Builders

utlook

www.elpasobuilders.com

2014: issue 2

IMPACTFEES:
How do you justify more costs
and how do you see El Pasos future?
By Ray Adauto, EPAB
The issue of impact fees for water and
wastewater resurfaced and this time
around the Public Service Board (PSB)
or El Paso Water Utilities as most of you
know them, requested to nearly double
the fees already in place. According to
the utility the request is necessitated by
the projected growth and needs for
infrastructure to meet the growth
projections provided to them by the City
of El Paso. Impact fees are fees
allowed under Texas Local Government
Code 395 and are subject to the rules in
that code. In El Paso City limits the fees
are designated for water and
wastewater, not for any other cause.
Some states allow impact fees for things
like schools, fire stations, police
stations, roads and other things
associated with new areas. In El Paso
the PSB designed the boundaries of the
impact fees on open or raw land primed
for growth according to the information
from the City of El Paso challenged the
development industry by saying that
growth did not pay for itself and made
public comment espousing that view.
The local news media was bombarded
with what the city referred to as facts,
but in fact the city commissioned study

done internally by John Neal and

supported by an National Association of
Home Builders study shows that new
growth pays for itself in about seven
years, then continues to pay for the
maintenance of the infrastructure for
decades more. In addition new
residential development brings retail
and commercial growth providing more
sales tax and property tax benefits to the
City. Additionally jobs are created and
those people spend money enhancing
the local economy.
Proponents of zero growth chided the
reports as more rhetoric from the
building/development community and
urged council to adopt impact fees.
Under Chapter 395 a citizens committee
on capital improvements must be
formed and members of the affected
industry must be represented. In El
Paso that committee is comprised of
one appointment by each of the city
council representatives and one by the
Mayor. By full disclosure to you I
currently serve as Chair of the
committee. I have been a member of
the CIAC since it was established.
Others in our industry have also been
on the CIAC and one of the most
knowledgeable is Bobby Bowling IV,

who chaired the committee as well. Mr.

Bowling knows the law and the intent of
the law and has taken issue with how
the City of El Paso and PSB
implemented the impact fees in the first
place. One thing that we have in Texas
is Chapter 395, a rule book if you will on
the definition and allowable rules of
engagement for impact fees in Texas,
Bowling said to the Outlook.
Government subdivisions have use of
an impact fee if they can prove that what
they are using the impact fees falls
under the rules in 395. We fought the
original assumptions proposed by the
PSB and its consultants because our
industry is really the experts on growth
and the expansion of proposed growth,
he said. The industry told the city
council at that time that the population
numbers and proposed growth were too
optimistic and that therefore the CIAC
voted to recommend only 50% of the
proposed impact fee be implemented at
the time, Bowling continued. No one
believed us and in that case Mayor John
Cook and PSB President Archuleta
worked to get a 75% fee approved and
it was, he continued. Our five years
down the road have proven that we
were right and the city was wrong in

estimating the growth, and as a result

the PSB is woefully short on recovery of
costs they have made so far, said
Bowling. In fact the PSB reported over
$20,000,000 was spent and only
$1,900,000 was collected, or about a
10% collection rate. According to CIAC
this is bad for the city, falling way short
of the anticipated collection. The CIAC,
in its report to the Mayor and Council as
dictated by Chapter 395 reported a 9-0
vote to hold the line on the fees while
looking for alternative methods of
collection as allowed by the law.
City Council will take public comment
and may take action on the proposed
fees presented by the PSB and
consultants. Whatever the city council
does will have significant impact on
future growth, and they will ultimately
decide if growth occurs inside the city
limits or continues outside in the county
and other communities surrounding El
Paso. The impact fee issue will have a
significant impact on the future taxpayer
inside the city limits, since new homes
and businesses will either pay taxes in
the city or outside it.

Cold Weather
Drives Housing
Starts Down

permits, which are often a harbinger of

future building activity, posted a modest
1.3 percent decline to a seasonally
adjusted annual pace of 602,000 units.
Cold weather clearly put a chill on
new home construction last month and
this is also reflected in our latest builder
confidence survey, said Kevin Kelly,
chairman of the National Association of
Home Builders (NAHB) and a home
builder and developer from Wilmington,
Del. Further, builders continue to face
other obstacles, including rising
materials prices and a lack of buildable
lots and labor.
Though the decline in starts is largely

weather related, it is worth noting that on

the upside housing production for the
fourth quarter was above 1 million for
the first time since 2008 while singlefamily permits held relatively steady,
said NAHB Chief Economist David
Crowe. The less weather sensitive
permits data suggests that our forecast
for solid growth in single-family housing
production in 2014 remains on track, as
pent-up housing demand is unleashed.
In January, single-family housing
starts posted a 15.9 percent decline to
573,000 units while multifamily
production fell 16.3 percent to 307,000
units.

Regionally, single-family starts activity

rose 10.7 percent in the West and 2
percent in the Northeast and fell 13.8
percent in the South and 60.3 percent in
the Midwest.
Overall permit activity fell 5.4 percent
to 937,000 units in January. The decline
was due primarily to a pullback in
buildings with five units or more, where
permits fell 13 percent to 309,000 units.
Regionally, overall permit issuance
was down 10.3 percent in the Northeast
and 26 percent in the West, but rose 8.6
percent in the Midwest and 3.4 percent
in the South.

