Thursday, September 28, 2006

Old developer allowed to sell downtown Boise hole

by Lora Volkert @ Idaho Business Review

Most people know it as “The Hole In The Ground.”
The empty pit of concrete and rebar at Eighth and Main in Boise was the beginning of a 25-story office and residential building that inspired artwork, vitriol, lawsuits and its own Web site.

Although the hole was only the beginning, during 10 long years city officials and residents realized the project had no middle. But they are tentatively, tepidly listening to an idea that could mean the saga’s end.

It began in 2001, when the Capital City Development Corp. — the redevelopment agency for downtown Boise — sold the lot at Eighth and Main to developer Rick Peterson for $265,000.

Peterson promised 25 glorious stories and said he had financing to make it happen. But that financing fell through again and again. The developer put some of his own money into the project, but construction was stop and start, with little work done after the first year. Contractors did just enough to keep the building permit valid — a little concrete here, some rebar there — while Peterson sought other financing deals, none of which panned out.

Contractors went unpaid and filed liens. The building permit was revoked, then reinstated.

Headlines in this paper tracked the lack of progress.

June 2001: “Boise Tower groundbreaking ceremony postponed.”

February 2002: “Work to resume on Boise Tower.”

May 2002: “Boise Tower seeks new construction financing.”

November 2002: “Developer says work on Boise Tower may resume.”

January 2003: “Boise Tower announces third lender; construction to go forward.”

June 2003: “Boise Tower default declared.”

October 2003: “Work on Boise Tower starts up again.”

Boiseans waited. They stewed. They sniped. The Tower became a running joke.

A snarky Web site sprang up,, with a forum for readers to submit ideas for filling the hole. Among the suggestions: an ice skating rink, PETA supporters, people who use air quotes, and bacon.

The city put up plywood fences around the site and had murals painted so citizens wouldn’t have to look at the hole. But a nearly 60-foot banner with the ironic proclamation that Boise Tower is “what’s going up downtown” remained for years.

In June 2003, CCDC declared Peterson’s firm — Boise Tower Associates — in default and asked for the site back.

But Peterson refused to hand it over. The resulting court battle seemed to be settled in February of this year, when Judge Kathryn Sticklen told Peterson to return the site to CCDC. The ruling was appealed.

However, in April Peterson’s firm agreed to pay CCDC $950,000, according to court documents. That agreement was part of a three-way deal to transfer title of the land to Charterhouse Boise Downtown Development, a new firm that wants to build a 31-story building at the site.

But CCDC has not been paid most of its money, and it may be a long time coming.


Rather than turn the title back to CCDC, Peterson is selling the property.

CCDC Executive Director Phil Kushlan said it was only when Peterson faced losing the title in his appeal of Sticklen’s ruling that he agreed to transfer the property to Rogers.

But Peterson’s firm sold the land for considerably more than the $100,000 CCDC has received from the sale, according to an attorney involved in the case.

“Charterhouse paid quite a bit more than that,” said Rick Boardman, an attorney at Perkins Coie who represented CCDC in the settlement, said.

Gary Rogers, the developer who founded Charterhouse, hasn’t disclosed what he paid for the site.

“We paid more money than I wish we had to acquire the site,” Rogers said. “We paid more money than we wanted to solve a problem.”

The Ada County Office of the Assessor has set the site’s value at $943,300. Assessments tend to lag behind purchase prices, Deputy Assessor Brad Smith said.

According to court documents, the $100,000 Charterhouse paid to CCDC as part of the sale will be applied to what Peterson owes the agency.

Boise Tower Associates will pay a portion of the remaining $850,000, and Charterhouse will pay the rest, Kushlan said.

But CCDC won’t receive the rest of its money from Charterhouse until the company’s construction financing closes, Boardman said. Rogers has said he has two investment firms interested in his project, and he wants to begin construction by Christmas.

It may take longer for CCDC to receive its money from Boise Tower Associates. According to court documents, payments to CCDC are contingent on the firm winning or settling its lawsuit against Washington Capital Management, which at one point committed to provide financing for the original project.

The transfer of property from Rick Peterson to another developer was what CCDC wanted all along, Kushlan said. It was a better scenario for CCDC than simply getting the property back.

“We didn’t want the title back. We wanted a building there,” he said.

City suit

A provision of the agreement between Peterson and CCDC gave the group the right to take back the title to the site if Boise Tower Associates failed to fulfill its part of the bargain. CCDC tried to exercise that right, but Peterson refused to return the title.

Boise Tower Associates countersued CCDC, the city of Boise and former Boise Planning and Development Services Director Timothy Hogland.

The company claimed that CCDC unreasonably withheld approval of financing and that CCDC interfered with the construction process by conspiring with the city of Boise to revoke the building permit before it had lapsed.

The settlement terms for CCDC’s lawsuit required Peterson to drop his countersuit against CCDC.

However, Peterson has not dropped his suit against the city of Boise, which is scheduled for trial on March 12, 2007.

In a deposition, Peterson’s attorneys asked Hogland about the permit revocation. According to court records, he was asked if he had any reason to dispute work was done the day concrete was poured.

“Well, if you call 14 yards of concrete work, yeah,” Hogland said.

“I guess I don’t have a feel for what 14 yards is,” the attorney said.

“A project that size, it’s like I said, it would be equivalent to nailing a few nails on a house,” Hogland said.

* * *

Boise Airport updating master plan

Soaring to new heights (Business Barometer)
by John Anderson @ Idaho Business Review

Imagine, if you can, Boise without a major air carrier airport.
Passengers would travel by private auto or bus. Goods would travel by truck, or the limited backhaul of rail. Micron, HP, and all of our high-tech businesses could not exist in Boise. Headquarters, including Boise Cascade, Albertsons, Washington Group, and the banking industry would not tolerate driving over six hours to Salt Lake City, the nearest air carrier airport. Imagine, if you can, a quaint little Boise city of about 15,000 people.

To guarantee that Boise Airport (BOI) remains a leader in providing aviation access, we are updating our Master Plan, looking at the short-run capital plan, and the long-run strategic plan to remain viable 50 years in the future.

Zoning off and on the airport and the proposed Lake Hazel extension to I-84 are being reviewed to make certain no new housing is placed near the airport, and that compatible industrial or commercial uses are encouraged.

We will also recommend that no new housing be allowed within 20,000 feet off the east end of our runways, and 15,000 to the west. This would extend about a half mile beyond the Micron campus and almost to Maple Grove. On airport property we will propose a new “airport zone,” similar to the university zoning around BSU.

On the capital side of Master Planning, we are working to add more readily developable land to our aviation inventory. With the development of new corporate aviation facilities by Micron and Appleton Air Sports, we have little land on which we could build a hangar on today. To increase our inventory, we are taking several steps:

• Relocate Orchard adding 60 acres, spring 2007.

• Extend the south parallel taxiway east beyond the Air National Guard, 2008, adding several hundred acres.

• Move National Guard Munitions Storage area, 2008-2011, adding about 60 acres.

• Construct new Air Traffic Control Tower (shifting target), allows development of our newest runway areas, adding about 1,000 developable acres for aviation uses.

