Builders utlook www.elpasobuilders.com www.epbuilders.org 2013 issue 6 From Greater El Paso Chamber of Commerce, edited by Ray Adauto On June 25th General Ray Odierno, Chief of Staff of the Army, announced the results of the Army’s 2020 Force Structure Realignment, which will reduce the Army’s Active Component end-strength from the 570,000 soldiers currently serving to 490,000 by 2017. In January of this year, the El Paso community was made aware of the Army’s Programmatic Environmental Assessment (PEA) which was considering possible cuts and realignments among 23 of the Army’s bases, including Fort Bliss. Since then, the Chamber (led by our strong volunteer leadership), has relentlessly advocated on behalf of Fort Bliss and the regional military community . Through visits to the Pentagon and elected leadership on Capitol Hill, the Chamber has touted the exceptional qualities that make Fort Bliss the premier installation in the Department of Defense. The Chamber was also given the opportunity to host a Listening Session in April, which was attended by Army officials who were charged with assessing each of the 23 installations and their neighboring communities. The Chamber utilized the Listening Session to highlight the billions of dollars of investments made by the community in transportation, education, healthcare, housing, and quality of life to support the growth of Fort Bliss. Thus, after months of waiting General Odierno announced that Fort Bliss was one of ten Army bases in the United States which will have a brigade combat team deactivated by 2019. The Chamber is proud to say that although Fort Bliss will be losing a Brigade Combat Team (3-1 AD) and a net loss of 750 soldiers, it will remain an essential power projection platform for the Army and will be minimally impacted by the overall Force Structure Realignment. In his announcement, General Odierno also warned that the Army’s Force Structure Realignment may only be the first of additional cuts the Army must make in order to meet budget requirements, if sequestration continues into the next fiscal year. Under such fiscally challenging circumstances, it is important for the business community to not only understand how the local economy will be impacted by these changes, but also that our troops need community support now more than ever. Through these challenging times, the Chamber remains committed to Fort Bliss and will continue to support our regional military installations through proactive advocacy and outreach efforts. On June 27 the United States Air Force chose Fort Bliss as a major training center location for security forces that will be deployed around the world. In the announcement USAF will bring between 8,000 to 10,000 airmen through the training that ranges from 10 days to 60 days in duration. At the end of each session graduation will bring in visiting family members as well . The move to Fort Bliss was anticipated but other communities, like San Antonio, lost out. Fort Bliss is the premier DOD facility in the world with over $7 billion invested over the last five years. Fort Bliss housing: good or bad for local builders/developers? A recent meeting with the US Army Garrison Command left questions for the private sector on whether the future of single family and multifamily construction will be positively or negatively impacted. Most of the members in attendance felt that it will be negative given the statistics presented and the need for the Army’s principal contractor, Balfour Beatty, continue to build inside the wire. Joined at the meeting held at the Greater El Paso Chamber of Commerce by the El Paso Apartment Association, commercial real estate companies and Chamber members, attendees listened to Garrison Commander Dayley report on what to expect at Bliss over the next few years. “We continue to look at upgrading the housing for family and single soldiers by constructing housing inside the post,” Dayley told the audience. “We are particularly interested in west Bliss and modernizing housing along US 54 near the golf course and building new single soldier barracks (apartments) for them near our Freedom Crossing,” he continued. The apartment builders and associates were concerned that statistics being presented on the occupancy rates were old and not accurate. “What we think is that the Army needs to be giving correct numbers, otherwise it looks to outside interests like we are short on apartments, while that is not reality,” said Ray Baca local apartment management member. The presentation says that there is a 93% occupancy rate while the apartment managers present said 88-89% is the reality. “We were told to b uild for the incoming troops back five years ago, and private sector did that anticipating a return on investment,” Baca continued. “What we are seeing is an oversupply now as troops are transitioning in and out quicker. Now the Army is going to compete with us for the market share and that’s troubling,” he continued. Single family housing also has not taken off with the military a s anticipated. In the past the makeup of the troops was different when the Air Defense School was at Bliss. The troops now coming in are much younger and single, mostly not ready or able to purchase a home while stationed at Fort Bliss. “We are seeing much more sales of rims and big screens than we are of houses,” said Edmundo Dena, President of th e associa tion. “The rea lity is that these younger troops need to partner up in an apartment so they can deploy and return without the cost of a home purchase,” he continued. Even transitional housing for Senior Soldier Unaccompanied Housing (SUH) for E-6 and above will see a new complex with 260 units at market rate rents. This housing is targeting students assigned to SNCO and officers coming to Bliss unaccompanied. In other words apartments for non-family moves to Bliss for training, education (SSgt Major School) or assignment. This will directly impact area apartment rentals, especially those in North East and west of the post. The post plans to add about 800 homes to their current 3600 inventory by end of 2016. They are also planning to sell off 1635 acres of land near Montana Avenue and Loop 375, plus an additional 94 acres near the old Beaumont. Army Force Structure Realignment: Understanding the impact to local business community This image was originally posted to Flickr by DVIDSHUB
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On June 25th General Ray Odierno,Chief of Staff of the Army, announced the
results of the Army’s 2020 Force StructureRealignment, which will reduce the Army’sActive Component end-strength from the570,000 soldiers currently serving to490,000 by 2017.
