Builders
utlook
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2015: issue 5
MARKET WATCH: Housing starts surge 20% By Ruth Mantell, Market Watch WASHINGTON — In a show of housing-market vitality, the pace of construction started on new U.S. homes in April jumped to the strongest level since the onset of the Great Recession, the government reported Tuesday. Construction started on new U.S. homes sprang up 20.2% in April to a seasonally adjusted annual rate of 1.14 million. That’s the biggest monthly percentage gain in more than 24 years and the highest level since November 2007, the U.S. Commerce Department reported. “The April data also strengthen the view that the weakness in February and March was largely transitory and likely caused by harsh weather conditions,” Robert Wetenhall, an analyst with RBC Capital Markets, wrote in a research note. Starts for single-family homes rose 16.7% to an annual rate of 733,000, the fastest pace since early 2008, while starts in buildings with at least five units jumped 31.9% to a pace of 389,000. Economists particularly like to see growth for single-family-home building, which costs more and creates more jobs than building one apartment. That’s why Tuesday’s data on single-family homes were particularly heartening, said David Crowe, chief economist of the National Association of Home Builders. “Home buyers have been reluctant to buy until there is a clear sign that the economy, and more particularly their own future, is more positive. As employment grows and some wages increase and as home equity improves, some of those households break out of their concerns and are beginning to shop for a new home,” Crowe said. Tuesday’s strong report leads to a key question: Was April just a blip? “It may prove difficult to sustain the April pace of 1.135 million units in the near term, as it undoubtedly includes some delayed groundbreaking,” said Stephen Stanley, chief economist at Amherst Pierpont Securities. It’s also worth noting that there was a confidence interval of plus-or-minus 14.4% for April’s overall starts growth of 20.2%, showing that there may have been a much narrower increase (or a much larger increase) in construction than the headline numbers stated.
There are multiple reasons for builders to be hopeful about 2015 sales. Young families and other first-time buyers are tip-toeing into the market, a trend that will support the broader economy and other homeowners who want to buy a new place.
“As always a large confidence interval suggests avoiding euphoric celebration,” said Gregory Daco, head of U.S. macroeconomics at Oxford Economics. Still, there were several strong elements to April’s report that signal that the market is healing, though perhaps at a less frenzied pace seen in Tuesday’s data. The annual pace of permits for new construction, a sign of future demand, sprang up 10.1% to 1.14 million, the most since mid2008. The pace of permits for single-family homes rose 3.7% to an annual rate of 666,000, while the pace of permits for apartments rose 20% to 444,000. There are multiple reasons for builders to be hopeful about 2015 sales. Young families and other first-time buyers are tip-toeing into the market, a trend that will support the broader economy and other homeowners who want to buy a new place. Further, applications for mortgages to buy a home recently hit the fastest pace in almost two years. However, major stakeholders in the housing industry still have concerns. Builders have lost some confidence in current sales of single-family homes, signaling wariness over whether families are ready to take the plunge
into the new-home-buying pool, according to a Monday report. Rising home prices and weak income growth aren’t helping home sales. Neither are the strict lending standards that banks have set in the wake of the financial meltdown, as they look to protect themselves from legal and financial risks of making mortgages. Shares of builders fell in recent weeks after companies reported disappointing news about margins, even as orders rose. Analysts are conflicted about the fate of builders. One brokerage recently downgraded shares of seven home builders, reasoning that they typically lag the broader market during the summer. Elsewhere, Morgan Stanley researchers reported that builders may be in a relatively good position this year, thanks to a strengthening economy. Economists polled by MarketWatch had expected an overall April starts rate of 1.03 million, compared with an originally reported rate of 926,000 in March. The government revised March’s starts rate to 944,000. Total housing starts remain far below an average pace of about 1.5 million over the 20 years leading up to the housing bubble’s 2006 peak.
Continued Growth Building Permits Hit Seven-Year High Forbes- Groundbreakings on new homes rose by a dramatic 20.2% in April and permitting hit a seven-year high, the U.S. Commerce Department said Tuesday. The numbers suggest that the ongoing inventory shortage holding back the housing recovery should ease in coming months. Housing starts stood at a seasonally adjusted, annual rate of 1.14 million in April. That pace is 9.2% higher than the rate of 1.04 million in April 2014. Tuesday’s numbers surpassed expectations of economists surveyed by Bloomberg ahead of the release. Single-family housing starts in April rose 16.7% above the level in March, hitting a (seasonally adjusted, annual) rate of 733,000. Starts on buildings with five or more units were up by 32% in April, to a (seasonally adjusted, annual) rate of 389,000.
April also marked the highest level of permitting the nation has seen since June 2008, when the (seasonally adjusted, annual) rate was 1.18 million. The number of building permits issued in April rose 10.1% over March, to a seasonally adjusted annual rate of 1.14 million. That rate was 6.4% higher than a year earlier, when the estimate stood at 1.07 million. Single-family permits were up by 3.7% in April compared to March at a seasonally adjusted, annual estimate of 666,000. Buildings with five units or more hit a permit rate of 444,000 in April, up 20% compared to March. Despite the strong numbers, builder confidence in the market for newly constructed, single-family homes fell two points in May to a level of 54, according to the latest National Association of Home Builders/Wells Fargo Housing Market
Index, released Monday. However, a reading of 50 or higher means that more builders rate conditions are good than poor; the measure has now hit that mark for eleven consecutive months. “Consumers are exhibiting caution, and want to be on more stable financial footing before purchasing a home,” said David Crowe, NAHB’s chief economist. “On the bright side, the HMI component measuring future sales expectations has been tracking upward all year, mortgage rates remain low, and house prices are affordable. These factors should spur the release of pent-up demand moving forward.”
