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EL PASO
BUILDERS
A S S O C I AT I O N O F
National, State & Local
Building Industry News
2017: Issue 3

www.elpasobuilders.com
Markets predicted to lead
the nation in housing
Realtor.com
Forecasts Post-
Election Economy to
Result in Higher
Mortgage Rates
While Housing Delivers
Slower Gains in 2017
Phoenix housing market
predicted to be top out of
100 local metro forecasts
The 2017 housing market will be a
year of slowing, yet moderate growth,
set against the backdrop of a
Western metros in the U.S. are forecast to see a price increase of 5.8
changing composition of home buyers percent and sales increase of 4.7 percent, much higher than the U.S.
and a post-election interest rate jump
that could potentially price some first-
with anticipation of stronger economic of buyers in 2017 and given theyre home supply are not expected to
timers out of the market, according to
and wage growth next year, both of less dependent on financing, they are change in 2017. Median age of
the realtor.com 2017 housing
which favor buyers. However, higher anticipated to be more successful inventory is currently 68 days in the
forecast released today.
rates will make qualifying for a when it comes to closing. top 100 metros, which is 14 percent
mortgage and finding affordable or 11 days faster than U.S. overall.
The report also predicts the top
inventory more challenging. 2. Midwestern cities will continue
five housing trends of 2017, as well
to be hotbeds for millennials 5. Western cities will continue to
as home prices and sales for the
We dont expect the outcome of the Midwestern cities are anticipated to lead the nation in prices and sales
100 largest metros in the U.S.
election to have a direct impact on the continue to beat the national average Western metros in the U.S. are
health of the housing market or in millennial purchase market share in forecast to see a price increase of 5.8
2017 National Housing Forecast
economy as we close out 2016. 2017 with Madison, Wis.; Columbus, percent and sales increase of 4.7
The 2017 national real estate
However, the 40 basis points increase Ohio; Omaha, Neb.; Des Moines, percent, much higher than the U.S.
market is predicted to slow compared
in rates in the days following the Iowa; and Minneapolis, leading the overall. These markets also dominate
to the last two years, across the
election has caused us to increase pack. This year, average millennial the ranking of the realtor.com 2017
majority of economic indicators. Home
our interest rate prediction for next market share in these markets is 42 top housing markets, making up five
prices are anticipated to increase 3.9
year, said Jonathan Smoke, chief percent, far higher than the U.S. of the top 10 markets on the list (Los
percent and existing home sales are
economist for realtor.com. With average of 38 percent. With strong Angeles, Sacramento and Riverside,
forecasted to increase 1.9 percent to
more than 95 percent of first-time affordability in 15 of the 19 largest Calif., Tucson, Ariz., and Portland,
5.46 million homes. Interest rates are
home buyers dependent on financing Midwestern markets, realtor.com Ore.) and 11 of the top 25 (Colorado
expected to reach 4.5 percent due to
their home purchase, and a majority expects this trend to continue in 2017 Springs, Colo.; San Diego; Salt Lake
higher expectations for inflationary
of first-time buyers reporting one or even as interest rates increase. City; Provo-Orem, Utah; Seattle. and
pressure in the year ahead.
more financial challenges, the uptick Oxnard-Thousand Oaks-Ventura,
weve already seen may price some 3. Slowing price appreciation Calif.)
Realtor.com is forecasting the
first-timers out of the market. Nationally, home prices are forecast to
homeownership rate will stabilize at
slow to 3.9 percent growth year over Top 2017 Housing Markets
63.5 percent after bottoming at 62.9
Top Housing Trends for 2017 year, from an estimated 4.9 percent in Despite a more moderate housing
percent in 2016. New home sales are
2017s predicted slowing price and 2016. Of the top 100 largest metros in market overall in 2017, strong local
expected to grow 10 percent, while
sales growth, increasing interest rates the country, 26 markets are expected economies and population growth will
new home starts are expected to
and changing buyer demographics to see price acceleration of 1 percent continue to fuel the nations hottest
increase 3 percent. The forecast is
are setting the stage for five key point or more with Greensboro-High markets. The realtor.com 2017 top
based on GDP growth of 2.1 percent,
housing trends: Point, N.C.; Akron, Ohio; and 10 housing markets based on price
a 2.5 percent increase in the
Baltimore-Columbia-Towson, Md., and sales gains are: 1. Phoenix-
consumer price index and
1. Millennials and boomers will experiencing the largest gains. Mesa-Scottsdale, Ariz.; 2. Los
unemployment declining to 4.7
dominate the market Next year, Likewise, 46 markets are expected to Angeles-Long Beach-Anaheim, Calif.;
percent by the end of the year.
the housing market will be in the see a slowdown in price growth of 1 3. Boston-Cambridge-Newton, Mass.-
middle of two massive demographic percent or more with Lakeland-Winter N.H.; 4. SacramentoRoseville
Prior to this months election,
waves, millennials and baby boomers Haven, Fla., Durham-Chapel Hill, Arden-Arcade, Calif.; 5. Riverside-San
demographics and an improving
that will power demand for at least N.C.; and Jackson, Miss., undergoing Bernardino-Ontario, Calif.; 6.
economy were laying the foundation
the next 10 years. Although increasing the biggest shift to slower price Jacksonville, Fla.; 7. Orlando-
for a substantial increase in first-time
interest rates have prompted appreciation. Kissimmee-Sanford, Fla.; 8. Raleigh,
buyers in 2017, but due to mortgage
realtor.com to lower its prediction of N.C.; 9. Tucson, Ariz.; and 10.
rate increases over the last few weeks
millennial market share to 33 percent 4. Fewer homes on the market Portland-Vancouver-Hillsboro, Ore.-
realtor.com predicts first timers will
of the buyer pool; millennials and and fast moving markets Inventory Wash.
face new hurdles as they navigate the
baby boomers will still comprise the is currently down an average of 11
qualification and buying process.
majority of the market. Baby boomers percent in the top 100 metros in the
These higher rates are associated
are expected to make up 30 percent U.S. The conditions that are limiting
2 Builders Outlook 2017 Issue 3

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YOUR KEY TO HOME SALES.
By installing natural gas in your new homes and developments, youre opening the door
to added value for potential buyers.

Natural gas kitchens sell themselves, and natural gas furnaces, water heaters and clothes
dryers offer greater efficiency and lower operating costs than their electric counterparts.

For more information:


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William Nieves: 915-496-6126
Jorge Sejera: 915-680-7216

Please continue to direct service line and meter set requests to the Texas Gas Service
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2017 Issue 3 Builders Outlook 3
Presidents Don

Message Building a house, not a big deal,


Rassette

its very easy. Right?


