TRI-COUNTY REGION – The consensus coming from members of the building communities in San Miguel, Ouray and Montrose Counties is that now is a pretty good time to build – but the summer construction season might not be shaping up as quickly as one would hope.
According to Telluride Building Official David “Sam” Samuelson, “If you have the cash or ability to get it, things are going to get done quicker and cheaper. People are hustling to find jobs.”
With that hustling, there’s a little wiggle room in pricing that can prove advantageous to someone with the cash on hand to undertake a new structure or renovation project.
A little wiggle room, mind you – but perhaps not as much as people would like to believe. While builders might be willing to shave a point or two off their profit margins, raw materials prices have not decreased and the fuel required to move them, if anything, is only going up.
“Thinking about building, people have this idea that since the economy is down it’s a great time to build,” said Dan Daley of Snowy Ridge Builders in Ridgway.
“It’s a good time to negotiate, but materials aren’t down.”
“We’re seeing a slight decrease in costs of what it was several years ago,” said Bryan Deppen, project manager for Telluride’s Overly Construction. “But it’s not quite as low as a lot of people are expecting or seeing in other areas.”
Montrose County Planning and Development Director Steve White said, “The price comes down a little bit at least for the labor,”noting that at the same time the cost of certain types of lumber, for example, have increased. Still, generally speaking, “when times are slow it’s the time to build,” he said. “You’re going to find more resources.”
Things have certainly changed since the last building boom. “Five to eight years ago everybody was just crazy [busy],” said Montrose County Building Official Greg Pink. “They didn’t have enough help; getting work was not an issue, all they had to do to start a job was finish the last one.”
But it’s a different story now, with more workers bidding on the same jobs and many carpenters scrambling to find the most basic work.
“There are people who call and stop in periodically to see what’s going on,” Pink said, noting that builders and other industry workers are working harder for job leads. “They know there’s not much going on.”
In fact, through March of this year Montrose County has issued 40 building permits, including four for single-family residences, 16 residential additions or remodels and 13 garages or carports, for a total construction valuation of just over $2 million.
Ouray County has issued eight permits worth just over $1 million in valuation for the first three months of this year.
“It’s very slow,” said Mountain Village Building Official Chad Root when asked how this year’s building season appeared to be shaping up.
Mountain Village Community Development Director Chris Hawkins put summer construction valuations at $8.3 million, including four new single-family homes.
“We’re obviously not going to have a major commercial construction project this year,” he said. “There’s just no commercial lending right now.”
It’s a similar story in San Miguel County, according to San Miguel County Building Official Gary Hodges. “I’m not real optimistic about the construction season,” he said. “I think this year will be slower than 2009 and 2009 was an off year.”
San Miguel County logged 13 permits for the first three months of this year, worth about $580,000 in valuation.
So far this year the Town of Telluride has logged 24 permits with a valuation of over $4.7 million, however, a number of those are for the town’s Gold Run affordable housing project.
While the U.S. Census Bureau and the Department of Housing and Urban Development announced last week that new housing starts saw a modest but welcome increase nationally in March to mark the third consecutive month of gains, closer to home in the West region the numbers told a slightly different story.
The agencies tracked some 626,000 new privately-owned housing starts across the country last month to post a 1.6 increase over February and a 20.2 percent increase over March 2009, but here in the West (Arizona, Colorado, Idaho, Montana, Nevada, New Mexico, Utah, Wyoming, Alaska, California, Hawaii, Oregon and Washington) the number of new starts actually decreased by 2.1 percent from 143,000 in February to 140,000 in March.
Still, those numbers totaled a 75 percent increase over the 80,000 new starts in the West during March 2008.
The number of new, privately-owned housing structures authorized by building permits across the nation rose by a more substantial 7.5 percent, from 637,000 permits in February to 685,000 in March – an overall increase of 34.1 percent above the 511,000 permits issued across the nation last year.
Again, however, the West bucked the national trend with 139,000 structures authorized by building permits in March, down some 6.7 percent from the 149,000 authorized in February. Still, the same region saw 31.1 percent more authorizations for privately owned housing structures in March 2009 than the 106,000 permits issued in the West one year earlier.
The numbers seem consistent with feedback from the regional building community, suggesting that if construction is improving nationally the trend hasn’t quite hit home.
“All in all I see our region being down,” said Jay Kyne, owner of K&K Concrete in Ridgway. “People that want to do projects are unable to get funding,” he said. “Our glory days are certainly well behind us for a while and I don’t see it changing in the next year.”
Kyne estimated he has let go about half his boom-time staff of 100 and is traveling farther – to Crested Butte and Grand Junction, for example – for the work he does have.
“We were solely working in the Telluride region for the last 10 years,” he said. But right now, “There’s just not the work there.”
It’s similar story for Kathy Green of BONE Construction, who said, “I’m not seeing too many new jobs of any size coming along.”
Although her 11-employee firm has managed to stay busy so far thanks to larger projects that are beginning to wind down, Green admitted to “contemplating layoffs in the not too distant future” if some new work doesn’t come in.
“I think we’re just starting to see the impacts of the downturn,” she said.
“It’s not looking good at all,” said general contractor Josh Kent, who has been doing carpentry in Telluride since 1973. “I’ve seen plateaus but I’ve never seen anything last this long at all.”
Regionally, “there may be a little less than last year,” said Mountain Village’s Root. “That’s the feeling I’m getting when talking to different contractors,” he continued, noting that Montrose-based builders who previously had more work than they knew what to do with now stop him to ask about leads. “They’ll ask what projects we have going through,” he said.
Overall, the feeling out there is that the region is pretty much looking at another slow construction year – probably on par with last year, but in many ways it’s still too early to tell. That’s the bad news.
The good news is that there are indicators that work may pick up next season, with realtors reporting an uptick in activity and the Telluride Historic and Architectural Review Commission reporting it has its hands full with applicants seeking the necessary town approvals for new projects, according to Planning and Building Director Mike Davenport.
“We have clearly seen a significant increase in number of HARC applications,” he said. “Mostly new [construction] applications.”
“The big question will be how many of the applications will actually go to permit.”
And that’s a big question.
“Contractors don’t know they have work till they actually start digging some dirt,” said San Miguel County’s Hodges.
“We’re getting phone calls more frequently,” said Overly Construction’s Deppen. “There is nothing for sure signed up on the line,” but “there seems to be some recent activity, which is a good thing.”
“I’m seeing more inquiries now than I have in the prior two springs,” said Telluride architect Peter Sante, who after a two-year dry spell is now working on a house. “I’m feeling good about that.”
“This is probably the worst I’ve seen in 31 years,” but there seems to be some improvement, said Telluride architect James Hardy. “You can see the light at the end of the tunnel. It might be a long tunnel, but by God the light is there.”
“The phone is starting to ring,” said Larry Coulter of Coulter Construction in Ridgway, who has had consistent work throughout the downturn, but a few weeks ago was forced to lay off some workers when his existing projects wound up.
But that has changed.
“It looks like I’ll be hiring them back,” he said.