NAHB

Due largely to unusually severe

weather, across much of the nation,
housing starts fell 16 percent to a
seasonally adjusted annual rate of
880,000 units in January, according to
newly released figures from the U.S.
Department of Housing and Urban
Development and the U.S. Census
Bureau. Meanwhile, single-family

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2014 issue 2

2014 issue 2

Builders Outlook

Presidents Message |
Frank
Torres

ElPasoDisposal

President,
El Paso Association
of Builders

Its barely February and there are a lot of things already happening at our
association.
I was honored to lead our first Board of Directors meeting in January, our
financial report and the 2014 operating budget were approved by the board.
The 2014 budget passed with the condition of generating more revenue on
other activities due to the fact that it appears we will not have the income from
the Parade of Homes (trouble finding a single site); everybody on the board
agreed to increase the membership by bringing at least two more members
each either by asking some to renew or find new ones. I will like to extend this
idea to all the members, and not only to the Board of Directors. Call the office
if you need an application for either associate or builder member, it will be
delivered to you by fax, email, etc. I will ask Ray if we can post them on our
website in order to be printed directly from there.
Many other ideas were proposed like casino night, adding a golf tournament,
Yard sale, were just some things brought up. We can have the best ideas but,
without your participation, they are nothing but ideas. We will keep you
informed on all these activities when they happen, thanks in advance for your
participation.
We had our Board orientation on 01/11/2014 thanks for all of you that
participated but those of you that couldnt make it pick up a Board Orientation
package from the office. As you probably noticed by now, this year we changed
our meetings to the second Wednesday of the month. Several of us attended
the International Builders Show on Las Vegas on February, and speaking of
Home Shows, I like to personally thank Rassette Homes for building the home
inside the Civic Center for the Home and Garden Show, happening from
February28th to March 2, 2014. Thanks also for all of you members that will
participate on it. We are working on the issue of Impact Fees, something that
we feel our industry cant afford to absorb. I am sure Ray Adauto will have
more of this on his outlook article specially the impact fee isuue. And dont
forget: do business with a member.

772-7495

Showroom:
2131 Missouri
915 533 6045

fax 533 6096

Thomas R. Brown, Owner

Builders Outlook

2014 issue 2

Perspective

Ray Adauto,
Executive
Vice President
EPAB

If you have never experienced a

super large product show with a major
conference attached to it then it is
hard to explain to you what the
International Builders Show is like.
However if you are struggling under
the current economy then brothers
and sisters take heart because the big
show was really about one thing:
commitment.
I dont mean to say that the show
was anything less than spectacular
because this 2014 version had all the
trappings and feel of something big
and beautiful. There was so much to
see on the exhibition floor that you
literally cannot see all of the displays
or visit with all the exhibitors. Its that
big. Its so big that there really are
only two places in the entire country
where this show can be held, either
Las Vegas or Orlando. Frankly for me
Las Vegas is my choice for a variety of
reasons. But first I want to transport
you to some very interesting things
that went on at the conference. The
education portion of the IBS is an
integral part of the overall experience.

Las Vegas IBS huge, industry commitment is bigger

Its where experts come to educate or
offer advice to those of us who dont
know it all. I ran into expert writers,
economists, housing experts and the
like. There was a class going on for
almost everybody.
You could go to the 50+ Housing
Council education and editorial
committee meeting at 7:15 am on
Sunday. Yes, 7:15 am on a Sunday in
Las Vegas. Or you could attend
Construction Codes and standards on
Green building at 7:30 that same
morning. As a matter of fact I counted
16 different meetings going on that
Sunday morning between the hours of
7 a.m. and 8:30 am. Again this was a
full two days before the official
opening of the exhibition hall. An
interesting aspect of the IBS is that the
International part isnt just a marketing
ploy like when we say El Paso
INTERNATIONAL airport, but we
only fly domestic routes from here. No
the International part is real. I met a
home builder from Africa while
working the NAHB Book store as an
ambassador. He had come to the

show to learn and to make

connections for supplies and training.
He was a quiet man, a long way from
home, but on a mission to soak in
everything the IBS had promised. Mr.
Dele Abraham, Vice President of Delly
Lordford & Company, LTD., Llupeju,
Lagos, Nigeria. He traveled 7,495
miles one way to attend. A full 15,000
miles round trip. Soak that in as you
read it. Compare that with the 742
miles its from El Paso to Las Vegas. I
was humbled.
So I wondered why the talk at the
show was about the economy and
frankly how it just hasnt gotten better.
The mood was a mixed bag of
anticipation and caution. No one was
saying anything really super about the
national economy and instead I got
the sense that there was more of a
militant defiance, a kind of selfcommitment to making it better for
myself. Shows like this can be
frowned upon as too frivolous, but I
didnt see or hear that at this show.
No what I heard was a call to action
and to getting housing back to work.

The attendees and exhibitors all were

there for business. Yes its Las Vegas
and all but the members that I saw
there were focused on finding new
ways to generate income. As with all
organizations some people used the
IBS
to
lobby
against
more
government, some lobbying to change
the organization itself. This was to me
an activist IBS where you couldnt help
but feel that this country has got to get
housing moving again and until then
the great recession wont go away.
There was also some concerns voiced
on the NAHB itself and frankly a good
organization always has to have
discussions and transparency on its
actions. To that I was glad to see that
TAB past president and friend
Granger McDonald got on the NAHB
ladder as the third VP. Granger and
the board have a lot of work ahead of
them. They have a committed group
who goes to meetings at 7 a.m. on a
Sunday in Vegas. That my friend,
along with visitors like Mr. Abraham
reminds us what home building
means.

2014 issue

Builders Outlook

Industry News
Texas Builder Elected
to Leadership of
NAHB

Granger MacDonald, a Kerrville,

Texas-based builder and developer with
40 years of experience in the home
building industry, was elected as the
2014 third vice chairman of the National
Association of Home Builders (NAHB)
during the associations International
Builders Show in Las Vegas.
MacDonald is president of the
MacDonald Companies, a diverse
development,
construction,
and
management enterprise with more than
35 neighborhoods completed throughout

Texas.
We expect the housing industry to
continue to strengthen in 2014 and will
work with Congress and regulators to
ensure we do not impede the ongoing
recovery, said MacDonald. Specifically,
we will be urging policymakers to protect
the mortgage interest deduction,
maintain a federal backstop for housing
to ensure a reliable and adequate flow of
credit to keep homeownership and rental
housing affordable, and resolve a flawed
appraisal process that has negatively
affected property values.
MacDonald has been active in the
NAHB leadership structure at the local,
state and national levels throughout his
career. A senor life director, he has
served on the NAHB Board of Directors
for more than 30 years and is a member
of the NAHB Executive Board.
He has also served as chairman on
several influential NAHB committees and
councils,
including
the
Federal
Government Affairs Committee, the
State and Local Government Affairs
Committee, the Housing Credit Group,
the Multifamily Council and BUILD-PAC,

the political action committee of NAHB.

