Edited by Ted
Western States Face Water-Short
Nailed in One Antitrust Case, Weyerhaeuser
Faces Follow-Up Suits
How Cold Is Too Cold? Poured-Wall Pros Pool
Referral Fees -- or Kickbacks? Custom
Builders Question Payments to Realtors
Business Tune-Up: Scheduling Part-Time
A Comeback for California
Western States Face
As cities grow and water supplies tighten, builders must
practice conservation and play politics
In February of this year, Denver was grappling with an ongoing
municipal water crisis. A lingering drought had left area
reservoirs 60% empty, and local governments were debating a
continued ban on lawn watering and new caps on water
But in March, a record blizzard dumped 6 to 8 feet of snow on
the Rockies. As the new snowpack melted, lake levels rose. By
May, some local reservoirs had reached 85% of capacity and were
headed higher. "TV news was showing the guy who has to move the
boat docks back as the water rises," says Colorado HBA official
Rob Nanfelt. "He couldn't move them fast enough."
Long-term problem. But one
spring storm can't change Denver's underlying reality: In
Colorado and throughout the West, urban growth is coming up
against a limited supply of water, most of which is already
claimed by the region's farmers. Irrigation accounts for 80% to
85% of total water use in western states.
Only about 5% goes to household uses, and new homes built to
modern codes use far less water than existing homes with
old-style showers, sinks, and toilets. But new houses and lawns
can make a difference at the margins, and water issues have
become a convenient touchstone for opponents of development.
And unlike agriculture, home construction has no entrenched
This "xeriscaped" front yard in Denver
uses a mixture of drought-tolerant plants with a variety of
flower and foliage colors. It will save around 10 gallons per
square foot over the course of a growing season, compared to a
Kentucky bluegrass lawn.
Trouble ahead, trouble
behind. The West's population is booming. Nevada led the
nation in percentage growth with a 66% population surge during
the 1990s, and Southern California added 2 million residents
for the largest absolute increase in the country. California's
total population, now 34 million, may number 50 million by
2025, according to the Census Bureau, while the West's total
population will likely grow from 61 million to 84
Providing water for such numbers will bring on both technical
and political problems, with no easy solutions in sight. An
Interior Department report released in May, "Water 2025,"
labeled Denver, Las Vegas, Salt Lake City, Houston,
Albuquerque, Flagstaff, and Reno as hot spots where conflict
over water is probable in coming decades. The report said Los
Angeles, Sacramento, San Diego, Phoenix, and San Antonio could
also see water-related disputes.
In fact, the competition is already underway. Much of the
region relies heavily on water from the Colorado River, which
is tapped to serve farms and cities in Wyoming, Colorado, Utah,
Nevada, New Mexico, Arizona, and California. But Nevada and
Arizona are fast approaching the limits on their takes under
old interstate agreements and court rulings. California, which
has overdrawn its allotment for years, went to court this
spring to block a 15% rollback ordered by Interior Secretary
Builders begin to adapt.
Hard pressed to wrestle new water from farmers with prior
claims, city utilities are pressuring homeowners and builders
to cut household water use.
Aurora, Colo., a fast-growing Denver suburb, considered
measures to reduce water tap allocations for new buildings in
2002. But city planners backed off the plan when they learned
that development used only 1.5% of the city's water and
curtailing new construction would cost the city thousands of
construction jobs and millions of tax dollars -- including the
money needed to fund new water sources and delivery systems in
preparation for future droughts.
Aurora's tap fees were boosted from $6,846 to $10,711
recently, reports the Denver Post. Nanfelt says builders have
concerns about how cities account for the funds. "Just in the
Metro area, our builders have paid in more than a billion
dollars in tap fees in the last ten years," he reports. "Our
question for the municipalities is, Where has that money
Cooperating with utilities.
But builders are heeding utility calls to conserve water.
Denver's HBA is working with Denver Water, the city's utility,
on a proposed rebate program for water-conserving new homes.
And the association has completed a voluntary "water-wise" plan
for builders that includes ultra-low-flow toilets, advanced
water-conserving faucets and showerheads, limits on turf area,
and efficient moisture-sensing or rain-sensing irrigation
systems. Compared to existing homes, the measures could cut
household water use by some 60%.
