Builders

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www.elpasobuilders.com

2014: issue 11

Western States Drive Surge in Building Permits

October was a mixed month for new
residential construction data. More
permits were issued than in September
but housing starts and completions
were both down. September numbers
for permits and housing starts were
upgraded slightly from original
estimates while the completions
number was revised down.
Permits for construction of privately
owned housing units were issued at a
seasonally adjusted annual rate of
1.080,000. This was an increase of
4.8 percent from the revised (from
1,018,000) September estimate of
1,031,000 permits and 1.2 percent
higher than the October 2013 rate of
1,067,000.
Single family construction permits
were issued at a rate of 640,000, up
1.4 percent from the September
estimate of 631,000 (originally
624,000) and 2.4 percent higher than
in October 2014. Permits for units in
building with five or more rose 8
percent from a September rate of
376,000 to 406,000.
Seasonally adjusted construction
starts were at an annual rate of
1,009,000 units. This was a decrease
of 2.8 percent from the September rate
of 1,038,000 but 7.8 percent higher
than the October 2013 annual rate of
936,000. September's number was
revised up slightly from 1,017,000.
Single family housing starts were at
a rate of 696,000 compared to 668,000
in September, a gain of 4.2 percent
and 15.4 percent higher than in
October 2013. Construction was

begun on multifamily units at a rate of

300,000, a 15.5 percent decrease from
a rate of 355,000 starts in September.
Housing completions were at a
seasonally adjusted annual rate of
881,000, an 8.8 percent drop from
September's revised estimate of
966,000 but 8.1 percent higher than a
year earlier. September was revised
from an original estimate of 999,000.
Single-family units were completed
at an annual rate of 585,000 units, off
the September pace by 7.4 percent
and down 3.1 percent from a year
earlier. Multi-unit construction also
decreased from the previous month by
11.6 percent to 289,000 units.
On a non-seasonally adjusted basis
there were 95,000 construction permits
issued in October compared to 90,700
in September. Housing starts fell from
95,500 to 84,400 and completions
were down 10,200 units to 80,100.
Permits in the Northeast region
were down 21.5 percent on an annual
basis from September and 8.7 percent
from a year earlier. Housing starts
were decreased 16.4 percent and 22.4
percent respectively compared to the
two periods. Construction was
completed on 27.1 percent fewer units
than the previous month but the figure
was 44.8 percent higher than a year
earlier.
In the Midwest permits fell 11.4
percent from the previous month and
were 4.9 percent lower than in October
2013. Housing starts were 18.5
percent below what they were in
September and 15.7 percent lower

than a year earlier. Completions were

down 14.3 percent from September but
were up 5.9 percent on an annual
basis.
The South saw an increase in
permits of 8.8 percent compared to
September but permitting was 2.3
percent lower year-over-year.
Construction starts rose 10.1 percent
from September to October and the
October rate was 30.9 percent above
that the previous October.
Construction completions were off 15.4
percent from the September pace and
down 6.4 percent from a year earlier.
Permits were issued in the West at a
rate 21.6 percent higher than in
September and 17.6 percent above the

pace a year earlier. Construction

starts were down 10.9 percent monthover-month and 0.5 percent year-overyear. Completions rose by 26.8
percent and 31.8 percent from the two
earlier periods.
At the end of October there were an
estimated 116,600 permits for
residential construction that had been
issued but remained unused, fairly
equally divided between single family
and multi-unit permits. There were an
estimated 802,000 units under
construction, 360,000 single family
units and 431,000 units in multi-unit
buildings.
By: Jann Swanson, Mnd Newswire

October Housing Starts Down, Permits Up:

Should You
Invest?
A string of housing data released last
week clearly indicates that the housing
recovery is well on track in the latter
half of the year. While housing starts
declined in October, building permits
and sales of existing homes improved.
Data released by the U.S.
Department of Housing and Urban
Development and the U.S. Census
Bureau on Nov 19, showed that
housing starts declined 2.8%
sequentially in October to an annualized
rate of 1.08 million units.
Nevertheless, housing starts
improved 7.8% year over year,
suggesting that the broader housing
trends are very much in place.
Moreover, single-family housing starts
rose 4.2% in October, clearly indicating
that the drop in housing starts in the
month was driven by a slide in multi-

family construction a rather volatile

sector.
Building permits a gauge of future
constructions improved for the
second consecutive month in October.
After improving 1.5% in September,
building permits grew 4.8% in October.
Sale of existing homes rose 1.5% in
October for the second month per data
released on Nov 20. Interestingly, sale
of existing homes rose 2.5% from the
same month last year the first yearover-year increase since Oct 2013.
The median existing-home price rose
5.5% in October but it was much less
than the 11.5% increase seen in
October last year. New homes inventory
for sale declined 2.6% to 222,000 units
in October. This is a 5.1-month supply
at the current sales pace, higher than
last year.
Home builders are also becoming
more optimistic as demand for new
homes increases with the improving job
market and growing consumer
confidence. Homebuilders confidence,
as indicated by the National Association
of Home Builders (NAHB)/Wells Fargo
housing market index, rose 4 points to

58 in November a relief after a drop of

the same magnitude in the number last
month.
Stabilizing mortgage rates this year,
improving job market, moderating home
prices and rising inventory levels have
paved the way for a steady recovery in
the housing sector in the second half
after a slump at the beginning of the
year. The housing market momentum is
expected to continue in 2015 as well.
Though higher than the average rate
in 2013, mortgage rates in 2014 are still
below historical levels, making housing
affordable. According to the Freddie
Mac mortgage survey, the 30-year fixed
mortgage rate has gone down from
4.43% in January to 4.04% in October.
Moreover, though home prices have
been rising in 2014, the rates have
moderated since the last year.
A report from the S&P/Case-Shiller
home price data through August
showed a persistent slowdown in price
increases this year. The year-over-year
reading for the 20-city index showed
price increase of 5.6% in August, softer
than the 6.7% increase in July.
Homebuilder stocks rose on Friday,

