Building northern Nevada
The demand for housing is increasing in northern Nevada as more companies settle in the region. With this demand comes many opportunities and challenges for the building and development industry.
Panelists Neoma Jardon, Reno City Council member for Ward 5, Chip Bowbly, managing partner of Reno Land Development Company, and Jesse Haw of Hawco Properties, discussed the current landscape of the building and development industry at the Builders Association of Northern Nevada 2016 Housing Forum held this August.
Jardon explained that when she was first elected four years ago, there was hardly anyone in the building and permitting office. Now they have lines of people.
“It is coming at us hard and fast,” Jardon said.
In 2009, Sparks, Reno and Washoe County combined only had 511 permits issued for single-family homes and zero multifamily permits issued. In contrast, in 2015, there were 2,010 permits issued for single-family homes and 781 units of multifamily homes, said Don Tatro, the director of public affairs for BANN and moderator of the forum.
However, with the growth that the region is experiencing comes many challenges. Employment is out-pacing housing, and building costs are increasing along with rents and home prices.
“While we must celebrate our recent successes, we must address our problems before they become a crisis,” Tatro said.
Tatro explained that 24.3 percent of the cost of a new home is due to regulations. That is an average of $80,000 for a $330,000 house. This has increased 30 percent in the last five years.
The price of lumber also is increasing significantly along with the cost of labor for contractors.
Haw explained that many of northern Nevada’s construction professionals moved to other states or switched industries to find work during the Great Recession. Now, this lack of contractors is driving up the price of labor. At the same time, more of the Baby Boomers are retiring and it is proving hard to replace mid-level and higher-level executives in the construction industry. All of these factors are continuing to drive up the cost of building.
“If you are looking at all the indicators, sadly it is going to go up,” Haw said.
Financing is also hindering construction for new homes.
“Financing is really difficult,” Haw said. “Getting money right now is expensive if you can get it at all.”
Yet, the need for more housing in the region continues to increase.
According to Jardon, the 2 percent vacancy rate coupled with rising rents and home prices is already affecting lower-income populations such seniors and the homeless.
“The affordability issue is driven largely by the availability issue,” Jardon said. “There is just not enough product out there that in a competitive market can help keep those prices down.”
She explained that the City of Reno is looking at incentives and fee reductions for builders and developers. One of the ways the City is doing this is through the deferral of sewer hookup fees for developers.
“We want to make it appealing for (builders and developers) to want to do projects,” Jardon said.
The City is also working to streamline some of the building processes and is creating an online program for the project review process for all jurisdictions.
According to Jardon, while northern Nevada has been given a great gift of economic growth, they need to make sure they handle it in a thoughtful manner. They need to have the appropriate infrastructure to support the development and the funding to provide the services such as fire, sewer, water, etc., for the new developments. They are working to look at these challenges through the update of the master plan, which has not been updated in 20 years. The City is currently looking for public input. It will be completed in the beginning of 2017 and Jardon encouraged community members to visit http://www.reimaginereno.us/ to learn more about the master plan.
Meanwhile, more companies are continuing to relocate to northern Nevada. According to Bowbly, who sits on the Economic Development Authority of Western Nevada (EDAWN) board, EDAWN expects to announce in the near future that about 12 new companies are settling in northern Nevada. That includes the mid-August announcement of healthy living e-commerce Thrive Market’s new distribution center, which will bring 400 jobs to the region.
“There is going to be a need for all the people who are coming here to live and have some affordable housing,” Bowbly said.
He currently has several projects that include affordable housing aspects such as The Summit Club in South Reno. It is a 584-unit multifamily apartment complex with 155 of the units being dedicated to workforce housing.
“I feel like we have an obligation to have a balanced growth,” Bowbly said.
Bowbly is also the developer for Park Lane. He is working to redevelop the blighted lot into a mixed-use development that will include 1,200 residential units, 100,000 square feet of retail and 100,000 of office space. The residential units will be built first and will be comprised of three different multifamily complexes, two of them being high-density urban-wrap multifamily units. He anticipates that these units will attract many Millennials who want to be in the Downtown and Midtown areas of Reno.
“Reno is so far behind the curve on both well designed and ‘Millennial’ product,” he said.
Bowlby plans to start putting in the major backbone infrastructure in the end of the first quarter of 2017 and to start building in the second quarter of 2017.
All three panelists spoke about the over capacity of schools as one of the main concerns for the growing economy.
“It is probably the biggest thing that can shut us down if we don’t fix it,” Bowbly said.
Nevertheless, Jardon, Bowbly and Haw were all optimistic about the future for northern Nevada.
“Three years ago you said the word Reno and nothing positive was attached to it,” Jardon.
“I am really excited about where we are going,” Haw said.
Christal Park Keegan’s professional experience includes working as an attorney for the National Judicial College in Reno and for the Chapman Law Firm in Northern Nevada.