Builders are also joining water utility efforts in San
Antonio, which faces new state limits on withdrawals from a
regional aquifer. "A lot of the production builders install sod
that will not survive our summers without continuous watering,"
says San Antonio Water System official Dana Nichols. "Some
houses are using 50,000 gallons a month to water the grass in
summer." But builders have joined the utility to market a
program rebating up to $1,000 to buyers of homes that use
drought-tolerant grasses and shrubs and that restrict turf to
50% of the lot.
A few cities have yet to feel the heat. Salt Lake City draws
its water from local creeks and aquifers. "We haven't had to
use Utah's Colorado River rights," says Utah HBA official
Tasman Beisinger. "Are we concerned about conservation?
Absolutely. But no one is making rules for new houses
Meanwhile, with agriculture the biggest drain on water
supplies, builders are little more than spectators to the
region's big battles: the contest between the farms and the
cities and between states. Interior Secretary Gale Norton
scheduled a water summit in Denver for early June, but in May,
Rob Nanfelt said the association had no plans to participate.
"As far as I know," said Nanfelt, "we haven't been
Nailed in One Antitrust
Case, Weyerhaeuser Faces Follow-Up Suits
A small Washington lumber mill has bested forest-products
giant Weyerhaeuser in federal court, winning treble damages of
$78 million for alleged unfair competition. Ross-Simmons
Company, a family-owned mill in Longview, Wash., said that
Weyerhaeuser locked up the region's supply of red alder (a
hardwood used for furniture and cabinets), then used its market
dominance to drive competitors out of business.
Ross-Simmons attorney Michael Haglund promptly filed suit on
behalf of five more plaintiffs, seeking total damages of $206
million (which antitrust law would triple to $618 million).
Haglund also wants Weyerhaeuser stripped of some alder timber
After two decades of gains, Weyerhaeuser currently controls
the bulk of the Northwest's alder trees. In the new case, four
small mills charge Weyerhaeuser with cutting them off from the
resource. A fifth plaintiff, British Columbia mill Coast
Mountain Hardwoods, says Weyerhaeuser destroyed it by bleeding
it dry in a joint venture, then buying its remaining assets for
a fraction of their worth.
Weyerhaeuser is appealing the Ross-Simmons decision, and a
spokesperson called the follow-up suits "an affront" to the
company's workers. The firm took a $52 million charge against
earnings to cover the damages, posting a first-quarter loss of
The world's biggest lumber company, Weyerhaeuser reported just
over $300 million in hardwood sales in 2002, compared to more
than $7 billion in softwood sales and total sales of $18
billion (including pulp and paper sales and other income). But
legal troubles related to hardwood could do disproportionate
damage to the firm's bottom line. Weyerhaeuser bought its first
alder mill in 1980; by 1997, the number of mills in the market
had shrunk from 40 to 15, and Weyerhaeuser had captured a 65%
share, according to the Seattle Times. The Ross-Simmons
case could be just the beginning: "If that one ruling stands,"
a market analyst reportedly told the Tacoma Tribune, "it does
open up for a lot of other guys."
How Cold Is Too Cold?
Poured-Wall Pros Pool Experience
With sweat running down your back in July, it's hard to
believe in winter. But if your October foundation work gets
delayed until December, you may be interested in an upcoming
report from the Concrete Foundation Association (CFA), a group
of residential poured-wall contractors. Armed with high-tech
temperature probes, CFA members have been logging data from
real wall pours under field conditions, in search of practical
rules for cold-weather concrete work.
"Two winters ago several of our contractors reported that
building inspectors were shutting down the job sites because of
the cold," says CFA technical director Jim Baty. "Some of them
were able to open up again by working with engineers and
proving that their mix would work."
The CFA decided to examine the cold-weather performance of
different mixes under field conditions, so that more
contractors could demonstrate to building officials the
validity of their mix designs and protective measures. "Our
members bought Hobo Datalogger kits to monitor concrete
temperature and ambient temperature in the first 48 hours,"
Does cold weather have to shut down the
pour? Foundation contractors using Hobo Dataloggers (top left
and right) have been gathering real-world data to guide
cold-weather concrete practice.