• Open third runway for all users when new Air Traffic Control Tower (ATCT) is commissioned. FAA is now saying it will not be completed until 2013.

• Construct new taxiway connecting third runway with the main airport complex. Target to complete with ATCT completion.

By opening new lands for aviation development, opportunities for small and large employers will be created. As an example, the Idaho National Guard, Boise Airport’s largest tenant, has well in excess of 1,000 full-time employees on airport property.

Western Aircraft, situated on about 10 acres of airport property, employs from 120-140 full-time mechanics, specialists, and sales people. And Precision Propeller located on one acre of airport land has a very small workforce that provides a valuable service to the aviation community and a good living for the sole proprietor.

We have had multiple inquiries recently from businesses that could locate from dozens to hundreds of new aviation jobs on Boise Airport. Opening up new land for direct aviation development will likely bring new and decent-paying jobs to our economy.

From a 2004 survey of airport tenants, we found that there were well over 4,200 employees located on airport property with an annual payroll of $250 million. This makes the airport campus one of the largest employers in the Valley. New aviation development will likely push these numbers even higher.

Developing BOI as an air cargo center has been discussed for some time. Land will be available, and we can build our third runway to exceed the standards of any air cargo aircraft in the world. We are well situated for non-stop flights to Europe and Asia. Airports on the West Coast are overcrowded.

The National Interagency Fire Center (NIFC) is one of the major employers with direct aviation access to the airport. Indeed, they could not exist as they do today without our major air carrier airport. In the long run, we would like to make more land available to NIFC in our south runway area, relocating their existing campus, and perhaps expanding their facilities. This is a process that will take at least a decade or more to facilitate.

Then there is the passenger terminal complex, which absorbs much of our capital funding. In addition to the obvious need for a parking garage expansion, there will be needs to build a new concourse in the three- to eight-year time frame, and build new U.S. Customs and Border Control facilities in both the short and long term.

Even though BOI is completely self-supporting, the State of Idaho makes it very difficult for airports to borrow the money that is needed to complete these projects. Boise Airport has passed Airport Revenue Bond measures with over the two-thirds majority required in the 1960s and 1980s. We believe there is a significant education process required for voters to understand that there is no payment from local taxes, even in default, from Airport Revenue Bonds.

In addition to passing an Airport Revenue Bond with a two-thirds majority, alternatives could include the following:

• Change the Idaho Constitution.

• Define Airports as Ports, which are allowed to issue Revenue Bonds.

• Privatize individual projects.

Privatization may be a short-term fix for a parking garage expansion. While we may examine this more closely, privatizing passenger facilities, U.S. Customs facilities (which pay no rent), or runways is very unlikely to work. Over the long run, we need to find a way to leap from the 19th century to the 21st century in terms of Airport Revenue Bonding capabilities.

BOI is more than just a place for airline passengers to come and go. BOI is an economic juggernaut that allows Boise and the surrounding areas to prosper. As one of the largest employers in our area, the airport must be protected from incompatible development, and we must develop more land for direct aviation development, as well as continue to develop the passenger terminal complex. These developments will require a reliable access to the bond market.

Over the next 50 years of our long-term strategic plan, we believe that BOI has the potential to be, and in fact will be, the leading airport in the Pacific Northwest.

John Anderson is the director for the Boise Airport.

Wednesday, September 27, 2006

Analyst: Mortgages going down

by Brad Carlson @ Idaho Business Review

A slowdown in the housing market won’t lead to a meltdown in the mortgage market, according to an executive with mortgage giant Countrywide.
Home buying and refinancing will continue in a housing market that’s active but down from last year’s highs, William Berliner said.

Berliner is executive vice president of Countrywide Securities Corp. He spoke in Boise Sept. 20 at a Chartered Financial Analyst Society of Idaho luncheon meeting at the Owyhee Plaza Hotel.

“It remains relatively robust, despite the higher level of (interest) rates,” he said.

He’s optimistic despite Coutrywide’s mortgage production being down by about 25 percent from last year largely on fewer refinances.

“It’s a market that is trending downward, but is not by any means a bubble popping or collapsing,” Berliner said.

Mortgage defaults and home foreclosures should move higher. However, many homeowners can tap equity, and that should keep defaults and foreclosures well below levels from 2000 and 2001.

Berliner said defaults would mainly be seen on sub-prime loans issued to people with lower credit ratings.

One reason the mortgage market remains active despite higher interest rates is that borrowers are focused on payment choices, not just interest rates, Berliner said.

Borrowers are more comfortable with adjustable-rate mortgages now compared to a decade ago, he said.

About 75 percent of second mortgages are adjustable-rate, and 40 to 50 percent of “ARMs” are interest-only or pay-option, he said.

High-income borrowers continue to use the new products as cash-management tools, supporting demand, Berliner said.

The top 20 percent of wage earners drive mortgage production and pay the bulk of mortgage interest, he said. The top 40 percent of earners account for more than 70 percent of mortgage equity withdrawal. That’s a factor in his expectation that equity withdrawal will diminish but not collapse.

Home ownership has fallen recently among lower-income groups, said Berliner, who is based in Calabassas, Calif.

Cash-strapped borrowers who can make only minimum payments on the non-traditional mortgages run the risk of failing to maintain or build equity given higher interest rates, he said. However, “hybrid” mortgage rates remain below fixed mortgage rates.

Conventional fixed mortgages were used on 63 percent of purchases in 2003, compared to 42 percent last year and 37 percent in the first half of this year. On the refinance side, 47 percent of loans were fixed compared to 76 percent in 2003.


Monday, September 25, 2006

Feds hold short-term rates

Fixed Rates Like the Fed
FW Market Update

Underlying credit markets may have been roiled this week, but you can't tell that from that stance of the Federal Funds Rate and the average 30-year fixed-rate mortgage (FRM). After this week's FOMC meeting, Fed Funds remained at 5.25%, while fixed rate mortgages closed the nation's leading mortgage survey at an average rate of 6.50%. However, the average five-one Hybrid ARMs ticked two basis points (.02%) higher, landing at 6.26% for the week.

The statement which the Fed released at the close of the FOMC meeting sounded a lot like the one from August: "moderation in growth"... "cooling of the housing market"... "readings on core inflation elevated"... "some inflation risks remain." As with last time, the decision to hold short-term rates unchanged was not unanimous.

What wasn't included this time, though, was a characterization that the housing market was cooling "gradually." Also absent was the assertion that "lagged effects of increases in interest rates and energy prices" were contributing to the slowdown. Housing seems to be cooling more quickly than the Fed anticipated, perhaps, and the effects of previous interest rate increases and high energy costs appear to be part of the picture now.

The National Association of Home Builders

West Ada County-Meridian will plan for new I-84 interchange

Article published Sep 25, 2006
by Kathleen Kreller @ The Idaho Stateman

Meridian will plan for new I-84 interchange
City will bring design experts, public together for 4 days to craft Ten Mile area's future

Meridian leaders are hoping a days-long blitzkrieg of planning sessions, public meetings and debate will hammer out the layout and look for a four-square-mile area around the future Ten Mile freeway interchange.