Nov 21, following the upbeat housing

data. While Lennar Corp. (LEN - Analyst
Report) and DR Horton, Inc. (DHI Analyst Report) rose less than 1%, Toll
Brothers, Inc. (TOL - Analyst Report)
Ryland Group, Inc. (RYL - Snapshot
Report), KB Home (KBH - Analyst
Report) and PulteGroup Inc. (PHM Analyst Report) witnessed more than a
1% rise.
However, what keeps us concerned is
the probability of a rise in short-term
interest rates in 2015 as the Fed ended
its six-year long quantitative easing
program in October, assuming that the
economy will not need any meaningful
assistance at the current level
Though the Fed has reaffirmed that
the key interest rate will be kept at the
record low level for a considerable
time, investors have started speculating
about the timing of the planned rate
hike.
by Zacks Equity Research

Builders Outlook

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For more on how to use natural gas to turn your prospects into buyers, contact
Eduardo Lucero at ealucero@texasgasservice.com or (915) 680-7216.

2014 issue 11

2014 issue 11

Builders Outlook

Presidents Message |
Frank
Torres
President,
El Paso Association
of Builders

I hope this message finds everybody in good

health. Congratulations to all the builders that participated on the 2014 Treasure
Tour of Homes, especially those who sold some inventory during this event. We
normally hold events like this to help our association revenue, but our priority was
to send potential customers to new home models. We received some emails from
builders that really like this event, some said that it was the best advertisement
for the money. Please send us your remarks as we may want to do this twice a
year to keep traffic flowing at your models.
The Pro Am golf tournament was great thanks to Sam Shallenberger, Ray,
Margaret, the professional womens council, volunteers and of course all the
companies that participated either by putting a team together, advertising or
sponsoring this event. Special thanks to Painted Dunes personnel for their help
and all the Pros to make this possible. I want to especially thank our sponsor
StrucSure Home Warranty. I had the pleasure of playing with Scott Whisenant
from StrucSure and had a good time.
The installation for our new president for 2015 Edgar Montiel will take place on
December 12th, 2014 at The Marriot Hotel El Paso Airport. We still have some
tables available. Make your reservations and join us for a good time.
Congratulations Edgar. You can be late for cocktails but, be on time for your
installation.
Almost a year ago, on my installation as president, we recognized and awarded
one of our most dedicated members and past president with the Life Member
Award, Mr. E. H. Baeza. I cannot believe he is no longer with us, as you know by
now he passed away in November. Our sincere condolences to Robert Baeza
and his family. E.H. will be missed. Even thou his body is no longer with us, his
spirit still working, as we have received memorials from Lone Star Title Company
and from CMD Endeavors in E. H.s name, to be used for the young designers
scholarship. Thank you to both companies for thinking of our scholarship as a
way to remember Mr. Baeza.
Happy Thanksgiving to all. See you at the installation. Im really looking
forward to it.

E. H. Baeza
In Memorium
E. H. Baeza, past President and Honorary Life Member,
passed on November 7, 2014 at the age of 90. Mr. Baeza began
in the construction business as a common laborer for the late
Joe C. Yarbrough and rose to superintendent with the company.
Mr. Baeza formed his own business in 1955, with building, real
estate, and plumbing. In 1973 E. H. served on the Fred Hervey
mayoral team as alderman.
He was responsible for public works, streets, sanitation,
traffic and engineering departments. During his term he was
involved in the building of the El Paso Civic Center. E. H. won
the highest city of El Paso award, the Conquistador Award in
1980. In 1995 Mr. Baeza was the recipient of the Pat Cox
lifetime award by the EPAB, and in 2013 was awarded the
Honorary Life Member designation.
Mr. Baeza continued to work each day even through his
battle. He will be remembered as a hardworking, honest,
sincere and above all a dedicated family man. May God shine
perpetual light on him.

Builders Outlook

2014 issue 11

Perspective
Ray Adauto,
Executive
Vice President
EPAB

I remember going to the Popular

Department store downtown as a kid
and walking up to the Santa guy with my
wish list. As a kid in the 50s and 60s
that red suited white bearded guy was
the one who could make my Christmas
worth waking up for. I knew that if I got
to him early he could find a way to make
sure my tree was surrounded by my
gifts. Frankly I seemed to always get
most if not all of what I asked for. I wish
I could do the same now and ask Santa
for things our industry needs. Theres a
problem though. The needs for our
industry in El Paso appear to be much
different than the needs of the rest of the
country except for Detroit maybe.
Funny, you can always find one place
worse than yours and for the last
decade Detroit is on everyones list.
In my list to Santa Id ask for these
things we sure could use help on:
Santa tell government to get out of our
way. It is one thing to say that
government is here to benefit a
community but weve got too much
government now days. There are more

As long as were asking Santa for gifts,

I have a list of my own
rules and more laws, more codes and
more feesSanta can you give us a
hand?
Santa, tell the Fed they swung the
pendulum too far and their rules are
choking our new home sales. I
understand we contributed to the
problem back then and we had some
hand in it. Loans went to some not so
qualified and dishonest lenders fueled
the flames. The Fed had to do
something, but they just have gone too
far. Santa ask them to make loans
available again with reasonable
requirements so we can sell homes.
Santa, tell the city to sell some land in
realistic parcels. Right now were
seeing the city deep in debt and looking
for ways to raise revenue at the expense
of the private sector. Santa tell the city
leaders to run the city like a real
business, cut expenses where they can
and find a way to pay for services or
things before they go out and build it.
Remind them of the land deal. They hold
the key on that and we could use some
of it. Kind of like eating an elephant. You

do it one little bite at a time.

Santa can you tell the Congress and
White House to get along? The
economy isnt great, and these folks
arent helping any. Could you send them
a signal, like thunder or a bolt of
lightning, something that makes them
notice. Were in trouble Santa and these
two have to start working together for
the good of the country. By the way are
you required to have Obamacare?
Santa can you please bring El Paso
some jobs? How about some direct
flights to Detroit and Mexico? We
are seeing more from the
automotive industry in Mexico
but theres no way to get El Paso
in the mix if we cant pretend to
be a player. While youre at it,
get the airport guys working on
ways to stop the bleeding. Were
losing more flights every month
and that creates some big
problems for the city. Remind
the pooh bahs that the
airport is an economic
driver.