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Builders Outlook
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2015 issue 5
2015 issue 5
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Builders Outlook
President’s Message Edgar Montiel President, El Paso Association of Builders
One of my responsibilities as President of the association is to write the monthly President’s Messages and each month I am astonished at just how much our association is doing for our industry and members. House Bill 1736 by Rep. Jason Villalba (R-Dallas) recently passed both the House and Senate and awaits Governor Abbott’s signature. This bill puts the adoption of energy code updates by the state for residential construction governed by the International Residential Code on a minimum six year cycle. In short, the biggest thing that this helps curb is the adoption of the new Energy Code requirements that would have cost builders on all newly constructed homes. I would like to think that everyone that attended this year’s Rally Day played a major role in
“WHATCHA” What the EPAB Is doing
building support for this bill with our Representatives and Senator. If you run in to someone that attended give them a high five. Our Assessment Committee recently to discuss how assessments are calculated and invoiced. The idea is to simplify the process and increase the revenue in to the association. Once a plan is in place we will present this to our board for a vote and then to our members if adopted. Our preliminary discussions have been very productive and we are all super excited with where we are headed. The washer tournament was a huge success and a ton of fun. I, for one, had never played it in my whole life but was pleasantly surprised at how entertaining it truly was. Nineteen different teams participated and Team Interceramic, consisting of Samira
Gonzalez and Roberto Rubio, ultimately won the tournament. I would like to thank our major corporate sponsors Lone Star Title, Foxworth-Galbraith, and Tropicana Homes for helping make the event possible. I would also like to recognize the t-shirt sponsors Randall Smith CPA, Interceramic Tile and Stone, and Haskins Electric. Our Board and General Meetings will be on June 10 at the El Paso Club. Our board of directors will meet at 11AM and the General Meeting will follow at noon. Our guest speaker will be Mr Dean Inniss, President and COO of Rocky Mountain Mortgage Company. Mr. Inniss is a major asset to our industry and will provide insight in to local mortgage financing happenings. He brings over 30 years of experience in the field so be ready
to soak in all of the invaluable information that he will be presenting. Something that I would like to put on everyone’s radar are the new CFPB closing rules and regulations that will be affecting all of us beginning August 1, 2015. There will be new documents, steps, and timeframes that will impact ALL closings after August 1, 2015. If you haven’t already done so, get with your title company to go over the new policies as soon as possible. In closing, the hot summer months are upon us so make sure to tell your employees and contractors to stay hydrated and safe. As always, I wish all of you the best with your businesses.
HOME O F
T E X A S
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Builders Outlook
2015 issue 5
Perspective Ray Adauto, Executive Vice President EPAB
I’ve got a few things I’d like to write about this month because it was a month of ups and downs, personally and professionally. Let me give you the ups first because these things are important to the membership as a whole. Our association is staying pretty steady as far as membership and while that is normally interpreted as good we can’t safely stay where we’re at and accomplish what we need to do. I know that some of our detractors, and perhaps even you, wonder what I am getting for my money. It’s a matter of relevancy and every organization from the church to the civic clubs, associations suffer the same questions. The leadership questioned this at our recent board meeting, not to complain but to get a handle on what to tell those nay sayers or better yet what to present to potential members as “proof” that your investment in the association pays dividends. To that end we are commissioning a simple one page handout that you can have printed or send via email. In it we list some of the most recent accomplishments in working to keep you in business. We will highlight our efforts at the city, the state and the national scene. While we’ve been working on this issue of the Outlook we got a great report out of Austin about the strong support we got on important legislation that will significantly impact construction, mainly to do with
The value of membership and the loss of friends energy codes or codes in general. Our efforts for the industry will give our members a better opportunity to build to codes that won’t be placed out there at the whim of a political subdivision, i.e. the city or county. Codes are where I think we have been most effective, from the fire sprinkler debate to the ability to delay unnecessary codes locally. The cost savings per house is in the thousands of dollars just on the fire sprinkler work, meaning again that our members and staffs have had a significant savings passed on to you and the consumer. There isn’t a single member of the El Paso Association of Builders who isn’t affected positively by this. So are nonmembers. The difference here is that the non-member is letting others carry the ammo if you will, pay for it and work on it while sitting back and getting the rewards. Moochers is what my dad would call them, others use less kind words. Your membership dollars help pay for the lobby teams at the state and U.S. Capitol and frankly there aren’t many businesses in El Paso that could do that on their own. Membership allows the smaller business to have equal footing with the multinationals, something very rare in today’s business world. It’s by the power of uniting for a purpose that makes associations like ours work. It isn’t cheap to do this kind of work and frankly we’ve been holding back on
talking or doing something about that for a while. Our leadership knows this and is working on ideas on how to be able to continue the work with the rising costs of doing so. Some more of the good stuff: The association tried something new this month as well, a washer (or watcha) throwing contest. The initial concerns turned into a great result because of our partners. TrusJoist showed us how to put it on and set it up. Lone Star Title partnered with us to make sure we actually could. Foxworth Galbraith partnered on the food and beverages, and then our t-shirt partners made sure we had a real sense of team. They were Haskins Electric, Interceramic Tile and Stone, and Randall Smith CPA. Because of their support we handed out some very nice “wicky” shirts that are comfortable and wick up sweat like a sponge. Our 19 teams had a great time and our chef, Chris Morales of Sierra Title did the hot dog cooking, Gina Avila from Morrison Supply helped registration. Margaret was the admin in charge as always. It was especially cool to see that this tournament brought in old and new members together in a classic competitive event where all appeared to have had a blast. So that was some of the good things that happened this month. We did however experience some not so good
news. First we learned of the passing of Jack White, a longtime member who supported the association for decades. We also lost a past President, Zeke Zar, another longtime supporter and friend. May they rest in peace. We had a lightning strike at the office the night of the washer tournament and that strike killed our PBX phone system. Speaking of phones my cell phone was lost and never returned in spite of knowing where I lost it and hoping someone with a little sense of honor would return it. If you have ever experienced losing a cell phone you understand my frustration and anger. Our office phones are a work in progress right now so please bear with us. Summer has arrived and we will be busy throughout the upcoming months. We will start to decipher our wins and losses at the Texas Legislature and figure out where we need help. We are doing the same with the city of El Paso, working with the City Manager’s office to make sure we’re at the table and not the main course. We’ll help our brethren in Austin, Houston, DFW and other areas struck by the torrential rains and subsequent floods. If nothing else I’ve found that we are resilient and quickly turn adversity to advantages because of our purpose in life and our ability to call on you. Thank you for your membership.