City leaders know that once the new interchange is installed, the area's current rural nature will change forever over the next 10 years. Developers are planning huge new shopping centers, apartments, office buildings, stores and homes.

So Meridian is launching a $65,000 study to decide what the area around the interchange will look like. And local transportation agencies are amassing funds to construct the interchange and making plans to improve and expand roads that will someday feed the interstate at Ten Mile Road.
The four-day study starts today and runs through Thursday, Sept. 28 at the empty Jabil building, 1303 E. Central Drive in Meridian. The study is known as a "charette," and involves a series of intensive workshops where design experts work with the public to develop the plan. The public is encouraged to attend.

"The Ten Mile interchange is a critical need for our region. We've been asking for it and planning for it for 30 years. It's finally becoming a reality," said Meridian traffic planner Steve Siddoway. "We are really trying to interface the planning of land use and transportation together in a way we have never really done before. We want the public to come ... to make this a better plan."
Developers and city planners have said the area just north of a future interchange at Ten Mile Road likely will develop first, with large retail stores, malls, office buildings and restaurants. Apartments, duplexes and townhouses likely will be built farther away from the interchange, they say. A developer has purchased acres of land near the Ten Mile overpass with plans to build commercial centers and office buildings.

Ten Mile Road is the next logical place for commercial growth in Meridian because all the available land along other commercial areas such as Eagle Road and Main Street will be built out in the next five years, David Turnbull, president of Brighton Corp., who co-owns about 120 acres near Ten Mile, has said.

Residents, traffic planners and city staff have discussed a new interchange at Ten Mile for years, and city leaders like Meridian Mayor Tammy de Weerd have zealously lobbied for it.
The Idaho Transportation Department secured $19.6 million in federal money in July to build the interchange, and remaining funds could come from former Gov. Dirk Kempthorne's $1.6 billion highway plan that is paid for with GARVEE (grant anticipation revenue vehicle bonds. The entire interchange project is estimated to take about two years and could start sometime in 2009.

The plan will include the area running from Linder Road west to McDermott Road and from Overland Road north across the interstate to the rail line.

Thursday, September 21, 2006

Planned communties could add 50,000 homes

by Lora Volkert @ Idaho Business Review

The developers of nine planned communities hope to build nearly 48,800 homes in Ada County over the next 15 to 20 years.
That’s enough for most of the 53,000 additional households Ada County is projected to have by 2020, according to the Community Planning Association of Southwest Idaho.

It’s also more than twice the 22,686 homes built in Ada County over the last five years of the state’s building boom, according to U.S. Census Bureau estimates from the Idaho Department of Commerce and Labor.

And, finally, the total doesn’t account for additional phases of the Avimor development near Eagle or a planned community at Blacks Creek, neither of which had housing estimates available.

They are, in short, expecting big things.

The total was compiled by the Idaho Business Review using public records and estimates from developers.

Some of the first homes from the batch of planned communities will enter the market in May 2007, when Avimor plans to hold its grand opening, SunCor General Manager Bob Taunton said.

The volume of planned communities could lead to a crowded market for developers of regular subdivisions or condominium projects, especially as new homebuilders continue to enter the market.

But that doesn’t mean Ada County is in for 20 years of overbuilding, said Steve Barbey, an associate broker with Group One Real Estate.

If developers pace their building evenly, the nine planned communities would add about 2,440 houses per year to the housing market. Real estate agents sold nearly 3,000 homes just in the last three months, according to the Intermountain Multiple Listing Service.

Build-out schedules for the planned communities suggest housing won’t enter the market that evenly, but developers may be forced to delay, Barbey said.

It’s not in a developer’s best interest to build more houses than the market can absorb. If they do, Barbey said, the houses will sit empty or won’t fetch a good price.

Developers may say they’ll build thousands of homes per year now, Barbey said, but that doesn’t mean they will. If the market can only absorb 500 of their homes per year, they’ll make adjustments, he said.

“What they plan on doing and what actually comes to pass are two different things.”

Some developers have ambitious plans. Dennis Baker plans to build 3,300 homes per year in a 20,000-unit planned community called Isaac’s Canyon, according to Ralph Perez, senior vice president of Isaac’s Canyon Development Co.

Other planned community developers are playing it safe. Tucker Johnson, the developer of a 1,350-unit community called The Cliffs and of the 600-unit Hazelwood South, said he plans to build conservatively in 50-lot phases rather than 100-lot chunks.

Some planned community developers expect demand for their housing products to be higher than for the rest of their market. They’re relying on what they see as a unique product.

Eighty acres of soccer, tennis, swimming and golf academies at the center of The Legacy, a 1,350-unit planned community planned in west Eagle, will be a draw in a market where so many people are active in the outdoors, said project manager Todd Santiago.

Isaac’s Canyon could be set apart from other planned communities because it plans be the first LEED-certified green planned community in the country. Leadership in Energy and Environmental Design is developing green building standards for residential communities, Perez said. Isaac’s Canyon Development plans to develop its building standards to coincide with LEED’s requirements, he said.

Isaac’s Canyon also plans to offer fiber optic cable to every home and build denser, more city-like housing, Perez said. The developer plans to build four or five elementary schools, two middle schools and a high school, he said.

Perez said he expects the real estate market to be cyclical, and during downturns Isaac’s Canyon Development plans to change its product mix and offer more small homes and fewer high-end houses.

But he still banks on Isaac’s Canyon being so unusual he’ll be able to sell houses no matter what the rest of the market is doing.

“There are no planned communities in the Valley like the type of planned community we’re doing,” Perez said.

* * *

Don't forget home warranties

by Ken Miller

In all the excitement of moving into a new home and the blizzard of paperwork that comes with it, it’s important to keep track of all the warranties for the myriad appliances and gadgets that come with the house.
But besides the warranties for such things as your new refrigerator, range, microwave, and everything else, industry experts caution against ignoring the most important warranty of all – the one on the house itself.

“Most builders carry a one-year warranty on homes,” said Wendy Rhodes of Holton Homes in Nampa. “We do an 18-month warranty. It has been a selling point for our homes and it encourages buyers.

“Most of the time,” Rhodes said half-jokingly, “if something’s going to happen to a home, it happens in month 13.”

Home builders, real estate agents and consumer protection groups say home warranties generally aren’t complicated, but they can vary dramatically in terms of what they cover, how long they cover it, and the overall hassle factor in resolving issues that can arise with new homes.

One-year builder warranties on new homes are the industry standard, although some builders, such as Holton, find extended warranties an attractive lure for buyers.

In the case of existing homes, warranties are almost always recommended. Sellers like to include them as a plus in attracting buyers; buyers typically demand them whether they pay for them or not. Often, the seller and buyer will split the cost of a one-year or 13-month warranty on an existing home.

Beyond the standard warranty is an array of additional products that cover problems out to 10 years or more.

Just because a home is new doesn’t mean it’s less prone to leaks, cracks or other headaches. In fact, new homes are more likely to develop problems related to settling than older ones.

So how do you know how much warranty is enough, and whether you should consider buying additional insurance to cover problems after the warranty expires?

