www.elpasobuilders.com
Builders Outlook Issue 1 2011
Building El Paso’s tomorrow today
Local builder chosen to represent industry in controversial EPA Storm Water proposal
‘Every property owner in the United States should be concerned about this rule. It could potentially burden cities with the task of spending billions of dollars to comply with an EPA rule that would do little or nothing to protect the nations waterbodies in some parts of the country. And, as history shows us, when the feds burden the cities and states with unfunded mandates, the only alternative local governments have is to raise taxes or create another fee.’
PRSRT STD U.S. POSTAGE PAID EL PASO TX PERMIT NO. 429
Bobby Bowling IV
From NAHB El Paso home builder Bobby Bowling IV was selected by NAHB to represent the building and development industry as a Small Business Representative on a federal Small Business Regulatory Fairness Act (SBREFA) panel to review a proposed new rule from the EPA. The rule the EPA is proposing would require "postconstruction" stormwater discharge permitting and reporting to the EPA. In other words, the EPA is considering requiring property owners to continue along the same lines of the type of reporting builders and developers are familiar with regarding Storm Water Pollution Prevention Permits (SWPPP) indefinitely (i.e. forever!!!). For example, the proposed rule could require you to log in and record data on every rain event, and file regular reports to the EPA, the city of El Paso (El Paso's designated "MS4" agent for EPA), and/or the state of Texas. The issue from the EPA's perspective is best summarized from the caption below taken directly from a briefing paper the EPA submitted to the SBREFA: Long term stormwater discharges from developed sites, such as subdivisions, roadways, and commercial buildings or shopping centers, can significantly alter the hydrology of a site and can have a negative impact on receiving waterbodies*. Generally, as sites are developed, there is an increase in impervious areas where water cannot infiltrate into the ground, leading to increases in stormwater discharges. Additionally, as stormwater moves over land, it picks up pollutants from various sources, such as fertilizers that have been applied to land, oil, grease and metals contained on roadways, and sediments contained on a variety of surfaces. These pollutants, as well as the velocity and volume of the stormwater discharges, contributes to water quality impairment. In fact, stormwater remains a leading cause of water quality impairment. According to the 2004 Water Quality Inventory, urban stormwater discharge is the source of problems in: • 22,559 miles, or 9.2% of all impaired rivers and streams • 701,024 acres, or 6.7% of all impaired lakes • 867 square miles, or 11.3% of all impaired estuaries As the above summary reflects, the EPA is responsible for enforcing the Clean Water Act (CWA), which is intended to protect the nations navigable waterways (*the term "waterbodies" that the EPA inserted is actually not the correct term from the statute). However, as the statistics provided by the EPA themselves show, "urban stormwater discharge" accounts for less than 10% of the problem! ("Urban stormwater discharge" includes stormwater runoff from ALL development activity, building activity, industrial activity and even every completed development!) Where does the other approximately 90% of
the pollutants into the nations waterbodies come from, you might ask? Well, some comes from industrial and other development activities outside of urban areas, but the vast majority come from farms, which are completely unregulated and exempt from the CWA. "It's crazy that our industry is building and developing incredibly eco-friendly communities and infrastructure, yet the EPA keeps coming back to our industry to increase our costs of development and now, just simple land ownership, for an incredibly insignificant diminishing return for the environment," says Bowling. Bowling also points out that increased costs would make development infeasible in most instances, especially in today's environment. "I showed them an example for a 10-acre apartment project where their additional rule could add as much as a million dollars to the cost of the project. They keep mentioning that 'green jobs' could be added, by I fail to see how ANY jobs can come from a project that is infeasible and won't be done." During the most recent SBREFA hearing at EPA headquarters in Washington, several small business entity representatives voiced their concerns over the fact that the EPA continues to seek new rules limiting developers while continuing to ignore the farming and other unregulated communities. However, the solution to that complaint seems to be only through congress and a change in the CWA. "The
CWA also is very unfair to the desert southwest, because we really have very little, if any, 'navigable waterways' or even any 'waterbodies.' El Paso and other desert communities should be exempt from these portions of the Clean Water Act, because all rainfall either evaporates or percolates into the ground far before it ever reaches a body of water. Plus, a long time ago, developers here began building retention ponds to alleviate natural flooding patterns, so even less stormwater is flowing here after a rain event than mother nature intended in El Paso today anyway." The SBREFA committee has until January 5, 2011 to submit comments to the EPA with regard to the rule. After that, the formal SBREFA report would be published sometime in mid-February, and a proposed rule from EPA could then be promulgated and published for public comment. The final rule (in one is recommended for passage by the administration) would come in late 2011 or early 2012. Bowling concluded, "Every property owner in the United States should be concerned about this rule. It could potentially burden cities with the task of spending billions of dollars to comply with an EPA rule that would do little or nothing to protect the nations waterbodies in some parts of the country. And, as history shows us, when the feds burden the cities and states with unfunded mandates, the only alternative local governments have is to raise taxes or create another fee."