MacDonald was elected president of
the Texas Association of Builders in 2010
and is a member of the Texas Hill
Country Builders Association, the
Greater
San
Antonio
Builders
Association, the Home Builders
Association of San Angelo and the Home
Builders Association of Greater Austin.
Actively involved in his community, he
has had years of experience working
with and serving on governmental
commissions and boards. He served on
the Kerrville/Kerr County Airport Board
and the City of Austin Planning
Commission. He was also chairman of
the City of Austin Environmental Board
and president of the Upper Guadalupe
River Authority.
He and his wife, Kathy, reside in the
Texas Hill Country. His second-incommand in the MacDonald Companies
is his son, T. Justin MacDonald, also a
long-term member of NAHB.
NAHBs newly elected senior officers
serve on a multi-year leadership ladder.
MacDonald will become chairman of
NAHBs Board of Directors in 2017.

A W A R D E D

TEXAS BUILD E R O F THE Y E AR

2013

We build so you can GROW

Housing Affordability
Holds Steady in
Fourth Quarter
Slightly lower median home prices
along with a small uptick in mortgage
rates contributed to housing affordability
holding steady in the fourth quarter,
according to the National Association of
Home Builders/Wells Fargo Housing
Opportunity Index (HOI), released today.
n all, 64.7 percent of new and existing
homes sold between the beginning of
October and end of December were
affordable to families earning the U.S.
median income of $64,400. This is
virtually the same as the 64.5 percent of
homes sold that were affordable to
median-income earners in the third
quarter.
Meanwhile, the national median home
price dipped from $211,000 in the third
quarter to $205,000 in the fourth quarter
while average mortgage interest rates
rose from 4.45 percent to 4.54 percent in
the same period.
Housing affordability is stabilizing at a
time when pent-up demand and ongoing
job growth are helping housing markets
across the nation to gradually
strengthen, said NAHB Chairman Kevin
Kelly, a home builder and developer from
Wilmington, Del. While this bodes well
for housing in 2014, builders continue to
face challenges, including tight credit for
home buyers, inaccurate appraisals, and
a shortage of workers and buildable
lots.
Youngstown-Warren-Boardman, OhioPa was the nations most affordable
major housing market, as 89.4 percent of
all new and existing homes sold in this
years fourth quarter were affordable to
families earning the areas median
incomes of $53,900. Meanwhile,
Kokomo, Ind., claimed the title of most
affordable smaller market, with 96.3
percent of homes sold in the fourth
quarter being affordable to those earning
the median income of $60,100.
Other major U.S. housing markets at
the top of the affordability chart in the
fourth quarter included HarrisburgCarlisle, Pa.; Syracuse, N.Y.; BuffaloNiagara Falls, N.Y.; and ScrantonWilkes-Barre, Pa.; in descending order.
Smaller markets joining Kokomo at the
top of the affordability chart included
Springfield, Ohio; Monroe, Mich.;
Vineland-Millville-Bridgeton, N.J.; and
Cumberland, Md.-W.Va.
For a fifth consecutive quarter, San
Francisco-San Mateo-Redwood City,
Calif. held the lowest spot among major
markets on the affordability chart. There,
just 14.1 percent of homes sold in the
fourth quarter were affordable to families
earning the areas median income of
$101,200.
Other major metros at the bottom of
the affordability chart included Santa
Ana-Anaheim-Irvine, Calif.; Los AngelesLong Beach-Glendale, Calif.; New YorkWhite Plains-Wayne, N.Y.-N.J.; and San
Jose-Sunnyvale-Santa Clara, Calif.; in
descending order.
All of the five least affordable small
housing markets were in California. At
the very bottom of the affordability chart
was Santa Cruz-Watsonville, where 18.6
percent of all new and existing homes
sold were affordable to families earning
the areas median income of $73,800.
Other small markets at the lowest end of
the affordability scale included Salinas,
San Luis Obispo-Paso Robles, Napa,
and Santa Rosa-Petaluma, respectively.

Builders Outlook

2014 issue 2

2014 ISSUE 2

Builders

Builders Outlook

utlook on the scene |

More Than 75,000 Attend 2014 International Builders Show

More than 75,000 builders, remodelers
and suppliers packed the aisles at Design
& Construction Week, which ends today at
the Las Vegas Convention Center. For the
first time, NAHBs International Builders
Show, the Kitchen and Bath Industry Show
(KBIS) and the International Window
Coverings Expo co-located to offer an
unparalleled exhibition and education
program for all facets of the residential
construction industry.
IBS exhibitors filled 440,000 square feet
of exhibit space with everything from
millwork to marketing services, a
significant leap from last years total of
355,000 square feet. In all, Design &
Construction Week offered attendees more
than 650,000 square feet of exhibit space.
How was the show? Fantastic, said
exhibitor Joe Dote of KP Building Products
in Holly Springs, La. The way it was laid
out, the leads, the crowds everything was
fantastic.
Fantastic, agreed Frank Thompson, of
Sweetwater Builders in Cranberry
Township, Pa. I had one guy tell me he
needs twice as much space next year for
his booth. I even had someone say there
were too many people in the aisles but
that is such a good thing.
Its the energy, said Jake Whittaker of
Delaware Siding Company in Bear, Del.
Its just a world of difference from the last

several years. You could just tell when you

walked in the hall.
Its great to see the economy coming
back, the exhibitors coming back and the
members building again, said Randy
Strauss, chair of the NAHB Convention &
Meetings Committee, who gave the IBS
report to a jubilant Board of Directors on
the shows last day.
Strauss reported that plans are already
under way to incorporate more residential
construction suppliers and their trade
shows into next years Design &
Construction week, which is set for Jan.
20-22, 2015, again in Las Vegas. This
thing is getting better and better.
While most home builders continue to
see their markets brighten, IBS euphoria
was tempered by the remaining headwinds
preventing a full recovery. Tight credit
conditions, building supply price increases
and the limited availability of buildable lots
are three obstacles, and one builder from
South Dakota warned of a fourth.
We saw a lot of good people leave the
industry during the downturn, and its
getting harder to find skilled labor to fill
needed construction jobs, said Dwight
Bickett of Bicketts Construction in Rapid
City. Were becoming a complete industry
of older people and young kids, with
skilled middle managers and trade
partners harder to find, he said.