2015 issue 5
Housing Production Jumps 20.2 Percent Nationwide housing starts rose 20.2 percent to a seasonally adjusted annual rate of 1.135 million units in April from an upwardly revised March reading, according to newly released data from the U.S. Commerce Department. This is the highest level of housing production since November 2007. Both housing sectors registered production gains this month. Singlefamily housing starts increased 16.7 percent to a seasonally adjusted annual rate of 733,000 in April while multifamily starts rose 27.2 percent to 402,000 units. “Our builders tell us that consumers are slowly returning to the market,” said NAHB Chairman Tom Woods, a home builder from Blue Springs, Mo. “This month’s report shows release of pent-up demand and evidence of a sustainable housing recovery.” “The April gains make up for the
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Builders Outlook production dips we saw in the past two months, but single-family housing is still only about halfway back to what could be considered a normal market,” said NAHB Chief Economist David Crowe. “With low interest rates and affordable home prices, we expect more upward momentum in the months ahead.” Combined single- and multifamily starts were up in three out of the four regions in April. The Northeast posted an 85.9 percent gain, the Midwest rose 27.8 percent and the West increased 39 percent. Housing production dropped 1.8 percent in the South. Overall permit issuance rose 10.1 percent in April to a rate of 1.143 million. Multifamily permits registered a 20.5 percent gain to a rate of 477,000 while single-family permits increased 3.7 percent to 666,000. Regionally, the Northeast, South and West posted respective permit gains of 38.8 percent, 9.9 percent and 3 percent. Permits dipped 1.3 percent in the Midwest.
Builder Confidence Falls Two Points Builder confidence in the market for newly built, single-family homes in May dropped two points to a level of 54 on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI) released today. It is a nine-point increase from the May 2014 reading of 45. “Despite this month’s slight dip, builder confidence in the new home market remains above the 50-point benchmark,” said NAHB Chairman Tom Woods, a home builder from Blue Springs, Mo. “Overall, the second quarter of 2015 is shaping up to be very solid.” “Consumers are exhibiting caution, and want to be on more stable financial footing before purchasing a home,” said NAHB Chief Economist David Crowe. “On the bright side, the HMI component measuring future sales expectations has been tracking upward all year, mortgage rates
A W A R D E D
TEXAS BUILD E R O F THE Y E AR
remain low, and house prices are affordable. These factors should spur the release of pent-up demand moving forward.” 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. The index’s components were mixed in May. The component charting sales expectations in the next six months rose one point to 64, the index measuring buyer traffic dropped a single point to 39, and the component gauging current sales conditions decreased two points to 59. Looking at the three-month moving averages for regional HMI scores, the South and Midwest each rose one point to 57 and 55, respectively. The Northeast fell by one point to 41 and the West dropped three points to 55. Editor’s 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.
2013 New-Home Sales Rise 6.8 Percent
We build so you can GROW
Sales of newly built, single-family homes rose 6.8 percent to a seasonally adjusted annual rate of 517,000 units in April, according to newly released data from HUD and the U.S. Census Bureau. “Sales are moving forward and our builder members are telling us they are starting to see more activity as more buyers get off the fence and enter the marketplace,” said Tom Woods, chairman of the National Association of Home Builders (NAHB) and a home builder from Blue Springs, Mo. “Following an unusually low sales report in March, today’s numbers are consistent with other data we’ve seen recently and indicate a continuing, gradual improvement in the housing market,” said NAHB Chief Economist David Crowe. Regionally, home sales were mixed, rising 36.8 percent in the Midwest and 5.8 percent in the South. The Northeast posted a 5.6 percent decline and the West fell 2.3 percent. The inventory of new homes for sale edged up to 205,000 units in April. This is a 4.8-month supply at the current sales pace.
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Builders Outlook
2015 issue 5
The Economy
Crudely Speaking Historically, the price of West Texas Intermediate Crude (WTI) has always been slightly higher than the price of North Sea Brent Crude, the major benchmark off which twothirds of the world’s Elliot Eisenberg internationally traded crude oil is priced. WTI has historically been more expensive because it is “light sweet crude,” meaning it contains less than 0.5% of sulfur and is considerably lighter than water and lighter than any other crude oil, and therefore the world’s most valuable oil. Despite possessing these very desirable physical characteristics, for the last several years WTI has regularly traded for less, sometimes much less, than Brent. This situation is not only detrimental to American oil exploration and production firms but also US
households. Interestingly, this situation can be easily righted if only Congress would pass legislation. Let me explain. Until 1973, US oil, like all other goods and services, could be easily exported. However, an export ban was imposed after the 1973 Arab oil embargo in an attempt to prevent future oil shortages and arguably to help the US gain energy independence. For decades the ban had no obvious impact as the US was a huge oil importer. But now due to hydraulic fracturing and horizontal drilling, the US now produces about twice as much oil as it did a few short years ago and is now the world’s second largest oil producer. Because the US used to import large quantities of oil, and because due to geography and politics the imported oil was primarily “heavy sour crude,” most American refineries are ill equipped to refine the high quality WTI coming from the new and newly-invigorated US oil fields. As a result, US crude oil is quickly filing up storage tanks
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and in the process driving down the price as domestic supply vastly exceeds refiner demand. If Congress were to lift the export ban, the price of WTI would rise to the world price, which would expand domestic oil exploration and production and increase rig counts and employment in the oil patch. Counterintuitively, it would also reduce the retail price of gasoline. This is because gasoline is tied to the price of Brent, since all refiners except American ones distill crude into gasoline from oil priced off of Brent. Because the export ban does not cover distilled products like diesel, gasoline and jet fuel, the price American refiners charge for distillates is the world price, even though the crude they purchase is cheaper due to the export ban on domestic crude. Gasoline here and abroad would thus be cheaper because the release of more US crude onto the world market that is now bottled up onshore due to the export ban, would reduce, albeit slightly, the price of Brent, and in
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the process slightly reduce the price of distillates including gasoline. Of course there is never a free lunch in economics. Were the export ban lifted, the losers would include domestic refiners as they would pay more for crude, and foreign oil producers such as the Saudis, Russians, Canadians and others as they would receive slightly less for theirs. That said, repealing the ban makes sense. It would save US consumers money and slightly increase returns to investors in the oil patch. And if the Saudis are unhappy, they can recall that the export ban only exists because they embargoed us 40 years ago!