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Builders Outlook
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Builders Outlook
President’s Message Greg Bowling President, El Paso Association of Builders
We recently had our end of the year installation and awards banquet at the Camino Real Hotel. I’d like to thank all of you who attended, especially the event partners- JOBE Materials, LP* Tropicana Homes * El Paso Building Materials * MTI Ready Mix * Western Wholesale Supply * Passage Supply/Arrowcool * Sierra Title Co. * Foxworth Galbraith Lumber * JDW Insurance *Bank of the West * who made the evening possible. I’d also like to extend a special thank you to Ray Adauto and staff Angie DeLuna and Margaret Adauto for all the planning and hard work they put in to hold such a great event.
I’d of course also like to acknowledge and congratulate our award winners for 2010: Builder of the YearMike Santamaria of Mountain Vista Homes Associate of the YearJavier Ruiz of Senercon/Border Solar Pat Cox AwardRandy Bowling of Tropicana Homes John Schatzman AwardLorraine Huit of Cardel Design Group Next time you see one of these 4 members thank them for going above and beyond for our industry and for EPAB in 2010. Coming up quickly on our calendar is the first event for 2011- NAHB’s International Builders Show in Orlando will be held January 12th through the 15th. There’s already a small contingency from El Paso set to go but for those who’ve never attended IBS, I strongly encourage you to go and experience just how vast this show is. There is typically over 1000 booths where suppliers market their latest products and tools. In the past I’ve found many of these presenters don’t currently have a
presence in El Paso but are very interested in trying to establish a local builder or supplier relationship in El Paso. In addition to this, there is also over 200 education sessions covering every possible industry topic. Plus plenty of stuff devoted to niche markets in the industry, including multifamily housing, custom building, green building, 50+ housing and remodeling. For more information contact Ray Adauto or go to the IBS website at www.buildersshow.com Locally we are getting ready for our Spring Home Show, Presented by the El Paso Association of Builders. The Home Show is the ONLY home show that the El Paso Association of Builders endorses or promotes. This show is produced by RJ Promotions of St. Joseph, Missouri with Corey Jackson and others from RJ. I urge all of our members to support this event by getting a booth and showcasing your products or services to the thousands of visitors we will have. My company, Tropicana Homes, closed three home sales last year directly from the show. This tells us that we have hit upon a marketing tool
that works and will work for you. The secret? Get a booth space and work the event. The association can really use your help. As of this notice only 25 spots remained so call the office or ask for Cory when you call the number on the ad located in this publication. Tell them you are calling as a member or because you support the EPAB. Lastly, at our final board meeting of 2010 the board gave John Chaney permission to negotiate to continue or relationship with the Adams Golf Pro Tour event for 2011. For those of you who didn’t get to participate in this event last year, you missed out. This year the tournament will be in June so if you don’t want to miss out this year, reserve your team or sponsorships now as I’m sure they will be going quickly. Ray and John have already begun getting the partner packages together, and they are taking reservation for teams. The Pro-am is scheduled for June of this year. Let’s make 2011 one of the best years ever for the EPAB. I appreciate each one of you and hope that I can serve you well as your President. Thanks and let’s get going.
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4 JANUARY 2011
Builders Outlook
Perspective Ray Adauto, Executive Vice President EPAB
With all the gladness I can muster I’m just happy that 2010 is over and done with. The year was particularly difficult for a variety of reasons, some of which I don’t care to rehash, and some that require us to really look at with an eagle eye. Allow me to first say thank you to all of our faithful members who sacrificed to continue being members. You may think the word sacrifice is a little strong but when others bailed out the majority of the members kept us going. In 2010 we had one of the most successful membership drives of any home builders association in the country thanks to the leadership of Mike Santamaria and his dedicated team leaders. Our newest members have been working the membership just like we suggest. We gained new members and lost some but overall our association is growing in a down economy. We were not surprised to see some local associations fold or really cut operations.