In January of this year, the El Pasocommunity was made aware of the Army’sProgrammatic Environmental Assessment(PEA) which was considering possible cutsand realignments among 23 of the Army’sbases, including Fort Bliss. Since then, theChamber (led by our strong volunteerleadership), has relentlessly advocated onbehalf of Fort Bliss and the regional militarycommunity. Through visits to the Pentagonand elected leadership on Capitol Hill, theChamber has touted the exceptionalqualities that make Fort Bliss the premier
installation in the Department of Defense.The Chamber was also given theopportunity to host a Listening Session inApril, which was attended by Army officialswho were charged with assessing each ofthe 23 installations and their neighboringcommunities. The Chamber utilized theListening Session to highlight the billions ofdollars of investments made by thecommunity in transportation, education,healthcare, housing, and quality of life tosupport the growth of Fort Bliss.
Thus, after months of waiting GeneralOdierno announced that Fort Bliss was oneof ten Army bases in the United Stateswhich will have a brigade combat teamdeactivated by 2019. The Chamber is
proud to say that although Fort Bliss will belosing a Brigade Combat Team (3-1 AD)and a net loss of 750 soldiers, it will remainan essential power projection platform forthe Army and will be minimally impacted bythe overall Force Structure Realignment.
In his announcement, General Odiernoalso warned that the Army’s ForceStructure Realignment may only be the firstof additional cuts the Army must make inorder to meet budget requirements, ifsequestration continues into the next fiscalyear. Under such fiscally challengingcircumstances, it is important for thebusiness community to not onlyunderstand how the local economy will beimpacted by these changes, but also thatour troops need community support nowmore than ever. Through thesechallenging times, the Chamber remainscommitted to Fort Bliss and will continue tosupport our regional military installationsthrough proactive advocacy and outreachefforts.
On June 27 the United States Air Forcechose Fort Bliss as a major training centerlocation for security forces that will bedeployed around the world. In theannouncement USAF will bring between8,000 to 10,000 airmen through the trainingthat ranges from 10 days to 60 days induration. At the end of each sessiongraduation will bring in visiting familymembers as well. The move to Fort Bliss
was anticipated but other communities, likeSan Antonio, lost out. Fort Bliss is thepremier DOD facility in the world with over$7 billion invested over the last five years.
Fort Bliss housing:good or bad for localbuilders/developers?
A recent meeting with the US ArmyGarrison Command left questions for theprivate sector on whether the future ofsingle family and multifamily construction
will be positively or negatively impacted.Most of the members in attendance felt thatit will be negative given the statisticspresented and the need for the Army’sprincipal contractor, Balfour Beatty,continue to build inside the wire.
Joined at the meeting held at the GreaterEl Paso Chamber of Commerce by the ElPaso Apartment Association, commercialreal estate companies and Chambermembers, attendees listened to GarrisonCommander Dayley report on what toexpect at Bliss over the next few years.“We continue to look at upgrading thehousing for family and single soldiers byconstructing housing inside the post,”
Dayley told the audience. “We areparticularly interested in west Bliss andmodernizing housing along US 54 near thegolf course and building new single soldierbarracks (apartments) for them near ourFreedom Crossing,” he continued.