President,
El Paso Association
of Builders

Theres more pressure on our many day to day problems of legislature. TAB is requesting your price of a house in El Paso and you
building industry, than ever before. building at this time. I have been support on 9 House bills and 2 can see how excessive and
We must build better, more energy- and always will be a strong Senate bills for legislation to expensive are these fees. These
efficient houses faster, smarter, proponent that no one can enhance career and technical are just 2 areas that I will highlight,
more efficiently to meet a moving accurately predict the future, but education and workforce training. at this time. I will always encourage
target of buyers that demand more you can prepare yourself for the Are you aware of these bills and you to share your concerns with
innovations as standards. As future. One of the best ways to what they could offer you, in terms those in Austin whose votes might
builders, we must do that in areas prepare, that I have found is to of a larger, a more reliable and a make a difference in keeping
where there have been or presently communicate (i.e. share) my better trained work force. Another housing affordable.
are lot shortages, restricted concerns with people or groups that bill before the House is HB 1449, a Closer to home, are the upcoming
financing, labor shortages might offer solutions. One such bill which would prohibit cities from local elections. In the city, the
(especially after border patrol visits), program to prepare is focusing on mandating linkage fees. This is Mayors seat and Districts 2, 3, 4, &
material delays for quantities promoting construction careers to what I meant earlier when I listed 7 representatives will be determined
needed or lack of inventory by high school students/young adults excessive fees by entities as a on May 6th, 2017. As an
suppliers, permit delays, excessive and having them team up with local problem in our industry. Linkage association member, be prepared to
fees by entities, NIMBY attitudes builders. Some of the programs fees are imposed by cities in some interview and possibly endorse
and restrictions resulting in litigation have been funded by corporate other states on new development candidates based on their interview
and delays. The above issues dont sponsorships and/or donations. and housing projects to subsidize and political positions. Details will
even get into sales, marketing, and Some of our professionals have low and moderate income housing. be announced at our April meetings.
product design that must be volunteered their time to mentor and The linkage fees are relatively stiff, If you havent already donated to
accounted for, so that our products share knowledge with the students with an average modifier of our BUILD PAC; please consider
will be chosen by todays buyers. which may lead to future $70/square foot. Yes, a 2000 square donating to our BUILD Pac, so that
The problems above, are by no employment and opportunities on foot home would have a fee of our endorsement will make a
means meant to list all our both sides. Oh, by the way, one $140,000 imposed on the project. difference.
industrys issues, but to highlight such program is before the state Compare this to the average sales LETS PREPARE TO SUCCEED
4
Executives
Builders Outlook 2017 Issue 3

Message Signs of the economy look good, labor a concern

wall along the Mexico-U.S. border. MacDonald has met with President while they are on the jobsites. It is
Immigration is a hot topic putting Trump and he is deeply committed to proven that not all students need to go
Ray Adauto, America first was one big reason keeping our workforce legal and to a four year college since statistically
Executive President Trump won the election. working. The truth is that contractors on over 60% dont finish is four years.
What the President said in his run for the border will be subjected to higher Take that money and go learn a trade
Vice President
office was that the border is more than a costs as cheap labor disappears under and get a great paying job right from
EPAB line, it is the embarkation line or our the new immigration policies. school rather than just accumulating
country and that he would protect it with Secondly (and riding on the coattails loan debt. The labor pool of young
whatever means available to the of immigration) is the looming labor students is sufficient to offset any
government. The wall will have to be shortage. Construction is not a job that anticipated labor shortage. We have to
more than concrete and steel because can be taken over by a click of a join the school districts in making
The economy under the the terrain will require the use of high keyboard. It is on site, it is skilled, and training a priority and an exciting fun
administration of President Trump has tech solutions as well as the concrete. it has to be trained. Thats why we experience. And we need funding.
shown some real gusto over the last few So when talking about labor does this believe so strongly that our labor has to While we love the current business
months since his election. The stock new position put builders in peril? With have vocational education as part of a climate and the potential rewards, it is
markets have reached all-time highs the recent raids on local construction robust educational system. We are important to talk about the risks we
with many sectors doing extremely well. sites it appears that Homeland Security short on every level. Carpenters, face. The Association will continue to
Housing has had that uptick as well but is going after the low hanging fruit. But plumbers, electricians, HVAC all in short work to ensure that our labor force is
there are a few items that need to be in effect most of the workers that arent supply. We are not training to fill the available no matter what the current
talked about that could very well hurt here legally know that the risk is always vacancies of today much less those of politics are. For that reason its
the industry. present. The risk for the contractor can tomorrow. We urged our legislature to important that you support our efforts at
First and foremost is immigration. be lowered or removed with proper fund training with these simple fixes: all levels. And its important that you
The policy of this administration is clear: paperwork and subcontractor make transportation to training schools prepare.
we welcome legal entry into the United agreements. The NAHB and TAB have from the regular high schools a priority;
States and will make it harder for illegal put out immigration policy statements. create a non-college curriculum; and
entry. The symbolic structure is the Our NAHB Chairman Granger provide insurance coverage for students

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National
2017 Issue 3 Builders Outlook 5

Builder News
Builder Confidence Hits points to 78 while the index charting sales The inventory of new home sales for

12-Year High
expectations in the next six months rose sale was 266,000 in February, which is a
five points to 78. Meanwhile, the 5.4-month supply at the current sales
n Builder confidence in the market for component measuring buyer traffic jumped pace. The median sales price of new This months gain in
newly-built single-family homes jumped six eight points to 54. houses sold was $296,200. single-family starts is
points to a level of 71 on the National Looking at the three-month moving Regionally, new home sales increased consistent with rising
Association of Home Builders/Wells Fargo averages for regional HMI scores, the 30.9 percent in the Midwest, 7.5 percent in builder confidence in the
Midwest increased three points to 68 and the West and 3.6 percent in the South.
Housing Market Index (HMI). This is the housing market, said
the South rose one point to 68. The West Sales fell 21.4 percent in the Northeast.
highest reading since June 2005.
dipped three points to 76 and the
Granger MacDonald,
Builders are buoyed by President chairman of the National
Single-Family Housing
Trumps actions on regulatory reform, Northeast edged one point lower to 48.
Association of Home
New Home Sales Rise
particularly his recent executive order to
Starts Reach Highest
rescind or revise the waters of the U.S.
Builders