Santa will you be using those big

white whatchamacallits on the freeway
as beacons for your travel Christmas
Eve? If so ok, otherwise can you get
those hideous maypoles down and
instead widen the freeway?
Thanks for listening Santa. Well see
if these others will. Santa, I want to say
thanks for the hope you bring us each
year. Some people say you dont exist
but I think you do.

2014 issue 11

Builders Outlook

Industry News
Single-Family Starts
Up 4.2 Percent While
Overall Production
Drops Slightly
Single-family housing production in
October reached its highest level since
November 2013 while the more volatile
multifamily sector brought combined
nationwide starts activity down 2.8
percent to a seasonally adjusted annual
rate of 1.009 million units, according to
newly released figures from the U.S.
Department of Housing and Urban
Development and the U.S. Census
Bureau.
The rise in single-family starts is
more proof that the economy is firming
and consumer confidence is growing,
said Kevin Kelly, chairman of the
National Association of Home Builders
(NAHB) and a home builder and
developer from Wilmington, Del. We
expect continued upward momentum
into next year.

The increase in single-family starts

shows that the housing market
continues to recover at a steady, gradual
pace, said NAHB Chief Economist
David Crowe. On the multifamily side,
production is stabilizing above historic
levels as demand for rental housing
increases.
The 2.8 percent decline in overall
starts in October was due primarily to a
15.4 percent decline on the multifamily
side, which brought that sectors annual
production pace to 313,000 units on a
seasonally adjusted annual basis.
Meanwhile, single-family starts posted a
4.6 percent gain to 696,000 units.
Regionally in October, combined
housing production dropped in
Northeast, Midwest and West, with
respective losses of 16.4 percent, 18.5
percent and 10.9 percent. Total
production rose in the South by 10.1
percent.
Issuance of building permits
registered a 4.8 percent gain to a
seasonally adjusted annual rate of 1.08
million units in October. Multifamily
permits rose 10 percent to 440,000 units

while single-family permits increased 1.4

percent to 640,000 units.
Regionally, the Northeast and Midwest
registered overall permit losses of 21.5
percent and 11.4 percent, respectively.
The South and West posted respective
gains of 8.8 percent and 21.6 percent.

Housing Affordability
Slightly Lower in
Third Quarter
Firming home prices in markets
across the country contributed to a slight
dip in nationwide housing affordability in
the third quarter of 2014, according to
the National Association of Home
Builders/Wells Fargo Housing
Opportunity Index (HOI), released today.
In all, 61.8 percent of new and
existing homes sold between the
beginning of July and the end of
September were affordable to families
earning the U.S. median income of
$63,900. This is down from the 62.6
percent of homes sold that were

A W A R D E D

TEXAS BUILD E R O F THE Y E AR

2013

We build so you can GROW

affordable to median-income earners in

the second quarter.
The national median home price
increased from $214,000 in the second
quarter to $221,000 in the third quarter.
Meanwhile, average mortgage interest
rates decreased from 4.44 percent to
4.35 percent in the same period.
Low mortgage rates, strong job
growth and affordable home prices
make this a good time to buy a home,
said NAHB Chairman Kevin Kelly, a
home builder and developer from
Wilmington, Del.
Even with nationwide home prices
reaching their highest level since the
end of 2007, affordability still remains
fairly high by historical standards, said
NAHB Chief Economist David Crowe.
Rising employment and incomes,
interest rates that remain near
historically low levels, and pent-up
demand should contribute to positive
momentum heading into next year.
Youngstown-Warren-Boardman, OhioPa. claimed the title of the nations most
affordable major housing market, as
89.1 percent of all new and existing
homes sold in this years third quarter
were affordable to families earning the
areas median income of $52,700.
Meanwhile, Cumberland, Md.-W.Va. and
Kokomo, Ind. each tied as the most
affordable smaller market, with 94.8
percent of homes sold in the third
quarter being affordable to those
earning the median income of $54,100
in Cumberland and $56,900 in Kokomo.
Other major U.S. housing markets at the
top of the affordability chart in the third
quarter included Syracuse, N.Y.;
Indianapolis-Carmel, Ind.; HarrisburgCarlisle, Pa.; and Dayton, Ohio; in
descending order.
Meanwhile, smaller markets joining
Cumberland and Kokomo at the top of
the affordability chart included
Davenport-Moline-Rock Island, Iowa-Ill.;
Mansfield, Ohio; and Springfield, Ohio;
in descending order. For an eighth
consecutive quarter, San Francisco-San
Mateo-Redwood City, Calif. was the
nations least affordable major housing
market. There, just 11.4 percent of
homes sold in the third quarter were
affordable to families earning the areas
median income of $100,400.
Other major metros at the bottom of
the affordability chart were Los AngelesLong Beach-Glendale, Calif.; Santa AnaAnaheim-Irvine, Calif.; San JoseSunnyvale-Santa Clara, Calif.; and New
York-White Plains-Wayne, N.Y.-N.J.; in
descending order.
All five least affordable small housing
markets were in California. At the very
bottom was Napa, where 10.2 percent
of all new and existing homes sold were
affordable to families earning the areas
median income of $70,300. Other small
markets included Santa CruzWatsonville, Salinas, Santa RosaPetaluma, and San Luis Obispo-Paso
Robles; in descending order.
Please visit nahb.org/hoi for tables,
historic data and details.