The apartment builders and associateswere concerned that statistics beingpresented on the occupancy rates were oldand not accurate. “What we think is that theArmy needs to be giving correct numbers,otherwise it looks to outside interests likewe are short on apartments, while that isnot reality,” said Ray Baca local apartment
management member.The presentation says that there is a
93% occupancy rate while the apartmentmanagers present said 88-89% is thereality. “We were told to build for theincoming troops back five years ago, andprivate sector did that anticipating a returnon investment,” Baca continued. “What weare seeing is an oversupply now as troopsare transitioning in and out quicker. Nowthe Army is going to compete with us forthe market share and that’s troubling,” hecontinued.
Single family housing also has not takenoff with the military as anticipated. In thepast the makeup of the troops was different
when the Air Defense School was at Bliss.The troops now coming in are muchyounger and single, mostly not ready orable to purchase a home while stationed atFort Bliss. “We are seeing much moresales of rims and big screens than we areof houses,” said Edmundo Dena, Presidentof the association. “The reality is thatthese younger troops need to partner up inan apartment so they can deploy andreturn without the cost of a homepurchase,” he continued. Eventransitional housing for Senior SoldierUnaccompanied Housing (SUH) for E-6
and above will see a new complex with 260units at market rate rents. This housing istargeting students assigned to SNCO andofficers coming to Bliss unaccompanied.In other words apartments for non-familymoves to Bliss for training, education (SSgtMajor School) or assignment. This willdirectly impact area apartment rentals,especially those in North East and west ofthe post.
The post plans to add about 800 homesto their current 3600 inventory by end of2016. They are also planning to sell off1635 acres of land near Montana Avenueand Loop 375, plus an additional 94 acresnear the old Beaumont.
Army Force Structure Realignment:Understanding the impact to local business community
This image was originally posted to Flickr by DVIDSHUB
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I am humbled more times than you canimagine or that I will admit anywhere but here. This time it’s because of the Paradeof Homes and the absolutely stunning job done by so many for so many.Personally I walked into our Winton Flair home and thought to myself how reallycool the amenities are and I’m trying to figure out how to incorporate them into myAccent Homes. Probably not but at least now I know what to shoot for. All thehomes are great and offer El Paso a little diversity in styles and arrangements.They are beautifully built and wonderfully decorated. Thank you to all who haveinvested so much time, money and effort into this show. My special thanks goesto my Vice President Frank Torres and my Executive Officer Ray Adauto.
These two guys work their tails off for the association without asking anything inreturn. They are always assisted by Isela (Frank’s wife) and Margaret who areequally hard working. Then you add Kathy Parry from HUNT. What can you sayabout her that hasn’t already been said? I can say this: she is a great person,
hardworking board member, and outstanding employee for HUNT. She’s toughlove with the builders but in the end it’s because of her push that we even have theparade. To the entire HUNT group thank you on behalf of the EPAB. JustinChapman is a really positive guy who let us have this. Thank you Justin.
We’re busy and we’ve been blessed with a political victory of sorts as well withthe election of our Build PAC endorsed candidates. Congratulations to OscarLeeser, Larry Romero, Carl Robinson, Emma Acosta, and Lilly Limon on theirvictory. The world has really changed for you and we stand here ready to help youhelp us house the people of El Paso. Thanks to our Build PAC, Greg Bowling,Bobby Bowling and Randy Bowling, along with the “silent” members who turnedout and made history again by backing the winners. To those in our industry whosupported candidates with poor or reckless hate for home building we offer ourhand and hope you learn from this. A united industry can do many great things. Adivided one creates problems for you and for us. Perhaps this is a tough lesson tolearn just like we have in the past. Standing up for your industry and convictionsis really a whole lot more important than getting invited to a cocktail party. Like wesay “better to be AT the table than on it.”
Sunny with Cloudy PeriodsLooking ahead at the second half of2013, the economic news is pretty solid.
The US economy ison the mend, thelabor market is slowlyhealing and houseprices are up about10% from year-agolevels. In addition,Europe (while inrecession) appears tobe holding together,DC budget
brinksmanship is fading, car and light-
truck sales along with consumersentiment are rising, and new homeconstruction continues its steadyascent. The only serious domestic fly inthe ointment is the significant fiscal dragfrom Washington as the result ofsequestration and year-end taxincreases. The biggest foreign drag isEurope’s recession is hurting USexports.