6.1 Percent in February Level since Late 2007


rule that impacts permitting, said NAHB
Chairman Granger MacDonald, a home
builder and developer from Kerrville, n Sales of newly built, single-family n Nationwide housing starts rose 3
Texas. homes continued to expand, rising 6.1 percent in February from an upwardly
While builders are clearly confident, we percent in February to a seasonally revised January reading to a seasonally
expect some moderation in the index adjusted annual rate of 592,000 units, adjusted annual rate of 1.288 million units,
moving forward, said NAHB Chief according to newly released data by the attributable to unusually warm weather
according to newly released data from the conditions throughout most of the country,
Economist Robert Dietz. Builders continue U.S. Department of Housing and Urban U.S. Department of Housing and Urban
to face a number of challenges, including Development and the U.S. Census said NAHB Chief Economist Robert Dietz.
Development and the Commerce The modest drop in multifamily starts is in
rising material prices, higher mortgage Bureau. Department. Single-family production
rates, and shortages of lots and labor. Februarys increase in new home sales line with our forecast, which calls for this
increased 6.5 percent to 872,000 units sector to continue to stabilize in 2017.
Derived from a monthly survey that is consistent with builders growing its highest reading in nearly a decade
NAHB has been conducting for 30 years, confidence in the housing market, said Regionally in February, combined single-
while multifamily starts fell 3.7 percent to and multifamily housing production rose
the NAHB/Wells Fargo Housing Market Granger MacDonald, chairman of the 416,000 units.
Index gauges builder perceptions of National Association of Home Builders 35.7 percent in the West. Starts fell by 3.8
This months gain in single-family starts percent in the South, 4.6 in the Midwest
current single-family home sales and sales (NAHB) and a home builder and developer is consistent with rising builder confidence
expectations for the next six months as from Kerrville, Texas. Builders are and 9.8 percent in the Northeast.
in the housing market, said Granger A drop in multifamily permits pulled
good, fair or poor. The survey also encouraged by heightened consumer MacDonald, chairman of the National
asks builders to rate traffic of prospective activity and by the expectation that overall permit issuance down 6.2 percent
Association of Home Builders (NAHB) and in February. Multifamily permits fell 21.6
buyers as high to very high, average or regulatory costs will decline in the year a home builder and developer from
low to very low. Scores for each ahead. percent to 381,000 units, while single-
Kerrville, Texas. We should see single- family permits rose 3.1 percent to 832,000
component are then used to calculate a The uptick in mortgage interest rates is family production continue to grow
seasonally adjusted index where any having a minimal effect on new home units its highest level since September
throughout the year, tempered somewhat 2007.
number over 50 indicates that more sales thus far, said NAHB Chief by supply-side constraints such as access
builders view conditions as good than poor. Economist Robert Dietz. Ongoing job Regionally, overall permits rose 25.4
to lots and labor. percent in the Midwest. Permits fell 10
All three HMI components posted robust creation, rising household formations and The growth in the single-family arena is
gains in March. The component gauging affordable home prices should keep the percent in the West, 10.4 percent in the
very encouraging, but may be partly South and 22.3 percent in the Northeast.
current sales conditions increased seven market on an upward trajectory in 2017.

BUILDING El Pa
aso SINCE 1950
6 Builders Outlook 2017 Issue 3

Expert
Analysis

With Interest Rates So Low,


Should the Deficit be Bigger?
Elliot Eisenberg
Economic & Policy
Blog

Recently, Senator Tom Cotton from natives to do more agreeable work. professions do not appear to be rising number of buyers would progressively
Arkansas and Senator David Perdue And when only high-tech immigration substantially faster than those in decline.
from Georgia introduced legislation is analyzed, at worst, studies find that occupations where labor shortages are While many Americans fear that
aiming to reduce legal immigration to wages of American computer workers less severe. This is because more immigrants -- in particular illegal
slightly more than 500,000/year from and scientists are depressed by up to construction and metal workers simply immigrants -- threaten their
the current rate of one million/year. 10%, but the overall economy is better cannot be found, regardless of the employment opportunities and wages,
The explanation given by both off by boosting innovation and wage offered. Thus, employers have in almost all situations that is not the
senators was that reducing the reducing prices for consumers. been forced to cut back on production case. Frequently, immigrants perform
number of immigrants would shrink the While somewhat counterintuitive, because of a dearth of skilled labor. demanding physical work that
pool of labor, thus raising wages, and these studies demonstrate that rather This situation helps no one. Americans prefer not to do, and even
hopefully encouraging some of the than taking jobs performed by natives, Separately, ponder this: on average, when that is not so, immigrants often
many Americans who have quit the immigrants create new employment the working-age population grew by have skills that are in short supply.
labor force to return. While sounding opportunities, and along the way, can 1.4% per year between the years 1965 Lastly, in an economy that is rapidly
plausible, the data does not support push the natives into higher paying and 2015, and economic growth aging and slowly growing, immigration
this position. Moreover, reduced jobs. The mistaken belief that averaged 3%. Assuming current is the key to population growth. That
immigration will bring the US perilously immigrants reduce employment fertility and immigration rates, the growth will allow us to avoid a host of
close to a situation it has never seen: opportunities for Americans is based working-age population will grow just painful problems, including declining
near-zero population growth. on a false notion that there is a fixed 0.3%/year between now and 2037. property values and rising tax burdens
Per an exhaustive study carried out amount of work to be done, and that With only 500,000 immigrants per that we would be wise to avoid.
by the US National Academy of job gains made by immigrants come at year, the working-age population will
Sciences, immigration does not drive the expense of natives who are grow by just 0.1%/year. And with no Elliot Eisenberg, Ph.D. is President of
GraphsandLaughs, LLC and can be reached at
down wages. Rather, immigration was displaced. immigration, the working-age Elliot@graphsandlaughs.net. His daily 70 word
found to have a very small and short- In addition, immigrants often bring population shrinks by 0.1%/year. economics and policy blog can be seen at
term effect on native-born workers skills that are in great demand. For Under these conditions, we will be www.econ70.com.
lacking a high school degree. Another example, at present, there is a lucky to see annual GDP growth of
study that looked at non-European shortage of occupational and physical 1.5%/year, not to mention declining
immigration into Denmark between therapists, nurses, construction house prices. House prices would be
1991 and 2008 found that immigrants workers, engineers, metal workers, expected to fall in cities in counties
didnt reduce wages, and instead freed etc. However, wages in these with declining populations, as the
2017 Issue 3 Builders Outlook 7

EPAB MEMBER ONLY EVENT


REACH POTENTIAL HOME BUYERS

JOIN US MAY 27
A special one day home buying exttravaganza!

Bassett Place, witi h its central


Make plans now to participate in First LOCATION

location and ample parking, is a


Home Saturday - a home buying fair to

perfect location for First Hoome


be held at Bassett Place on May 27.

The highly promoted event is an Saturday. Recent demographic


ideal opportunity to identify first data indicates that this is an ideal
time home buyers and offer your venue to target first time buyers.
services as they begin their
search for a new home.
The FirstHome Saturday Event
SHOWTIME

A special grand prize will open May 27 at 10:00 AM and


sweepstakes promotion will be conclude at 6:00 PM.
featured in all event advertising to Exhibitors will be allowed to set up
help encourage a great turn-out. their booths starting at 9:00 PM
FridayMay 26 and Saturday May
By participating in First Hoome 27 between 9:00AM - 9:30AM.
Saturday, you will have the
opportunity to meet first time
home buyers at your exhibitor A media plan with extensive radio,
ADVERTISING

booth and receive contact data for television, and print advertising wil
visitors entering our sweepstakes. begin 10 days prior to the event
and run until May 27. A social
First Home Saturday is specifically media campaign will also be
designed for affordable home launched two weeks before the
builders and those who sish to event.
reach this valuable target market.

The event is exclusively Booths are available for $429 for a


EXHIBITOR BOOTHS

designed for Members of the 10 x 10 space.


El Paso Association of Builders

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Event & Promotion by Snappy Publishing, LLC
BUILDERS
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9158202800 ted@snappypublishing.com
2017 If you're renovating or
building a new home, look
spring home decor trends out for the following trends to

season of style include, and those to avoid,


for Spring 2017.
Amelia Barnes, Domain Reporter

dark interior colour as we say


whats

<IN
goodbye to navy and midnight
blues.