el paso development news

In store for 2014
Major Projects to Look Forward to This Year
Its a new year in El Paso, and several
major development projects are scheduled to get underway or be completed in
2014. From freeway projects on the
West Side to major medical facilities on
the East Side, most parts of the Sun City
should see major activity.
Heres a look at some of the larger
developments that should see progress
this year.
I-10 Collector-Distributor Lanes
Plans to add collector-distributor (CD)
lanes to Interstate 10 in West El Paso
have been in the works for years, but the
project recently got a shot in the arm in
the form of funding support from the
County of El Paso. Now, the $150 freeway project could be set for construction
to begin by the end of 2014.
The CD lanes will create a buffer for
the main lanes by collecting and distributing traffic to and from on- and offramps between Executive Center
Boulevard and Mesa Street. The number
of lanes will vary along the five mile
stretch of I-10.
Initial renderings of the planned project
included toll lanes when first unveiled
years back, but now only include regular
main lanes in the middle of the freeway.
No word on whether or not toll lanes will
be included after all. The future, toll-only
Border Highway West will have an interchange with I-10 within the boundaries of
this project.
Montecillo Town Center
West El Paso should see a good
amount of progress on the highly anticipated Montecillo Town Center project
which will include the Alamo Drafthouse
theater location as an anchor. The
SmartCode developments
Entertainment District will include street
retail, a big box retail space, commercial
office space, and 99 residential units,
according to initial site plan details.
No concrete timeline has been disclosed by the projects developer, though
the Alamo Drafthouses announcement in
March of 2013 indicated it would be
soon, and has indicated plans to open in
Fall of 2014. Crews finally broke ground
in November 2013 and have been working to clear the site for construction ever
since.
The project is located on Mesa Street
across from the Venue at Montecillo
apartment complex. Another retail and
restaurant project at the development,
TI:ME at Montecillo, should be completed this year.
Triple-A Ballpark
The project with the tightest timeline is
undoubtedly the baseball stadium currently under construction in Downtown El
Paso. With an opening date set for April,
construction continues at breakneck
speed at the site.
Only nine months have passed since
the former City Hall was demolished in
ten seconds to make room for the ballpark that will house the El Paso
Chihuahuas Triple-A team. Now, steel
beams continue to outline the skeletons
of the main and outer buildings.
The $62 million project was designed
by the Populous architectural firm of
Missouri which specializes in sports facilities.
San Jacinto Plaza
Downtown El Pasos main park, San
Jacinto Plaza, has been undergoing renovation work for several months, and

now the project is moving into its next

phase. The plazas boundaries have
been expanded by taking over the parking lane formerly adjacent to the park on
all sides.
The City recently awarded the contract
for the next phase to Basic IDIQ, Inc.,
and includes installation of all the new
features and fixtures that residents will
experience once San Jacinto Plaza
opens. Initial completion estimates had
the plaza reopening by the end of 2014,
though that could be pushed back if
Basic IDIQ uses the entire 360 days in
the contracts language to finish.
Gayle Greve Hunt School of Nursing
/ Cardwell Collaborative
Steel beams are now going up on the
campus of the Medical Center of the
Americas (MCA) in Central El Paso for
what will become the Gayle Greve Hunt
School of Nursing. The 34,000 square
foot structure will be part of the Texas
Tech University Health Sciences Center,
which also includes the Paul L. Foster
School of Medicine.
Construction began last year and will
become the new home for the nursing
school, which is currently housed in temporary quarters near Downtown El Paso.
A donation from the Hunt Family
Foundation helped form the school in El
Paso in 2010. The new building is
scheduled to be completed in 2015.
Nearby on the northern edge of the
MCA campus, work should begin this
spring on the Cardwell Collaborative, an
83,000 square foot building to be used
for biomedical technology research by
public and private entities. The building
will be located along Gateway Boulevard
East, near Raynolds Street, and may
also be completed next year.
Airport Hotel/Retail Complex
One of the largest construction projects set to begin in 2014 will take shape
on El Paso International Airport land. A
$64 million project will bring a high-rise
hotel and a retail center to 10-acres at
the corner of Airway Boulevard and
Boeing Drive.
The developer, EP Vida, LLC, received
an incentives contract from the City in
which it promises to create 300 jobs at
the hotel/retail complex. According to
preliminary site plans, the retail center
will create an urban main street which
ends at the hotel tower.
The City of El Pasos 2013 Annual
Report indicates the project should break
ground in May of 2014, with completion
slated for June 2016. Few details have
been disclosed by the developer, but a
rendering indicates the hotel may carry
the Westin brand.
Eastside Crossings
Already underway in Far East El Paso
is the project to bring a mixed income
community to the city. Eastside
Crossings will create 188 apartments
that will have a mix of market rate, public, and affordable housing units.
The $22 million project is a partnership
between the Housing Authority of the
City of El Paso, Hunt Companies, and
Investment Builders, Inc. Units at the
complex, which is near the intersection
of Joe Battle Boulevard and Zaragoza
Road, may be ready for occupancy by
fall of 2014.
Sierra Providence East Expansion
The Sierra Providence East Medical
Center opened in Far East El Paso in

The Topping Ceremony was recently held for the Hunt School of Nursing in
Central El Paso, one of 2014s major projects in the city. (UMC of El Paso)

Projects slated for El Paso this year include (counterclockwise from top left) I-10
Collector-Distributor Lanes, the Montecillo Town Center, the Triple-A Ballpark,
San Jacinto Plazas renovation, the Gayle Greve Hunt School of Nursing building, the Airport Hotel/Retail Complex, Eastside Crossings, the Sierra Providence
East Medical Center expansion, the William Beaumont Army Medical Center
replacement hospital, and the Northgate Transit-Oriented Development. (El
Paso Development News)