Builders Outlook

2014 issue 11

The Economy

Dangerous Deflation
On the surface deflation sounds
wonderful. Rather than rising prices,
deflation results in declining prices. In this
way, purchasing power rises, effectively
giving everyone a pay
raise.
Better yet,
deflation
is
accompanied by near
zero interest rates
making
borrowing
cheap. What on Earth
could be better! It turns
out, almost anything.
Elliot Eisenberg
When people expect
falling prices, they wait as long as
possible before making large purchases,
such as a car or a house because the
longer you wait the cheaper the item
becomes. Similarly, deflation breeds a
strong desire on the part of households
and firms to hold cash as it continually
appreciates. By contrast, inflation creates
an incentive to spend since cash falls in
value over time.
Deflation is not simply falling prices,
which can be good, but is also
characterized by falling wages, not so
good. In a deflationary environment, due
to a lack of demand for goods and
services, firms fight for market share by
slashing prices. By doing that, total
revenue falls, forcing firms to pay workers
less. However, since reducing wages of
existing employees is hard, companies
first hire fewer workers, then lay workers
off, which leads to stagnant wages and
eventually rising unemployment, which
forces workers to accept lower wages.

Deflation also creates a reluctance to

borrow, since loans have to be repaid in
future dollars that are worth more than
those borrowed. Think about it - if you
have a mortgage payment that is
$750/month and inflation is 4%/year and
your income keeps up with inflation, your
mortgage payment becomes a smaller
and smaller percentage of your monthly
income. But if deflation is 4%/year and
your income falls by that amount each
year, that $750 mortgage payment can
quickly loom large and dramatically crimp
spending.
As a result, borrowers find that the real
amount of their debts rise over time. In
response they save more to compensate
and in the process spend less. Of course,
lenders are better off, but they do not
increase their spending by as much as
debtors decrease theirs. As a result,
overall spending levels decline more.
Exacerbating this problem, in a
deflationary economy banks have little
incentive to lend, as the only way to entice
borrowers is to offer negative interest
rates. But in this case, the more banks
lend, the more they lose. As a result,
banks do little lending, firms struggle to
grow and many of both fail, causing
wages to fall. In the end, consumers buy
little more than essentials and everyone
holds on to as much cash as possible.
Not a pretty picture.
Lastly, deflation makes it essentially
impossible for central banks to set interest
rates low enough to stimulate demand.
While central banks can set rates at 0%,

ElPasoDisposal

772-7495

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2131 Missouri
915 533 6045

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Thomas R. Brown, Owner

its hard to get below zero. With inflation

of 3%, a zero interest rate is a -3% real
interest rate. But with -1% deflation, a
central bank would have to offer an
interest rate of -2% to achieve the same 3% real interest rate. While theoretically
possible its impossible in practice.
Because of chronic falling wages,
reduced spending and limited lending,
deflation is something to be avoided.
Once it takes hold, its inordinately difficult
to get rid of. Japan has been struggling
with deflation for decades and is now

employing desperate measures to

eliminate it, with limited success and high
costs. We dont want to wind up like
Japan.
Have a wonderful holiday season and
see you in January! (Remember, I will not
be writing an article in December).
Elliot Eisenberg, Ph.D. is President of
GraphsandLaughs, LLC and can be
reached at Elliot@graphsandlaughs.net.
His daily 70 word economics and policy
blog can be seen at www.econ70.com

2014 ISSUE 11

Builders

Builders Outlook

utlook on the scene |

Pro Am Golf

The annual Sun Country Pro Am, a.k.a.

The El Paso Desert Open was played at
Painted Dunes on November 5.
Sponsored by StrucSure Home Warranty
the open found 19 teams paired with
professional club pros from around the El
Paso and New Mexico region. The Open
has become one of the finest
tournaments in the city and it is played
with real scores and handicaps. Each pro
enters the tournament in their own
bracket and take home prize money. The
teams entered through the Association
play for prizes keeping the amateur status
clean for those players. StrucSure
Home Warranty was proud to help with
the event this year and we are simply
blown away with the whole tournament,
said Scott Whisenant, area representative
for StrucSure. The course was in great
shape, the weather was great and the
total package was awesome, Scott
continued.
Mark Gonzalez, Painted Dunes head
Pro summed it up nicely. We look
forward each year to having the EPAB
out here for this tournament and frankly
the pros have a good time with it, he
said.
The week started off shaky as the
weather was cold and blustery during the
weekend prior to the tournament. On
Monday it rained, followed by the same
on Tuesday. Wednesday was different as
the clouds hung around but the wind died
down and the sun actually broke through
for a while. I really think we dodged a
bullet, said John Chaney, Passage
Supply. The golf gods were with us on
this one, he continued. While the
weather was cooperating some of the
golfers said the greens were not so
forgiving. I think we could have done a
little better but overall the course and the
conditions were great, said Mountain
Vista Builders Mike Santamaria as he
stroked a birdie into the cup.
The 2014 El Paso Desert Open
presented by StrucSure Home Warranty
was successful in many ways and Cochairman Sam Shallenberger said he is
looking for ways to improve it. I can
thank so many for all theyve done for this
years event, but like all things well take
a long look at it and see what we can
improve, Sam said. The golfers all
agreed that the goodie box was awesome
and that the scores were fair. We didnt
see any new course records at this event,
unlike so many tournaments we go to,
said Greg Bowling from Tropicana
Homes.

el paso development news

Brio RTS Launches First Route
After years of planning, engineering, and construction, Sun Metro has
finally launched its first Brio Rapid
Transit System (RTS) route. The
Mesa Corridor route officially began
running on October 27, 2014.
El Paso's mass transit system held
a "launch party" last month at
Cleveland Square. The Mesa Corridor
route runs from Downtown El Paso to
the Westside Transfer Center, with 22
stops along the round trip.
The Mesa Corridor is the first of
four planned routes, with the Alameda
Corridor planned for completion in

2016. The Dyer and Montana

Corridors will follow.
Brio is Sun Metro's "like rail" bus
system that includes special 60-foot
articulated buses that will arrive at
stations every 10 minutes during peak
hours. Stations are spaced about a
mile apart, and buses will have the
ability to lengthen green traffic signals
at certain intersections.
The project cost for the Mesa route
is $27.1 million, funded in part by the
Federal Transit Administration. More
information can be found at sunmetro.net/brio.html.