"Dark green as a paint colour for


rooms such as a bedroom creates
a wintery Scandi backdrop for tan
leathers, reindeer furs, brass lamps
and natural linen," Macer says.
1. Terracotta 2. Cork
"Used in a feature armchair or
Warm materials You heard it here first cork is cushions and decor items as an
such as terracotta making a comeback. accent, it adds depth and can bring
tiles will replace in the colours from the outdoors."
currently popular Not only is cork a stylish material
cool and white idea that adds warmth and texture
tones. to spaces, it's also ideal for
absorbing noise in our increasingly 4. Upholstered bedheads
"Unlike in the 80s, they aren't used large, open plan homes.
as border tiles. Instead they will Beds will change dramatically in
have a natural matte finish and be "It's used in coffee table bases in 2017, with upholstered bed heads
used as feature walls in bathrooms combination with stone tops, and set to replace the timber bed
or for cladding fireplaces," says as solid cork stool or side table," frames currently dominating the
Lauren Macer of Sisalla Interior Macer says. market.
Design.
"I predict cork could be used to "They've been a staple in luxury
"I think that by avoiding terracotta clad entire walls in the home office hotel bedrooms and celebrity
tiles that are too rustic and keeping and used to pin notes to." homes for a while, but now we're
with a matte finish, this trend could all falling head over heels for the
add character and warmth to bedhead trend," says Emma
interiors again." Blomfield, stylist at online
homewares retailer
3. Dark green TheHome.com.au.

Dark shades of "Whether you opt for the classic


green will become model in neutral colour with
the new must-have buttons, or a plush one in velvet, a
Builders Outlook Issue 3 2017

1. Copper "We have all seen the 'Keep calm and


' posters and they have had their day,"
Our experts almost Macer says.
unanimously agree that
copper and rose gold will
be out by 2017. Photo: Mint Afternoon

4. Fiddle leaf figs (pictured at left)

Once a feature of every magazine


bedhead is an easy way to update and spread, the fiddle leaf fig will soon be
add instant glamour to a bedroom." substituted for a new statement indoor
plant.

Not only are consumers arguably tired of


5. Escapism the fiddle leaf fig's look (and increasingly

Homes with nooks and places to retrieve


will become more popular as humans
react to our increasingly technological
lives.

"With an ever-increasing amount of time "As a material, copper is beautiful


spent in front of a computer or and will always be in style in some
smartphone screen during the day way or another," says the Nathan +
there will be a greater desire to create Jac team.
spaces in our lives devoid of digital frustrated by the high prices and wait
distraction," says the team at Nathan + "However, the oversaturation of cheap periods) it's also proven difficult to keep
Jac. and shiny imitation copper just ends up alive in southern Australian climates
looking like you've tried too hard, and by given it's native to parts of western
"This may not mean listing the 65 inch doing so, you've already missed the Africa.
flat screen on Gumtree, but we will seek boat."
to create havens of calm and tranquility, "The staple indoor plant needs to have
whether it's a bedroom or a nook we can In its place, a more industrial aesthetic is an update. Move over fiddle leaf figs, the
escape to, even if it is to lazily scroll our anticipated. olive tree is coming," Blomfield says.
Instagram feeds in peace."
"Warm metals like copper, brass and 5. Open plan living
Relaxed furniture and materials will rose gold will continue to be on trend for
follow suit, from deep sofas with linen autumn/winter 2016, but as we move Defined living spaces are returning to
slip covers, to oversized love seats, day into summer 2017 you'll see a shift away modern homes as consumers seek more
beds, Icelandic sheepskins, chunky knit from this super polished look," says private home layouts.
wool rugs and floor cushions. Diane Cocksey, Senior Interior
Decorator at Freedom. "As people have now lived with the open
plan living areas incorporating kitchen,
"I expect you'll see a more industrial living, dining and even study areas, they
aesthetic, with black steel and burnished have found problems with acoustics and
metals taking over the home." cooking smells through the space,"
6. Jewel tones Macer says.
"The living, kitchen and dining areas
While pastel shades of pink and blue are could be located around central
currently having their day in the sun, courtyard, breaking up the large open
they will soon be overtaken by jewel 2. Marble space."
tones inspired by metals, space, stars,
clouds and the cosmos. With marble homewares all the rage in
the mass-produced homewares market, 6. Subway tiles
"Metallics, metals, raw-cut quartz, Lucite we can soon expect a sharp decline in
and opal will add a dash of sparkle and interest. Modern bathrooms and kitchen
interest," says the Nathan + Jac team. commonly feature the humble subway
"Marble has had a good run, but it's time tile due to the affordable price point and
"X-ray materials, transparent fabrics, for a change," Cocksey says. its versatile look. However, the
floaty silks and sheers will create a proliferation of this look will see its
lightness and soft romantic element to "Look forward to raw, earthy textures like popularity decline.
this trend, which embodies an optimism timber, clay and wicker."
for where we have come from and "We have seen them at our local cafe
where we are headed." 3. Quote artworks and basically they're everywhere,"
Macer says.

OUT>
After years of popularity, consumers will
predictably move away from quote "A beautiful option for a kitchen
artworks. splashback is a "finger" or "kit-kat" tile.
Long and thin, they look great laid in
"[They're] so clich," says the Zwei vertical or horizontal rows."
interiors team.
10 Builders Outlook 2017 Issue 3

Lending Banks Up Pace of Construction Lending

Two-Year Trend Even with the surge in lending over the

Expected to Continue
past two years, C&D exposure for the bank
industry remains below pre-2008 financial

