Wednesday, January 12, 2005

Building boom unlikely to bust


Demand continues to outstrip supply in region
Susan Voyles
RENO GAZETTE-JOURNAL



HOME CONSTRUCTION: Manuel Alvarez applies stucco Wednesday to the exterior of a home being built in north Reno on Beacon Drive. - David B. Parker/RENO GAZETTE-JOURNAL David B. Parker/David B. Parker
HOME CONSTRUCTION: Manuel Alvarez applies stucco Wednesday to the exterior of a home being built in north Reno on Beacon Drive.



Construction hit a record $1.6 billion in the Truckee Meadows in 2004, including 5,631 new homes and apartment units, according to building permits issued by the county and cities.

Some officials expect the building boom will continue this year for home and commercial construction.

“Anybody who drives anywhere in the city would know that would be the case,” said Evelyn Owens, building permit supervisor for Reno.

Sparks assistant city manager Randy Mellinger and Reno planning director John Hester said the boom isn’t likely to stall.

“Both commercial and residential developers say there is more demand than supply,” Hester said.

Mellinger, a member of the county economic development authority, said good times are being driven by retired Californians buying homes, low interest rates and businesses fleeing California because of the state’s lingering budget problems.

But Michael Lynch, Builders Association of Northern Nevada executive director, said he fears the pace of construction the past few years could ebb because of a shortage of land and construction workers.

“We are in the middle of a land crunch,” he said.

State officials point to the construction industry creating a surge in the economy. In November, construction jobs in Washoe County totaled 20,100 compared with 24,200 in the gaming industry. On average, state statistics show construction workers make twice as much as casino workers.

Despite 2 to 3 feet of snow, workers were busy framing and applying stucco Wednesday at R&K Home’s new Hillcrest subdivision in north Reno.

The only delay has been getting delivery of trusses to build roofs, said Dave Messmann, construction superintendent.

“We lost two weeks but it didn’t stop us,” he said.

The Sacramento firm is building 86 homes at Hillcrest, 700 homes in Fernley and custom homes in Hidden Valley. Last fall, it won approval to build 157 homes on one acre-plus lots in Golden Valley and is planning to build in the Verdi area.

Since R&K began framing homes in July, 60 homes are now in progress at Hillcrest and people have moved into 11 homes.

“People are just standing in line to buy homes,” Messmann said, adding a rise in interest rates didn’t slow demand.

In the pipeline

According to regional planners, Reno has 16,100 housing units approved but not built, Sparks has 11,600 and Washoe County has 4,900 outside the cities.

For these 32,600 housing units, the next step would be applying for building permits.

In Reno, Owens said construction was at an “all-time high” in 2004 at $1 billion in building permits. (Land costs are extra.)

The city issued permits for 2,825 single-family homes in 2004 and 1,794 in 2003. Total building permits issued was 12,457, up 37 percent from two years ago.

Hot spots include Summerset and the southeast Truckee Meadows being annexed by the city. Two major hospital expansion projects are under way in downtown Reno.

Hester said several developers are now talking about building housing and retail projects along the Truckee River, east and west of central downtown.

An upscale shopping center is being built at Virginia Street and the Mount Rose Highway. But a 1-million square-foot expansion at Meadowood Mall must wait until a new interchange is built, Hester said.

Sparks growth

In Sparks, home construction dropped 320 homes to 979 in 2004 from 2003.

“They used to build houses as fast as they could,” Mellinger said.

But customers put deposits on five to six houses at a time. And after they were built, the speculators would sell them quickly, making $20,000 to $30,000 per house.

At R&K homes, only 10 homes are released at a time to stop speculation, said Gerald Hillin, assistant superintendent at the Hillcrest project.

Mellinger expected Kiley Ranch North, the city’s first “smart growth” project to get final approval Wednesday night before the Regional Planning Commission. It would put 4,436 compact homes and apartments within walking distance of jobs at a 142-acre business park and 123 acres of shopping and businesses.

A 110-acre business park is planned next door at Pioneer Meadows.

“We still see Pioneer and Kiley North get started this year,” Mellinger said, adding another business park is planned at Stonebrook.

He said a Home Depot, Costco, Lowe’s and many other stores will be built along Pyramid Highway. A Super Wal-Mart will be built next to the new Kohl’s department store, he said.

Shopping centers called the Sparks Town Center, the Sparks Crossing and the Sparks Galleria on Pyramid Highway will have 1 million square feet of retail space.

On Monday night, the Sparks City Council sent the Sparks Crossing project back to the drawing board Monday night, saying it needed further design work.

But grading work continues for the Sparks Galleria to be built on 70 acres.

Mellinger also expects construction to begin this year for Copper Canyon in the hills along Vista Boulevard, including 1,033 homes, 867 apartments and 3.6 million square feet of office space.

Home sales are now under way at the Foothills at Wingfield Springs. Since approval early last year, Vista Boulevard has been extended, model homes built and the first homes are going up. It would include nearly 2,000 new homes.

In the Marina district, Mellinger said he expects to hear by Feb. 1 whether a minor league baseball stadium will be built. A potential investor, he said, is now sizing up the market for baseball fans. If built, he said the opening would now be in 2007, rather than 2006 as hoped.

Government feuds

Lynch said feuds among Washoe County, Reno and Sparks over growth, annexation and water issues are not good for business.

“We have the most litigious and restrictive county I’ve ever seen,” he said.

He claimed the county forces builders to go beyond established standards and threaten them with red tape if they refuse.

Mike Harper, county planning manager, challenged Lynch to cite specific cases.

“I’m baffled by this,” he said.

Nevada Supreme Court Justice James Hardesty is arbitrating disputes over the regional plan to avoid long court battles. Reno Councilman Pierre Hascheff said he and Sparks officials are negotiating their annexation disputes with Hardesty.

“There’s a lot at stake,” he said.

Regional planning director Dave Ziegler said his staff is doing studies on land availability for housing and commercial interests.

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