2010 ends, hope springs for better 2011 We lost our friend Dave Rowe at the Las Cruces/Southern New Mexico HBA for financial reasons, and we were shocked to hear that the Illinois State HBA folded. They were the first state association in the NAHB federation but the reality of hard times came to be. At the Texas Association a new increase of nearly 40% in dues was passed adding to the costs of the locals and forcing us to look at reduced local revenue or increases in dues to the locals. We will be looking very closely at what steps we need to take in order to stay on course but we won’t be making any rash judgments until we can look at alternative methods of revenue generation. Our bylaws were tested in 2010. Without that document and without great leadership in the Past Presidents and our council Jay Kerr circumstances could have been different. Thanks to all of you for your hard work in getting us through it. Our new leadership comes with a wealth of experience and dedicated service. Some will have to learn the ropes while others will really showcase their talents after years of service. Congratulations to Greg Bowling and his administration. Our installation capped off an interesting year but if this
Send us your comments. E-mail to: ray@elpasobuilders.com
event is used as a tide mark then 2011 will be a really good year for the EPAB. We had about 240 members; friends and relatives join the celebration of the installation. The setting at the Camino Real was elegant and the food was outstanding. I would like to thank my staff for the hard work and dedication to details for such a big event. Our business partners stepped up to the plate and allowed our attendees to enjoy a really great event. Please thank them as you work with them. They are the unsung heroes of the night. Our strategic meeting in early December gave us insight into what direction we will take in 2011. It starts with moving meeting times to a better business time and removing one headache for the staff, ordering food. That’s not to say that we won’t have a meal or two every now and then but I think what you will see is a more business focused board and general
meeting than what we’ve had before. Our goal is to give you a good reason to take time from your busy schedule to come to a meeting. We have asked all of our council chairs to do likewise and we expect that again you will be pleasantly surprised. This month is our annual Home Show at the Convention Center, January 21-23. This is the showcase event for your association in the first quarter and one that should be supported by you as a member. If you are hungry for business then you should be hungry to showcase your business in front of thousands of consumers. Why would you not invest in a weekend to see thousands of potential customers? Your cost per exposure is tiny, but not being there is costly. You see if there are thousands of people over at the show then who’s left to come into your store? Numbers after all is the name of the game. Ask Tropicana Homes. They CLOSED three homes last year directly from the show. THREE HOMES. Now that’s what being there and working the floor can do. So goodbye and good riddance to 2010. Let’s remain optimistic in 2011 and work hard to make it the banner year we all want and need. Happy New Business Year to all of you. Thanks.
Builders Outlook
Guest Perspective
Chente Quintanilla State Representative The United States Census just released the preliminary numbers of the census taken earlier this year. The numbers are pretty much in line with what we were hearing over the past few months. Statewide, Texas had a tremendous amount of growth; second only to Nevada. Our population grew by 20.6%
Guest Perspective
Silvestre Reyes US Congress El Paso will receive its first full Passport Agency thanks to the American Recovery and Reinvestment Act. In May 2009, I was proud to announce that El Paso will receive its first full service Passport Agency with the help of 2.1 million in Recovery Act funding. This new facility is scheduled to open in March 2011 and will have the capacity to not only accept passport applications but also issue passport books and passport cards. With the new travel rules that require all U.S. citizens returning from Mexico and Canada to have a passport or passport card, this level of service is greatly needed. As we all know, for thousands of El Pasoans traveling to Mexico is a daily routine, and I urged the administration and the leadership at the State Department to
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Preliminary census numbers good, Texas population up from April 1st of 2000 to April 1st of 2010. That rate of growth puts the Texas population at approximately 25.1 million citizens. With our growth and the loss of population in many areas, Texas will gain 4 Congressional seats, remaining second to California. While the local population numbers have not been released, there is a great probability that the growth is in the Austin, Dallas, San Antonio, Houston and lower Rio Grande areas. The demographic numbers have yet to be announced but it is a good bet that the Hispanic population had the highest growth. With that amount of growth, it is going to be difficult to avoid increasing the number of minority districts in Texas; mainly Hispanic. While I feel our main identity should be American, there are certain issues that can be considered
differently by more Hispanic representation and with greater benefits to our population. The drawing of the districts won’t be an easy one. Special interests will be solidly in place influencing the redistricting that is about to occur for our Congressional districts. I hope this time around, it won’t be as ugly as the redistricting was in 2003. I can tell you quite honestly that many tempers were flared to a dangerous level. For El Paso County, the numbers for the state population are close to what we used in October of 2009 when we started monitoring the census process. The numbers my office used to project the population in each House district were a little low. The actual number per district is 167,648. That means without adjustments, our county population needs to be at 838,243 residents in order to keep
all five districts within the county. There is, however, a give or take when determining the population. Each House district may be a plus or minus that number by five percent. That means the population in El Paso county can be as low as 796,330. The State Demographer has estimated the population of El Paso County to be at 804,000 which would be very good for our representation. Other estimates ranged from 754,000 to 773,000. Our fate is in the hands of those who made the count. For months, my office had been voicing great concerns, not on the population estimates, but on the actual count. I supported my concerns with specific shortcomings in the physical count in my district. We can only wait and see the actual count at this point.
Recovery Act brings needed facilities to El Paso bring a full-fledged passport agency here. In April 2007, I wrote a letter to the thenAssistant Secretary for Consular Affairs Maura Hartly requesting the Department of State to establish a satellite passport office in El Paso to accommodate the expected increase in demand for passports as a result of the Western Hemisphere Travel Initiative (WHTI) that took effect June 1, 2009. Currently, El Pasoans who urgently need a passport are served out of the Houston agency, and must overnight their applications or travel across the state. When this facility opens next year, that will all change. This new passport agency is one of only five new full-fledged agencies in the nation funded by the Recovery Act which represents another milestone investment for our community. This legislation was passed by Congress and signed by the President in February 2009; one of the very first pieces of legislation signed by President Obama to help move our economy forward. Once the agency is complete, it will have nine public counters, with a lobby big enough to accommodate 75 customers at a time. It will employ a staff of approximately 37 people, providing good paying jobs to many El Pasoans. Also, the Bureau of Diplomatic Security will open an office here in El Paso with full-time investigators to combat passport and visa fraud.