through 2017
crisis levels, KBRA added. For all banks,
C&D loans represented 3.4% of total loans
as of year-end 2016 compared with a peak
The construction and development level of 8.4% as of year-end 2007.
(C&D) lending category for U.S. banks was Regulatory scrutiny of C&D and
once again the most rapidly growing loan commercial real estate (CRE) exposure
category in 2016, following a year of appears to have intensified over the last
outsized lending growth in 2015. Bank's year with regulators reiterating guidance
C&D lending surged almost 14% in 2016, on total concentrations. Regulators are
topping 13% growth in 2015. carefully reviewing underwriting, stress
This compares with total loan growth of testing and monitoring practices, as well as
just 5% in each of the two years prior to reiterating regulatory guidance on C&D and
that, according to data from Kroll Bond CRE concentrations.
Rating Agency (KBRA). Given the continued C&D lending levels,
C&D lending among banks remained bank regulators are still expressing concern
strong despite a slowdown in many other this year. Just this week, the Federal
lending categories, particularly in the Deposit Insurance Corp. issued a new
second half of the year. Growth slowed report on credit risks trends and
considerably for many other lending supervisory expectations.
categories, notably residential mortgages, The FDIC recognizes that many construction industry executives, have vice president and national sales manager
auto and commercial and industrial (C&I). institutions manage concentrations in CRE entered 2017 with increased optimism for of the Construction Group at Wells Fargo
After posting the largest percentage loans well. History, however, has also continued nonresidential construction Equipment Finance. Contractors have
lending upsurge in this category during demonstrated that CRE, particularly the activity, according to a recent survey of increasingly improved their businesses and
2016 of 58%, overseas banks with US acquisition, development and construction industry contractors and equipment this year looks to provide more
branches appear to be backing off making (ADC) subset, is susceptible to cyclical, distributors by Wells Fargo Equipment opportunities to do that again.
loans in this category this year, decreasing competitive and other, sometimes Finance, a subsidiary of Wells Fargo & Co. A growing number of executives believe
their holdings in this category in 2017 to unanticipated, factors that can quickly The surveys primary benchmark for the industry will expand in the next two
pre-2016 levels. knock supply and demand out of balance, measuring construction industry contractor years, with 84% of executives expecting
US-based banks posted a 12% lending ultimately resulting in significant losses for and equipment distributor sentiment, the moderate to significant expansion. A big
increase, with that growth unevenly split many institutions, the FDIC noted. Optimism Quotient (OQ), reached its third change from last year when only 62%
between large and small banks - 8% The FDIC is particularly concerned for highest reading in 20 years with a very expected expansion.
growth in C&D lending vs. 15% growth small community banks. In fact, the FDIC positive 123 for 2017, a marked increase With construction execs brimming with
respectively. Community Bank Study showed that, over over the 2016 reading of 108. According to optimism, banks are expected to increase
Given considerable competition and a 26-year period, such small community Wells Fargo, an OQ score greater than 100 their C&D lending, at least through the first
pricing pressures in most loan categories, institutions specializing in CRE lending had suggests strong optimism for increased quarter of 2017. From the end of the year
bankers may be tempted to ramp up their a failure rate of 2.25 times that of the local construction activity versus the prior through Feb. 22, US banks increased their
C&D lending, a comparatively higher average community bank.1 calendar year. outstanding C&D loan balances from
margin, but also higher risk loan product An OQ reading at this level leads us to $297.9 billion to $303.9 billion - on pace for
according to KBRA. Construction Industry Executives believe that the industry will continue to annual increase of 12%, according to the
However, banks still appear to be mindful Expect Increased Activity in 2017 build on the momentum generated over the latest Federal Reserve bank asset
of the painful lessons from the recent past. Meanwhile, the banks' clients, last few years, said John Crum, senior numbers.
2017 Issue 3 Builders Outlook 11
El Paso
Development A Solid Foundation
Written Insured
News for Your Business
Builders Outlook 2016 Issue 9 New Home

Massive East Side


www.elpasodevnews.com
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HOME
O F T E X A S

By Armando Landin Towards the


Far East El Paso could be in line for
northeastern side of
MARK SMILEY
the project, the
one of the biggest retail and 800-445-8173
entertainment centers the city has ever
seen, according to plans for a new
developer envisions
sales@homeoftexas.com

an outlet mall with


center at the Americas Interchange.
www.homeoftexas.com/ElPasoOutlook
Plaza Del Rey would have a total of

more than 600,000


2.8 million square feet of usable space if
built as currently planned, including 1.68
million dedicated to retail alone which square feet of retail
includes a proposed outlet mall.
Developers for the site envision an
enormous retail area that swoops
around the outside of the development
surrounding an inner area with
restaurants, entertainment options, and
space alone. More
restaurant and retail
spaces line the
areas along
new h o m e s
Gateway East. for el paso...
hotels.
The site plan shows a total of four
hotels, all located nearest to the
Interstate 10/Loop 375 interchange. The
y f o u n d h e re
plan includes a total of just under 500
hotel rooms at the development. retail space, Plaza Del Rey would
easil
To the southwest of the hotels, an certainly be one of the largest shopping
entertainment and restaurant district center projects ever built in El Paso. In
February 2017
FREE

el paso

would take shape. The site plan includes comparison, Cielo Vista Mall contains
builders

Introducing
large ponds with spouting fountains lined around 1.2 million square feet of
by a total of ten restaurants. More leasable space while the Fountains at
restaurants would line Americas Avenue, Farah has about 600,000 square feet.
El Paso New
the frontage road to Loop 375 south of I- The project's website cites the
10. combined population of El Paso and Home Builders
Entertainment options in the plan Juarez as a reason for starting the
include a movie theater, an unspecified development, stating, "Together with the
"entertainment" building, and a Topgolf- surrounding areas, the cities form El
magazine & website
style driving range. PasoJurez, the second largest bi-
Retailers line the southern boundaries national metropolitan area on the
...
more information

of Plaza Del Rey in a general power


oMoves.com for
Visit www.ElPas

Mexico-United States border with a


center layout, with major anchors combined population of over 2.7 million
Part of Homes of El Paso magazine
surrounded by smaller stores and shops. people."
Two major anchors have their own spot The entire development surrounds the
Mailed monthly to thousands of local homes
along Americas Avenue in the plan. existing Texas A&M AgriLife Research
Towards the northeastern side of the Center, currently surrounded by the
El Paso Airport distribution
project, the developer envisions an vacant land.
outlet mall with more than 600,000 There is no timeline for construction of
Stand alone magazine each quarter
square feet of retail space alone. More the project, and the site plan was most
restaurant and retail spaces line the likely created for illustrative purposes
Call Martha today for more
areas along Gateway East. and is subject to change, particularly if information at (915) 204-7017.
Additionally, the plan dedicates 99,000 the land is sold to another developer.
square feet for grocery, 31,400 square West Retail of El Paso is the developer
feet for fitness, and 8,400 square feet for on the project.
Another Mesa Publishing Publication, serving El Paso Home

bank uses at the 300 acre project. For more information, visit the West
Buyers for 25 years. www.MesaPublishing.com
At a total of 1.68 million square feet of Retail website: www.westretail.net www.ElPasoNewHomeBuilders.com
12 Builders Outlook 2017 Issue 3

Updated every month, here is a list of the 2017 EPAB Membership.


EPAB Membership Remember to please do buinsess with fellow members.