2008 in the fastest growing part of the

city. Now, construction is ongoing on a
new 145,000 square foot expansion that
will add a four story tower to the site.
Room will be added for 30 additional
surgical beds, 30 medical beds, a 12-bed
cardiovascular intensive care unit, and
10 more beds for the emergency department. Ground broke on the project one
year ago and is expected to be completed by the end of 2014.
The hospital is located at the corner of
Joe Battle Boulevard and Edgemere
Boulevard.
William Beaumont Army Medical
Center Replacement Hospital
Quite possibly the largest and most
expensive construction project in the reason is the William Beaumont Army
Medical Center (WBAMC) replacement
hospital in East Fort Bliss. The huge,
$648 million contract was awarded last
year to Clark McCarthy Healthcare
Partners II.
The 1.13 million square foot facility will
have a myriad of clinics in addition to its
135 hospital beds and 10 operating
rooms. Some of the 30 specialty clinics
include ones dedicated to behavioral
health and oncology.
The hospital campus will also include

over 4,000 parking spaces, a two way

approach helipad, therapeutic gardens,
and recreation trails. The contractor,
Clark McCarthy Healthcare Partners II,
received its notice to proceed in June of
2013 and expects to complete construction in 2016.
Northgate Transit-Oriented
Development
The now-vacant site of the former
Northpark Mall in Northeast El Paso may
finally see activity this year, according to
media reports from last year along with a
recent grant awarded to the City to construct a transit terminal.
The development is envisioned as a
mixed-use project with housing, shops,
restaurants, and office space intermingling along tree-lined streets. Matthew
McElroy, the director of the City
Development Department, indicated in
September that the project may break
ground in 2014.
City officials received a $10.3 million
federal grant to construct a transit terminal at the Northgate development. Three
developers submitted proposals for the
30-acre site last year, but the City has
yet to disclose any more details about
the plans.

Builders Outlook Issue 2.2014

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

More Housing
Downtown
Multi-Story
Apartment Building
Seeks City Approval
in the coming years, if the project
receives City approval. The Campbell
Apartments would span a half-acre
made up of adjacent properties at the
corner of South Campbell Street and 3rd
Avenue, one block south of Paisano
Drive.
According to the Master Zoning Plan,
there will be 82 apartment units made up
of 16 three-bedroom, 49 two-bedroom,
and 17 one-bedroom units spread out
over four levels. The apartments will surround a central, landscaped courtyard.
In addition, four spaces at street-level
will be dedicated to commercial use, with
a total of nearly 4,000 square feet available for this purpose. The shop fronts
will line South Campbell Street, with residential apartments on the floors above
the retail space. Access points to the
courtyard will be located between the
shops, with an additional two access
points leading out to the alley behind the
building.

Office Park Expands

in West El Paso
A budding office park is ready to
begin its second phase of construction
in West El Paso. Ventanas Corporate
Center, located off Sunland Park Drive
west of Interstate 10, is adding two
more buildings to the site, an L-shaped
property tucked behind the Holiday Inn
Sunland Park.
The two new structures will add a
total of 19,600 square feet of space and

Airport Hotel
Developer Moves
Forward
Jordan Foster Construction Chosen as
Contractor for Hotel/Retail Complex

The front and side elevations of

the planned structure show a
four-story, mixed-use apartment
building. (City of El Paso)

There is no parking included in the

project, and the developer is seeking a
100% reduction to the parking requirement. The Master Zoning Plan states the
project will be built in one phase.
The new project will replace several
older structures, including existing multifamily apartments. The site sits just outside of the Downtown core in a city block
on the northern edge of Segundo Barrio.
No information is yet available on rental
rates or individual apartment size.
There has been an uptick in new residential projects for the Downtown area in
recent years. The Magoffin Park Villas
brought 91 units to the Magoffin historic
neighborhood in 2011, and The Mix at
Union Plaza added 14 units last year.
Next up are the Martin Building apartments in the middle of Downtown which
will contribute about 40 units.
Other developments in the pipeline
include a Franklin Avenue project with 40
units, the Artspace artist lofts with 50
units, and the Savoy apartment project
with 27 units.
A rezoning application is scheduled to
be considered at the February 13, 2014,
City Plan Commission meeting. City
Representatives may consider the item
for final approval at the February 18,
2014, City Council meeting. No timeline
for construction of the project has been
disclosed.

Construction of a 4-Star hotel and retail

complex near the El Paso International
Airport is set to begin this summer, and
now the developer has announced the
contractor chosen for the project. EP
Vida, LLC, a development company with
an office in El Paso, announced in a
press release that Jordan Foster
Construction will perform predevelopment services for the project.
The complex will include a 220-room,
full service hotel with an attached 80,000
square foot retail center. Renderings of
the hotel indicate it will rise more than 10

Transportation
Update: Border
Highway West
Commission Approves $600M Minute
Order for Loop 375 Extension
A minute order was recently signed by
the Texas Transportation Commission
approving a $600 million grant for the
Border Highway West project in El Paso,
with funds coming from Texas Mobility
Fund bonds. The new tollway will extend
Loop 375 from south of Downtown to the
northwest for seven additional miles.
The funds have been authorized for the
Camino Real Regional Mobility Authority
(CRRMA), who originally sought to make
the project a reality. However, the Texas
Department of Transportation (TXDOT)
requested last year that the CRRMA
waive its option to develop the project so
that TXDOT could bring it to fruition.

be constructed just south of the existing

Phase One buildings. According to a
press release, the idea behind the
design of the office park was to provide
an attractive corporate park environment that offers an abundance of parking, energy efficiency, contemporary
southwest design, corporate signage,
fiber optic internet services, and amenities that include an outdoor gazebo
area.
The size of the office park will eventually expand to a total of 89,113 square
feet when built out. Phase One opened

with 25,000 square feet in 2013 and has

an 82% occupancy rate. According to
the developer, EP Riverbend
Development, LLC, the project is the
largest professional office complex to
undergo construction outside of El
Pasos Central Business District in more
than 15 years.
Ventanas Corporate Center is located
at 3821 Constitution Avenue.

stories and may carry the Westin brand

name.
The site plan shows that the hotel will
have a triangular footprint at the end of a
street lined with shops. There has been
no indication if any retail or restaurant
tenants have been signed. The press
release also indicates that it will include
both indoor and outdoor entertainment
venues.
El Paso City Council approved an
incentives package last year for the
hotel/retail complex on airport land, which
is expected to cost $64 million to construct. The contract, approved in late May
of 2013, stipulated that EP Vida must
begin construction within one year.
The Citys list of Four Star amenities
include availability of presidential and
executive suites, concierge service, a full
service restaurant and bar, meetings
rooms, and upscale interior finishes.
The City desires a modern, refreshing,
welcoming, comfortable and exceptional

