of the
Greater El Paso Association of Realtors, a
member of the CCIM West Texas Chapter, a
member of the International Council of
Shopping Centers, a member of the Board of
Directors of the Central Business
Association, and President of the Board of
Directors of the of the Downtown
Management District. He currently is a Texas
licensed Real Estate Broker and the
President of MIMCO, Inc.
The membership also welcomed the 2014
Young Designer award winner from El
Dorado High School, Juan Carlos Gutierrez
and instructor Luisa Valenzuela.

Content provided by
El Paso Development News
visit: elpasodevnews.com

MCA Foundation
Eyes New
Location for
Biomedical
Building
Cardwell Collaborative
Could Now Be Built on
Jefferson High School
Landt

The Medical Center of the Americas

Foundation (MCA) announced last week
that it would now like to build its
biomedical research building on Jefferson
High School land in Central El Paso. The
MCA submitted its preliminary proposal to
the El Paso Independent School District
Board of Trustees last week.
The MCA outlines how it believes the
60,000 square foot Cardwell Collaborative
will benefit Jefferson High School and
Silva Health Magnet students by locating
the building on Jeffersons campus. It
would require a lease to purchase 2.6 to
2.9 acres of land to work.
On the land, the MCA will construct the
Cardwell Collaborative building, a power
generator, and a surface parking lot. MCA
also acknowledges that certain structures
on campus would have to be demolished
to make room for the large building.
As part of the proposal, the MCA may
build and equip a computer lab within the
Jefferson/Silva campus, improve campus
landscaping, and improve campus gates
and signage.

This concept
image shows
what the
Caldwell
Collaborative
may look like
when
completed.
(MCA
Foundation)

MCA will also create a master plan for

the Jefferson campus to show how the
Cardwell Collaborative will be integrated
onto the property. It also states that
students will be able to tour the facility,
attend lectures at the facility, intern or work
at the facility.
The MCA announced plans for the
Cardwell Collaborative last year, a $30
million four story structure that will house

public and private laboratory space. Initial

plans were to locate the building on Tech
Park land adjacent to Gateway East
Boulevard.
Based on the newest proposals, MCA
officials would like to have an agreement
in place by August 31, 2014, in order to
begin site work in September and building
construction by October.

el paso development news

Sun Bowl, Haskins Center to get Upgraded Video Displays:
UTEP Partners with Daktronics to Bring Larger, High Resolution Screens to Facilities
Fans attending football and basketball
games at the University of Texas at El
Paso (UTEP) will be treated to much
larger, clearer video displays beginning
in the fall. This is thanks to a new partnership with audio-visual technology
company Daktronics of South Dakota.
School officials announced the new
displays last week, and workers are
already removing the existing screen at
the south end of the Sun Bowl. This is
where the largest display will be
installed, a 34 feet tall by 60 feet wide
LED screen that will tower above the
entrance tunnel. It includes wide-angle
visibility and will be capable of showing
windowed feeds, different squares within
the screen that can be used to show
data, animations, video, and advertisements.
To the right and left of the main display, two narrow displays will show statistics, such as the existing scoreboards,
animations, and sponsored messages.
Each will be six feet tall and stretch 90
feet long. A similar screen on the north-

TIME Teases New

Restaurants as
Opening Nears
Non-Traditional Center
Introducing Three Eateries
to Montecillo Development

Museum of
History Digital
Wall Adds Fifth
Display
UTEP Partners with
Daktronics to Bring Larger,
High Resolution Screens to
Facilities

ern end will measure four feet high by 96

feet long.
Daktronics will also install a new
audio system inside the Sun Bowl which
will work hand in hand with the video
system. According to a press release,
the audio system will provide full-range
sound reproduction and deliver clear and
intelligible speech.
At the Don Haskins Center, two endwall displays will work similarly to the
large display at the Sun Bowl. The
arenas screens will measure 13 feet tall
by 40 feet wide. In addition, Daktronics
will install new locker room clocks, shot
clocks, and backboard lighting kits.
University Ticket Center, in front of the
Don Haskins Center, will receive the final
new display, a four foot high by 18 foot
wide marquee. It will be used by UTEP
to highlight upcoming events and for
other messaging purposes.
All the new displays are scheduled to
be installed during the summer and
should be ready for use by fall.