For starters, basic problems such as foundation settling and wall cracks, basement leaks and electrical and plumbing flaws are generally covered during the life of your 12- or 18-month builders warranty. When that warranty expires, the builder is generally only liable for significant defects in the home, and even that can be up to dispute. That’s why many buyers opt for additional insurance products that generally run $300 to $400.

“When people are getting ready to purchase a home, they should always make sure they get an inspection done,” said Beve Bryant of the Better Business Bureau in Boise. Bryant said inspectors can identify existing problems in new or older homes, but they can also warn buyers of issues that may turn into problems later on.

Beyond the standard new-home warranty, “in buying an insurance policy, know who you’re dealing with,” Bryant said. “The obvious thing people tend to forget is to check out their reliability report online at our Web site.”

A quick stop at the Idaho BBB Web site at can help home buyers check out a home warranty company’s history, among other things.

“It’ll tell you how long they’ve been around, if they’ve had any complaints, what the complaints were about, and how they took care of them,” she said. “Having a complaint isn’t necessarily bad; that’s part of being in business. How they deal with it is more important.”

Real estate agents should also be considered a resource in helping home buyers determine whether the standard warranty that comes with a house is sufficient, or whether it’s a better bet to purchase additional coverage for problems that crop up after that critical first year.

“The builders give a one-year warranty usually, and within that one-year warranty they pretty much take care of most tings,” said Chris Findlay at Holland Realty. “They don’t do paint touch-up and that kind of thing. Some will do house-settling issues, but some don’t do any of that.”

Findlay recommends obtaining a copy of the warranty in advance and studying it closely before buying a home so you’ll know in advance whether the coverage meets your comfort level.

Problems, especially with new homes, are almost inevitable, he said. It’s how the builder handles them that makes the difference, and that’s why it’s a good idea to ask the builder for references from prior customers to attest to how the builder resolved any problems.

“But it’s not the first year that’s the problem,” Findlay said. “You want the builder to be really on the hook for the first year. That first-year stuff should be taken care of by the builder, and if you have a Realtor, that’s part of our job.

“I’m always in contact with the buyer’s agent when they have a problem. And I’ll tell the buyer, if you can’t get hold of your Realtor or the builder, then call me. The quicker you can get it nipped in the bud, the better.”

Back at Holton Homes, Rhodes said her company sends customers a letter nine months after the new home sale to schedule an appointment to check the house for any problems. Holton does the same after 18 months, at the end of the standard warranty.

Holton also provides a 10-year structural warranty that covers such things as cracks from foundation settling, she said.

“Before we close, we have a final walk-through,” Rhodes said, noting that Holton also provides home buyers with a list of all subcontractors who worked on the home, so owners can reach the subs directly for such problems as a plumbing issue.

Just in case, Holton has an employee who does nothing but warranty work on the company’s houses, she said.

“Some companies take longer to get out to you,” said Holland’s Findlay, adding local companies such as First American Title that offer additional home buyer’s protection plans are good bets because they’re easily accessible.

Findlay said home buyers should be aware that if they buy additional coverage such as a 10-year warranty, that policy should be scrutinized because the coverage may diminish over the life of the warranty.

Warranty tips

For those in the market for a new or existing home, here are some tips from industry experts on what to look for and what to ask in looking for home warranty protection.

• First and foremost, determine what the warranty covers. New homes should come with standard one-year warranties; some 18 months or more. These warranties should cover such essentials as appliances but more importantly the home’s plumbing, heating and cooling, electrical and other systems. For existing homes, warranty policies that last 12 or 13 months typically cover these major mechanical systems, but also major appliances that come with the home.

• Those buying policies for existing homes should also make sure they know exactly what’s covered, particularly for such things as a swimming pool or septic tank or even roof problems.

• In the case of existing homes, warranties are popular both among buyers and sellers. Since the builder’s warranty has lapsed on an existing home, sellers often find including a warranty with the home an attractive addition in the package. In some cases, buyers of existing homes split the cost of a warranty product with the seller. Regardless of which side of the transaction you’re on, it’s worth asking your real estate agent about.

• If you buy additional home warranty insurance, what are the deductibles? Who will you call if something goes wrong? Can you have the problem fixed and submit the bill, or must you clear it with the warranty company for them to send someone to help? Know how the problem will be addressed.

• Buyers of existing homes should always have the home inspected, which is typically required regardless by the lender. That inspection should flag the kinds of problems that may arise down the road. Increasingly, new-home buyers are also paying for an inspection just to be safe.

• For new-home buyers, make sure to keep all your warranties for such things as appliances and whatever else comes with protection together. This warranty protection lasts beyond the life of your builder warranty, but you generally need to contact the manufacturer to resolve complaints.

* * *

Tuesday, September 19, 2006

Old pals team up on subdivision

Article published Sep 19, 2006
by Joe Estrella @ The Idaho Stateman

Developers say lots on 73-acre Two Rivers neighborhood in Payette will sell for less than lots elsewhere in the Valley

Brad Smith and Stan Clements have been friends since they attended elementary school together in Emmett more than 50 years ago.

So it was no surprise when the two went into business together as developers of Two Rivers Estates, a 73-acre, 170-lot residential project northeast of downtown Payette where building sites are selling for as much as 50 percent less than in other areas of the Treasure Valley.

"It's farmland that can be seen from Stan's house. It's close to downtown, but still in the country," Smith said. "For years, we would sit drinking coffee at his dining room table and talk about how we should buy that land and develop it."
Both men bring a certain expertise to the project. Smith, who lives in Boise now after 20 years in the construction business, oversees day-to-day on-site operations. Clements, who has owned various area business over the last 30 years, including All Valley Insurance Agency in Payette, handles the financial side of the business.

"And we managed to put the deal together through outside investors and without having to borrow any money," said Clements, who expects the project to be popular with retirees who are looking for a more laid-backed environment.
He says the property has some of the best views in the area, with Cuddy Mountain visible to the north and Blue Mountains to west. At its highest point, the property overlooks the junction where the Snake and Payette rivers meet.

Lots on the first 40 acres to be developed have been annexed by Payette and come with city services, including water, sewer and natural gas.

Clement said a 14,000-square-foot building lot, or the equivalent of a third of an acre, sells for $59,000.
"In Meridian, something like that would cost you $130,000," he said.

Kim Bruce, the Century 21 Parkview agent who is marketing the project, says six of the first 11 lots offered in the first phase of the development have been sold, with a deal pending for the remaining five locations.
"We were able to sell the first lot before the sidewalks were even put in," Bruce said.

Another feature that their clients like is that they can bring in their own builder, compared to some area communities where buyers are required to use a builder selected by the real estate company that is marketing the project.

That was enough to convince Payette native Ken Eckhart, 53, who was one of the first in line when Two Rivers began marketing the project.
Eckhart purchased a quarter-acre lot with an eye toward the day when he retires from his job as an assistant manager at the Outdoorsman sporting goods store in Ontario.

His says his decision was easy after he learned he would be able to do a lot of the work on his new home himself, rather than having to use a pre-selected builder.
"I couldn't find a lot in Payette where you didn't have to use their builders," Eckhart said. "And I wouldn't have bought a lot where they said I had to use their builder."