Builder members Pointe Homes Cognent, Inc. Mechanical Technologies


as of April 1, 2017 Carlos Villalobos Martin Paredes Jaime Zubiate
Porter Homes Conde, Inc. Morrison Supply
AT Architectural Designs Albert Porter Conrad Conde Sam Shallenberger
Elsa Taracena R.C. Baeza & Associates CQC Testing and Engineering, LLC MTI Ready Mix, Inc.
Accent Homes Robert C. Baeza Jaime Rojas Tony Mullen
Mark Dyer/Raul Chavez R.E. Welch Contractor Dal-Tile Neeuhome.com LLC
Bain Construction Gordon Welch Joseph Cepeda Walter Pichardo
Scott Bain Rassette Homes, Inc. Demcon Disposal Management, LLC New Era Foam
Bella Homes Donald Rassette Aby Escorza George Tollen
Leti Navarrete Santana Custom Homes Dempsey, Cooper & Lane, LLC Passage Supply
Bella Vista Custom Homes, Inc. Fernando Santana Richard T. Dempsey John Chaney
Edgar Garcia Southwest Land Development Serv. Dorney Security Patriot Mortgage
BIC Homes Doug Schwartz John Dorney Randy Bowling
Antonio Cervantes The Heritage Group DWS Building Supply Pella Windows
Carefree Homes David Bingham Sabrina Voorhies Jason Bates
Richard Aguilar Trejo Construction Co. E.F. Building Materials, Inc. Performance Glass & Aluminum
Casas De Leon, LLC Juan Trejo Efren Fraire Hector Hernandez
Nick Bombach Tropicana Building Corp. Eagle Roofing Products Pioneer Bank
Classic American Homes Bobby Bowling IV Scott Aguilar Kathy Carrillo
Priscilla Hernandez Tropicana Development El Paso Building Materials Post Tension
Crown Heritage Homes Greg Bowling Ken Wade Dennis Moore
Lydia Mlouhi Tropicana Homes El Paso Disposal Powerfoam Insulation:
Cullers & Caldwell Builders Randy Bowling Irma Parsons Metlspan NCI Group, Inc.
John Cullers Tropicana Properties El Paso Mortgage Bankers Association Arnie Pederson
Cullers Homes Demetrio Jimenez Randi Cabrera Randall Smith, CPA
Jason R. Cullers Villagi Homes, LLC El Paso Star Ready-Mix Concrete Inc. Randall Smith
Custom Dream Homes Kristi Eddings David Armendariz Real Estate Weekly Newspaper
Leti & Javier Navarrete Will Harvey Development El Paso Times Riley Stephens
D. R. Horton Homes Will S. Harvey Jose Molina Rebath of El Paso/Las Cruces
Jaime Gonzalez Winton/Flair Homes El Paso Truss Lisa Walling
Dawco Home Builders Herschel Stringfield Luis Mendiola Remcon Self Storage
Walter O. Lujan El Paso Winnelson Joan Swahlen
Deal-2-Deal Homes Associate Members Rene Goldfien Richman Group Affordable Housing Corp.
dba Deal-2-Deal,LLC Ferguson Enterprises Inc. Kevin Hoffman
as of April 1, 2017
Delton Deal Albert Holguin Rocky Mountain Mortgage Company
Del Rio Engineering, Inc. First Light Federal Credit Union Dean Inniss
84 Lumber Lorenzo Revelez Roe, Brad
Sal Masoud Ernie Chavez
Diamond Homes, LLC Firth, Johnston, Bunn & Kerr Bradley Roe
ABC Supply Co., Inc. Jay Kerr Rudolph Chevrolet
Valerie Baquera Larry Eck
Donald Ward Builder, Inc. Foxworth Galbraith Lumber Art Smith
Acme Brick Company Bret Thompson Sarabias Blue Sanitation
Donald Ward Vanessa Rocha; Steve Bush
E. Valencia Land Development LLC Franklin Building Materials Monica Brown
Adams Moulding & Lumber Ricardo Aguilar; Cristina Sheldon Senercon
Eddie Valencia Tom Swahlen
Edward's Homes, Inc. GCC Sun City Materials, LLC Javier Ruiz
Area Iron & Steel Works, Inc. Victor Tito Marquez Sherwin Williams Paint
Eduardo Fernandez Fred L. Edmonston Jr.
EPT Land Communities GECU- Greater El Paso Credit Union Cruz Lopez
Atrium Homes Brenda Aguirre Sierra Title Company/Lawyers Title
David Bogas Ricardo Bocardo Jr.
Everest Homes GEPAR-Greater El Paso Chris Morales; Angelique Roman
Bank of Texas Assoc. of Realtors Simpson Strong-Tie Company, Inc.
Edmundo Dena, Jr. Ray Owen
Fortune Custom Homes Sharron Ramirez Ken Donham
Barnett & Bennett Construction Hardware Specialties Snappy Publishing, LLC
Javier Andrade Ben Trzyna
Gaddy Construction Jeff R. Paxton Ted Escobedo
Baron Supply Harris Real Estate Group Solar Smart Living
Charles Gaddy David Trammell
GMF Custom Homes, LP Lane Harris Larry Perea
Barragan & Associates Haskins Electric Southwest Dcor El Paso Corporation
Frank Torres Benito Barragan
Guel Construction Charles B. Haskins, Jr. Chris Matthews
Barrett Airworks Home of Texas Spectrum Technologies
Rudy Guel Alexandro Castro
Hakes Brothers LLC Mark Smiley Miled Daou
Beasley, Mitchell & Co., LLP Home Performance Testing Stewart Title of El Paso
Chris Hakes Brad Beasley
Hanson Asset Management, LP Fernando Garcia/Ray Gonzales Cindy Bilbe
BMC Select HUB International StrucSure Home Warranty
Russell Hanson Jaeson Iovinella
Homes by Design Luis Rosas Scott Whisenant
Boise Cascade Interceramic Tile & Stone Gallery Su Casa Magazine
Leslie Driggers Hoard Mike Flores
Hunt Communities, LLC David Holguin Bob Skolnick
Bonded Builders Home Warranty Grp. J & H Concrete & Post Tension Sun City Winnelson
Kathy Parry Bill Deal
Icon Custom Home Builder, LLC. Jorge Herrera Dean Moore
Border Solar James L. Ellis, CPA, PC Texas Gas Services
Carlos Garcia Javier Ruiz
Industrial Realty Group Incorporated Jim Ellis Mica Short
Builders Source Appliance Gallery Jobe Materials, LP Texas Title Company
Brent D. Harris Kathy Rose, Sandra Lucero
JER Custom Homes, LLC Charlie Tellez Steve Raney
C. D. Lee/Britton Insurance & Bonding Joe Bernal Insurance TFCU
Jorge E. Rodriguez Anthony Landavazo; Lisa Daniels
Kayton Lee Residential, Inc. & Financial Services, Inc. Yolie Melendez-Estrada
Cabinet Masters Joe M. Bernal The Dorian Group/Ocean Gallery USA
Brianna Barnes Mike Robles
LMJ Construction Co., LLC L & P Building Supply Miguel Angel Mercado
Capital Bank, SSB Denise McConnell TRE & Associates
Mike Lopez David Ortwein
Loyalty Homes Legacy Real Estate Services Linda Troncoso
Cardel Design Group /TTi Prop. Management. Trim Team
Gustavo Loy Lorraine Huit
M A Builders & Design, LLC Patrick Tuttle Juan & Kris Hernandez
Casa Ford & Casa Nissan Lone Star Title Co. of El Paso USA General Contractors
Mustafa Ali Luke Lowenfield
Metro Homes, Inc. Sam Trimble Javier Olmos
CEA Engineering Group Love Engineering, Inc. Vision Consultants, Inc.
Fernando Torres, Judith Arrunada, Jorge L. Azcarate
Millennium Homes Montez Love Kelly Sorenson
Central Texas Metal Majestic Realtors WestStar Home Loans
Dan Ruth Roofing Supply Co.,Inc.
New Horizon Builders Patti Musshorn Sandy Matyi
Ben Garza, III MAK Roofing & Construction WestStar Bank
Georgiana Garcia Chaparral Materials, Inc.
Pacifica Homes, Inc. Felix Vizarreta David Osborn
Kevin Fortin Masco Contract Services WestStar Title
Juan Jose Vasquez City Bank Texas
Palace Homes, Inc. dba Gale Insulation Janette Coon
Bob Kotarski Tom Harmon
Robert Diaz City Lights
Palo Verde Homes McCoy's Building Supplies
Thomas Brown Jorge Martinez
Edgar Montiel
13
Association
2017 Issue 3 Builders Outlook

If you have an event or meeting that you would like to share with
News & Events
EPAB members, please submit your information to:
margaret1@elpasobuilders.com