A large, LED display will replace the existing one at the Sun Bowl at UTEP, as
seen in this concept image. (Daktronics)

One of the three new eateries in the

coming weeks, and the developer is using
social media to provide glimpses into the
future restaurants.
TIME at Montecillo, a self-described
non-traditional shopping center, has
plans to open a casual grill house, a cantina serving Mexican-style street food,
and a donut and coffee shop at the corner
of Mesa Street and Montecillo Drive.
Recently, TIME debuted a Facebook
page for Hillside Coffee & Donut Co.
(facebook.com/HillsideCoffee), the centers resident coffee shop that will grind a
local roast daily and sell a variety of
brews alongside handmade donuts.
Recent Instagram photos hint that the
donuts will be uniquely square-shaped.
There are less details available regarding Stonewood Modern American Grill,
though guestlife.com describes it as offering southwest flair with its own spin on
steaks and modern American grill food.

Early on, developers had squarely

described it as a steakhouse, though it
seems the menu will now vary in terms of
the type of grilled items it will offer.
The third eatery, Cantina Malolam, will
serve tacos and ceviche, among other
offerings including beer. A recent teaser
Facebook photo shows a brightly colored
circular design on glass panels, most likely from the interior of the restaurant.
Websites exist for the restaurants but
currently contain only a link to an employment application. According to recent
posts at the TIME Facebook page (facebook.com/TimeAtMontecillo), at least
some of the restaurants could open in
June.
TIME at Montecillo will also include several local retailers in 12,000 square feet of
leasable space at the center. It will be a
unique addition to Montecillo, with recycled shipping containers incorporated into
portions of the structures. The center is

The El Paso Museum of Historys

planned digital wall will be adding an
additional screen, according to an amendment to the contract for the project. The
TouchCity Digital Wall, designed by
Gibson Group of New Zealand, will now
be made up of five 95-inch screens.
Originally, the design plan called for
using four 103-inch screens, but that size
is no longer available from the manufacturer. The newer 95-inch screens are the
largest currently available displays that
can accommodate the project. This
change amounts to 63 horizontal inches
of additional display.
The change will increase the cost of the
displays by about $40 thousand, which
includes a change to the order for specialty glass from EuropTec of Germany. The
City expects to offset the increase with
savings in technology purchases of about
$80 thousand.
New renderings from the projects architect, MNK Architects of El Paso, show the
five displays along the exterior southern
wall of the museum, within a protective
welcome pavilion.
The entire project has a budget of $3
million, which includes construction of the

pavilion and the purchase and installation

of the digital wall. Also part of the project:
a mobile digital wall that will be mounted
onto a 10-foot shipping container and be
used at different sites around the city, and
two kiosks within the museum, each with
a 46-inch screen.
A new, revised timeline tentatively

owned and operated by local bar and

restaurant group Pan y Agua, the same
group that created Crave Kitchen and Bar
and Independent Burger.

shows that the digital wall could be up

and running by the end of December
2014. City Council voted on the amendment at its June 10, 2014, meeting.

Builders Outlook Issue 6/7.2014

Hotel Indigo
Chosen to Fill
Former Artisan
Location
New Addition will
Increase Downtown
Inventory by Over 100
Rooms