With all this in mind, I expect Q3 GDPto be about 1.75% and Q4 GDP to come
in slightly higher at 2.1%. As for housingstarts, in Q3 they should, for the firsttime in years, exceed a million units(seasonally adjusted and annualized)with single family starts coming in at675,000 and multifamily starts reachinga pace of about 340,000. In Q4 singlefamily starts should hit to 700,000 withmultifamily starts unchanged.
Inflation will remain benign. Thecombination of weak global growth, flatto declining energy and commodityprices, and flat to mildly rising foodprices will keep CPI growth well below
2%. Moreover, the combination of tinyrises in import prices, producer prices,consumer prices and anemic wagegrowth means that personalconsumption expenditure inflation, theFeds preferred inflation measure, willbarely exceed 1%, giving the FederalReserve ample room to continue itsprogram of quantitative easing.
As for jobs, despite an improving labormarket, the unemployment rate at theend of the year will remain above 7%.
And combined with an annual inflationrate of well below 2%, it makes me thinkBernanke and the rest of the votingmembers of the interest rate-settingFederal Open Market Committee willcontinue purchasing $85 billion/month inTreasuries and mortgage-backedsecurities at least through October2013. Any tapering of QE3 willcommence in late 2013 and more likelyin early 2014.
Another reason why QE3 will bemaintained in that due to weak wagegrowth, consumer spending is rising
quite slowly and is being fueled, at leastin part, by a decline in the personalsavings rate which now stands at ascant 2.5%. Of course rising stockprices, improving home values andeasing credit market conditions are alsoaiding the rise in consumer spending.But a sudden rise in interest rates couldderail these positive developments andweaken manufacturing, which iscurrently neither expanding norcontracting. As such, the risk is simply
not worth the return, at least for now.What would change my thinking about
QE3 would be consistent monthly non-farm payroll job growth of greater than187,000. If we manage to achieve that,the Fed would likely reduce the amountof its monthly bonds purchases andinterest rates would rise. However,given a growing economy, the rate riseswould not be growth-sapping and I putthe chances of a new recession at nomore than 10%. In the meantime, I lookforward to continued, slow and steadyimprovement the rest of the year.
Have a wonderful summer and seeyou in August! (Remember, I will not bewriting an article for July).
Elliot Eisenberg, Ph.D. is President of GraphsandLaughs, LLC and can be reached at [email protected] daily 70 word economics and policy blog can be seen at www.econ70.com.
Elliot Eisenberg
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The 2013 Parade of Homes kicked offwith a preview party on June 21. Nearly1300 visitors entered the Parade site thatnight and enjoyed beautiful weather andgreat food and drink. The Parade ofHomes is located on the Westside of El
Paso in a HUNT community named theFalls at Cimarron. This planned communi-ty features spectacular views of the uppervalley and the Franklin Mountains. Homesin the Parade range from the high $200’sto the mid $400K depending on who built itand the amenities they present. “Weoffered the El Paso Association of Buildersa really beautiful area to hold the Paradeof Homes,” said Kathy Parry, Director ofBuilder Relations Southwest CommunityDevelopment for HUNT. “The buildershave done a great job getting these homesready to show and sell and as you can seefrom the throngs of visitors we have a realpent up demand for this,” she continued.
“I am just blown away with all the differ-
ent homes and the detail that was put intoeach one of them,” said Edmundo Dena,President of the El Paso Association ofBuilders (EPAB). “We can’t thank thebuilders and HUNT enough for the workthey have done to get us this show,” hecontinued. Thirteen builders joined in theeffort and each one built their home insteps that were something to see. “If youwould have told me that all these homeswould have been done on time I wouldhave said you’re crazy,” said Frank Torres,chairman for this year’s Parade. “As abuilder myself I know the stress thatcomes with doing a show like this, and itcan be a real problem as the time getsshorter. I think these builders did an out-standing job all the way around,” Torrescontinued.
The 2013 POH features these custombuilders: Palo Verde Homes, PuntoLiving, Pointe Homes, Icon CustomHomes, Winton/Flair, Phillips Homes,Joseph Homes, Trinity Homes, QualityCraft Homes, Crown Heritage Homes, RCBaeza, Bella Vista Custom Homes, and M
A Homes. Each is different with a person-ality designed to fit a variety of wants.With a Parade Home the buyer gets addi-tional value because vendors and suppli-ers are more apt to showcase the latestwares and provide a good price point tothe builder. Parade homes resale values
often are higher according to agents andso the value continues long after the initialpurchase.