This 60-foot articulated bus is part of Sun Metros Brio fleet, pictured at the
Glory Road stop. (Sun Metro)

City to Lease Two Restaurant Spaces in Public Buildings

Locations Downtown, Near UTEP

Schlotzsky's will occupy a 1,834 square foot space on the first floor
of the Mulligan Building. (City of El Paso)

Two City of El Paso buildings will get

new restaurant tenants, according to
this week's City Council agenda. The
City2 building and the Glory Road
Transit Terminal may see eateries in
the coming months.
A Schlotzsky's restaurant will lease
storefront space at the City's Mulligan
Building in Downtown El Paso, one of
two retail spaces in the historic structure. (City of El Paso)
City2, the civic name given to the
historic Mulligan Building in Downtown
El Paso, has two storefronts for lease,
and a Schlotzsky's sandwich shop is
poised to open up in one of the
spaces. The building is located at 218
N. Campbell Street, across the street
from City Hall.
The operator of the Schlotzsky's
restaurant is seeking a 10-year lease
for the planned 1,834 square foot
space, with an option for two additional
five year lease periods. The City will
make improvements to the interior to
bring it to "shell space" condition prior
to turning it over.
Schlotzsky's operator will spend
about $500,000 to improve the space,

according to the agenda item. It may

open as a combination
Schlotzsky's/Cinnabon restaurant,
though no construction timeline or
opening date has been disclosed.
Another lease is pending for the
Glory Road Transit Terminal near the
University of Texas at El Paso (UTEP).
According to the lease, the lessee is
Sumatra Hookah Lounge, LLC.
The lease states that food and alcoholic beverages will be allowed, but
smoking will be prohibited on the
premises since the terminal sits on
UTEP land. The terminal also serves
as a parking garage next door to the
Don Haskins Center.
A retail space at the Glory Road
Transit Terminal will be leased to a
possible restaurant and/or bar in a
space indicated here by the orange
arrow. (google.com/maps)
This space is 3,750 square feet and
sits in the southeast corner of the
structure, along Cincinnati Avenue. The
lessee is seeking a five year lease with
two additional five year options. No
timeline or opening date is included in
the lease agreement.

Loop 375 Extension Now Called 'Border West Expressway'

State and local officials held a
groundbreaking this week for the now
renamed Border West Expressway
project in West El Paso. The project,
formerly known as Border Highway
West, will create a tolled expressway
and complete the loop around the city.
The largest part of the 7.4 mile project will be the construction of a fourlane tollway stretching from Racetrack
Drive on the West Side to Loop 375's
current terminus at Santa Fe Street
south of Downtown El Paso.
Racetrack Drive is located along
Paisano Drive just south of Interstate
10 in the vicinity of Sunland Park
Drive.
This 5.6 mile portion of the project
will be completely tolled, with two
lanes in each direction. It runs from
the Sunland Park area south generally along Paisano Road around the
Cemex property until about Executive
Center Boulevard where it will run

largely parallel to Interstate 10 near

the University of Texas at El Paso. It
will then continue south around the
Union Plaza and Chihuahuita neighborhoods and connect with the current Loop 375.
Southeast of Downtown, a new
interchange will be constructed that
will create ramps near the intersection
of Paisano Drive and Coles Street in
South El Paso. This will allow commuters to enter and exit the non-tolled
portion of the Border Highway.
Abrams-Kiewit Joint Venture, the
contractor on the project, has created
four "Work Areas" of focused work:
Work Area 1 from Park Street to
northwest of Spur 1966 (Schuster
Extension); Work Area 2 from northwest of Spur 1966 to Downtown;
Work Area 3, which is the reconstruction of Loop 375 south of Downtown;
and Work Area 4, the Coles-Paisano
Interchange.

Work Areas 1 and 4 will be the first

to see construction start. Construction

on the $550 million project should be

completed in fall of 2017.

Builders Outlook Issue 11.2014

Airport Hotels
Suing City of
El Paso and
Westin Developer
Two (possibly three) hotel operators
near the El Paso International Airport
are suing the City of El Paso and EP
Vida, LLC, the developer of the highrise Westin Hotel and attached retail
complex that are planned for airport
land.
The City is scheduled to discuss two
items in executive session on Tuesday,
November 11, 2014, relating to EP
Vida, which wants to build the Acequia
Park hotel and retail complex that
would include the Westin brand. The
first item is the pending legal case
while the second regards the Chapter
380 incentives package approved for
the project last year.
Details of the case are not available,
but the names on the agenda item
indicate that the lawsuit was brought

by three airport hotel operators: EP

Hotel Partners, LP, which operates the
Radisson Hotel; Spokane Equities
Limited Partnership, parent company
of the Wyndham Hotel; and CP El
Paso, Ltd., the operator of the Marriott
Hotel. A previous claim was filed a
year ago without a "Cause Number" by
EP Hotel Partners and Spokane
Equities. In addition, although CP El
Paso is listed in the City's agenda
item, it is not listed as a plaintiff in the
online Register of Actions.
In May of 2013, the City of El Paso
awarded an incentives package to EP
Vida, LLC, to develop a nine-acre
property at Boeing Drive and Airway
Boulevard into a four-star hotel and
retail complex. As part of the agreement, the developer will construct a
hotel with at least 220 rooms along
with an 80,000 square foot retail complex. In all, the project is expected to
cost $64 million, according to the
incentives agreement.
The Acequia Park project's timeline
has shifted multiple times, with initial
plans to begin construction towards the
beginning of 2014, according to the
developer, later setting summer of

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

The timeline for the Acequia Park hotel/retail project near the El Paso
airport has shifted multiple times. A lawsuit naming the developer, EP
Vida, will be discussed in Executive Session at the next City Council
meeting. (Ronkot Design Vimeo Channel)

2014 as the target time frame. In July,

the developer stated that revisions to
the propertys plat had delayed the
project and that they were not sure
when construction would begin.
It is unclear if the delay of groundbreaking on the project has been

affected by the pending legal case as

well; details will most likely be kept
sealed as City Council will discuss the
case behind closed doors. A new vote
may be required if the City opts to
change or amend the Chapter 380
agreement with EP Vida.