The Recovery Act has provided some of most significant federal investments to our community. There are many projects underway, including the $50 million warrior in transition complex at Fort Bliss, which was rated the #1 Recovery Act project in the nation by the White House and will treat wounded soldiers returning from conflict. The Glory Road Sun Metro terminal, a new fire station, new Head Start facilities in the northeast and in Canutillo, a $6 million expansion of the Project Vida
Community Health Clinic in south central, and now we have this passport agency and many other tangible assets that will add to the long term economic health of our community. I am very proud to have this facility here and I am grateful for all of the hard work and cooperation by our federal officials. This facility is long overdue, and I am pleased to see yet another great project for the El Paso community through the American Recovery and Reinvestment Act.
6 JANUARY 2011
Builders Outlook
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Builders Outlook
JANUARY 2011
New OSHA Ruling Clarifies Key Residential Safety Regulations From NAHB: The National Association of Home Builders (NAHB) applauds the Occupational Safety and Health Administration’s (OSHA) decision to withdraw the interim fall protection guidelines for residential construction that were issued in 1995 and revert to the previous guidelines. “Job site safety is the number one priority for builders,” said NAHB Chairman Bob Jones, a home builder from Bloomfield Hills, Mich. “This action will clarify what actions builders need to take to comply with OSHA regulations while helping to ensure safer work sites.” The interim guideline, intended as a temporary policy, was implemented in 1995 to allow employers to use alternative measures for fall protection without having to provide a written, site-specific fallprotection plan or prove that conventional fall-protection systems were not feasible for a particular project. Prior to 1995, OSHA required builders to provide conventional fall protection (i.e., guardrail systems, personal fall-arrest systems or safety-net systems) for workers engaged in residential construction working six feet or more above a lower level. If an employer determined that using conventional fall-protection methods was not feasible or would create a greater hazard, the employer had to provide a written fallprotection plan utilizing alternative fall
protection methods. OSHA’s new compliance directive (STD 03-11-002) eliminates the interim guideline and reverts back to the pre-1995 regulation. In a 2008 letter, NAHB requested that OSHA rescind the interim guideline as it created confusion about fall protection requirements for residential construction. The new directive (STD 03–11–002) will require employers to comply with 29 CFR 1926.501(b)(13), which will “eliminate confusion in the residential construction industry as to which fall-protection methods and systems must be used and would make compliance with OSHA fall-protection requirements for the home building industry much simpler and easier to understand, as well as put into practice” according to the letter. The guideline still provides flexibility for employers by allowing them to implement a written fall-protection plan if they determine that conventional systems are not feasible or create a greater hazard to workers. OSHA’s Advisory Committee on Construction Safety and Health and the Occupational Safety and Health State Plan Association also supported rescinding the interim guideline. Construction and roofing companies have until June 16, 2011 to comply with the new directive.
New-Home Sales Rise 5.5 Percent From NAHB: Sales of newly built, single-family homes increased 5.5 percent to a seasonally adjusted annual rate of 290,000 units in November, according to newly released figures from the U.S. Commerce Department. The gain represents a partial bounce-back from a near-record low, downwardly revised number of new-home sales in October. “While builders continue to face a great deal of competition from short-sale and foreclosure properties, the improvement registered in new-home sales in November is a good sign,” said Bob Jones, chairman of the National Association of Home Builders (NAHB) and a home builder from Bloomfield Hills, Mich. “With consumer interest in new homes expected to continue to revive as the economy and job markets improve, and inventories of new homes for sale near record lows, our concern now is that a lack of construction financing will keep builders from being able to expand the selection of what they have to offer buyers heading into the spring.” “Builders in our latest surveys have indicated that they are starting to see more buyers who are seriously considering a new-
home purchase, and today’s numbers showing that sales headed in the right direction in November bode well for what the future may hold,” agreed NAHB Chief Economist David Crowe. “The extremely low inventory of new homes on the market is also a positive sign that builders have been exercising tremendous caution with regard to new construction activity. That said, unless builders’ access to financing for new development improves, many will not have a product to sell when the opportunity arises, which in turn would slow a market recovery as well as potential job generation from new home building.” The improvement in new-home sales was driven by gains in two regions in November. The South, which is the nation’s largest housing market, posted a 5.8 percent gain, while the West showed a 37.3 percent rebound from the previous month. Meanwhile, declines of 26.7 percent and 13.2 percent were registered in the Northeast and Midwest, respectively. The inventory of new homes for sale fell to 197,000 units in November, marking the first time in 42 years that this measure has fallen below the 200,000 level. This amounts to an 8.2-month supply at the current sales pace.