Now, the two parties will partner up on

the project, with TXDOT responsible for
most of the development and construction and the CRRMA overseeing the
design and installation of toll facilities and
infrastructure. In addition to the $600 million secured for the project, TXDOT will
kick in another estimated $200 million
needed to complete the tollway.
Four development teams were shortlisted for the project last October, including
two that recently held meetings for subcontractors interested in performing work
on the tollway. Rio Bravo Developers,
consisting of Fluor Enterprises of Irving,
Texas, Ames Construction, Inc., of
Minnesota, and Austin Bridge & Road,
L.P., also of Irving, held a meeting on
January 15, 2014. And Border Highway
Mobility Partners, consisting of Walsh
Construction of Chicago, Sundt
Construction of Arizona, Infrastructure
Corporation of America of Tennessee,
and Parsons Corporation of California,
held a meeting on February 5, 2014.
The other two teams consist of Camino

guest experience for the hotel.

The hotel project will be constructed on
a nine-acre vacant property at the corner
of Airway Boulevard and Boeing Drive. It
may open as soon as fall of 2015,
according to the press release.

Frontera Constructors (Zachry

Construction Corporation of San Antonio
and Skanska USA Civil West of
Colorado) and Abrams-Kiewit (J.D.
Abrams, L.P. of Austin and Kiewit
Infrastructure South Co. of Omaha).
The nine mile project will create a
seven mile tolled expressway from
Downtown El Paso, where Loop 375 currently ends, to the north and west to a
point just south of the Interstate 10 at
Paisano Drive intersection near Sunland
Park. Southeast of downtown, a new
multi-ramp interchange will connect the
existing Border Highway with Paisano
Drive and Delta Street, providing east
and westbound access to the citys center.
TXDOT is expected to choose the
development team this spring with a
Notice to Proceed possibly issued by the
end of 2014. The project may take about
three years to complete.

10

Builders Outlook

The Economy

Interest Rate
Movements:
What Are They
Telling Us?
By Elliot Eisenberg,
Ph.D.,
GraphsandLaughs,
LLC

Over the last eight months interest

rates have gyrated more dramatically
than in years. This process has not
only whipsawed investors but seriously
called into question the nascent
housing recovery. After all, how can
housing starts rise from their near
historic lows if rates are one percent
higher than they were in late spring
and with interest rates expected to rise
somewhat higher over the course of
2014? Is not the housing sector highly
interest rate sensitive? And isnt the
Federal Reserve deliberately buying
tens of billions a month in mortgage
backed securities to keep 30-year
mortgage rates low to help the housing
market? Relax. While new residential
construction is indeed interest rate
sensitive, it is also heavily dependent
on other macroeconomic factors and
they will more than compensate for the
recent rate rise.
To use an analogy, interest rate
movements are like a thermometer. A
rise in body temperature may or may
not be a good thing; it all depends on
the initial level. A rise in body
temperature of two degrees from 94
degrees to 96 degrees is excellent
news and suggests a patient
recovering from hypothermia. By
contrast, a rise in body temperature of
an adult from 102 to 104 is serious,
and suggests a very ill patient in need
of prompt medical attention. Changes
in interest rates should be similarly
viewed.
Interest rates are the cost of
borrowing money. When times are
good and economic growth is robust,
interest rates rise because investors
borrow funds for investment purposes
while households borrow to finance
purchases of cars, houses and other
big ticket items. This increase in
demand raises rates and this rise is
healthy. Returning to our thermometer
analogy, this would be like a rise from
96 to 98 degrees. Sometimes,
however, the economy grows so fast
that shortages of workers and supplies
start to materialize, resulting in
inflation. If allowed to fester, inflation
can spin out of control. That is why
interest rates continually rose during
the 1960s and 1970s. Eventually,
things got so bad the Federal Reserve
raised rates to 20% to weaken the
economy and squeeze inflation out of
the system. This would be equivalent
to a rise in body temperature from 103

2014 issue 2

ry edition
h anniversa
Special 65t

to 105 degrees. This rise was

necessary but was a sign of a
profoundly sick economy.
Until recently, despite amazingly low
interest rates, no one borrowed;
witness the ridiculously low levels of
new home construction and investment
in plant and equipment by firms,
because everyone was pessimistic
about the future. This would be akin to
fall in temperature from 95 to 93, a bad
sign. However as the economy
improves, and trust me it is, albeit way
too slowly, and as we become
increasingly optimistic about the future,
interest rates will rise and this is what
is finally starting to happen. The
thermometer is now in the process of
going from 94 to 95.
In this early phase of the recovery,
firms hire workers, begin buying
equipment and start building plant. As
a result, unemployment rates decline,
wages start rising and household
spending increases. And this boosts
GDP growth, which results in yet more

corporate spending and more

household consumption on, among
other things, housing. Given the
immense slack in our economy this
process could last several years,
accompanied by slowly rising interest
rates akin to the thermometer rising
from 96 to 98.6!
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.

E L PO CAISA OT I O N
B

OF

BUILDERS

ASS

years

S
E L PA S O
UILDING

FUTURE

m
builders.co
www.elpaso

46
S I N C E 19

Reserve your advertising space

in the 2014 edition of
Economist Elliot Eisenberg is a
regular contributor to the Builders
Outlook. His wealth of experience on
housing has been the model for HBAs
across the country over the past
decade. Now in private practice, Dr.
Eisenberg brings his insight every
month to our members.

DREAM HOME
The El Paso Association of Builders
exclusive magazine featuring the
absolute very best in custom home
building and luxury living.