Site Plan: Redd Road Crossing

After years of planning and development, wayfinding signs and kiosks are now
being placed around Downtown El Paso.
The first phase of the project includes 18 wayfinding kiosks and 28 directional
signs attached to existing street light fixtures, according to downtownelpaso.com.
The kiosks are generally four-sided and will come in two sizes, a medium ninefoot tall kiosk, and a larger 12-foot high kiosk that includes overhead lighting powered by solar panels.
The Downtown Management District is managing the project for the City of El
Paso.
LEFT: One of the first wayfinding kiosks in Downtown El Paso was installed last
week. It includes overhead lighting powered by solar panels.
(downtownelpaso.com)

Whole Foods Market Site Plan Revealed, Includes Adjacent Shopping Center
Whole Foods Market officially
announced its El Paso location two
weeks ago, verifying that it will build a
new store on North Mesa Street on the
West Side. Now, a rezoning application
filed with the City shows the potential
site plan for the property on which the
grocery store will sit.
Plans show a 45,000 square foot
store with a 5,000 square foot mezzanine for a total of 50,000 square feet of
space for the Whole Foods Market,
which will go up at the corner of North
Mesa Street and Pitt Street, about 600
feet east of North Resler Drive. It will
be situated towards the back of the
property with parking located on the
north and east sides of the building.
The main entrance will be located in
the northeast corner of the store, with
a secondary entrance near the northwest corner. This area shows "outdoor
seating," potentially for an onsite
eatery as Whole Foods tends to
include in its newer stores.
The rezoning application also shows

an adjacent development planned

immediately east of the store which
includes multiple buildings. In all, the
center will include 45,500 square feet
of space available for retail, restaurant,
and office uses. No tenants are named
in the site plan.
The cluster of buildings are situated
in a rough arc surrounding an inside
parking lot, with some of the buildings
lining North Mesa Street. Large trees
may line the street with smaller trees
planted throughout the property.
No official timeline has been
announced for the development,
though El Paso Inc. reported a possible completion date of late 2016 for the
Whole Foods Market.
RIGHT: The site plan for a development which includes a Whole Foods
Market shows its proposed location in
West El Paso. An adjacent center may
include restaurant, retail, and office
uses. (Original Site Plan: City Council
Agenda)

10

Builders Outlook

2014 issue 11

Expert Advice

The Argument for

Employee
Benefits
Joe Bernal
Employees
Benefits of
El Paso

Every year, the cost of benefits goes up.

Rules and regulations governing their
administration grow more complicated. And
then theres the Affordable Care Act Its
enough to make an employer wonder
whether to stop offering benefits and face the
ACAs penalties next year. But doing so could
put your firm at a disadvantageheres why.
Employees Want Benefits
In survey after survey, employees rank
benefits as one of the most important factors
in their job satisfaction. They also affect your
ability to recruit and retain talented
employees. EBRI, the Employee Benefits
Research Institute, says, one-quarter
(25 percent) of employees report they have
accepted, quit, or changed jobs because of
the benefits, other than salary or wage level,
that an employer offered or failed to offer.
(EBRI Notes, November 2013, Vol. 34, No.
11. www.ebri.org)
Aflacs 2013 WorkForces Report says,
Workers who are extremely or very
satisfied with their benefits program are
three times more likely to stay with their
employer, compared to those workers who
are dissatisfied with their benefits program.
Moreover, 69 percent of workers who are
not satisfied with their current benefits
package indicated that by improving their
benefits package, their employer could
entice them to stay.
Employees Like Their Benefits
In a survey by EBRI, a majority of workers
described the U.S. healthcare system as
poor or fair (21 percent and 34 percent,
respectively).
EBRI
says
their
dissatisfaction with the health care system
appears to be focused primarily on cost.
While the healthcare system as a whole
earns poor grades, most workers with health
insurance like their health plan, with half (51
percent) either extremely or very satisfied.
Benefits Have Tax Advantages
Proponents of removing employers from
the benefits business say doing so would
allow them to pay higher salaries. However,
this would make both employers and
employees lose important tax advantages.
Employers can deduct the cost of providing
qualified benefits (which include health,
dental, life, disability and retirement plans)
as a business expense, while employees
receive the value of these benefits tax-free.
Providing a portion of compensation in the
form of benefits also allows the employer to
reduce payroll tax obligations.
Benefits Affect Health, Productivity
Cost causes 25 percent of uninsured
adults to go without needed healthcare each
year, and 22 percent to go without needed
prescription drugs, reports the Kaiser Family
Foundation. Having medical insurance
removes some of the barriers to receiving
health services when needed, which could
prevent minor conditions from worsening
and reduce reliance on emergency care.
People who have health and dental
insurance are generally healthier than those
who lack it. Health and financial problems

(which can often stem from health

problems) also affect employee productivity.
In surveys for the Aflac 2013 WorkForces
Report, 37 percent of workers attributed
their inability to work to financial or health
problems. The U.S. Centers for Disease
Control estimates employers cost of lost
productivity due to personal and family
health problems at $1,685 per employee per
year, totaling $225.8 billion annually.
Healthcare Reform Causes Confusion
What about healthcare reform? Couldnt
you just give employees a set dollar amount
and let them shop for their own coverage on
an exchange?
Although the health insurance exchanges
were supposed to level the playing field
between individual and group insurance
purchasers, the fact remains that coverage
on the group market is generally less
expensive much less expensive if your
organization self insures or has a
grandfathered plan. Individuals also
typically have much less leverage over
providers and have fewer information
resources on quality and effectiveness than
buyers of group plans do.