As for the preview party the interest washigh on the homes, but it was about see-ing old friends and making new ones aswell. “I can tell you that I think this is thebest preview party in thirty years,” saidpast President Mark Dyer. “I knowbecause I haven’t missed anysince that time,” he went on. As theparty wound down one thing remainedclear: this was long overdue. “I am soappreciative of the HUNT community andall the builders, volunteers and suppliers,”said Ray Adauto, Executive Vice PresidentEPAB. “I want to single out Frank Torres,Isela Torres, and Margaret Adauto for theirhard work at the preview,” he continued.“Frank deserves a huge thank you fromevery member for the unselfish way he putthis together,” Adauto continued.
The POH continues until July 7 withhours of presentation Monday-Friday 3-7pm, Saturday and Sunday 11-7. Entry is$5 for anyone over the age of 12.
During National HomeownershipMonth in June, the NationalAssociation of Home Builders(NAHB) is telling young people thatthe time is right to buy a home, andthe nation’s builders are building thehomes they want.
“As the economy recovers andyoung people who had to live athome with their parents moveforward with their lives and achievetheir dreams of homeownership,home builders are delivering homesthat cater to the floor plans, featuresand affordability that this generation
desires,” said NAHB Chairman RickJudson, a home builder anddeveloper from Charlotte, N.C.
More than 80 percent ofGeneration Y home buyers—peopleborn in 1977 or later—said inNAHB’s 2012 consumer preferencesurvey they prefer a highly energyefficient home that results in lowerutility bills during the home’s lifetimeover a lower-priced home withoutenergy efficient features. Today’snew homes feature ENERGYSTAR-rated appliances; windows,doors and insulation that bettercontrol the home’s interior climate;and other modern components such
as tankless water heaters andHVAC systems that save costs onutility bills.
And cost-conscious young buyerswill be happy to hear that a newhome actually costs less to maintainthan an older home. An NAHB studyfound that homes built before 1960have average maintenance costs of$564 a year, while a home built after2008 averages $241. Plus,mortgage rates are still very low,bolstering affordability for homebuyers.
Generation Y buyers favor mediaand game rooms more than anyother specialty rooms for their nexthome. New homes today not onlycontain these spaces, they areoutfitted with the state-of-the-artelectronic and wiring componentsthat can accommodate high-definition televisions, full-housesound systems, hard-wired fire andsecurity alarms and more.
Young buyers can check outmany of the outstanding designsand features being included inhomes built by NAHB members atour social media communitiesf a c e b o o k . c o m / h o m e b u i l d r s ,pinterest.com/nahbhome andgoogle.com/+nahb. They can also
access home buying and homebuilding information and resourceson NAHB’s website atnahb.org/forconsumers.
The time has never been betterfor young people to become homeowners, whether it be a new homeor existing,” said Judson. “There areoutstanding opportunities in thecurrent market, with near record lowinterest rates, competitive pricesand new homes being built thatinclude open layouts, energyefficient components and otherfeatures that cater to young buyers.”
Trends:
Home BuildersBuilding Homesthat Young BuyersWant
More than 80 percent of Generation Y home buyers—people born in 1977 or later—saidin NAHB’s 2012 consumer preference survey they prefer a highly energy efficient homethat results in lower utility bills during the home’s lifetime over a lower-priced homewithout energy efficient features
e options builders askedfor are right here.Developed with the backing of the strongest insurance carriersserving the Texas building industry, the exclusive TAB endorsedinsurance program oers new exible options and rates that aremore competitive than ever before.
Summer is officially here and theheat proves it. After so muchactivity over the last few monthsmany of our associate membersare now working with the Parade ofHomes builders, getting them readyand hopping for some really goodthings from that. I know that we
look forward to doing the Paradebut it’s a lot of work. I would like tothank many of you who will bemanning the ticket booth andhelping the association with yourefforts.
Our next official event is comingup July 10 as we go out to Bowl ElPaso for some indoor fun. Teams
are forming and it’s easy to getgoing with a four person team, orperhaps you’d like to be a KING Pinand get a team plus do someadvertising with us. Anyway, we’relooking forward to it.
We won’t have a meeting in Julybut I am calling for one August 5, so
put the date on your calendar.Again if you’re going out onvacation or taking a short tripsomewhere around here be carefuland enjoy yourself.