Call Margaret today at 778-5387

2014 issue 2

11

Builders Outlook

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12

Builders Outlook

2014 issue 2

Innovation and the new normal for housing, a particular view

By Walter Lujan,
Dawco Home Builders, El Paso

The following paragraphs are

intended to share lessons learned
from a specific strategy followed by
Dawco in response to the economic
downturn. The Great Recession
affected everyone, the housing
industry was particularly affected,
and it forced builders to change the
way they build and operate in order
to survive. Many housing
certifications such as Energy Star or
Green Certified homes became too
costly or became a lower priority due
to the cost to get them certified rose.
My company, Dawco Home
Builders, is constructing a model
home that is the result of lessons
learned since the start of the Great
Recession. The model home is one
that has a projected HERS rating of
52 or is about 48% more energy
efficient than a similar home under
the present building code. The
addition of a solar system should
lower the HERS rating to 16-34 or
66%-84% more energy efficient. It
will have several green features as
well as a number of Universal design
features, what is called Aging in
Place features, along with some
other features but of course due to
cost constraints not every desirable
upgrade can be built into it.
Dawcos response to the economic

crisis was to follow a highly technical

multi-disciplinary approach to
housing, to take a holistic view of
housing in its multitude of facets not
only in familiar areas such as energy
efficiency, renewables, green
features and others but also digging
deeply into the social aspects of
housing: the economic burden,
wealth creation, policies, cost
location, transportation costs, social
mobility, age, multi-generational,
affordability aspects. In order to
better understand the designated
areas we acquired multiple
certifications from the NAHB Green
certification, the Building
Performance Institute (energy
audits), became partner in DOE/EPE
programs, decreasing our building
activity to become engaged in
programs to acquire the appropriate
experience such as weatherizing
close to 60 homes for the City of El
Paso, or acquiring, rehabilitating and
selling foreclosed homes along with
some partners under a HUD
program.
We also performed energy audits,
built green certified homes, building
investment properties in in-fill lots to
put to practice a number of
innovative methodologies and
technologies proposed by a range of
companies, organizations or
government institutions. For
example Housing and

The only title company in the

heart of downtown El Paso.

DOWNTOWN 415 North Mesa 225-8200

stewart.com/el-paso

Transportation Affordability Index,

Energy affordability Gap, Aging in
Place, Universal Design, while also
acquiring and learning energy
modeling software, going into depths
of difference in algorithms used to
simulate energy usage, investment
metrics. I literally read hundreds of
scientific articles(as opposed to
marketing articles or commercial
experts) regarding HOUSING in a
very holistic view, and studies from
DOE, EPA, HUD, universities, etc. I
then analyzed the technologies or
products and their performance
under a given set of conditions, their
benefits, limitations and unknowns.
In a nutshell, what works for El Paso,
what is hype, what is cost effective.
During this same time the U.S.
government implemented an
unprecedented level of cooperation
between government agencies,
enlisting the help of elite institutions
such as the Center for Housing
Studies at Harvard (which many
consider the pre-eminent housing
studies organization in USA) to
develop and implement policies that
will guide the new housing norm. The
new norm is basically all inclusive
with financial, technical, development
components. New standards were
and are developed and implemented
in a multitude of areas that have or
will have a direct impact on housing.
Many are technical standards that
are becoming national standards that
states and cities do or will follow.
The results are sobering. In
general and in particular the El Paso
home builders face increased
materials costs, tougher building
codes, proposed increases in fees,
fierce competition, and higher selling
costs. Now former house upgrades
have become standard items, along
with tighter lending requirements,
competition from resales, and
increased real estate commissions or
bonuses. Requesting cost reduction
from subcontractors and suppliers
has become the norm. Many builders
have gone bankrupt during this
recession while others are surviving
and a very few others thrived as they
perfected the right formula.
From Dawcos perspective the
answer lies in finding, developing
and implementing a delicate balance,
finding a way to provide value to the
customer not as much to the hedonic
but in the utilitarian benefits. We

must provide quality affordable

housing for the markets served,
which provides the right amount of
energy efficiency, durability, design
and upgrades that can be
appreciated by the customer. Of
course the challenge continues.
What is the right balance? How do
you balance technologies or do you
spend money in more expensive
cabinets or do you improve the
insulation? Still many in the
development community believe a
house must be built in such a way as
to facilitate wealth creation which can
take the form of energy efficiency,
higher and quicker appreciation,
improved durability, etc. It is not
rocket science to use formulas to
ensure families do not go into
foreclosure based on extreme
economic burdens by not finding the
right balance.
Affordable housing whether owned
or rental remains at the forefront of
the challenges. Affordable is not
only the house payment, as there
are many other factors that could be
an economic burden to homeowners.
Affordable does not mean low
income, as it is also defined by
market segments. A house
foreclosure means a damaged credit
that may take years to be repaired
and for that person to become a
home buyer again. In another words
any new housing should be a vehicle
for wealth creation for the
homeowner and not an economic
burden of such magnitude that will
lead to foreclosure. Of course
builders do not control all the
variables, but we can help.
If in fact we are in a new era where
old formulas will fade away. You
need a more systematic, realistic,
focused effort to learn the new
realities in home building. Its time to
learn, adapt, and try. Motivation
alone is not good enough.
Walter Lujan was educated as an engineer
but his passion is building. He has earned
the prestigious National Association of
Home Builders Certified Green
Professional Builder. His work includes
finding technical methodology to home
construction including minimizing waste on
a building site. Mr. Lujan serves on the El
Paso Association of Builders board of
directors.

2014 Issue 2

13

Builders Outlook

www.elpasobuilders.com
www.epbuilders.org

Membership News
UPCOMING EVENTS |
FEBRUARY 28, MARCH 1 &2
HOME AND GARDEN SHOW
CIVIC CENTER

MARCH 12
BOARD MEETING
EPAB OFFICE

APRIL 9
BOARD & GENERAL MEETING
EL PASO CLUB

APRIL 16
GOLF TOURNAMENT
HORIZON GOLF COURSE

RENEWALS |
BASKIND & HOSFORD

EL PASO ELECTRIC COMPANY

PLANET FITNESS

EL PASO BUILDING MATERIALS

MC COYS

RUDOLPH CHEVROLET

JOE BERNAL/EMPLOYEE BENEFITS OF EL PASO

CANO HR GROUP, LLC

BLUELINX

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NEW MEMBERS |
INK PRINTING CENTERS
CONTACT: ROGELIO MUNOZ
1355 GEORGE DIETER, BLDG. C,
STES. 103-104
EL PASO, TEXAS 79936
915-219-7328