Mixes and conditions varied so widely on site that CFA decided
to also do controlled testing: a series of cylinder sample
tests coupled with full-scale wall tests of 48 selected mix
designs. "To date we have not had a mix that failed," says
Baty, "and we've poured at temperatures down to
It's important that concrete be delivered at 60°F, and it
makes a difference whether you cover it, says Baty, but he
says, "We can effectively support concrete being placed at
temperatures down into the teens -- whereas now, if it gets
below 30°F to 35°F, building officials are
CFA's physical testing provides validation for computerized
maturity testing that can predict concrete strength gain based
on the known chemistry of the mix. "That hasn't really come
into residential work, but it's aggressively practiced in road
and bridge construction," says Baty. "There the issue is not
how cold can you pour, but how soon can you strip the forms and
move on? We're not saying, Use this mix design for these
conditions. We're saying, Here's a process you can use to show
how your mix will perform, rather than go through the elaborate
physical testing we have done."
CFA's results will be presented in September at the ACI 306
conference in Boston, Mass.
Referral Fees -- or
Kickbacks? Custom Builders Question Payments to Realtors
Paying real estate agents a commission is nothing unusual
for a spec builder, for whom the transaction is like the sale
of an existing home. But what if an agent sells a building lot,
then approaches a custom builder with an offer to refer the
buyer to the builder -- for an undisclosed fee? Santa Fe, N.M.,
contractors say that's unethical, and they hope to end the
In April, Santa Fe marketer Robin Dorrell called a public
meeting to draw attention to the issue. Dorrell, who runs a
referral service for architects, wants lawmakers to force
realtors to disclose all fees collected from builders.
But Lee McDaniel, a New Mexico Real Estate Commission
investigator, told JLC, "This thing about kickbacks is
strictly an allegation by Robin Dorrell. There are no
complaints about it in our files, and she gave me no evidence
that it is even happening." McDaniel says current regulations
for realtor disclosures depend on when the fee is collected:
"If the realtor refers a customer to a builder after a lot sale
has closed, any fee is not required to be disclosed." Perhaps
the builder should disclose the arrangement, McDaniel says, but
"custom building is a service -- it's not a sale of real
property. We have nothing to say about that."
Assistant Attorney General Albert Lama attended Dorrell's
April meeting and says, "People made all kinds of claims, but
no one could show me one person who has been harmed. Unless
someone is harmed, we have no cause to take action."
Ed Breitinger, president of the Santa Fe Homebuilders
Association, sees it differently. "This is definitely
happening," he says. "The month before Robin's meeting, I was
approached twice by realtors wanting to refer customers to me
for a fee, and neither one wanted it disclosed."
One realtor wanted a 6% commission, says Breitinger. "When I
objected to that, he quickly dropped it to 3%. I told him that
I thought 1% would be a fair finder's fee, but that I would
still disclose it." Neither realtor called back.
An informal survey of builder members found many who had been
asked to hide realtor referral fees ranging from 3% to 6%,
Breitinger says. Most contractors in the survey opposed the
fees altogether, but Breitinger is focusing on disclosure. He
has asked the state HBA to push for a change in builder license
laws that would require builders to disclose all referral
"The realtors like to be paid out of the first progress
payment, or even the deposit," says Breitinger. "That's very
hard to hide, because division one costs are generally paid
based on the percent completion of the project. And that puts
builders in an awkward place. Sixty thousand dollars on a
million dollar house? People are going to say 'Wait a minute --
I didn't get anything for that.'"
"It takes two to tango," says the Real Estate Commission's Lee
McDaniel. "The bottom line is, no professional should ask
another professional to cover up a payment. It shouldn't be
asked in the first place, and it sure as heck should not be
agreed to. If it's happening, I'd like to know about it. I
would love to get my hands on a case like that, just to see
what we could make of it."
Scheduling Part-Time Office Help
Many of my clients have reached the point where they can no
longer do all their office work themselves. Supervising three
or more employees, plus selling and estimating enough jobs to
keep them busy, usually forces the business owner to start
handing over office tasks.
Before there's enough volume to support a full-time office
worker, many builders look for part-time help. The right person
can work beautifully -- given the right schedule.
There are several ways to schedule 15 or 20 hours a week. The
person could work 8 to 10 hours a day for two days each week
(the Two-Day Plan), put in random hours up to a given maximum
(the Flex-Time Plan), or show up for 3 to 4 hours each day (the
Daily Plan). Each choice creates a different situation.