An investment group has announced

the brand for an upcoming hotel that will
take the place of a currently-vacant building in Downtown El Paso. Esperanto
Developments of El Paso announced last
week that a Hotel Indigo will fill the spot
at 325 North Kansas Street.
Hotel Indigo is the boutique hotel arm
of InterContinental Hotels Group, the
same company that operates brands
such as Holiday Inn and Candlewood
Suites. According to Hotel Indigos website (ihg.com/hotelindigo), each location

reflects the unique local culture, character and geography of its surroundings,
but all locations provide the same excellent service.
A search of different Hotel Indigo locations throughout the world shows that
each hotel is styled differently, though all
locations include rooms with hard-surface
flooring, a staple of the chain according
to its Facebook page.
The El Paso hotel will take over the
defunct 12-story Artisan Hotel location
that has sat empty for four years. The
owner of the property at the time filed for
bankruptcy and the Artisan went into
foreclosure. Then last year, Summit 11
Investment Group struck an incentives
agreement with the City of El Paso and
the County of El Paso to bring a name
brand hotel to the site within a year,
pending purchase of the building. The
sale to the new owners of the property
went through in September 2013.
According to the incentives agreement,
the hotel must be open for business by
June of 2015, and must include amenities such as meeting and banquet space,
an on-site restaurant and bar, a renovated pool area, and a rooftop spa and fitness facility. The exterior should also see
renovation.
Representatives of Esperanto

Content provided by
El Paso Development News
visit: elpasodevnews.com

Developments told the El Paso Times

that construction should begin within four
weeks, and that the Hotel Indigo franchise agreement should be signed within
a week.
Hotel Indigo operates 35 locations in
the United States, including five in Texas
(Dallas, Houston, Waco, and two in San

Room designs for Hotel Indigo locations

vary from city to city and are based on
the neighborhood in which they are constructed. These are, clockwise from top
left, Lijiang (China), Birmingham (UK),
Nashville, and Rome.
(facebook.com/hotelindigo)

New Skate Park Officially Opens in Northeast El Paso

the project, which is located on the northern side of the 58-acre Northeast
Regional Park located at 11270 McCombs
Drive. There were 133 parking spaces
created during the project.
We are truly excited to open this latest
project from the 2012 Bond Issue for the
citizens of El Paso, states Tracy Novak,
the Citys Parks and Recreation Director,
in the press release.
The $1.5 million project was the first to
receive funding from Quality of Life bonds
approved by voters in 2012. Voters
approved a total of $245 million for parks,
recreation, open space and zoo improvements.
Medlock Commercial Contractors, LLC,
of El Paso completed the work, which
began one year ago. Officials originally
hoped to have the project completed early
this year.

ar

One of the largest 2012 Quality of Life

bond projects to date has been completed
in Northeast El Paso. The Northeast
Regional Skate Park held a ribbon-cutting
ceremony last Thursday to celebrate the

official unveiling of the park.

The skate park spans 25,000 square
feet, becoming the largest such park in
the city, and includes features such as a
snake run, banked dip, a door way, flat

rails, rollers, (and) vertical extensions,

according to a press release.
Seventy-six trees, landscaping,
stormwater elements, shaded benches,
and sidewalks were also added as part of

Designed by California Skateparks of

Upland, California, the new skate park
includes 25,000 square feet of features.
(www.californiaskateparks.com)

Ten-Acre East
Side Retail
Project Glimpsed
in Development
Plan

A detailed site development plan is

offering a glimpse at a future retail project
slated for East El Paso. The 10.85-acre
property is at the corner of Montana
Avenue and Tierra Este Road.
The initial site plan shows a standard
strip center layout with pad sites showing
specific building footprints along with
more general retail structures. Longer
buildings are located towards the back of
the property, near the boundary with
Evergreen Cemetery to the east.
Across Tierra Este Road, a larger shopping center includes a Walmart
Superstore, Lowes Home Improvement
store, and several smaller retailers and
restaurants.
The site plan is being presented to the
City Plan Commission as part of a 2002
ordinance that allowed the zoning to
change from Residential to Commercial.
River Oaks Properties of El Paso is listed
as the owner on the current detailed site

development plan submission.

There are 296 parking spaces in the
site plan, though only 152 are required by
the City of El Paso. Another 15 bicycle
spaces are planned. The City is recommending additional parking lot trees be
added to the plan.

According to the development plan, the

project will be built in two phases, with the
portion of the property closest to Montana
Avenue considered Phase Two. No timeline for the project has been disclosed,
and the shopping center does not appear
on River Oaks Properties website.

