Reno contractors: ‘Holistic approach’ needed to meet development demand
Special to the NNBV
About the event
Speaking to a crowded banquet room at the Atlantis Casino Resort Spa on June 26, executives from regional development companies, along with city of Reno At Large Council Member David Bobzien, discussed key issues facing Reno as it grows, including:
• Sewer capacity
• Current and future development projects and concerns
Aside from Bobzien, panelists included Par Tolles of Tolles Development, Shirley Folkins-Roberts of Panattoni Development and Kurt Stitser of Realm Constructors. Don Tatro, executive director of the Builders Association of Northern Nevada, served as moderator.
RENO, Nev. — Reno’s explosive growth over the past few years has begun taxing key services and infrastructure, and the continued densification of the region will only further stress existing sewer, water, transportation and workforce services.
Those topics and other key development issues were the focus of a June 26 mid-year industry review hosted by the Builders Association of Northern Nevada and the Northern Nevada chapter of NAIOP (National Association of Industrial and Office Parks).
As Nevada gears up for general elections in November, these development issues will be at the forefront of both voting trends and election campaigns, said city of Reno At Large Council Member David Bobzien.
“Growth, and concerns about infrastructure and housing affordability, will be at the top (of voter’s minds)”, he said. “How campaigns design mailers and TV spots, and how those campaigns play out could provide some really interesting insight into where the community is at with these issues.”
Growth already is impacting infrastructure in the North Valleys, where hundreds of apartment units and single-family homes currently are under construction, and more than 15,000 single-family homes and 1,600 multi-family units could be developed in the next few decades.
Sewer capacity in the North Valleys already is problematic and has led to plans to expand the Reno-Stead Water Reclamation Facility. Phase 1 would cost about $9 million, with up to 1 million gallons of wastewater per day redirected to the Truckee Meadows Water Reclamation Facility on Clean Water Way in East Sparks.
A second expansion of the RSWRF to handle all the expected growth in the North Valleys would cost approximately $85 million and would increase capacity to nearly 4.8 million gallons per day.
‘Labor is a real issue’
Labor shortages continue to be a pressing concern for regional developers, with no signs of it easing. In May of 2018, there were 17,500 people employed in the sector, the U.S. Bureau of Labor Statistics reports, up 1,000 jobs from December of 2017.
However, construction employment levels during this current boom cycle of growth are far lower than during pre-recession levels. Reno-Sparks and Storey County construction employment in May of 2006 was 25,500 workers, the Department of Employment, Training and Rehabilitation reports.
The demand for labor has pushed up construction costs, said Kurt Stitser of Realm Constructors.
“Labor is a real issue,” he said. “With all the new businesses coming to town, it’s great for our community, but it’s also pulling from our pool of labor that could actually build houses. There is a lot of pressure to build new homes, but (developers) simply aren’t able to build as quickly and inexpensively as we would like because of labor shortages.”
The lack of skilled tradespeople also has led to an increased likelihood of construction defects, and longer build times, Stitser noted.
Automation and off-site assembly may eventually be a solution that helps ease labor shortages, especially for residential framing and carpentry.
“If you can build 24/7, 365-days a year in a temperature-regulated environment, eventually we will see that come into play,” said Don Tatro, executive director of BANN. “Innovation will come. (Building) is an area where we need to get creative and innovative.”
‘Now we are in full-on growth mode’
And though housing prices have seen an incredible run-up over the last decade or so, they still aren’t any higher than pre-recession levels, added Par Tolles of Tolles Development.
“We bang on that drum, but we just got back to where we were in 2006,” he said. “It’s good to be mindful about how housing is so expensive, but we are in the same place we were 12 years ago. Fortunately for a lot of us who own homes or bought at the wrong time, housing prices have gone up.”
Tolles also said one of the keys to smart growth is ensuring elected officials and developers are in lock-step with the region’s needs.
“We need to lay a foundation that allows us to continue to develop,” he said. “If we can’t build anymore, that is going to be problematic. We didn’t build anything for eight years (during the recession), and we had a virtually declining population. Suddenly the switch goes on and we are a boom town.
“We were in a kind of catch-up mode and making up for what we didn’t do for the last eight years, but now we are in full-on growth mode. There needs to be a very holistic approach to meeting demand and also needing infrastructure and the foundational framework that allows us to continue to grow.”
The $1 million Intermediary Relending Program loan is for 30 years at a 1% interest rate and will be used to recapitalize the Rural Nevada Development Corporation’s loan authority.