Suppose your Two-Day Plan person works on Mondays and
Thursdays. Whenever she comes in, she'll face a backlog. You'll
lose time each week leaving and reading notes and having brief
meetings to catch up. Your job-cost data will be current only
twice a week. Three days out of five, your phones won't get
answered. And you'll be tempted to post urgent checks or
invoices yourself (believe me, that can snarl things up).
With the Flex-Time Plan, phone coverage is sporadic. You'll
probably continue to do some urgent tasks yourself, creating
duplication and confusion. And you and your office worker will
still have to leave notes for each other.
With the Daily Plan, my preference, your worker is there every
day. You'll be less likely to have to do things you hired her
to do, and you won't have to write each other notes. Your
worker will stay aware of job progress and new clients. And
your voice-mail message can give callers the regular office
hours, enhancing your professional image.
A Comeback for
In recent years, the California condominium has looked more
endangered than the California condor. Despite a huge demand
for low-end units, condo construction has been stymied by
litigation risks and development restrictions.
But a report in the Sacramento Bee says that with
single-family lot prices rising out of reach, builders are
planning 1,700 condo units in eight projects around the city.
That will amount to 10% of homes built in the area, up from an
average of 1% in previous years, says the Bee.
Condos are leading a statewide boom in home construction, with
multifamily permits through March totaling more than 28,000, a
gain of 57% over last year. Single-family permits were up 25%
over March 2002, at more than 64,000.
That's still far short of the boom years of the 1980s, when
condo and apartment construction peaked at 160,000 units before
crashing to a low of 15,000 in 1993. A crawl back to around
43,000 in the year 2000 seemed to end at a brick wall, with the
stock market collapse, land scarcity, and crushing insurance
rates combining to stifle the market.
Now pent-up demand and record low interest rates seem ready to
push the condo market through that barrier. One builder, James
Brennan of Brenson Corp., told the Sacramento Bee that
California's new dispute resolution reform law, SB 800, played
a part in his decision to go ahead with a condo project (see
California 'Fix-It Law' Aims to Limit Defect Lawsuits,"
"This will be the best year we've had since 1990," says
California Building Industry Association executive Bob
Rivinius. "But one reason the market is so strong is that we're
still not producing enough housing here. And unfortunately it's
the affordable units that aren't being built."
Rivinius does credit SB 800 with a positive impact. "So far,
the effect is just psychological, because it has only been law
for four or five months. But it has already caused a couple of
insurers to put their toe back in the water, and it has led a
few more builders to take a chance on multifamily work."
OffcutsA New Jersey builder who hired detectives to secretly
tape-record meetings with town officials
can use the tapes
as evidence in a lawsuit against the town despite ethical
concerns, a state judge has ruled. The Newark
says an attorney for Readington Township
builder Mark Hartman hired a man-and-wife team to pose as
environmental activists and gain the trust of town officials.
The pair taped town officials labeling Hartman an "archenemy"
and saying that they had acted to delay his projects knowing
that their rulings would be reversed on appeal.
The Massachusetts legislature is considering two fire
sprinkler bills, reports the Boston Globe. One would
authorize towns to require sprinklers in new one-, two-, and
three-family homes, and the other would require sprinklers in
any new building larger than 7,500 square feet.
American Polysteel has introduced an energy-efficient
mortgage (EEM) program in cooperation with First Federal
Bank that covers the entire continental U.S., Polysteel
announced in April. EEMs stretch allowable debt-to-income
ratios for home buyers because of reduced energy use by
concrete homes built with Polysteel foam forms. Under the
program, a single loan can finance lot purchase and house
construction, then roll over to provide permanent financing of
the home. Information is available at
www.polysteel.com or by calling
The U.S. probably won't remove import duties from Canadian
softwood despite a World Trade Organization ruling May 27
that said Washington calculated the duties improperly,
according to the Toronto Globe and Mail. Instead, the
Commerce Department can appeal the decision, stretching the
process out to year's end, then take an additional 15 months to
remove the tariffs if it loses the appeal. And the U.S. could
still recalculate Canada's alleged timber subsidy by a
different method and assess a modified penalty, experts
Nevada legislators have passed a right-to-cure bill backed
by builders after homeowner, trial lawyer, and builder
interests agreed on compromise language. The new law will
require homeowners to give formal notice and allow a 105-day or
150-day time frame for builders to fix any reported defect
before the homeowner can bring a lawsuit.