EC PLUMBING
CONTACT: ENRIQUE CASTRO
8621 NORTH LOOP
EL PASO, TEXAS 79907
915-791-0111

SANTANA CUSTOM HOMES

CONTACT: FERNANDO SANTANA
8746 MERCURY
EL PASO, TEXAS 79904
915-694-4256

SODA SPONSOR |

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CONTACT: LUIS MIRANDA
4104 MONTANA AVE., STE. A
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For the latest updates &

event information, visit:
elpasobuilders.com

Thanks to our FEBRUARY

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14

Builders Outlook

2014 issue 2

Associates Council

Sam Shallenberger
Western Wholesale Supply

ome
Your New H eva

Su Casa Nu
e best tim
NOW is th
new
to buy your so!
Pa
home in El

el
Ahora es
ra
tiempo pa
comprar
eva
una casa nu
!
so
Pa
El
en

I want to thank all of the members

who stepped up once again and helped
sell out the upcoming Spring Golf
Pachanga tournament. The event is
April 16 at Horizon Golf Course and it
appears it should be a really fun event.
Id like to thank HUNT who will sponsor
the dinner; Joe Bernal doing the Hole in
One challenge; Stewart Title and AT&T
who both are doing some major support
advertising. We have 26 teams filled
and ready to go. To some it would
appear that its not a big deal, but let

me tell you this every day we hear of

groups that have difficulty finding
players and advertisers. We are truly
blessed. You know Charlie Tellez at
JOBE came and delivered a bunch of
goodie bag stuff and I want to thank him
also.
Meanwhile by the time you read this
we are either doing or have just
completed another successful Home
and Garden Show. My hats off to Don
and Cheryl Rassette with Rassette
Homes who stepped up and got a

house inside the show.

To the
associate members who supplied the
house our many thanks. With your
support our association couldnt be
represented any better. I hope for
much success.
Finally a reminder we will be doing
some more exciting events through the
spring and summer. Keep your ears to
the ground and help participate when
you can.

Reach thousands of potential home buyers

Reserve your advertising space in the next edition of
Your New Home/Su Casa Nueva
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Call 778-5387 Today

Builders

utlook

www.elpasobuilders.com
www.epbuilders.org
6046 Surety Dr. El Paso, TX 79905
915-778-5387 Fax: 915-772-3038
execuTive oFFicerS
FrankTorres President
GMF Custom Homes
edgar montiel vice President
Palo Verde Homes
carlos villalobos Secretary Treasurer
Palo Verde Homes
Sam Shallenberger Associates chair
Western Wholesale
edmundo Dena - immediate Past President
Accent Homes
ray Adauto executive vice President
El Paso Association of Builders
Jay Kerr -Attorney of record

couNciL/commiTTeecHAirS
Associates council
Sam Shallenberger
Build PAc
Randy Bowling
Desert Green Building council
Javier Ruiz
Land use council
Sal Masoud
Young Designer Award
John Chaney
remodelers council
Rudy Guel
membership retention
Mike Santamaria, Greg Bowling
Finance committee
Carlos Villalobos
Womens council
Lorraine Huit
ADviSorYToTHeBoArD
J. Crawford Kerr, Attorney, Firth, Johnston
& Martinez
BoArDoFDirecTorS
Beverly Clevenger, Automated Division 6 Builders, Inc.
Leti Navarette, Custom Dream Homes
Kathy Parry, Hunt Communities
Edgar Garcia, Bella Vista Custom Homes, Inc..
Bud Foster, Southwest Land Development Services
Juanita Garcia, ICON Custom Home Builder, LLC
Walter Lujan, DAWCO Home Builders
Joey Najera, Joseph Custom Homes
Rigo Mendez, Mission Homes
Nick Bombach, Casas de Leon, LLC
Lydia Mhouli, Crown Heritage Homes
JJ Vasquez, Pacifica Homes
Dan Ruth, Millenium Homes
Ken Wade, El Paso Building Materials
Ruben Orquiz, MTI Ready Mix
Kathy Carrillo, Pioneer Bank El Paso
Henry Tinajero, WestStar Bank
Chuck Gabriel, Carpets West
Ted Escobedo, Snappy Publishing
John Chaney, Passage Supply
Joe Bernal, Employee Benefits of El Paso
Linda Troncoso, TRE & Associates
Margaret Livingston, Lawyers Title of El Paso
Orlando Rodriguez, Mass Media Advertising, Inc.
Bret Thompson, Foxworth Galbraith Lumber
Chris Worm, City Bank Texas
Sal Masoud, Del Rio Engineering

TABSTATe DirecTorS
Randy Bowling
Greg Bowling

NATioNAL DirecTorS
Bobby Bowling IV.
Demetrio Jimenez
NATioNAL ASSociATioN oF
Home BuiLDerS
(800) 368-5242

TexAS ASSociATioN oF
BuiLDerS
(800)252-3625

2013 Builder member of The Year

Edmundo Dena
Accent Homes
2013 Pat cox Award
Sam Shallenberger
Western Wholesale Supply
2013 Associate of The Year
WestStar Bank
Larry Patton, Burt Blacksher
and Henry Tinajero

Honorary Life members

Wayne Grinnell
Don Henderson
Chester Lovelady
Cliff C. Anthes
Anna Gill
Brad Roe
Rudy Guel
E H Baeza
Past Presidents
committed to Serve
Greg Bowling
Kelly Sorenson
Mark Dyer
Mike Santamaria
John Cullers
Randy Bowling
Doug Schwartz
Robert Baeza

Bobby Bowling, IV
Rudy Guel
Anna Gil
Bradley Roe
Bob Bowling, III
E. H. Baeza
Hershel Stringfield
Pat Woods

ePAB mission Statement:

The El Paso Association of Builders is a
federated professional organization representing
the home building industry, committed to
enhancing the quality of life in our community by
providing affordable homes of excellence and
value.
The El Paso Association of Builders is a
501C(6) trade organization.
2014 Builders Outlook
is published and distributed for the
El Paso Association of Builders
by Ted Escobedo, Snappy Publishing
ted@snappypublishing.com
El Paso Texas 79912 915-820-2800