Further, putting the coverage decision

making process directly in employees
hands could leave you with confused
employees. Aside from technical problems
with the exchanges, selecting a health plan
can be a daunting process. It requires
individuals to estimate their health costs for
the upcoming year, then review plans to see
which will cover their expected costs most
effectively, when balancing premiums,
deductibles and out-of-pocket costs.
A recently released study of individuals
selecting health plans on the state and
federal insurance exchanges found the
majority make poor financial choices. When
asked to make the most cost-effective
choice, respondents perform at near
chance levels and show a significant bias,
overweighting out-of-pocket expenses and
deductibles. Although study subjects did
not realize they were making poor
decisions, those decisions will cost them
and taxpayers approximately $10 billion per
year. Simply changing choice architecture to
provide calculation aids and a smart
default can encourage insurance buyers to
make better financial decisions.* In a group

setting, employers perform this function by

providing a selection of pre-screened plans
and plan education to their employees.
A good benefit program can help your
employees stay healthier, both physically
and financially. We can help you evaluate
your benefits program to ensure you are
getting the best value for your budget. You
can also enhance your benefits package at
no cost by offering voluntary benefits. For
more information, please contact us.
*Can Consumers Make Affordable Care
Affordable? The Value of Choice Architecture,
Eric J. Johnson et al, U of Penn, Inst for Law &
Econ Research Paper No. 13-28; Columbia
Business School Research Paper No. 13-56, July
9, 2013.

For more information contact

Joe Bernal
joe@employeebenefitsep.com
915-542-0900
(c) Copyright 2014 Employee Benefit
News. All rights Resrved.

2014 issue 11

11

Builders Outlook

National Housing News

For All Your Electrical Needs

Residential Specialists
Tract Homes Custom Homes

Total Customer
Satisfaction

Foreclosure sales
down a solid 36%
Hope Now:
Foreclosure sales hit lowest since 2007
Trey Garrison Housingwire.com

About
468,000
homeowners
received non-foreclosure solutions
from mortgage servicers in July,
August and September, according to
the voluntary, private sector alliance of
mortgage
servicers,
investors,
mortgage insurers and non-profit
counselors known as Hope Now.
Permanent loan modifications
totaled about 109,000 and short sales
totaled 30,000.
Other
solutions,
including
repayment plans, deeds in lieu, other
retention plans and liquidation plans,
made up the rest of the total number.
When homeowners do not qualify
for long-term permanent loan
modifications, mortgage servicers
continue to look for short term options
that, in many cases, lead to a
permanent solution, the HopeNow
report says.
Foreclosure
sales
totaled
approximately 108,000 for the quarter.
This is the lowest quarterly total for
foreclosure sales recorded since Hope
Now began tracking loan data in 2007.
Of the 109,000 loan modifications
completed for the third quarter of
2014, about 79,000 homeowners
received proprietary loan modifications
and 29,384 homeowners received
loan modifications completed under
the Home Affordable Modification

Program.
In the third quarter, the combination
of total loan modifications, short sales,
deeds in lieu and workout plans
outpaced foreclosure sales by a
margin of more than four to one, or
about 468,000 solutions vs. 108,000
foreclosure sales.
Quarter over quarter, foreclosures
sales fell 6%, while foreclosure starts
were up the same percentage.
During the third quarter of 2014,
there were an estimated 108,000
foreclosure sales, compared to
115,000 during the previous quarter
a decline of over 6%. Foreclosure
starts
increased
6%,
with
approximately 212,000 reported for
Q3 2014 vs. 200,000 reported for Q2
2014.
Loan
modifications
were
approximately 109,000 for Q3 2014
vs. 116,000 in Q2 2014, a decline of
approximately 6%.
Short sales completed in Q3 2014
were approximately 30,000 vs. 33,000
for Q2 2014 a decline of 9%.
Year over year, foreclosure sales
were down a solid 36%.
The 108,000 foreclosure sales in the
third quarter of 2014 compares to an
estimated 166,000 completed during
the third quarter of 2013.

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602-708-7560

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12

Builders Outlook

2014 issue 11

National Housing News

Big investors pull back on housing

When housing crashed in a large
way, big investors stepped in, both
mopping up the mess and squeezing
out big profit.
Now, with home prices rising and
fewer distressed homes to buy, the
housing trade is changing, and so
are the players. The number of sales
to investors increased in October
from September, according to the
National Association of Realtors, but
the mix is different.
"We've seen buying activity
slowing down among the largest
institutional investors, and some of
this activity (is being) replaced by
mid-sized companies and individuals

looking to buy and rent out single

family homes," said Rick Sharga,
executive vice president of
Auction.com. "The asset class
seems likely to continue to grow, but
the share of inventory purchased by
the largest funds appears to be
shrinking."
In Atlanta, where there are still a
considerable number of distressed
properties for sale, the investor
dynamics are strong but shifting.
"The demand side, the buyer side
of this investment has really never
been bumpier," said Simon Frost,
chief investment officer of Key
Property Services, a Marietta,

Georgia-based company that buys

distressed homes, renovates them,
re-sells them to other investors as
turnkey properties and then
manages them for those investors.
"It has gotten a lot more
unpredictable with respect to who's
going to be buying in any particular
month, given that the capital flows
are not predictable and stable."
Frost said the bigger institutional
investors have been more capitalconstrained lately because they
haven't shown huge profits yet to
their own investors.
In turn, they've moved toward
funding their purchases with debt.

That means they have to do rentalbased securitizations first to raise

cash, before buying more properties.
Cash flow is good on the properties
they've already rented, but they still
have a big backlog of homes to
renovate and rent, which cuts into
profit. Smaller investors are now
buying some of these properties in
both small and large portfolios.
"A lot of people are looking at
portfolios from us," said Frost. "We
still see the same people on the
courthouse steps, just not as
regularly as we used to."
-Diana Olick CNBC

GSEs officially update representation and warranty policies

Analysts say impact of long-awaited changes may be minimal
Fannie Mae and Freddie Mac both
announced changes to their
respective representation and
warranty policies, following through
on an announcement made by
Federal Housing Finance Agency
Director Mel Watt at the Mortgage
Bankers Association Annual
Convention & Expo in October.
During his speech at the MBA
Expo, Watt said that the FHFA was
planning to clarify Fannie and
Freddies representations and
warranty policies to help reduce

repurchases.
"We know that the Representation
and Warranty Framework did not
provide enough clarity to enable
lenders to understand when Fannie
Mae or Freddie Mac would exercise
their remedy to require repurchase
of a loan, Watt said at the time.
And, we know that this issue has
contributed to lenders imposing
credit overlays that drive up the cost
of lending and also restrict lending to
borrowers with less than perfect
credit scores or with less

conventional financial situations."