86% of Idaho Jobs pay $7.25 per hour or more

Analysis: 86 Percent of Idaho Jobs Pay $7.25 an Hour or More
Idaho Govenment Website

Over 86 percent of Idaho’s jobs pay more than the $7.25-an-hour minimum wage under consideration in Congress, a new analysis by Idaho Commerce & Labor researchers shows.

The study, conducted at the request of state Rep. Shirley Ringo of Moscow, found that two of every 15 jobs in the state last year paid between the current minimum wage of $5.15 an hour and the $7.25 rate proposed in the federal legislation that has stalled in a dispute over an attached provision cutting the federal estate tax.

The analysis by Research Analyst Supervisor Salvador Vazquez updates work he and other researchers did on the minimum wage a year ago, using 2005 information to estimate the economic impact in Idaho of increases the minimum wage to various levels.

The new analysis does not draw any conclusions or make any recommendations about revising the state’s minimum wage. It only estimates the number of Idaho jobs in 2005 paying within the designated wage ranges and the costs to Idaho employers if the wages for these jobs were increased to a higher level. The employer cost estimate also assumes that no jobs are being compensated at less than the legally mandated minimum of $5.15 an hour.

The cost to employers of bringing all 80,100 jobs paying less than $7.25 an hour up to that level was estimated at $142.5 million in 2005. That is just three-quarters of 1 percent of the 2005 statewide payroll of $19 billion.

The cost estimate does not include the effect of higher social security, pension, unemployment insurance and other fringe benefit contributions employers must make on higher wage rates or the payroll impact of avoiding wage compression for jobs that had been paying just above the higher minimum wage rate.

There was also no attempt to gauge the effect a higher minimum wage would have on job creation or retention.

A change in the federal minimum wage would affect the vast majority of jobs in Idaho, but there is a comparatively small proportion of Idaho jobs covered only by the state minimum wage. Should the federal minimum wage be increased, those jobs would continue to be governed by the state minimum wage until the state Legislature chooses to change it.

The minimum wage analysis a year ago focused only on a proposal being circulated at the time to raise Idaho’s minimum wage one dollar to $6.15 an hour. Based on 2004 information, the analysis determined that 32,100 jobs paid less than $6.15 an hour, and the cost to employers to raise the pay for those jobs to $6.15 would be $24.1 million.

The updated analysis found the number of Idaho jobs paying between $5.15 and $6.15 an hour in 2005 had increased by 2,675 to nearly 34,800 but remained essentially at the same proportion of all jobs at about 5.8 percent.

The analysis assessed the impact in 2005 of increasing the hourly minimum wage to $6.15, $6.50, $6.75, $7.00 and $7.25.

Rate Number of Jobs Cumulative Jobs Cumulative % of
Total Jobs Cost Increase
Per Hour Annual Cost
Increase (in millions)
Under $6.15 34,775 34,775 5.8% $14,605.5 $26.7
Under $6.50 14,517 49,292 8.3% $29,389.8 $53.8
Under $6.75 10,368 59,660 10.0% $43,008.8 $78.7
Under $7.00 10,016 69,676 11.7% $59,175.8 $108.3
Under $7.25 10,404 80,080 13.4% $77,895.3 $142.5
$7.25 or higher 516,920 86.6%
Total Jobs 597,000

Raising the minimum wage to $6.15 an hour would mean an average pay increase of 42 cents an hour, or 6.8 percent, for those 34,800 jobs.

• Raising the minimum wage from $5.15 to $6.50 would affect an additional 14,500 jobs at a cost a total of $53.8 million to bring all jobs under $6.50 to that level.
• Raising the minimum wage up to $6.75 would bring in another 10,400 jobs and increase the total cost to $78.7 million to bring all jobs to that level.
• Raising the minimum wage to $7 would benefit an additional 10,000 jobs and boost the total cost of bringing all 70,000 jobs paying less than that up to $7.
• And raising the minimum wage to $7.25 per hour would affect another 10,400 workers, bringing the cost of raising all 80,100 jobs to $7.25 an hour to $142.5 million.

According to the Bureau of Labor Statistics, nationally people earning the minimum wage are between 16 and 19 years of age and more likely to be unmarried. Four percent of the female population and 2 percent of all men make a minimum wage of $5.15 per hour. The jobs they hold are more likely to be part-time than full-time. About 60 percent work in leisure and hospitality, primarily in food services and drinking establishments.

"Economic growth has moderated" say Feds

With a Fed meeting closing in, mortgage rates edged downward a little this week, closing the nation's leading mortgage survey at an average 6.5%, the lowest level since March. The last time fixed rate mortgages held near these numbers, the Fed Funds rate stood 50 basis points -- a full one-half of one percent -- below present levels. Five-one Hybrid ARMs went in the other direction, ticking two basis points (.02%) higher to 6.24% for the week.

After the last FOMC meeting, the Fed's statement asserted that "Economic growth has moderated" and that "inflation pressures seem likely to moderate over time," but "some inflation risks remain." Essentially, the Fed put its faith in the ability of slowing economic growth to quell rising inflation, and hoped for the economic data to bear this out. So far, that has been turned out to be a pretty fair bet, and one that the market increasingly trusts. Of course, continued moderation is the key: should growth hold at these moderate levels, inflation should diminish over time, if in an uneven pattern.

There are some signs that inflation has begun to moderate. The latest report covering the Consumer Price Index was actually somewhat better than expected, with headline CPI rising by only 0.2% for August. Stripping out food and energy costs, the so-called 'core CPI' edged higher by a like amount. Over the past year, the annualized rate for headline CPI is 3.8% and core, 2.8%. While those numbers are still thought to be rather above the Fed's preferred levels, they represent a falloff from annualized figures over the past few months (4.3% in June, 4.2% in July), and the pattern does seem to be one of gentle decline.

The latest look at the prices of Imported and Exported Goods was out this week, too. Prices for Imports climbed by 0.8% for the month of August, and have climbed by 6.6% over the past year, but ignoring the effects of petroleum that increase notches just 2.7%. As with the CPI, the recent pattern has been one of a downward trend. Goods priced for export rose by 0.4% for the month, and have risen by 5.4% over the past year. Since the export number has risen for five consecutive months, it appears as though we are also exporting a little inflation to our trading partners. Higher costs for goods and services may also serve to temper growth somewhat in those countries, with potential for inflation cooling abroad as well.

Of course, we continue to import far more goods and materials than we export. As a result, the nation's imbalance of trade got a little bigger in July, leaping to a record $68.0 billion as oil prices held in the mid-$70 per barrel range for much of the month. Thankfully, that's no longer the case, so there's some reason to expect some improvement in the trade deficit when the August data comes due. For the month, the dollar value of exports declined, while the reverse was true for imports.

Retail sales posted a meager gain during August, climbing just 0.2% for the month, although the increase was dragged downward (for a change) by slipping gasoline prices. Still, the positive number was a surprise to the upside, as forecasts called for a decline of 0.2%. Perhaps those easing gas prices provided some additional cash for last minute back-to-school spending.