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JANUARY 2011
EPAB ON THE SCENE Installation and Awards Banquet The annual installation and awards banquet featured some surprises along with some well deserved honors. The 2010 installation of the 2011 Executive team and Board of Directors was held December 14 at the Camino Real Hotel downtown. The setting was elegant and the event moved along at a good pace ending within the promised ending time. The hotel delivered a great meal and quick service making the night just that much more enjoyable. Leading the awards was the selection of Builder Member of the Year and Associate Member of the Year. Mike Santamaria of Mountain Vista Builders was honored as the Builder Member of the Year. His selection was based on the outstanding work he did during the year as membership chair, Past President and involvement in other activities at the association. The Associate of the Year went to Javier Ruiz, President of Border Solar-Senercon and chairman of the Desert Green Building Council. His work for the association has touched not only the local builders but Javier travels the country giving lectures and seminars on green building, solar power and other energy wise systems. He is a great ambassador for the association and very deserving of his award. The annual service to the association award, the Pat Cox Award, went to Randy Bowling of Tropicana Homes for his unselfish time and energy spent on behalf of the association for the Texas Association of Builders. Randy travels almost weekly to Austin for hearings, committee meetings and legislative issues and does so without asking the association for anything. His position as Chair of the Government Relations Committee (GRC) at TAB has brought great respect for his leadership and vision on behalf of association members throughout the state. Lorraine Huit was honored with the John Schatzman Community Service Award for her dedicated 25 years of service on behalf of the EPAB. She has chaired or worked on so many civic and community committees that it would be hard to list them all. Most recently she has been active with Candlelighters, the United Way, and others, and she is the current President of the Westside Rotary Club. She travels around the country and the world in that capacity and spreads the good word of the EPAB everywhere she touches down. Lorraine joins Anna Gil as the only two recipients of the Schatzman. Brad Roe of Roe Engineering was honored as an Honorary Life Member of the EPAB. His presentation was the public recognition that the Board of Directors gave Brad earlier in the year. Brad has a long history with the association including his work as President of the EPAB over two decades ago. The EPAB was honored to have the Reverend William C. Cobb, Rector of St. Clement Church, give the invocation and blessing. He was witty and certainly got the festivities off to a great start. MTI Ready Mix and Western Wholesale Supply teamed up once again to sponsor the beverage bar. Their contribution allowed those attending to enjoy a great happy hour. Our thanks to both Tony Mullen and Sam Shallenberger for their partnership. The installing officers for the Board were Brad Roe, while Bob Bowling III installed the executive team and his son Greg as President. The Bowling legacy continues with all three sons having served as Presidents along with dad. A very impactful talk was given by Greg and the celebrations concluded. Congratulations to our award winners and to the incoming leadership.
Strategic Planning The 2010 Strategic Planning session was held in Ruidoso early in December. The event was President Greg Bowling’s idea to get members buy in to what the association goals should be in 2011. Kristi Sutterfield, former NAHB EO of the Year facilitated along with Ray Adauto. Several proposals of significance were made and will be implemented during 2011. Thanks to all who took time to go and work on behalf of the association.
NM Bowl Game The UTEP Miners got the invitation to a post season game and the Albuquerque based New Mexico Bowl was the sight. Several EPAB members took the trip including Mark Dyer and Ray Adauto. The game against BYU didn’t go the way Miner fans wanted but the trip included some restaurant visits and good conversation. We hope the Miners do well in 2011
Cullers & Caldwell Christmas Lunch John Cullers and Dalton Caldwell throw a yearly Christmas luncheon at a local establishment. This year the invitees were treated to some good Mexican food and plenty of refreshments. Pictured are l-r Dalton, Margaret Adauto, Adriana Cullers, and John Cullers.