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
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2015 ISSUE 5
Builders
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Builders Outlook
utlook on the scene |
Build Pac Washer Tournament a ‘hole’ lot of fun By Ray Adauto, EPAB When the idea of a Washer Throw tournament first came around we weren’t sure how to go about doing one and whether or not our members would be interested. We talked with other Texas Builders associations to find out what kind of reception they had in doing one coming away with surprising answers. Seems like the idea of throwing washers, or as we like to call them here watcha, overrode any misconception that this kind of event wouldn’t be fun. As a matter of fact what we found out was that the associations had some really outrageous story to tell. Now we have our own. Let’s start with the idea of what is a washer throwing contest. For the uninitiated the idea is to throw a specific size metal washer certain distance and drop it into a hole. Traditionalist, like our own Tony Mullen at MTI Ready Mix has been throwing watchas for years at company sponsored tournaments. There the idea is drop the washers into a PVC pipe flush with the dirt and thrown from a fair distance, something like 25 feet away. After watching a recent outing there is a certain skill set required to be good at that throw. It normally involves guys with years of experience throwing a specific way, sliders, bouncers, and the impressive hole in ones. The event we had planned for the EPAB was different in a lot of ways, but notably in the target and the distance to it. And one other thing, we didn’t care if you were a woman or man so long as you played. So with all my respects to Tony and his crew our event was a bit more, no it was a lot different. Let me share with you how. First of all we had partners in this event. From the Texas state association we were able to hook up with TrusJoist, a division of Weyerhaeuser, who furnished the “official” Texas Builders washer boards and rules. Secondly we had to find partners and we did very well. Our event partner was Lone Star Title; our beverage and food partner was Foxworth Galbraith; and our prizes partner was Tropicana Homes. We also got T-shirt partners with Haskins Electric, Randall Smith, and Interceramic. TrusJoist employees came to put on the game and brought everything we needed, boards, washers, rules, referees and scorers. In a matter of a couple of hours we had the association parking lot ready to go. Our first comers were the eventual third place team from Rudy Guel Construction. They were allowed to practice until we had everyone signed in and ready to start. Our 19 teams of two included some of our new members and some of our more seasoned and included some first timers like Brad Beasley CPA’s out of Las Cruces. “We absolutely had a blast coming down and we did ok, but more importantly we made some connections and got a better look at what the association is about,” said Brad. Others like past president Rudy Guel took it all in stride. “We have never seen a watcha tournament like this and my guys need to practice,” Rudy told the Outlook. The layout of the game took some by surprise, especially the old time watcha throwers. “My dad is totally confused by the layout, since he’s played watcha for decades and never like this,” said Gilbert Pedregon. His dad got right in the game and said he had fun. “I guess you’re never too old to learn something new,” he said. For their efforts the top three teams were as diverse a group as one would like. In 3rd place was Richie and Carlos from Guel Construction; 2nd place went to Bella Homes, with Arturo Lucero and Manny Garcia; and 1st place went to Samira Gonzalez and Roberto Rubio representing Interceramic Tile and Stone. “Can you believe that I shot the watcha in HIGH HEELS?” said Samira. Proved a point that everyone had a good chance at winning and that this event will thrive. As our cook Chris Morales so aptly put it “this event is gonna get big.” We agree. Look at the pictures and you’ll see why.
el paso development news Mall News: Cielo Vista Expansion; Bassett Place Makes Dave & Buster's Official El Paso's largest shopping center, Cielo Vista Mall, announced a planned 125,000 square foot expansion that will begin in 2016. Now, we have the first images of what that expansion may look like. According to the mall's Property Overview, the expansion will occur off of the western wing of the center where the current Dillard's mens and childrens store now exists. This would mean demolition of that location. A new Dillard's will be built at the end of the expansion to the west, making room for around 40 new retailers and a handful of restaurants. The new Dillard's will become the women's store; the men's and children's store will relocate to the current three-level women's store. A site plan shows the new western wing of the mall expanding into an existing parking area. The rendering shows a northward view of the planned new Dillard's building on the left side of the image. Liner structures are shown as restaurants in the rendering, with different construction materials distinguishing them from the larger mall building behind them. This is Simon Property's first major expansion in decades for Cielo Vista Mall, which is located at Hawkins Boulevard and Interstate 10 on El Paso's East Side. It is part of the $1 billion spent annually in property enhancements across all the malls the company owns and operates. Construction on the Cielo Vista expansion should begin in January 2016 with no mention of a completion date. A short drive to the west at Bassett Place, a new Dave & Buster's is scheduled to open by the end of 2015. After months of speculation, the East-Central El Paso mall confirmed the location in a press release. he entertainment and dining venue will open a 36,000 square foot location at Bassett where
the current food court exists. The food court will shrink and have a handful of eateries. The Bassett location is a bit smaller than the 40,000 square foot large Dave & Buster's prototype, with the small prototype measuring 26,500 square feet. Bassett Place was built in 1962 and is located at Geronimo Drive and I-10. At Right: This site plan shows the planned expansion of the western wing of Cielo Vista Mall in East El Paso. Both the first and second levels are included here, with the second level's site plan floating above the first level in this image. (Cielo Vista Mall Property Overview)
Martin Building Apartments Could be Named 'ElectriCity'
El Pasoans are getting a sneak peak at a giant sign that will adorn the Martin Building once its renovation is complete. The historic high rise is undergoing a renovation in Downtown El Paso. The image comes courtesy of a Facebook page highlighting the work of Los Angeles based Vuro Art Gallery, which is creating the sign. Light bulbs will line the inside of giant block letters spelling out "ELECTRICTY," which will sit atop the seven-story building according to City of El Paso documents. According to a teaser at the project's Facebook page, that may be the future name of the apartment building. The third through seventh floors of the building will house approximately 40 apartment units. The Martin Building is at the corner of Stanton Street and Mills Avenue, just one block east of San Jacinto Plaza in Downtown El Paso.