The nation's utilities and factories slowed a bit in August. Industrial Production fell by 0.1%, largely due to less output by mines and utilities.
Manufacturing continues to show strength, but the percentage of factory floors in active use trimmed from 82.7% in use to 82.4% for the month. Some upward movement was seen in the localized survey of manufacturing activity in the New York Federal Reserve district, where their activity index moved to 13.8 in September from 11.0 in August.

Optimism levels among consumers pressed downward in July and August, but at least some signs of improvement have come lately. The weekly ABC News/Washington Post poll of Consumer Comfort continues its rebound, ticking higher to -13 during the week ending September 10. It stood at a near-term nadir of -19 just three weeks ago. As well, the University of Michigan's survey of Consumer Sentiment sported a mild gain in the September preliminary survey. Their gauge rose from a final 82.0 in August to an 84.4 mark at mid-month September.

With employment near 'full,' hiring has been holding at subdued levels. Then again, so have layoffs, with weekly applications for unemployment benefits holding just above the 300,000 level for much of the summer. Last week, some 308,000 new applications for benefits were filed, the lowest number since late July.

On balance, the economy is slowing slightly and seems to be pushing inflation gently in the right direction. With slower growth, though, comes a bit of a problem for the Fed. Confounding their hope for weaker growth are lower interest rates, engineered not by the Fed but the markets themselves.
In recent weeks, mortgage rates have backed off their highs by almost a half-percentage point, and applications for refinancing -- stronger than you might think, given the levels of interest rates -- have picked up again, as borrowers seek to trade in poor-performing ARMs and look to recast balance sheets. For many borrowers, that will translate into additional equity-fueled purchasing power. In addition, purchase applications, while still in a long slide, have also turned higher, at least for the moment.
Economy-wise, housing has been among the weaker performers this year, but the slowdown here is probably the biggest contributor to the period of economic placidity the Fed has worked hard to engineer.

Falling gasoline prices may add fuel to the fire as well. High prices work much like a tax, removing money from consumer wallets and funneling them in into a narrow economic channel. With prices sliding by maybe 50 cents a gallon in some markets, that could produce many millions of dollars of new spending in a hurry, flaring both growth and inflation higher at a time when a gentler trend would probably be more welcomed.

It's with this backdrop that the Fed meets. So far, their plans and forecasts seem to have largely worked out, and there has been little news since the last meeting which should make the Fed feel compelled to move interest rates. Inflation does still remain a problem, though, and even if the trend is mildly downward for the moment, the Fed probably won't feel that it has any breathing room until it's much closer to 2% than the 3% we're hanging near. So, we'll get a second pause come the close of Wednesday's meeting, but I'm still of the opinion that another quarter-percentage point move may come yet this fall. Will the committee change the statement to allude to such potential? We'll see.

For next week, the Fed's the biggest game in town, but Housing Starts and PPI are due out as well. If current trends hold, a mild PPI and falling housing starts are to be expected, and mortgage rates wander in a couple basis point range.

Thursday, September 14, 2006

Pleo the lifelike robot was born in Eagle

Article published Sep 14, 2006
by Ken Dey @ The Idaho Stateman

Pleo the lifelike robot was born in Eagle
New toy from co-inventor of Furby already creating buzz for its charismatic behavior

Idaho, say hello to Pleo — a week-old Camarsaurus dinosaur from the Jurassic era.

If you startle him, he's scared. If you talk softly and pet him, he feels better. Play with him, he's happy. Keep food away from him and he gets cranky. And if you think you can trick him into walking off a tabletop — think again.

At a coffee shop in Eagle, Pleo charmed people at neighboring tables with his impromptu performance. He wagged his tail and walked playfully across the table, stopping when he sensed the edge was near.
Pleo isn't alive, but you wouldn't know it by his charismatic performance. And inventor Caleb Chung is hoping people connect to Pleo like they would a kitten or a puppy when the $250 toy hits the market next spring.

Chung knows a few things about bringing toys to life. Chung has worked at big companies like Mattel and holds more than 20 patents. But Furby, the '90s sensation he invented with a friend, was his biggest accomplishment.
Children and adults embraced the hamster-like Furby, fascinated by the cute toy's life-like behaviors. More than 50 million Furbys — worth $1.2 billion — were sold.

Chung co-founded the company Ugobe — as in "you go and be" — to develop Pleo. The company is based in Emeryville, Calif., but its research and development lab with 10 employees is in Eagle.

Based on early interest from retailers and the buzz created online, Pleo is already shaping up to eclipse Furby.
Pleo's first public appearance was in February in Phoenix at Demo 2006, an annual showcase of new technology for corporate executives, potential investors and industry media.

The company already has raised $2.7 million from investors and will close the deal on another $8 million this month. Chung says the company has $18 million in purchase orders from retailers to carry Pleo. The toy is being marketed at children, pre-teens and adults. Chung feels there's too much competition from video games and other items to target Pleo at teens.
Chung hopes Pleo will take the fascination of Furby a step further and help people embrace the concept of artificial intelligence by showing robots with the most human trait of all: emotion.

"Furby did that with only a little bit of memory and a few sensors," Chung said. "We created a balanced illusion of life so that people accepted the product as a little sort of life form."

Pleo's not on the market yet, but it's already developing fans.
The online video of Pleo's Demo 2006 unveiling has had thousands of hits and spawned dozens of Internet blogs devoted to Pleo. At, one blogger describing himself as a "manly-macho type of guy" offered a challenge to anyone who saw the video.

"I defy you to suppress the involuntary grin that will come over you when you watch Pleo's tail curl up as Caleb strokes its lower back," the blogger said. The blogger also said Pleo will be remembered as the first artificial "life form" that made people believe it was real.
The August Forbes magazine called Pleo one of the "seven amazing robots that will change your life."

Chung and his team of developers have done everything they can to make Pleo as lifelike as possible, starting with modeling Pleo after a real baby dinosaur. The team researched to get skeletal structure and movements correct; designers wanted Pleo to move naturally like a baby dinosaur, not a robot.

Dozens of motors and sensors control Pleo's movements and responses to the environment. Sensors detect touch, light, sounds and motions. The sensors feed processors that determine Pleo's responses to stimulation. Stroking Pleo's head soothes him; yelling can scare him.
John Sosoka, Ugobe's chief technology officer in Eagle, said the company is building Pleo with accessible software. The "open source platform" will let owners individually program Pleo by downloading new behaviors from the company's Web site or write their own programs.

The company hopes this feature will set it apart from other robotic products, where behaviors are set.
"If the computer controls the interaction and the device can't really respond differently to different inputs it doesn't feel right," Sosoka said. "It's not that interesting. You figure it out and then you're done."

Neena Buck, an analyst with Strategy Analytics, an industry market research firm, said similar robotic products on the market, such as Robosapien and the Roboraptor, don't appear to have Pleo's emotional connection. Pleo is more a pet than a robot, she said.

"The design philosophy is unique," she said. "They spent a lot of time on the emotional interface so someone believes that it's alive to create a relationship between the pet and consumer."
Whether that realism will pay off in sales remains to be seen. But Chung and Sosoka see Pleo as the perfect introduction to the artificial intelligence that they say will be a big part of the future.

"As with Furby, consumers will drive the usage," Chung said. "But if at the end of the day if we've created nothing more than a new platform for learning and creativity, then we die happy."