Watt said the FHFA's changes
include clearly defining life-of-loan
exclusions, which fall into six
categories:
1. Misrepresentations,
misstatements and omissions
2. Data inaccuracies
3. Charter compliance issues
4. First-lien priority and title
matters
5. Legal compliance violations
6. Unacceptable mortgage
products

Watt also said the FHFA would be

setting a minimum number of loans
that must be identified with
misrepresentations or data
inaccuracies to trigger the life-of-loan
exclusion, so that the GSEs will be
responding to a pattern of
misrepresentations or data
inaccuracies, not just outliers.
Now, Fannie and Freddie have
made the changes Watt announced
official.
-Ben Lane Housingwire.com

2014 Issue 11

13

Builders Outlook

www.elpasobuilders.com
www.epbuilders.org

Membership News
UPCOMING EVENTS |
DECEMBER 12
INSTALLATION
MARRIOTT HOTEL

JANUARY 7
ASSOCIATES MEETING
4:00
EPAB OFFICE

JANUARY 14
BOARD MEETING
12 NOON
EPAB OFFICE

RENEWALS |
BUILDERS SOURCE
84 LUMBER
JOSEPH HOMES

E. F. BUILDING MATERIALS
JKS HOMES
MECHANICAL TECHNOLOGIES

CAPITAL BANK
REVERSE FUNDING
EAGLE ROOFING PRODUCTS
CITY LIGHTS

ACCENT HOMES
M A HOMES
AUTOMATED DIVISION 6 BUILDERS
TROPICANA DEVELOPMENT

NEW MEMBERS |
LABOR MAX STAFFING
CONTACT: STEVE ELSEY
805 E. YANDELL DRIVE
EL PASO, TX 79902
915-351-0890

KALESA CONSTRUCTION, LLC. DBA

KALESA HOMES
CONTACT: MINDY KLINE
9434 VISCOUNT BLVD., STE 220
EL PASO, TX 79925
915-591-2915

CONDOLENCES |
Our deep condolences to WestStar Bank Chairman of the Board Rick Francis on the sudden
death of his son Tyler Francis, of Francis Aviation. Tyler was killed in an airplane crash
November 24th at the Las Cruces airport. Tyler is the grandson of former Mayor Larry Francis.

SODA SPONSOR

For the latest updates &

event information, visit:

elpasobuilders.com

Thanks to our NOVEMBER SODA SPONSOR:

JOE BERNAL EMPLOYEE BENEFITS OF EL PASO

Jaimes
Courier
Service,Inc.

915-549-4533
or
915-478-2404
Bonded, insured for
your peace of mind.

14

Builders Outlook

2014 issue 11

Associates Council

Sam Shallenberger
Western Wholesale Supply

Gee Whiz --- We just started this year

and it is all but over. As I have said
many time the older you get the faster
the time flies. It seems just like
yesterday Ray and I were having lunch
at Ernies, a cool little Mexican
Restaurant on Industrial drive right after
Christmas enjoying inexpensive good
Mexican food (must have been Rays
turn to pay key word inexpensive).
Our big final event for the year is the
installation and awards dinner. I want
to thank all the associate members who

stepped up to partner with the

association in this deal. Its always a
nice affair with everyone dressed up.
Looking forward to seeing you there on
December 12.
I would like to thank the associates
that participated in all the events that
we had this year. Remember that you
get Out of the association what you put
in to the association. Speaking of
which, I think we should have our first
meeting January 7, 2015 so we can get
a head start and do a good job planning

events for the year. I would like to have

every associate member that can make
the meeting bring an idea or project that
they think would be of interest and
make a great event.
Again see you at the installation as
we welcome Edgar Montiel as
President. I look forward to working
closely with him.

Advertise your business to the home

building industry
The Builders Outlook is the official publication of the El Paso Association of Builders. Our
award winning monthly newspaper is the only publication to target El Paso home builders and
related businesses.
Widely distributed throughout the city and available to readers online, the Builders Outlook is
an important advertising medium for any business that want to reach this valuable market.

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Builders

utlook

www.elpasobuilders.com
www.epbuilders.org
6046 Surety Dr. El Paso, TX 79905
915-778-5387 Fax: 915-772-3038
execuTive oFFicerS
FrankTorresPresident
GMF Custom Homes
edgarmontielvicePresident
Palo Verde Homes
carlosvillalobosSecretaryTreasurer
Palo Verde Homes
SamShallenbergerAssociateschair
Western Wholesale
edmundoDena-immediatePastPresident
Accent Homes
rayAdautoexecutivevicePresident
El Paso Association of Builders
JayKerr-Attorneyofrecord

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

TABSTATeDirecTorS
Randy Bowling
Greg Bowling

NATioNALDirecTorS
Bobby Bowling IV.
Demetrio Jimenez
NATioNALASSociATioNoF
HomeBuiLDerS
(800) 368-5242

TexASASSociATioNoF
BuiLDerS
(800)252-3625

2013BuildermemberofTheYear
Edmundo Dena
Accent Homes
2013PatcoxAward
Sam Shallenberger
Western Wholesale Supply
2013AssociateofTheYear
WestStar Bank
Larry Patton, Burt Blacksher
and Henry Tinajero

HonoraryLifemembers
Wayne Grinnell
Don Henderson
Chester Lovelady
Cliff C. Anthes
Anna Gill
Brad Roe
Rudy Guel
E H Baeza
PastPresidents
committedtoServe
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

ePABmissionStatement:
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