Proposed Site Plan

Presented to City as Part of
2002 Rezoning Agreement

10

Builders Outlook

2014 issue 6/7

The Economy

Economic
Forecast for 2nd
Half of 2014:
By Elliot Eisenberg,
Ph.D.,
GraphsandLaughs,
LLC

Increasing Momentum,
Reduced
Despite GDP growth stalling in Q1 due to
the Polar Vortex, slower inventory
accumulation and mildly lower exports, the
economic recovery remains intact. The
anemic performance of the US economy
from January through March was aberrant,
and
the
incoming
employment,
manufacturing and consumer spending data
all point to an economic pickup. GDP
growth the rest of the year should average
3%, with growth in Q2 closer to 3.25% as
the economy rebounds from the harsh
winter. In addition, reduced fiscal drag from
DC, increased hiring and spending by state
and local governments, and increased
corporate spending on plant and equipment
suggest we are finally entering a period of
faster growth.
That said, economically all is not well.
Wage growth remains anemic and while the
unemployment rate is 6.3%, down from
10%, the fall is largely due to a decline in the
labor force participation rate. The ranks of
the long-term unemployed remain elevated,
along with the number of those working parttime because they cant find full time work.
Add to that average overtime hours that are
remarkably high and termination rates that
are very low and what you have are
employers very reluctant to hire. This
situation cannot persist, and of late job
creation numbers have been on the
upswing. Therefore, net job creation will
rise from 200,000/month, where it has been
for the past year, to 220,000 or 225,000 by
year end and unemployment will probably
fall to 6.1%. I expect wage growth to start
picking up steam in 2015.
The biggest drag on the economy is
housing. After a promising first half of 2013,
the housing market is, at best, flat. While
rising interest rates and home prices, a lack
of inventory and lots, shortages of materials
and labor, and a lack of credit and first-time
buyers play a part, weak household
formation is the main culprit.
After
averaging over 1.2 million in the years prior
to the Great Recession, household
formations have been averaging 500,000
since the end of the recession. The good
news - household formation will rise now
that all eight million jobs lost during the
recession have been finally made up. We
are no longer making up lost ground.
Because of this, new single-family
construction activity in 2014 will reach
700,000, with multifamily adding 350,000,
while existing home sales should be down
slightly from last year.
As for inflation, its benign. No matter how
measured, there is no inflation to speak of in
the US. Commodity prices will remain wellbehaved given weak demand due to
economic slowing in China and weak growth
in Europe and the developing nations.
Absent some sort of geopolitical crisis,
energy prices will remain where they are

thanks to record US oil production. As a

result, expect tapering to end in November
and for the Federal Reserve to begin raising
short-term interest rates by mid-2015.
However, long-term rates have bottomed
and 10-yr Treasuries will end the year at
about 3% as the economy steadily
strengthens.
In short, the economy is improving and
Q1 was a speed bump. Long term rates will
rise, short-term rates will remain
unchanged, and housing will limp into 2015,
with prices rising slightly. Most critically,
household formation will strengthen and
corporate, state and local government
spending will rise. Lastly, the likelihood of a
recession during the next six months is
virtually zero.
Have a wonderful summer and see you in
August! (Remember, I will not be writing an
article in July).
Economist Elliot Eisenberg is a regular
contributor to the Builders Outlook. His
wealth of experience on housing has been
the model for HBAs across the country over
the past decade. Now in private practice,
Dr. Eisenberg brings his insight every

month to our members.