Builders Outlook Issue 5 • 2015
Content provided by El Paso Development News visit: elpasodevnews.com
El Paso Ranks 5th Best in Nationwide Well-Being Index The Sun City topped the nation in "purpose" and "physical" well-being in an recently published index. Overall, El Paso ranked 5th best in overall well-being for 2014. The 2014 Gallup-Healthways WellBeing Index measured the 100 largest metros in the country in five different categories of well-being, including purpose, social, financial, community, and physical. El Paso ranked number one in two of the categories, purpose and physical well-being. "El Paso is the only community with the highest well-being in more than one element," according to the report. The categories are described this way in the Index: Purpose: Liking what you do each day and being motivated to achieve your goals; Social: Having supportive relationships and love in your life; Financial: Managing your economic life to reduce stress and increase
security; Community: Liking where you live, feeling safe and having pride in your community; and Physical: Having good health and enough energy to get things done daily. El Paso's lowest rankings were in the Financial (#63) and Social (#57) categories. The city ranked 23rd in Community well-being. The only other Texas community in the top ten was Austin/Round Rock which ranked 6th best overall. Gallup and Healthways have teamed up since 2008 to create the Well-Being Index. It is self-described as "the most proven, mature and comprehensive measure of wellbeing in the world." Well-Being Index website: www.well-beingindex.com
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Builders Outlook
2015 issue 5
LEGISLATION
Reacting to Disaster: With the devastating floods and other tragedies that have occurred recently across the state, it is important that builders and remodelers be aware of the implications of Chapter 57 of the Texas Business and Commerce Code that was enacted by HB 1711 effective September 1, 2011. The bill applies to contractors who remove, clean, sanitize, demolish, reconstruct, or otherwise treat improvements to real property as a result of damage or destruction to that property caused by a natural disaster. Specifically, it requires that a "disaster remediation" contract must be in writing and prohibits a "disaster remediation contractor" from requiring payment prior to beginning work or charging a partial payment in any amount disproportionate to the work that has been performed. However, the statute exempts contractors that have held a business address for at least one year in the county or adjacent county where the work occurs. As these tragic floods and other devastation subsides and the rebuilding begins, TAB members must be aware of the statutory contract limits on those who have not had a business address for at least one year in the county or adjoining county of the disaster. Ignoring these requirements could result in a deceptive trade practices violation. Please see the text of HB 1711 below for details. To purchase the TAB Contracts Package, or if you need more information please contact the EPAB or go to www.TexasBuilders.org.
Bill Number: TX82RHB 1711 Date: 05-29-2011 ENROLLED AN ACT relating to disaster remediation contracts. BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: SECTION 1. Title 4, Business & Commerce Code, is amended by adding Chapter 57 to read as follows: CHAPTER 57. DISASTER REMEDIATION CONTRACTS Sec. 57.001. DEFINITIONS. In this chapter: "Disaster remediation" means the removal, cleaning, sanitizing, demolition, reconstruction, or other treatment of improvements to real property performed because of damage or destruction to that property caused by a natural disaster. (2) "Disaster remediation contractor" means a person who engages in disaster remediation for compensation, other than a person who has a permit, license, registration, or other authorization from the Texas Commission on Environmental Quality for the collection, transportation, treatment, storage, processing, or disposal of solid waste. (3) "Natural disaster" means the occurrence of widespread or severe damage, injury, or loss of life or property related to any natural cause, including fire, flood, earthquake,wind, storm, or wave action, that results in a disaster declaration by the governor under Chapter 418, Government Code. (4) "Person" means an individual, corporation, trust,partnership, association, or other private legal entity. Sec. 57.002. APPLICABILITY OF CHAPTER. (a) Except as provided by Subsection (b), this chapter applies to a contract between a person and a disaster remediation contractor for the performance of disaster remediation services on property owned or leased by the person. (b) This chapter does not apply to a contract between a person and a disaster remediation contractor for the performance of disaster remediation services on property owned or leased by the person if the contractor maintains for at least one year preceding the date of the contract a physical business address in: (1) the county in which the property is located; or (2) a county adjacent to the county in which the property is located. Sec. 57.003. DISASTER REMEDIATION CONTRACT REQUIREMENTS; CERTAIN CONDUCT PROHIBITED. (a) A contract subject to this chapter must be in writing. (b) A disaster remediation contractor: (1) may not require a person to make a full or partial payment under a contract before the contractor begins work; (2) may not require that the amount of any partial payment under the contract exceed an amount reasonably proportionate to the work performed, including any materials delivered; and shall include in any contract for disaster remediation services the following statement in conspicuous, boldfaced type of at least 10 points in size: "This contract is subject to Chapter 57, Business & Commerce Code. A contractor may not require a full or partial payment before the contractor begins work and may not require partial payments in an amount that exceeds an amount reasonably proportionate to the work performed, including any materials delivered."