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10 JANUARY 2011 Expert Advice
Javier Ruiz Senercon/Border Solar
2011: Energy Challenges and Opportunities First of all, I would like to wish everyone a very successful 2011 year, and even though a New year is just a change of number in a year, I like to see it as an opportunity to reflect all the challenges and opportunities that we went thru in the previous year, try to learn from our missed opportunities and capitalize on all of those learning experiences either good or bad. I know, this may sound too deep, but I just felt like sharing this with all of you. Going back to the topic of challenges and opportunities as they relate to Energy Efficiency, Green Building and Renewable Energy, 2010 was a great year. Initially, the El Paso Association of Builders building became the first in the nation to have Solar Power, secondly local homebuilders built homes with solar power, this is was the first time for El Paso to have new homes with Solar Energy, additionally regarding Energy Efficiency the El Paso area started more than 1,600 new Energy Star Homes, this alone is a very significant achievement because El Paso Builders are setting an Energy Efficiency standard in a voluntarily manner and offering their customers the benefits of energy savings for years to come. As you may see, El Paso homebuilding market has been evolving for the last few years by embracing energy efficiency not only as a marketing tool but as a tool to have more satisfied customers and improve the performance of the homes they build. Now we are seeing that more homebuilders are going a step further by introducing high performance products like spray foam insulation, vinyl windows, tankless water heaters and even solar power into their homes. 2011 will be a very interesting year to see how the market evolves and further adopts more of these technologies. As an Opportunity example, 2011 would be a year where Solar Energy is going to have a lot of attention in El Paso, and the main reason is because the City of El Paso and El Paso Electric have launched a Rebate program on first come first server basis, where they provide an upfront rebate reducing the cost of a Solar Photovoltaic System by an average of 25-30%, in addition there is a federal tax credit of 30%, reducing the overall investment by almost 60%, which makes it a very viable option to any homeowner or homebuyer to consider for their home. The opportunity here is to start considering building true Solar Ready Homes and have solar power offered as an option for home buyers; this will drive the market to the introduction of renewable energy into the new homes market and also would differentiate builders that are thinking about the future. The Challenge would be to try new and different things, try to innovate and evolve along with the market, as I have written before the home building industry is one of the industries that has the greatest potential to evolve into a more efficient industry thru economies of scale and trade education. So for this 2011, go after innovation and the energy efficiency opportunities that you have access to, go pass the challenges that all changes represent and consider that the homes you are building today will still be here in 1520 years and whatever energy efficiency measures you introduced today will be of a greater benefit tomorrow. If you have any questions or comments regarding this article or with any other Building Science, Sustainability or Renewable Energy theme, send us an email to: jruiz@senercon.com
Builders Outlook
Builders Outlook
JANUARY 2011
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NAHB Report: Small Builders Mainstay of the Nation's Housing Industry
Small home builders are the mainstay of the nation’s housing industry, including a sizable number of self-employed mom-and-pop operations, according to a new study by economists at the National Association of Home Builders. “Small businesses have always been the predominant force in housing and they lend this industry its economic vitality,” said Bob Jones, NAHB chairman and a builder from Bloomfield Hills, Mich. “We are seeing market conditions returning to normal in many parts of the country after a long, hard downturn, and these companies have the agility to move quickly and start leading the economy forward,” Jones said. “But first they need access to financing to build, which remains scarce during this critical phase of the recovery.” The study notes that the small builders and tradesmen who produce the majority of the nation’s new homes “compete in a fierce marketplace that challenges their economic survival. A much higher share of small businesses both enter and fail in the residential construction industry when compared to all U.S. firms,” according to the report.
“The residential construction industry is very dynamic, and a large number of firms enter the industry each year and a large number exit each year,” the report says. “With few barriers of entry, start-up builders can launch their business with a single new home.” Most home builders and remodelers are small businesses, “further facilitating movement into the industry when opportunities improve, and exiting either because of business failure or life-cycle decisions.” The report concludes that housing remains the domain of small businesses and looks at the Census Bureau’s Economic Census, which provides information on the size of businesses in various industries. Conducted every five years, the most recent census is based on business activity that occurred in 2007. Final tables for the construction industry were published this fall, on Oct. 19. Among the data that provides a profile of the housing industry as of 2007: • Slightly more than 65 percent of all home building establishments had annual receipts below $1 million. Almost 31 percent generated between $1 million and $10 million; and 4.1 percent had more than $10 million. • In 2007, 41,483 new single-family general
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contractors (who build on the owner’s land) did less than $1 million in business, about a 70 percent share of the 59,679 businesses in this group. Although multifamily general contractors tend to be somewhat larger, 42 percent of them also recorded less than $1 million in yearly sales or receipts. About 60 percent of the 35,378 “operative builders” (who own the land upon which they build) did less than $1 million in business. Eighty-four percent of 73,888 residential remodelers and 61 percent of 6,462 land developers saw less than $1 million. • Some 25 percent of $89.3 billion in total construction value delivered by single-family general contractors in 2007 was subcontracted out. Subcontracting amounted to half of $34.6 billion worth of construction among multifamily general contractors, 22 percent of $180.1 billion for operative builders and 23 percent of the $52.1 billion for residential remodelers. • These results are consistent with findings from NAHB’s monthly Builder Economic Council survey. Among the single-family builders responding, 40 percent said they subcontracted 100 percent of their work and another 39 percent subcontracted 76 percent to 99 percent of the work. The same builders used 24 specialty trade contractors in the process of building the average single-family home. • Seventy-four percent of a total of 477,950 specialty trade contractors rang up less than $1 million in business in 2007. • Under U.S. Small Business Administration standards, at least 96 percent of residential builders and remodelers were small (defined as doing no more than $33.5 million in annual
business). Also considered small were 94 percent of land developer (less than $7.0 million) and 98 percent of specialty trade contractor (less than $14 million) establishments. Most of the home building and trade contractor establishments were far below the SBA ceilings. Looking beyond the Economic Census, which only counts establishments with employees on the payroll, NAHB estimates that the ratio of the income of usually small, selfemployed independent contractors to wages and salaries generated in the construction industry is one to four. This is compared to a ratio of one to 10 in some other industries, such as manufacturing. Housing is also providing more opportunities for Hispanic businesses than U.S. industries overall, the study found. The 2007 Survey of Business Owners (SBO) recently reported that in 8.3 percent of a total 27 million businesses -- or 2.3 million -- at least 51 percent of the stock or equity was Hispanicowned. The Hispanic share for the construction industry (both residential and nonresidential) was higher -- at 10.0 percent, or 340,766 out of 3.4 million construction firms. Of the 2.6 million construction nonemployers found in the SBO survey, 11.6 percent were Hispanic-owned, as were 12.2 percent of the 1.9 million non-employer specialty trade contractors. For several trades, the Hispanic share among non-employers was around 20 percent -- including structural steel and precast concrete, drywall and insulation, tile and terrazzo and poured concrete.