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2014 issue 6/7

11

Builders Outlook

Expert Advice

Joe Bernal
Employee Benefits
of ElPaso

IRS Clarifies
Employer Reporting
Requirements
In 2015, Affordable Care Act reporting
requirements will begin to phase in for
employers with 50 or more full-time
equivalent employees. The statute calls for
employers, insurers and other reporting
entities to report information to the IRS.
Employers with 100 or more employees
must offer affordable health insurance
coverage to employees or make a shared
responsibility payment; employers with 5099 employees have received a one-year
reprieve (until 2016) from the coverage
mandate.
IRC Section 6055 applies to health
insurers and employers that self-insure.
They must provide information about the
entity providing coverage, including contact
information, and which individuals are
enrolled in coverage, with identifying

information and the months for which they

were covered.
IRC Section 6056 applies to employers
that must play or pay but that do not selfinsure. They must provide information
about the employer offering coverage,
including contact information and the
number of full-time employees. For each
full-time employee, they must also provide
information about the coverage (if any)
offered to the employee, by month,
including the lowest employee cost of selfonly coverage offered.
In March, the IRS released final
regulations on information reporting by
those employers. The regulations will
substantially streamline employer reporting
requirements by providing for a single,
consolidated form that employers will use to
report to the IRS and employees under
both sections 6055 and 6056, thereby
simplifying the process and avoiding
duplicative reporting.
Self-insured employers will complete
both sections of the form.
Employers that do not self-insure will
complete only the top section of the
form (reporting for section 6056).
Reporting requirements do not apply to
employers with fewer than 50 full-time
equivalent employees, who are exempt
from the ACAs requirements.
If the Affordable Care Acts coverage
requirements apply to your organization,
will you be ready? 2015 will be here before
you know it. Please contact us if you need
assistance in finding or administering an
employee health plan.

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12

Builders Outlook

2014 issue 6

Baby Boomers
Arent (Yet)
Downsizing in
Droves
By Nick Timiraos WSJ
Theres a popular perception that housing
inventory could surge in the coming years as the
Baby Boom generation those born between
1946 and 1964 downsizes, trading in larger
single-family homes for urban condos.
But two reports suggest that such downsizing
has yet to materialize and that it may not
happen, at least not to the extent that many have
assumed.
The idea behind the downsizing theory is
simple enough: It assumes that as the boomers
children graduate from college and move out,
theyll no longer have a need for the abundant
living space, quality schools, and other amenities
typically associated with single-family suburban
residency, writes Patrick Simmons, an
economist at Fannie Mae.
And the Fannie analysis of Census Bureau
data finds that, sure enough, the boomers are
becoming empty-nesters in droves, as the
proportion of the oldest half of the boomer
households that have a married couple with at
least one child under age 18 declined to 3% in
2012 from 10% in 2006. The trend holds for
younger boomers, too, with the rate dropping to
20% in 2012 from 35% in 2006.
The Fannie analysis also shows a similar trend
when it comes to boomers participation in the
workforce. The share of Boomers who werent in
the labor force, meaning they were neither
working nor looking for work, increased by 9
percentage points, with an even bigger jump for
the oldest half of the boomer cohort.
But while their households are shrinking and
they are working less, boomers were just as
likely to be living in detached single-family

Boomers may be slow to

downsize for several reasons,
wrote Mr. Simmons. For one,
they may like their homes. A
2010 survey by the AARP, the
seniors-advocacy group,
found 84% of boomers said
they would prefer to live in
their current houses for as
long as possible.

housing in 2012, the most recent year for which

data is available, as they were in 2006.
Why havent boomers downsized? One
possibility, Mr. Simmons notes, is that they like
their housing. He points to a 2010 survey by the
AARP that found 84% of boomers who said
theyd prefer to live in their current house for as
long as possible.
Another possibility: The scars of the housing
bust and the Great Recession have prevented
boomers from moving, either because they cant
find buyers for their homes or because they dont
have enough equity to sell and buy the home of
their retirement dreams.
The big question is what happens in the
coming years, and a second report, from Jed
Kolko, chief economist at Trulia Inc., says the
U.S. is unlikely to hit a wave of boomer-fueled
swaps of single-family homes for urban condo
and apartment dwelling anytime soon.
First, Mr. Kolko says boomers are still years
away from the age of downsizing. Using data
from a 2013 Census survey, he finds that the
share of households living in multi-unit buildings
doesnt rise until the head of those households
turns 75. The share of households living in multi-