Disaster Remediation--Important Statutory Requirements
Sec. 57.004. DECEPTIVE TRADE PRACTICE. A violation of this chapter by a disaster remediation contractor is a false, misleading, or deceptive act or practice as defined by Section 17.46(b), and any remedy under Subchapter E, Chapter 17, is available for a violation of this chapter. Sec. 57.005. WAIVER OF CHAPTER PROHIBITED. A person may not waive this chapter by contract or other means. A purported waiver of this chapter is void. SECTION 2. The change in law made by this Act applies only to a contract for the performance of disaster remediation services that is entered into on or after the effective date of this Act. A contract entered into before the effective date of this Act is governed by the law in effect on the date the contract was entered into, and the former law is continued in effect for that purpose. SECTION 3. This Act takes effect September 1, 2011. President of the Senate Speaker of the House I certify that H.B. No. 1711 was passed by the House on April 26, 2011, by the following vote: Yeas 141, Nays 4, 2 present, not voting; that the House refused to concur in Senate amendments to H.B. No. 1711 on May 23, 2011, and requested the appointment of a
conference committee to consider the differences between the two houses; and that the House adopted the conference committee report on H.B. No. 1711 on May 28, 2011, by the following vote: Yeas 146, Nays 1, 2 present, not voting Chief Clerk of the House I certify that H.B. No. 1711 was passed by the Senate, with amendments, on May 20,
2011, by the following vote: Yeas 31, Nays 0; at the request of the House, the Senate appointed a conference committee to consider the differences between the two houses; and that the Senate adopted the conference committee report on H.B. No.1711 on May 28, 2011, by the following vote: Yeas 31, Nays 0. Secretary of the Senate APPROVED:
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2015 issue 5
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Builders Outlook
SPECIAL REPORT:
21 HOT HOUSING TRENDS Everyone wants to be hip, and the latest trends in design can help distinguish one home from another. And it’s not all flash; many new home fads are geared to pare maintenance and energy use and deliver information faster. Here’s a look at what’s coming. By Barbara Ballinger , REALTOR.COM
In real estate trends typically come slowly, often well after they appear in commercial spaces and fashion. And though they may entice buyers and sellers, remind them that trends are just that—a change in direction that may captivate, go mainstream, then disappear (though some will gain momentum and remain as classics). Which way they’ll go is hard to predict, but here are 21 trends that experts expect to draw great appeal this year: Coral shades.(right) A blast of a new color is often the easiest change for sellers to make, offering the biggest bang for their buck. Sherwin-Williams says Coral Reef (#6606) is 2015’s color of the year because it reflects the country’s optimism about the future. “We have a brighter outlook now that we’re out of the recession. But this isn’t a bravado color; it’s more youthful, yet still sophisticated,” says Jackie Jordan, the company’s director of color marketing. She suggests using it outside or on an accent wall. Pair it with crisp white, gray, or similar saturations of lilac, green, and violet. Open spaces go mainstream. An open floor plan may feel like old hat, but it’s becoming a wish beyond the young hipster demographic, so you’ll increasingly see this layout in traditional condo buildings and single-family suburban homes in 2015. The reason? After the kitchen became the home’s hub, the next step was to remove all walls for greater togetherness. Design experts at Nurzia Construction Corp. recommend going a step further and adding windows to better meld indoors and outdoors. Off-the-shelf plans. Buyers who don’t want to spend time or money for a custom house have another option. House plan companies offer myriad blueprints to modify for site, code, budget, and climate conditions, says James Roche, whose Houseplans.com firm has 40,000 choices. There are lots of companies to consider, but the best bets are ones that are updating layouts for today’s wish lists—openplan living, multiple master suites, greater energy efficiency, and smaller footprints for downsizers (in fact, Roche says, their plans’ average now is 2,300 square feet, versus 3,500 a few years ago). Many builders will accept these outsiders’ plans, though they may charge to adapt them. Freestanding tubs. Freestanding tubs may conjure images of Victorian-era opulence, but
the newest iteration from companies like Kohler shows a cool sculptural hand. One caveat: Some may find it hard to climb in and out. These tubs complement other bathroom trends: open wall niches and single wash basins, since two people rarely use the room simultaneously. Quartzite. While granite still appeals, quartzite is becoming the new hot contender, thanks to its reputation as a natural stone that’s virtually indestructible. It also more closely resembles the most luxe classic—marble—without the drawbacks of staining easily. Quartzite is moving ahead of last year’s favorite, quartz, which is also tough but is manmade. Porcelain floors. (right) If you’re going to go with imitation wood, porcelain will be your 2015 goto. It’s less expensive and wears as well as or better than the real thing, says architect Stephen Alton. Porcelain can be found in traditional small tiles or long, linear planks. It’s also available in numerous colors and textures, including popular onecolor combos with slight variations for a hint of differentiation. Good places to use this material are high-traffic rooms, hallways, and areas exposed to moisture. Almost Jetson-ready. Prices have come down for technologies such as web-controlled security cameras and motion sensors for pets. Newer models are also easier to install and operate since many are powered by batteries, rather than requiring an electrician to rewire an entire house,says Bob Cooper at Zonoff, which offers a software platform that allows multiple smart devices to communicate with each other. “You no longer have to worry about different standards,” Cooper says. Charging stations. With the size of electronic devices shrinking and the proliferation of WiFi, demand for large desks and separate home office is waning. However, home owners still need a dedicated space for charging devices, and the most popular locations are a corner of a kitchen, entrance from the garage, and the mud room. In some two-story Lexington Homes plans, a niche is set aside on a landing everyone passes by daily. Multiple master suites. Having two master bedroom suites, each with its own adjoining bathroom, makes a house work
better for multiple generations. Such an arrangement allows grown children and aging parents to move in for long- or short-term stays, but the arrangement also welcomes outof-town guests, according to Nurzia Construction. When both suites are located on the main level, you hit the jackpot. Fireplaces and fire pits. The sight of a flame—real or faux— has universal appeal as a signal of warmth, romance, and togetherness. New versions on the market make this amenity more accessible with more compact design and fewer venting concerns. This year, be on the lookout for the latest iteration on this classic: chic, modern takes on the humble wood stove.