12JANUARY 2011
Builders Outlook
Builders Outlook
JANUARY 2011
13
Membership News UPCOMING EVENTS January 12-14 NAHB Winter Board Meetings And International Builder’s Show Orlando, Florida
January 21 – 23 Spring Home Show El Paso Convention Center February 1 Associates Council meeting 3:30 EPAB
January 19 Board Orientation 3:00-3:30 Board Meeting 3:30 – 4:00
February 9 Board meeting 3:30 EPAB February 10 Speed Networking 2:00 – 4:00 El Paso Association of Builders
SODA SPONSOR
Thanks to our JANUARY SODA SPONSOR: Bella Homes
February 22 – 26 TAB Meetings Austin, Texas
RENEWALS
NEW MEMBERS Punto Living, LLC Contact: Jorge Mejia 5766 N. Mesa St. El Paso, TX 79912 915-584-8011
February 23 Rally Day Austin, Texas
Baja Homes
Del Rio Engineering, Inc.
Bank of the West
Franklin Building Materials
Bohannons Development
General Electric
Corp.
Grey Jansing & Associates
CEA Engineering Group
Lone Star Title Co.
Cisco Homes, LLC
MA Homes
Classic Granite & Marble, Inc.
MTI Ready Mix
Davidson Custom Homes
R.C. Baeza & Associates
Your EPAB Membership can make stocking your office cheaper! Members of the El Paso Association of Builders enjoy many exclusive discounts from some of the finest merchants in the country.
MEMBERS RECEIVE THE BEST PRICE ON COMPUTERS FROM DELL For information go to: www.nahb.org/memberadvantage or call 778-5387
14 JANUARY 2011
Builders Outlook
Council Reports
6046 Surety Dr. El Paso, TX 79905 915778-5387 • Fax: 915-772-3038
REALTOR/Builder The GEPAR REALTOR/Builder Committee is starting a new program in 2011. We will be having monthly meetings with different El Paso Builders to come and present their homes and community to the El Paso REALTORS. These will be 1-2 hour meetings with the Builder of the Month speaking about their products and policies of building new homes. We have a great turn out for Builders who signed up to speak at our meetings. Some of our upcoming presenters are: Desert Agave Homes, Carefree Homes, Vista Serena Homes, Bella Homes, Desert View Homes, Segovia Homes, and Tropicana Homes. Our January meeting will be covering “Permit to City Final – Building a New Home.” Our speaker will be Kelly Sorenson from Vision Consultants. We would like to educate our REALTORS about the complete construction process from picking up a Permit to passing the City Final Inspection. Many REALTORS understand most of the building process. However, we would like the REALTORS
to have information about the complete building process. This would help REALTORS better explain to their clients why it is a good thing to take time to build a new home and what the steps are with City Building Requirements. The REALTOR/Builder Committee’s goal is to bring education to our REALTOR members and bridge the gap of communication that can sometimes appear between REALTORS and Builders. We want to encourage communication of both groups which will provide a better professional service for our Buyer Clients. REALTOR/Builder Committee is very excited for 2011, we are hoping to build a great program that will be continued for years to come and establish professional relationships that will last a lifetime. January Meeting: 1/21/11 from 12-2PM at the Greater El Paso Association of REALTORS. Fostering harmony amongst home builders, real estate professionals, and affiliate companies
AssociatesCouncil Eric Lowenberg, Emser Tile
As one year ends and another begins, we ponder the hardships that we faced and give thanks for the many blessings that were bestowed upon us. I have had the great honor of serving with some of the finest individuals in our Association. Randy O’Leary, Greg Bowling, Hector Montoya, Kelly Sorenson and Ray Adauto were instrumental in my growth as an associate member this year. Greg, Kelly and Ray, along with Frank Arroyos and Del Huit will help continue my
growth in the coming year. We are fortunate as an association to have such a large and vocal group of associates supporting our builder members. I feel that the associate membership is an integral part in the stability and growth of EPAB, and I encourage ALL of our associate members to assert themselves into the workings of this association. As I have said before, let’s not just “do business with a member”, let’s do business with an ACTIVE and INVOLVED member! I challenge our associate members to step up and get REALLY involved in the 2011 year. We have a lot to offer and a TON to gain as ACTIVE ASSOCIATE MEMBERS!!! I look forward to seeing all of you at the first Associate’s meeting on Tuesday, January 4th at 3:30pm. See you at the Homebuilders’offices and have a HAPPY NEW YEAR!