unit buildings actually falls for those aged 70 to

74, and todays boomers are between ages 50
and 68.
Therefore, as todays baby boomers age,
theyll grow into age groups first with a lower
likelihood of living in multi-unit buildings, says
Mr. Kolko.
But what if the baby boomers age differently
than their recent predecessors? Mr. Kolko finds
that the share of households headed by 50- to
69-year-olds rose to 21.3% in 2012 and 21.6% in
2013 after staying in the 19-21% range for the
last two decades. This could suggest a shift in
preference, though Mr. Kolko says its too soon
to draw any conclusions.
By the same token, the share of households
over the age of 69 that has been living in multiunit buildings has been dropping steadily, from
more than 30% in 1980 to less than 25% in
recent years. While the cyclical effect of the
recession might hasten downsizing for some
boomers, the secular trend means boomers are
reaching older adulthood in an era when
downsizing is less common and comes later than
it used to, says Mr. Kolko.

Baby Boomers Hold On to Houses

Despite Empty Nests, Older People Stay Put
By Nick Timiraos WSJ
The boomers are staying putat least for now.
The going wisdom says the number of homes
for sale should surge in coming years as baby
boomersthose born between 1946 and 1964
trade in large, detached single-family homes for
condos or attached homes in more urban areas.
But two reports suggest such downsizing has yet
to materialize and may not to the extent
suggested by some commentators.
The downsizing theory is simple: As the kids of
boomers graduate from college and move out,
their parents will no longer "have a need for the
abundant living space, quality schools and other
amenities typically associated with single-family
suburban residency," said Patrick Simmons, an
economist at mortgage-finance company Fannie
Mae, FNMA +1.53% in a recent report.
Meanwhile, census data released this week
showed population growth for Americans over
age 69 has been the lowest in the most dense
counties, the only age group in which that is
happening, said Jed Kolko, chief economist at
Trulia Inc., TRLA -1.04% the real estate website.
The Fannie analysis of Census Bureau data

finds boomers are becoming empty-nesters "in

droves." The oldest half of all boomer
households that were made up of a married
couple with at least one child under age 18
declined to 3% in 2012 from 10% in 2006. The
rate is dropping for younger boomer households,
too.
Older workers also have been dropping out of
the labor force. But while boomers are working
less and their kids are moving out, the share of
boomers living in detached single-family homes
was roughly the same in 2012, the most recent
year for which data were available, as in 2006,
Fannie said.
Boomers may be slow to downsize for several
reasons, wrote Mr. Simmons. For one, they may
like their homes. A 2010 survey by the AARP, the
seniors-advocacy group, found 84% of boomers
said they would prefer to live in their current
houses for as long as possible.
Meanwhile, the scars of the housing bust and
the Great Recession have prevented some from
moving because they don't have enough equity
in their homes or are unwilling to sell at prices
that are still down from their peak of the past
decade. Also, some homeowners who have

locked in low mortgage rates in recent years by

refinancing may be reluctant to move now that
rates are a little higher.
Russell Atkinson and his wife, both in their 60s,
have thought about moving on but have decided
to remodel their home in Los Altos, Calif.,
instead. Two other couples they know who, like
them, are empty-nesters, have bought larger
suburban homes in recent years.
"We love our neighborhood. The weather's
perfect, the health-care facilities nearby are
excellent," Mr. Atkinson said.
A bigger question is what happens in coming
years. A study by Mr. Kolko shows the share of
households headed by people ages 70 to 74 who
live in multiunit buildings has been declining for
years. The weak economy "can't be the whole
story," he said, because that trend predates the
recession by many years. Mr. Kolko found that
the share of households headed by 50- to 69year-olds who live in multiunit dwellings rose to
21.6% in 2013 after hovering around 20% for the
past two decades. This could be a sign that
boomers may favor multifamily dwellings more
than middle-aged Americans have in the past.