Wellness systems. Builders are now addressing environmental and health concerns with holistic solutions, such as heat recovery ventilation systems that filter air continuously and use little energy, says real estate developer Gregory Malin of Troon Pacific. Other new ways to improve healthfulness include lighting systems that utilize sunshine, swimming pools that eschew chlorine and salt by featuring a second adjacent pool with plants and gravel that cleanse water, and edible gardens starring ingredients such as curly blue kale.
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SPECIAL REPORT:
21 HOT HOUSING TRENDS CONTINUED FROM PAGE 11 Storage. The new buzzword is “specialized storage,” placed right where it’s needed. “Home owners want everything to have its place,” says designer Jennifer Adams. More home owners are increasingly willing to pare the dimensions of a second or third bedroom in order to gain a suitably sized walk-in closet in their master bedroom, Alton says. In a kitchen, it may mean a “super pantry”—a butler’s pantry on steroids with prep space, open storage, secondary appliances, and even a room for wrapping gifts. “It minimizes clutter in the main kitchen,” says architect Fred Wilson of MorganteWilson.
works, she spaces them four to five inches apart, starting at the center and at eye level and working outward, then up and down. She uses Frog Tape to test the layout since it doesn’t take paint off walls. Artist Francine Turk also installs works this way, but prefers testing the design on the floor like a big jigsaw puzzle. Cool copper. The 2015 “it” metal is copper, which can exude industrial warmth in large swaths or judiciously in a few backsplash tiles, hanging fixture, or pots dangling from a rack. The appeal comes from the popularity of industrial chic, which Restoration Hardware’s iconic style has helped promote, says designer Tom Segal.
Radzwillas. What’s different now is that all-white does not mean the same white, since variations add depth and visual appeal. White can go from stark white to creamy and beyond to pale blue-gray, says Radzwillas. He also notes that when cabinets are white, home owners can choose bigger, bolder hardware. Outdoor living. Interest in spending time outdoors keeps mushrooming, and 2015 will hold a few new options for enhancing the space, including outdoor showers adjacent to pools and hot tubs along
Grander garages. (above) According to Troon Pacific, the new trends here include bringing the driveway’s material into the garage, temperature controls, sleek glass doors, specialized zones for home audiovisual controls, and a big sink or tub to wash pets. For home owners with deeper pockets, car lifts have gone residential so extra autos don’t have to be parked outside. Keyless entry. Forget your key (again)? No big deal as builders start to switch to biometric fingerprint door locks with numerical algorithms entered in a database. Some systems permit home owners to track who entered and when, says Malin of Troon Pacific. Water conservation. The concerns of drought-ravaged California are spreading nationwide. Home owners can now purchase rainwater harvesting tanks and cisterns, graywater systems, weathercontrolled watering stations, permeable pavers, drought-tolerant plants, and no- or low-mow grasses. Salon-style walls. Instead of displaying a few distinct pieces on a wall, the “salon style” trend features works from floor to ceiling and wall-to-wall. Think Parisian salon at the turn of the century. HGTV designer Taniya Nayak suggests using a common denominator for cohesiveness, such as the same mat, frame color, or subject matter. Before she hangs
Return to human scale. During the McMansion craze, kitchens got so big they almost required skates to get around. This year we’ll see a return to a more human, comfortable scale, says Mark Cutler, chief designer of design platform nousDecor. In many living or family rooms that will mean just enough space for one conversation grouping, and in kitchens one set of appliances, fewer countertops, and smaller islands.
with better-equipped roof decks for urban dwellers. Also expect to see improvements in perks for pets, such as private dog runs and wash stations, says landscape architect Jean Garbarini of Damon Farber Associates. While it’s fun to be au courant with the latest trends, it’s also wise to put what’s newest in perspective for your clients. Remind them that the ultimate decision to update should hinge on their needs and budgets, not stargazers’ tempting predictions.
Give your customers the ‘option of the sun’ Now more than ever, El Paso home buyers are planning for the future.
Luxury 2.0. Getting the right amount of sleep can improve alertness, mood, and productivity, according to the National Sleep Foundation. With trendsetters such as Arianna Huffington touting the importance of sleep, there’s no doubt this particular health concern will go mainstream this year. And there’s no space better to indulge the desire for quality rest than in a bedroom, says designer Jennifer Adams. “Everyone is realizing the importance of comfort, quality sleep, and taking care of yourself,” she says. To help, Adams suggests stocking up on luxury bedding, a new mattress, comfortable pillows, and calming scents. Shades of white kitchens. Despite all the variations in colors and textures for kitchen counters, backsplashes, cabinets, and flooring, the all-white kitchen still gets the brass ring. “Seven out of 10 of our kitchens have some form of white painted cabinetry,” says builder Peter
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2015 Issue 5
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Builders Outlook
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IN MEMORIAM| Jack White On Monday, May 25th, God received another angel, Jack C. White. Our beloved husband, father, grandfather, great grandfather went home, to be with our Lord peacefully surrounded by his family at home. He is survived by his wife Sue and his daughters, Judy Stark and Claudia Lardizabal; son in laws, Richard Stark and David Lardizabal, as well as his grandkids Laura, Rickie, Isabella and Olivia and his great grandchildren Robbie, Claire, Katie, Madison, Michael and Kelsey. Visitation will be from 4:00-9:00 pm with a Vigil/Rosary at 7:30 pm Thursday, May 28, 2015 at Sunset Funeral Home-East, 750 N. Carolina Dr. Funeral Mass was held on Friday, May 29, 2015 at St. Thomas Aquinas Church. Interment followed at Fort Bliss National Cemetery.
