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Robust home building will test Durango-area labor supply

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Saturday, Feb. 10, 2018 5:58 PM
Nathan Mohan, owner of Mohan Construction, works on a home in the Twin Buttes subdivision on Wednesday as his dog, Jefe, enjoys the mild winter at the job site. The weather has allowed home construction to continue through the winter months in the Durango area.
Homes in Spring Creek Village have proved popular with teachers and everyday workers in Durango, said Tom Stilley, one of four partners on the project.
One home has been completed and is under contract in Twin Buttes, several more are under construction and a slew of new construction is slated to start in spring. Bob Smith, a contractor on the board of directors for the Home Builders Association of Southwest Colorado, expects a tight labor market this spring for skilled construction workers.

The warm winter has kept construction crews busy building homes through what is normally a slow time of the year, and indications are the pace of homebuilding is only set to increase in spring.

“Even right now, it’s hard to find someone, and now is not normally a busy period,” said Bob Smith of Buena Vista Builders and vice president of the Home Builders Association of Southwest Colorado. “A lot of contractors usually go to Arizona for the winter, but this year, the weather has just cooperated,” he said.

Steve Scott, a banker with First National Bank of Durango and president of the regional Home Builders Association, said interest in construction loans and mortgages were strong through winter, again an oddity that he also attributes to the mild winter.

Loans are tied to the prime rate, which is expected to increase through 2018, as most observers expect the Federal Reserve to raise interest rates by a quarter of a point three or four times this year, Scott said.

“We are in an increasing interest rate environment,” he said. But he said rates are still low enough at 4.75 percent to 5 percent for construction loans and 4 percent to 4.5 percent for mortgages to keep interest up.

Smith said La Plata County’s contractors are concerned about the number of skilled workers available for projects as both commercial and residential building rates have slowly recovered from the Great Recession of 2008.

Spring, when building gets going in earnest, will provide an indication if La Plata County’s skilled workforce is adequate to meet demand.

“Some people went to work in the tire store,” Smith said, speaking of the consequences of 2008 recession, “and they’re snakebit. They think there’s going to be another recession, and they figure they have a job and they’re not going to leave.”

Homebuilders, worried about the skilled labor force, Smith said, have begun working with Durango School District 9-R on its Trades N’ Training program that offers students a certificate in building trades such as roofing, plumbing, electrical work and dry-walling.

“We’ve noticed there haven’t been a lot of young people entering the industry,” he said. “It’s another way to keep youth in the area who want to stay here. It’s an alternative to a four-year college.”

Graduating high school students entering the construction field can expect to earn $15 an hour starting wage, and that might rise this spring given the expected pinch for skilled hands, Smith said.

In addition, certification in a specialty, such as plumbing or roofing, would increase the hourly wage.

Beyond the workforce in La Plata County, Smith said subcontractors from the Farmington area also could be attracted to Durango if spring demand for labor proves strong enough.

The financial incentive to find the needed workers is strong, he said, and contractors will seek skilled workers to complete their projects by fall, including scouring the Farmington area for the workers they need.

“No one wants to wait for their house or their building,” he said.

The demand and pressure to find skilled labor, in Smith’s estimation, will increase steadily through the building season.

Bob Delves, Twin Buttes chief operating officer, said one home has been completed and is under contract in the subdivision, four single-family homes are under construction as are six townhomes. In addition, 30 houses have completed the design-review process with plans to begin construction in spring.

Twin Buttes has 50 lots in its first phase, and about half the lots have sold, Delves said. The starting price of Twin Buttes lots is about $129,000. The 50 lots in Phase I, he said, represent about 80 residential units when factoring in townhomes and duplexes. “We’re tracking about where we thought we would be,” Delves said of sales.

In Spring Creek Village, a 38-acre subdivision a couple miles north of town off Florida Road (County Road 240), two lots sold in January; one went to construction immediately and one will begin in a couple of months, said Tom Stilley, a partner in the development, where lots have ranged in price from $104,900 to $115,000. Six lots remain in the 24-lot subdivision.

Lot sizes range from 7,000 square feet to 9,000 square feet and houses are ranging in size from 1,390 square feet to 2,000 square feet. Lot prices start at $104,900, Stilley said.

“The people who are moving in are school teachers, people who work in town. It’s affordable to them,” Stilley said. “It feels like you’re out of town, but it’s close to town.”

The subdivision’s infrastructure is built to city standards with sidewalks and city water. It is a joint-jurisdiction project with the city of Durango and La Plata County.

In Twin Buttes, Delves anticipates developing additional paved streets, curb and gutter and infrastructure for a new phase to be ready to go on the market later in the year – adding another 41 available lots in the development, which is located west of Durango and includes the U.S. Highway 160-Tipple Avenue intersection, an entryway paid for by Twin Buttes.

The new phase coming online later this year should include some apartments to add to Durango’s rental stock as well as some additional commercial space, Delves said.

“We’ll have a lot more people living here a year from now, and it will support some small-scale commercial such as a cafe and coffee shop” he said.

The development also offers fiber optics to each home, which Delves said is increasingly popular.

“Durango is a community on the rise, and we’re seeing interest from a tech-skilled, mobile workforce looking to leave places like California and big cities for a better lifestyle.”

The development is on 220 acres within city limits at the west end of town. On final build-out, which will take years, it has been approved for 655 residential units and up to 130 additional auxiliary dwelling units in addition of up to 115,000 square feet of commercial space and up to 25,000 square feet of community space.

The development includes 10 miles of new trails. Beyond the trials, which are withing city limits, are the Perins Peak State Wildlife Area and the San Juan National Forest.

patrickarmijo@durangoherald.com

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