2014 Issue 6/7

13

Builders Outlook

www.elpasobuilders.com
www.epbuilders.org

Membership News
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14

Builders Outlook

2014 issue 6/7

Associates Council

Sam Shallenberger
Western Wholesale Supply

Hello everyone! Is it hot enough for

you? I dont have a lot to report for this
edition except to bring up what were
looking at. . We are working on having
a sell-A-thon, a cool word for flea
market, sometime in September. We
will be having a meeting to discuss the
operating procedures in August.
Watch for the date. The concept is
simple: we will do it on a weekend,
have a big tent in the EPAB parking lot.
We will sell you a space and you are in

business. Were going to need some

help from a lot of folks including you.
Start looking for items you think youd
like to offer during this event. More
later.
The Pro-am golf tournament will be in
late October or early November. Four
man teams and a Sun country Pro. This
is always a well-attended event as it is
fun to play with the pros. Ray will send
out information on team availability and
sponsorships. We would like to thank

StrucSure Home Warranty for taking on

the lead sponsorship.
Remember, no meetings in July as
our traditional time off from the rigors of
the association continues. However, Id
like to remind you that the Texas
Sunbelt Show is going on in the San
Antonio area in mid-July, so if you
would like more information go to
www.sunbeltbuildersshow.com for it.
That is all I have for now so live it up
it is SUMMER TIME.

distinctively modern, while glass knobs

would give very similar cabinets a vintage
flair. Pair white Shakercabinet doorswith
oiled bronze pull cups and knobs, and you
might as well be in a Tuscan villa.
Your hardware selection or selections
can help bring mixed styles together, a very
popular move in contemporary kitchen
design. In fact, its not uncommon to see
different hardware types and finishes side
by side. Brushed nickel bin pulls
complement gold-patterned and mercury
glass knobs for a fantastic modern-vintage
mix in a painted gray-and-white kitchen
makeover. While youre making your
decision, make sure to attend to practical

matters as well as aesthetics. Traditionally,

knobs are used for doors, pulls for drawers.
But a beautiful knob is useless if it doesnt
fit in your hand so that the door opens
easily. Make sure the hardware feels good.
And if knobs just wont work for you, dont
be afraid to use pulls on everything. Also,
keep in mind the type of maintenance your
hardware will require. Textured pieces are
more difficult to clean, and some finishes
(e.g., brass) require more upkeep.
So pull out the catalogs, visit your local
specialty hardware store or surf the
internet; choices abound, and theres
nothing to hold you back. Whether youre
buying new cabinetsor sprucing up old
ones, your hardware can do a lot of design
work for a considerably small amount of
your project budget. If in two years your
tastes change, you can always switch your
hardware out for something that gives you
a different looka new hat and handbag
for your kitchen!

Trends

David De Rego
Hardware Specialities &
Glass Co., Inc.

If youve ever designed or remodeled a

kitchen, you know there are an
overwhelming number of decisions to make
with regard to cabinets. Keep the old, or
buy new? Reface or repaint? Adjustable or
fixed shelves? One question seems to lead
to another! Even once youve made what
may have seemed like a million decisions,
theres still one more consideration: the
hardware!
Cabinet hardware is the ultimate
accessory that can impact your room style.
Its the hat, shoes, and handbag of the
kitchen (or any other room for that matter).
Theknobs and pullsyou choose can send
the design of your space in one direction or
another, or they can bring styles together to
make them work.
For instance, the simplicity of Shaker
cabinets allows them to work well within
many different design styles. Oversized,
tubular hardware in a brushed nickel finish
makes a white Shaker-style cabinet feel

The options builders asked

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El Paso, Permian Basin and Surrounding Area
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Builders

utlook

www.elpasobuilders.com
www.epbuilders.org
6046 Surety Dr. El Paso, TX 79905
915-778-5387 Fax: 915-772-3038
execuTive oFFicerS
FrankTorres 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/commiTTeecHAirS
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
Womens council
Lorraine Huit
ADviSorYToTHeBoArD
J. Crawford Kerr, Attorney, Firth, Johnston
& Martinez
BoArDoFDirecTorS
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

TABSTATe 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 Builders 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