Connect to the El Paso


Association of Builders:
www.elpasobuilders.com

UPCOMING
EVENTS NEW MEMBERS

Advertise your Builders


Outlook 2016: H
ous
Recovery ing
National
, State &
Local Buil
ding Industry
News
2015: Issu
e 10

business to
www.elp

APRIL 12 Barrett Airworks


asobuild
to pick
ers.com up steam
a
challeng mid
S

Contact: Alexandro
teady em
es

BOARD MEETING
ployment
demand
, afforda and economic gro
mortgage ble hom wth, pen
e prices
gradual
upw
rates will
kee and attract t-up
headwinds ard trend in 201 p the housing ma ive
rela ted 6. Howeve rket on a
and labor, to

the home
r,
along with shortages and ava persistent

11:00 Castro
impeding risin g materi ilab ility of lots
a
to econom more robust rec als prices
are
ists who overy, acc
participate ording
d in a Nat
of Home
Builders ional Association
Constru (NAHB)
ction For Fal
ecastWebi l

GENERAL MEETING 10060 Railroad Dr.


nar.
This recov
NAHB Chie ery is all abou
t jobs, said
people can f Economist David
they have
incomes, get good jobs Crowe.
If ,
the hous that pay
dece about purchthe more comfortab
to move ing mark
forwa et will conti nt And while
asing a
new le they feel
The good rd. nue mortgage home.

12:00
news, Crow expected interest

El Paso, TX 79924
total U.S. to
averaging rise over the near- rates are

building
employme e adde
well abov nt of 142 d, is that 4.5 perce
e
that occu the previous peak million is now
percent
in nt in 2016 term, Single-Fa
rred in 2008 of 138 millio expected 2017, Crowe said and 5.5 Turning
mily Cont
inues to
The one to have
. n recovery. an impa this is not to the forec Post Gain
been conc caveat is that job As the ct projecting ast, NAH s
entra and wage economy on the housing 719,000
single-fam B is
sector, which ted heavily growth has grow th shou gets better, job
2015, up
11 perce ily starts
tends to in the servi even thoug produced nt in
than good
s producing pay lower wage
ce
will still h mortgage ld keep pace. So last year. from the 647,000
be rates production Single-fam units
Meanwhile s
, home
jobs. very afford low by historical will rise, they additional is projected to incre ily

MARRIOTT HOTEL
doubled standards
since 2011 equity has nearl able. 27 perce

915-591-8457
$12.5 trillio and now y and units. nt in 2016 ase an
n. stands at Supply to 914,0
The singl Head On the multi 00
peoples e biggest Crowe notedwinds 354,000 family side,
portfolio asse t in several units last year, produ ction
is the home most hindering factors 331,000 slightly abov ran at
said Crow a level that
e. Thats they own, NAHB survemore robust recov that are level of e the
primary
purchasers important beca y of its ery. Citing production is considered a
builders normal
sellers of of new home use the reported members, 13 perce an same expected
to rise 9
. Multifamil
y starts
existing labor was the nt this year percent are
homes.
The more the
s are a significan cost and availabilit of that concerns regar and post to 387,0
that conc ding lots 00

Fall Home
ratio shot decline
equity ern t problem y of in 2011 to 378,0 a modest 3 perce units
About one-fjumped to 61 percein 2011 and Concerns up to 58 perce and Residentia 00 units nt

and
nt in 2014 in 2016
ifth of build nt in 2014 at 58 perce over building . forecasted l remodeling activ .

Garden
ers share . nt amon mate
g builders rials stood

industry
d the from 33 over last to increase 6.8 ity is

Show
percent in 2014, up year perce
No doub in 2011. percent and rise nt in 2015

attracts
an addit
ideas that t that the home in 2016. ional 6.1
brought

thousan
really made together
that much the show

ds
of actua more interesting case home
lly . The proce
setting up piecing the walls
the floor together, ss
Continue
The annu

APRIL 19 El Paso Star Ready-Mix


a wall or and the
d Page
brought al Fall Hom in the ceilin all that goes
6
thousands e and Gard the faint g is not
Judson of people en show hearted. something on
Habitat
Willia
show kicke ms Conventio into the for Hum We were asked for
n could from anity to by
people wered off October 9. Center as the could, Torrethis build, and Im what we
donate
The thron
presented greeted by a proud that
very nicel gs of the show s told the
producer show complimen y case was Outlook. we
Show Tech ts of the waiting for quickly taken The rest of
Antonio. nology out parts that some of the frame to a lot
of San could be
The show waste. used so and other
showcase featured a spec

Concrete, Inc.
Over to
tacular showcase all a very beau not go to

GOLF TORNAMENT
Metro Homhome by new build for years home that will conti green
tiful
was made es. The design er member to come
. nue to give
of The Fall
site in orderto be partially cons the display show of Home and
establishe to meet the time tructed off its Garden
d lines center was kind this year since was the only some time,
that even for the show. Bowling taken over the civic Sam Shall said Associate
with that I have to for the enberger. s Chairman
hustled additional tell Cham Mens
product
to make
sure we time we you center turne pionship (ABC). and exhib
itors and We had new displ bring to
to had really complete d into a large bowl The civic have. that was the
CTU Metro show, said Fern a great with state ing alley a nice thing ays whats hot consumer beca
ando Torre run into The prese in the world use I know
situations of the art lanes to

Contact: David
staged the Homes. Beautiful s of center or like this . We Wizard, nting attrac said. of walls,
tion was
the show house became and elega
ntly that can
halls we when the
civic demonstra
Brian Sant
os the Wall Our since Santos
the favor use are
efforts.
winning
Best of ite of fit the tions durin who did several and all the re thanks to CTU
We are Show for of Show our shows, said only ones I really g the three
excited Tech love Acosta Realsuppliers and the Metro Homes
off our mode to be able the flexible but nology. We
Tommy
Mantini so many coming
to El Paso day event.
estate agen ls to the publi to show then again have to folks for and seein of gratitude Estate. We also staff of David
ts c and to we woul I be the Outlo the first g to the exhib owe
know time,
market and beca use were the real
showed
d have pent that this Builders
ok. The El
Paso Asso Brian told
civic center itors who a debt
product we think new to the during this up demand and year has things for with good produ filled the
to offer we have
a Wha even it other asso helped me get ciation of the visito cts and
continued the cons very t impre t. ciatio other Hom r to see. lots
umer, Torre good aisles and ssed many recommend ns and gigs with e and Our Sprin of
. was ation, he Im grateful for 11-13, 2016Garden Show is

Armendariz
s g
comfortab the amount of roomthe carpeted who has

VISTA HILLS CC
continued the on
ly move to authored . Santos, reach poten . Dont miss this for March
was one around. and is an several
of the nices I thought inventor how to
books Technolog tial customers. opportunity to
this companies and innov y Visit Show
t shows ator for www.show today at
weve had relationsh including Home several
in ip Depot. informationtechnology.com
Depot and with Rubber Maid My on the to get
Lowes is and Hom Spring show
really a
great thing e .
to

APRIL 27 WASHER
See More

117 S. Moon Rd.


Photos
Page 8

TOURNAMENT El Paso, TX 79927 The Builders Outlook is the official publication of the
EPAB OFFICE 915-860-8555 El Paso Association of Builders. Our award winning
monthly newspaper is the only publication to target
MAY 29 Rudolph Chevrolet El Paso home builders and related businesses.
FIRSTHOME Contact: Art Smith
SATURDAY 5625 S. Desert Blvd. Widely distributed throughout the city and available

7
BASSETTPLACE to readers online, the Builders Outlook is an
El Paso, TX 79932

7
important advertising medium for any business that
915-544-4321
want to reach this valuable market.

