Adam Pacheco, the El Paso director of Associated General Contractors, isn’t complaining about the El Paso economy these days – not at all.
“As far as construction goes, you couldn’t ask for anything better,” he said, describing the projects underway half way through 2017. “This is pretty much what contractors look for.”
By far, the majority of work is publicly financed – the city quality of life bond projects, highway construction and a new building under construction at Texas Tech University Health Sciences Center to name a few projects.
But, Pacheco said, there’s nothing wrong with that because private investment comes right behind it.
“It goes hand in hand,” he said. “You build a new school, and homes go up around it.”
Mayor Dee Margo, addressing contractors, local officials and others at an Associated General Contractors meeting Thursday, touted the addition of about 4,500 jobs this year, including 1,690 professionals and 1,200 leisure and hospitality workers.
The city’s unemployment rate dropped slightly to 4.9 percent, just above the state rate.
Margo also noted that El Paso is second in job growth in Texas at 3.3 percent, behind the Dallas metropolitan area, which is at 3.6 percent.
But, he said, 70 percent of the city’s tax base is based on single-family homes, which contributed to an anemic 1.4 percent increase in the city’s property tax base this year – the smallest increase among the state’s major cities.
“And, that is the problem,” he said, because a growing city with growing demands needs a growing housing market along with stronger industrial and commercial sectors to help with the burden.
Looking at the city’s continuing work on quality of life projects, the start of construction on the El Paso Independent School District’s $669 million in bond projects next year along with the Ysleta school district’s projects, Pacheco said the construction boom goes over the horizon.
“The future for the next 10 years looks pretty good,” Pacheco said.
The work is attracting out-of-town companies, he said. But as yet, he hasn’t seen signs that El Paso contractors are having a hard time keeping up.
“No one’s complaining,” Pacheco said. “I guess that’s a good problem to have. Everybody is pretty happy and excited about all the opportunities that are coming around here in El Paso.”
El Paso home sales are also up, said Dan Olivas, president of the Greater El Paso Association of Realtors.
“At this point in 2016, we’d sold 3,588 homes. But this year we’ve sold 3,913,” Olivas said. “That’s an increase of 325 or 9 percent.
Home prices have gone up considerably, too, according to Olivas.
“Our average last year was $158,000,” he said. “This year, it’s $168,000.”
The number of single-family houses on the market now is 4,100, which represents a six-month supply, Olivas said.
“The inventory we have is shrinking because of the number of homes that we’re selling,” he said.
It may not show up statistically, but Olivas said there’s a new vibrancy in the El Paso economy that’s demonstrated by the arrival of higher-end stores and restaurants, such as Whole Foods, Ruth’s Chris Steak House and Topgolf.
He thinks the massive new Union Pacific rail yard just across the state line in Santa Teresa is attracting workers who are buying homes in Northwest El Paso. And, he said, the city’s growing medical industry is recruiting and graduating more doctors who are buying homes.
Sales tax receipts are another indicator of economic activity, and revenue figures the city provided El Paso Inc. show a steady increase since 2013.
State, county and city sales taxes total 8.25 percent on purchases of goods and some services, and the city’s share is 1.5 percent.
In 2013, the city took in $75.6 million. Sales increased more than usual over the next two years, producing $81.6 million in revenues in 2015.
The city projects that by the end of the the fiscal year, on Sept. 30, the year’s sales tax revenues will total $84.6 million. That’s 12 percent above 2013 but only 3.6 percent more than 2015.
When it comes to revenues, Margo said, sales taxes have been a relative bright spot for the city.
“Sales tax revenues are driven by what attracts people to buy goods and services,” he said. “That’s one reason why we’ve got to complete the Downtown redevelopment, the streetcar project and the bond projects. That’s so we’re attracting visitors who will come in and buy goods and services and produce sales tax revenues.”
While the increase in those revenues is smaller this year than in recent years, Margo said, the city still took in more than he expected.
“We’re doing better than I thought,” he said. “We have a lot of Mexican consumers and the devaluation of the Peso in first quarter I thought would really hurt our sales tax revenues, but it didn’t to any great extent.”
Email El Paso Inc. reporter David Crowder at firstname.lastname@example.org or call (915) 534-4422,