Micron shares hit four-year high

Article published Sep 14, 2006
by Ken Dey @ The Idaho Statesman

Micron shares hit four-year high
Increased price, stock upgrade follow Boise tech giant's strong third-quarter earnings

Micron Technology's stock is trading at a four-year high this week, after a JPMorgan analyst upgraded his recommendation for the Boise company's stock based on higher prices for its primary product.

The stock recorded a high of $18.65 a share earlier this week, but pulled back somewhat as investors took profits. It closed at $18 a share Wednesday.

Over the past year, Micron stock has traded as low as $11.60 a share.
The boost in the company's stock price comes on the heels of a strong third quarter that saw revenues up nearly 25 percent over the third quarter of 2005.

Analysts say the increased stock price and improved market conditions are further good news for the company, which employs more than 10,000 people at its Boise headquarters and is the region's top private employer.
JPMorgan analyst Shawn Webster said in a research note to clients Monday that he was changing his rating from the equivalent of a hold to a buy.

Webster said the company would benefit from an increase in the price of DRAM — dynamic random access memory. DRAM chips are primarily used in personal computer applications and make up about half of Micron's business.

"Our checks indicate DRAM memory pricing continues to improve during the third quarter of 2006, ahead of our expectations for roughly flattish pricing," Webster said in his note.
Stock prices for most semiconductor companies saw a boost this week on the news that DRAM prices are expected to increase.

Bill Dezellem, with Tieton Capital Management in Yakima, Wash., said Micron's stock moved steadily up for the first part of the year, dropped back in July and is now on its way back up.
"The stock price is acting as though there is a continued increase in the level of conviction the investment community has that Micron is well positioned," Dezellem said.

Webster and other analysts say DRAM prices are being driven up by supply as companies move from DRAM production to making products like Flash memory.

Micron has done the same, but Webster said Micron still produces enough DRAM to benefit from the increased prices.
Webster expects demand for DRAM to remain strong as computer manufacturers need more memory to meet the demands of Microsoft's upcoming VISTA operating system.

Because Micron has diversified, Webster said, it's also in a better position to weather any downturn in the DRAM market.
Dezellem said demand for memory is typically strong as companies build up products for the Christmas season.

Micron fortunes have historically depended on the DRAM market. But the company has sought to insulate itself from the dramatic shifts in DRAM prices by diversifying the company with a better mix of products.

Micron's third-quarter 2006 earnings released in late June were the first time in the company's history that DRAM sales didn't account for the majority of Micron's revenue.
Company officials say they're moving to a mix where only a third of Micron revenues would be tied to DRAM. The rest would be split equally between flash memory and imaging chips.

Tuesday, September 12, 2006

Valley hiring expected to rise

Article published Sep 12, 2006
by Joe Estrella at The Idaho Stateman

Valley hiring expected to rise
Survey indicates more employers plan to add staff in 4th quarter

A majority of Treasure Valley employers will increase or maintain their staffing levels during the fourth quarter, according to a Manpower Employment Outlook Survey to be released today.

The survey found that employment in the Boise area is accelerating, with more businesses planning to add workers during the last three months of the year than did in the third quarter.

Don Holley, professor of economics at Boise State University, said a surge in late-year hiring is not surprising, given that fourth-quarter retail employment always spikes significantly ahead of the Christmas shopping season.
The Manpower report indicated that 30 percent of area companies surveyed plan to add staff between October and December, while 64 percent plan to maintain current staffing levels. Three percent of respondents expected to cut jobs, while another 3 percent were undecided.

Manpower's nationwide survey of 16,000 employers found that 28 percent expect to add payroll, while 58 percent expect no change. Eight percent plan jobs cuts, while 6 percent were undecided.
"Boise area employers have stronger hiring intentions than in the third quarter when 20 percent of companies interviewed intended to add staff, and 3 percent planned to increase head-count," said Boise-based Manpower spokeswoman Wendie Gregory, in a statement. "Employers also have more positive hiring intentions than they did a year ago, when 24 percent of companies surveyed thought employment increases were likely and 10 percent intended to cut back."
The Manpower report showed that more jobs are expected to be available in the fourth quarter in the construction, transportation/public utilities, wholesale/retail and education/services sectors.

The number of jobs in the durable and non-durable goods manufacturing, finance, insurance and real estate sectors is expected to be remain unchanged.
Holley said that with the residential homebuilding market apparently beginning to slump, the planned hiring in construction will likely be in the commercial sector, which is still trying catch up with the new housing that has been built in the Treasure Valley.

"The news about manufacturing is good for the economy, too, because that's Hewlett-Packard and Micron," he added. "There are certain industries that are critical to the economy. If Dillard's went away, another retailer would come in to take its place. But if HP, Micron, Simplot and state government went away, this town would dry up."

Monday, September 11, 2006

State labor rate stays strong

State labor rate stays strong

Seasonally adjusted unemployment in Idaho dropped to 3.3 percent in August, from 3.6 percent in July and 3.7 percent in August 2005.
More than 400 employers began operations in July, contributing to August employment growth, according to an Idaho Commerce & Labor Department press release.

The number of people working in Idaho last month totaled 735,100, about 21,000 more than a year earlier. New hires by Idaho’s more than 48,000 businesses hit 21,000 for just the fourth month since the 2001 economic slowdown. The 6,100-worker gain from July was the state’s fourth highest month-to-month increase.

Employers continued to seek and hire skilled workers, and the low unemployment rate appeared to be requiring operators in the typically lower-paying retail and food service sectors to dip deeper into the labor pool to meet manpower needs, state officials said. Education and wildland fire-related payrolls expanded.

Nearly two-thirds of the job growth occurred in the Boise–Nampa metro area.

At the same time, an Idaho county recorded a double-digit unemployment rate for the first time since August 2005. Power County’s unemployment rate, at 10.3 percent, was the highest in the state, the result of a layoff at a food processing facility.

Clearwater County at 9.6 percent and Benewah County at 9.2 percent followed. Both rely heavily on natural resource industries, state labor officials said.

Idaho has about 23,000 agriculture workers year-round, and 39,000 during peak season in July and August, Commerce & Labor spokesman Bob Fick said. Totals do not include 10,000 operators such as farm owners and unpaid family members.

Industrial, residential community proposed near BOI

Industrial, residential proposed near BOI
by Lora Volkert

A 600-acre planned community proposed for land southwest of the Boise Airport could include industrial development.
The proposal also calls for the land, currently outside Boise boundaries, to be annexed by the city.

The Hellhake Co., under the name Pleasant Valley South, has requested a rezone, land annexation and a comprehensive plan change that would allow the company to build a planned community. They are calling the development The Reserve, and want to build it on land east of the intersection of Cole Road and the New York Canal.

Boise Mayor David Bieter and other city officials have objected to planned communities in Ada County far outside city limits that could, they believe, impact city services.

Larry Sale, manager of The Reserve project, said the city of Boise has been cooperative so far.

Part of the Hellhake plan includes extending Lake Hazel Road across the New York Canal to Pleasant Valley Road, Boise Planning Director Hal Simmons said. Orchard Street would also be realigned with Gowen Road and Pleasant Valley, he said.