Call 778-5387 today for


EL PASO
more information
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14 Builders Outlook 2017 Issue 3

ExpertAdvice When a Committee of One Runs a 401(k)

Retirement Advisors. Hes probably the 401(k), agrees that many clients are oblivious to opportunities arise, advisers can make a point to
salesperson, the service person, the accounting ERISAs demands. Ubiquity sells 401(k) plans explain the facts. Phillips, for instance, discusses
person, the maintenance person. He may work and individual retirement plans (IRAs), mainly the topic at plan sponsor conferences and
80, 90 hours a week, and the 401(k) is an targeting startup companies. The average client events. He, Sampson and Howell also
afterthought. has about five through 20 mainly white-collar, recommend various free written resources such
Further, he is often an owner who says, I often IT, professionals. This group is often Web as the Department of Labor (DOL) website or T.
Editors Note: own this place, Im just going to make the savvy, but not investment savvyand they are Rowe Prices guides on fiduciary compliance in
Ruth Rivera from Bukaty Financial sent us this decisions. This arrangement may seem often uninterested in changing that. running an ERISAgoverned plan. Classes, too,
informative article that was published a couple of problematic, but it can actually be better for the We have to put some specific rails in place to such as those through the Plan Sponsor
years ago. The El Paso Association of Builders company, as appointing other inexperienced help those folks, he says. Fiduciary University, can be found online and in local
Retirement Program can help you realize a employees to the plan committee exposes them responsibilities are part and parcel of offering a colleges. Sampson, an adjunct lecturer has
specific customized program for you or your to liability while accomplishing little, Sampson 401(k) plan. But there are simple measures a taught four such classes, but only one small
business. says. Many just rubberstamp the owners votes small business owner can take to limit liability. business owner has yet to attend.
Contact Ms. Rivera at 512-796-1205. to avoid his displeasure. One man, one vote He suggests starting with the basics, first The free resources may suffice for daytoday
also quickens the management process, he instructing business owners that they are compliance, but when facing a complicated
By Karen Wittwer says. fiduciaries and broadly what that means, also question and the small committee is unsure of
Tax qualified retirement plans run by small Barring a formal voting process, the smallplan that they should follow their plan document what to do, it should seek professional guidance.
business owners must comply with ERISA committee takes the same steps any committee purchase a fidelity bond against losses and Even just a limited engagement, Phillips says,
whether the sponsor is familiar with the landmark would, he says. They will follow the terms of the ensure all fees are reasonable. could prevent a misunderstanding from
legislation or not. IPS and review the funds periodically. They will Financial decisionmaking can and probably becoming a lawsuit.
For the small business owner, offering a still have to determine standards for when theyll should be outsourced, though. Ubiquit advises He also recommends shortterm contracting
retirement plan can feel like the right thing to do. make a change: What are the criteria? Whats hiring a 3(38) fiduciary manager to take on that with a good adviser to build the plan
But helping employees provide for their financial the time frame? They should still follow that function, freeing the owner to select and monitor governance, maybe a charter and an IPS, a
future is merely one duty a small business owner process, and still document it like any other the adviser, not the investments. The present compliance calendar, and provide them some
takes on. company or committee would. Just because its time is especially training on how to fulfill their fiduciary duties and
According to professionals in the retirement an investment committee of one doesnt mean it favorable to engage a 3(38)s services, Howell make suggestions for how to get better ultimate
field, most new sponsors of small or microplans doesnt have to be prudent and do its due says. outcomes for participants. This trial relationship
are unaware of the critical duties of prudence, diligence, he says. Technology is enabling managers to deliver might become long term when the owner
loyalty and diversification of investments that a More often than not, though, Sampson says, their services in a really efficient way so that discovers the benefits. Besides avoiding
fiduciary to a plan assumes under the Employee clients will say, Hey, thats what I hired you for. pricingat least from our perspectiveis really trouble, if a plan is run more efficiently and is a
Retirement Income Security Act (ERISA). Many So communication around the basic tenants of being compressed, and there are some fantastic better plan throughout, if the investments are
are also unclear that the individual making plan the fiduciary duty remains importantas there deals out there, relative to even just a few years more accessible, [this can increase assets in the
level decisions for a micro plan in essence are key limits to the amount of ERISA liability one ago, he explains. Citing figures of 10 to 25 basis plan,] which also benefits the employer, he
becomes that plan's management committee can push off to a service provider, such as a points (bps), he says, this insurance is really says.
under ERISAmeaning he must perform many fiduciary adviser. inexpensive and probably well worth the price in Such relationships often do build and develop.
of the same responsibilities as the more robust In general, many small businesses most instances. I find these folks great to work with, because
and experienced committee of a mega plan. underestimate their fiduciary responsibility, he Jim Phillips, president of Retirement they put a lot of trust in usbecause they dont
How does an adviser best serve such clients, says. Resources, points to a void in formal have time to do it themselves or the experience,
for whom the retirement plan is just another They have the mindset: Whos going to communicationsfrom either the Department of Sampson says. It goes back to thats what I
benefit to offer and not understood as the source bother me, with a plan thats got only got a Labor (DOL), Internal Revenue Service (IRS) or hired you forjust do it. Not to mention that
of personal liability it potentially could be? couple hundred thousand or a million dollars vendors selling plan productstelling new committee membership is stable. Were not
A good place to start is coming to a better theyre going after the big companies. 401(k) sponsors what ERISAs demands are. dealing with a new committee member who
understanding of the client. The typical smallplan There hasnt been much to disprove that, but Unless a vendor tells them, they may never hear wants to bring in his guy every three years or
committee is indeed made up only of the it only takes one. Craig Howell, business it until they are blindsided by a plan audit, he year and a half, he says.
company owner, says Jim Sampson, founder development specialist institutional with Ubiquity says, adding that many smallplan sponsors are
and managing principal of Cornerstone Retirement + Savings, formerly The Online confused about their fiduciary role. When

  

 
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Builders Outlook 2017 Issue 2 El Paso Disposal
6046 Surety Dr. El Paso, TX 79905
915-778-5387 Fax: 915-772-3038
ExECuTiVE OFFiCERS
PRESiDENT
Don Rassette
ViCE PRESiDENT
TABSTATE DiRECTORS
Randy Bowling - Life Director
Sam Shallenberger
Edmundo Dena
772-7495
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SECRETARY/TREASuRER NATiONAL DiRECTORS
SergioCuartas Bobby Bowling, IV
ASSOCiATES ViCEPRESiDENT Demetrio Jimenez
SamShallenberger Leslie Driggers Hoard -Alternate
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Ray Adauto
PAST PRESiDENT Honorary Life Members
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Membership Anna Gill
Ted Escobedo Brad Roe
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Sal Masoud DRE Development organization.

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ome
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