Land Use Sal Masoud
By Linda Troncoso The start of a new year offers us a renewed energy and opportunity to participate in local issues affecting our industry. The City of El Paso is currently in the process of preparing a new Comprehensive Plan for El Paso. In addition, studies for new policy are ongoing to incorporate Smart Growth and Smart Code initiatives. With the election of Veronica Cobos as Judge of the El Paso County Commissioner’s Court, we may also see additional coordination between the County and City of El Paso for both services and policies.
www.elpasobuilders.com
Linda Troncoso
The election of new representatives to State and Federal positions may also initiate new policy making which could affect our industry. As we sit here today, it is fair to say that 2011 offers builders and developers alike the challenge to continue to monitor the changes and initiatives that will continue to come our way in the upcoming year. For that reason, we look forward to everyone’s participation at Land Use Council meetings in 2011. Best wishes for a successful 2011.
■ execuTIve OffIcers Greg bowling, President Tropicana Homes
■ NATIONAL DIrecTOrs Bobby Bowling IV. Demetrio Jimenez
Del Huit, vice President Cardel Design Group frank Arroyos, secretary/Treasurer Cisco Homes eric Lowenberg, Associates council Emser Tile & Stone Kelly sorenson, Immediate Past President Vision Consultants ray Adauto, executive vice President El Paso Association of Builders ■ cOuNcIL/cOmmITTee cHAIrs Affordable Builders Council Bobby Bowling IV Associates Council Eric Lowenberg Build PAC El Paso Randy Bowling Desert Green Building Council Javier Ruiz Government Affairs Council Pat Woods Industry Promotions Kelly Sorenson Land Use Council Linda Troncoso Sal Masoud Adams Pro AM Committee David Bogas Young Designer Award John Chaney Code Committee Kelly O’Leary Home Show Sam Shallenberger Remodelors Miguel Herrera Membership Drive Mike Santamaria Finance Committee Kathy Carillo Education Committee Frank Spencer ■ ADvIsOrY TO THe bOArD J. Crawford Kerr, Attorney, Firth, Johnson & Martinez ■ bOArD Of DIrecTOrs Danny Andrus, Trinity Homes John Arranda, Southwest Securities Bank, FSB Joe Bernal, Joe Bernal Insurance David Bogas, EPT Communities Doug Borrett, Karam Co. Sergio Cuartas, BIC Homes Edmundo Dena, Accent Homes Ted Escobedo, Snappy Publishing Art Garcia, El Paso Door Juanita Garcia, ICON Custom Home Builder,LLC Danny Gerard, Desert Agave Builders, LLC Miguel Herrera, Simply the Best Custom Homes Lorraine Huit, Cardel Design Group Walter Lujan, Dawco Home Builders Bruce Meyer, JDW Insurance Robert Najera, Joseph Homes Jose Ortiz, Foxworth-Galbraith Lumber Kathy Parry, Hunt Communities Bob Paschich, Oeste Homes Kathy Rose, Builders Source Regina Sanchez, Compass Bank Sam Shallenberger, Western Wholesale Frank Torres, GMF Homes Javier Veloz, Zia Homes Paul Zacour, Zacour & Associates
NATIONAL AssOcIATION Of HOme buILDers (800) 368-5242
TexAs AssOcIATION Of buILDers (800)252-3625
2010 builder member Of The Year Mike Santamaria Mountain Vista Builders 2010 Pat cox Award Randy Bowling Tropicana Homes 2010 Associate Of The Year Javier Ruiz Border Solar/Senercon John schatzman Award Lorraine Huit Cardel Design Group
Honorary Life members Brad Roe Cliff Anthes Wayne Grinnell Chester Lovelady Don Henderson Anna Gil
Past Presidents committed to serve Mark Dyer Mike Santamaria John Cullers Randy Bowling Doug Schwartz Del Huit Herschel Stringfield Robert Baeza
Bobby Bowling, IV Rudy Guel Anna Gill Bradley Roe Bob Bowling, III Pat Woods EH Baeza
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.
■ TAb sTATe DIrecTOrs ALTerNATes Doug Borrett, Karam Co. Randy Bowling, Tropicana Homes
© 2011 Builder’s Outlook is published and distributed for the El Paso Association of Builders by Snappy Publishing 240 Thunderbird • Suite C El Paso • Texas • 79912 915-820-2800
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