Julian Zar Julian Lee Zar "Zeke Zar" passed away on Sunday, April 26, 2015 at the age of 93. He was a World War II intelligence officer serving in the United States Army. In the 1960's to 1970's he was nationally recognized as the civilian authority of Government Programs. He did a stint as editor of Builders' magazine. Zeke then went on to be a general contractor and well respected in the Home Building Industry, serving as past President of the El Paso Home Builders' Association and El Paso Remodelers' Association. He was a Past President of the El Paso Association of Builders. He was also an accomplished amateur watercolorist and locally well-known cooking teacher in which he received many awards for his fajitas. He was a loving husband, father and will be greatly missed. He was preceded in death by his son William Lee Zar. He is survived by his loving wife Judith Zar. A Celebration of his Life was held on Thursday, April 30, 2015.
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Builders Outlook
2015 issue 5
Associates Council
Sam Shallenberger Morrison Supply
Time flies when you are having fun! I was out of town on May 21st when the WASHER tournament took place but Ray informed me that it was a big success and everyone had a blast. A big thanks to all that helped make this event a success. Thanks to our partners, Lone Star Title, Foxworth Galbraith, Tropicana Homes, Randall Smith CPA, Haskins Electric, and Interceramic.
We are looking at August for our BOWLING Pachanga and should have details shortly. We do not compete with each other unless your team has a bet with another team. This is just a way to beat the Dog Days of summer and share some fellowship with other members. We will have drawing for some cool prizes. We are shooting for an October time frame for the fall golf tournament for the
serious golfers. We don’t know if it will be a Pro –Am yet as we are going to make this a very special event. We will require established handicaps from each participant. The prizes will also be special as we realize the high level of competition. That’s about all I have as far as the associates go. Have a great and safe summer.
pay $160 and you would have to pay $40. Copayment: Another form of costsharing that requires an insured person to pay a fixed dollar amount when a medical service is received. The insurer is responsible for the rest of the reimbursement. If you pay $25 or some other flat amount for a covered medical visit, then your plan has a copayment. You most often find copayments in preferred provider organization (PPO) plans, point-of-service (POS) plans or HMOs, which also may charge higher copayments when you obtain services from out-of-network providers. Maximum out-of-pocket expense: The maximum dollar amount an insured must pay out of pocket during a year. Until you meet this maximum, you and the insurer share the cost of covered expenses. After you reach this maximum, the insurer may waive the coinsurance or copayment and pays all covered expenses, up to any annual or lifetime limit. Under the Affordable Care Act, the insurer for a non-grandfathered individual group plan must pay 100 percent of “essential health benefits” for the rest of the year after you reach the out-of-pocket maximum. Note that this is 100 percent of “essential health benefits,” not all covered benefits. Voluntary insurance plans, such as critical illness insurance, cancer insurance and hospital indemnity insurance, can help pay for some of these uncovered items. Annual and lifetime limits (or “cap”): The Affordable Care Act prohibits major medical insurance policies from having lifetime limits, or caps on the maximum amount your insurer will pay toward covered expenses. Out-of-network charges: Many plans pay a lower portion of any services you obtain from out-of-network providers. Some also have higher copayments. Before buying a plan, check its list of preferred providers or network providers to see if your physician(s) and local hospital of choice are included. If you’re not willing to switch to a preferred provider, factor higher out-of-network charges into your healthcare costs. “Usual, customary and reasonable” charges: You may find the term “usual,
customary and reasonable” (UCR) charges in your policy benefit statements. “Usual” means the provider’s usual charge for this treatment (i.e., he’s not charging you more because you have insurance!), “customary” means customary for all providers in your geographic area and “reasonable” means reasonable based on the particular circumstances of your claim. Once you pay any deductible amount and coinsurance, the insurer is responsible for reimbursing the rest of covered benefits up to allowed charges: the individual could also be responsible for any charges in excess. If your insurer deems your provider’s charges above the UCR amount, you could be responsible for the difference.
You’re more likely to run up against UCR charges in indemnity plans. PPO, POS (point of service) and HMO plans negotiate fixed payment schedules, so when you use an in-network provider who accepts your plan, he or she has likely accepted the insurer’s fixed payment. Regardless of the type of group health plan you offer your employees, it likely costs more or covers less—or both—than it did a few years ago. Voluntary benefits allow employees to buy coverage for additional services (such as vision or dental) or costs not covered by their major medical plan at competitive group rates through convenient payroll deduction. Please contact us for more information.
Expert Advice
Joe Bernal Employees Benefits of El Paso
The final cost of a medical insurance plan depends on more than just the premiums, even when you compare with similar benefits. plans Understanding the following definitions can help your employees understand the components that affect their medical coverage costs. The final cost of a medical insurance plan depends on more than just the premiums, even when you compare plans with similar benefits. Understanding the following definitions can help your employees understand the components that affect their medical coverage costs. Deductible: A fixed dollar amount you must pay during the benefit period — usually a year — before the insurer starts to make payments for covered medical services. If you have a family plan, you might have both per individual and family deductibles. Some plans may have separate deductibles for specific services. For example, a plan may have a hospitalization deductible per admission. To save money, consider raising your plan’s deductible. You might pay more out of pocket, but you could save substantially on premiums. Just make sure you have funds on hand to cover your deductible. With certain high-deductible policies, you can qualify for a health savings account (HSA), which allows your savings to accumulate tax-free to pay qualified medical expenses. Coinsurance: Coinsurance is a form of cost-sharing that requires the insured to pay a stated percentage of medical expenses after the deductible amount is paid. For example, let’s say your policy has a coinsurance percentage of 20. If you’ve already met your plan’s deductible for the year and your doctor charges you $200 for a covered office visit, your insurer would
2015 Issue 5
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Builders Outlook
Builders
utlook www.elpasobuilders.com www.epbuilders.org
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