Most planned communities include commercial space for office and retail uses. Suggested uses for The Reserve’s business campus, which would be built north of the Lake Hazel extension, include assembly and fabrication facilities, as well as medical labs and research facilities, according to the annexation and rezone application.

The business campus would have mainly office tenants with some industrial tenants, Sale said. The proposal includes industrial instead of retail because city planners told the company they didn’t want shopping or big-box stores in the area, he said.

Sixty-five acres of housing would be built in the northwest corner of the development, according to the application. More housing, including townhouses, row houses, condos, multi-family buildings, patio homes and detached single-family dwellings, would be built south of the Lake Hazel extension, for a total of 1,800 to 2,000 housing units, Sale said.

The housing would be built over about a dozen years, he said.

An urban village would be built at the intersection of the Lake Hazel and Orchard extensions for mixed residential and commercial development.

South of the Lake Hazel extension, Hellhake plans to build an elementary school, a park and two neighborhood commercial centers with mom-and-pop stores, Sale said.

The maximum housing density would be 20 units per acre, but the density would be reduced to one to five units per acre in the southernmost part of the development, where equestrian trails are planned.

Open space and a pathway system are planned in the southwest corner of the development.

The community is to be connected by pedestrian and bike paths, according to the application.

The extension of Orchard would run through state-owned land north of the development, so the Hellhake plans include a land swap with the state.

The company plans to submit its master plan application in late September or October, Sale said.

Sacramento Builder entering Idaho Market

Idaho Business Review

Sacramento-based Corinthian Homes, which recently entered the Treasure Valley market, plans to build 1,000 homes per year once the company has geared up, which should take three to five years, Director of Sales and Marketing Alicia Lopez said.
Corinthian Homes plans to start building two subdivisions this fall.

They include 124 homes in Rockbridge northwest of Idaho Highway 44 and Plummer Road in Star, and nearly 80 in Greenlinks north of Highway 44 in eastern Middleton, Lopez said.

The company plans to start work next year on eight more projects with a total of 5,000 buildable lots, some of which will be sold to other developers, Land Development and Construction Manager Mike Greiner said.

The projects include four in Star and two in Eagle, Lopez said.

Star has six months of housing inventory and Eagle has eight months, according to Holland Realty real estate agent Dan Neely.

But most of those homes are at high price points. Corinthian’s prices are still to be determined, but Lopez said the company expects most of its Star homes to sell for under $300,000.

“You don’t see much of that in Star,” she said.

September's Kickoff

In a holiday-shortened week, the average 30-year fixed-rate mortgage (FRM) managed a minor fall, easing two basis points (.02%) to close the first week of the month at 6.53%, according to the nation's leading publisher of mortgage rates and terms. Five-one Hybrid ARMs lost eight basis points (.08%) for the week, ending at 6.22%.

With the turn of the calendar comes the start of another football season, where weekly skirmishes are played out from sandlot to stadium. On the economic stage, the chief battle this fall will pit inflation pressures against market expectations. Inflation has built a lot of momentum coming into this season, but so far has met resistance in the form of hopes that slower growth will erode price pressures. At the moment, it's a pretty even match up, but will expectations withstand the constant pounding of higher costs? It's too soon to tell.

The Fed's preferred measure of prices, the 'core' Personal Consumption Expenditures (PCE) index, has been running above what it thought to be the Fed's preferred levels for a while now. For the most part, although those costs are elevated, they haven't been joined by wage pressures, and strong levels of worker productivity have allowed businesses to pay workers more without raising prices.

However, the latest revisions to productivity and wages for the second quarter of 2006 should add a little discomfort in the trenches. Worker productivity (output per hour) was revised upward to 1.6% for the period but was still well below Q1's healthy 4.3% clip. The increase in output, though, was overwhelmed by an upwardly-revised jump in the cost of labor per unit produced, which rose by 4.9% in the quarter. The government's measure of compensation for the first quarter was also revised upward to 9% from an initial 2.5% rise. While the compensation reports are a little troubling, it's hard to know what role bonus, stock options and other one-time increases played in the first quarter's spike. Regardless of the reason, labor costs rose by a stout 5% over the past twelve months. Weak productivity gains with rising costs could add fuel to the inflation fire, bringing the Fed back into play at some point this fall.

At least one Fed Governor noted as much this week. Despite voting for a pause at the last meeting, Janet Yellen, the head of the San Francisco Fed revealed that she still holds a bias toward higher interest rates if inflation proves less transient. In the same vein, Sandra Pianalto of the Cleveland Fed noted that while contained inflation expectations allowed her to vote in favor of a pause in August, "inflation risks are still out there."

Service industries monitored by the Institute for Supply Management said that price pressures remain elevated, too. The index of 'prices paid' in their monthly report for August saw just a little moderation in cost inputs, with the index declining to 72.4 from 74.8 in July. (As a diffusion index, values over 50 indicate rising prices.) Rising too was their overall index of activity, lifting to 57.0 from 54.8 for the month, pointing to a pickup in business during August.

The Fed's own survey of regional economic conditions, called the "beige book" for the color of its cover, told a tale of softer growth in five of its twelve regions, but level growth in the remaining seven through the end of August. Labor shortages and wage pressures were noted in some districts, not on a widespread basis but especially among workers with "specialized skills." In the report, perhaps the softest area of the economy was residential housing markets, described in the summary as having "weakened throughout the nation." Weaker home sales and home building will continue to temper growth, and forecasts for future activity have been ratcheted downward to what will still be pretty solid levels.

On a more recent basis, labor markets remain resilient. Initial Unemployment claims slipped to 310,000 during the week ending September 2. That figure represented the lowest level seen since late July, and coincided nicely with a fair pickup in the weekly ABC News/Washington Post poll of consumer comfort. After plunging by five points last week, the index took back four of those, closing the week ending September 3 at -15.

Way back in July, inventories at wholesale firms climbed by 0.8%, but a still-strong sales pace kept inventories on hand rather lean. Bulging inventories might presage a slowing in imports and manufacturing, but things seem reasonable in those areas at the moment. Also in July, borrowing by consumers rose by $5.5 billion, a greatly reduced level from June's $14.1 billion spending splurge. After two strong months of borrowing on plastic ($13b in May, $13.2b in June) revolving credit rose by a meager $3.4 billion in July.

Although inflation hasn't gone away by any means, we'd be remiss if we didn't mention that there is a little good news about prices. Gasoline prices have begun to slide in recent weeks, and crude oil prices finished the week in the low $66 per barrel range, more than 10% below recent peaks. If we can hold these levels or go lower, economic growth might pick up -- lower gas prices mean more disposable income to spread throughout the economy -- and perhaps some less upward pressure in the price of goods and services in general. Unfortunately, that's probably a bit of wishful thinking right now.

With a quiet, short week behind us, next week's calendar gets a little busier; we'll look at fresh data covering retail sales, import and export prices, industrial output and a few others, notably the Consumer Price Index. At least some of the recent decline in rates has been a bit of a forward bet that inflation will continue to ease, and if the report derails that, rates will likely turn up a little. We think that the general tenor of the week will be uneven, and we'll probably end up about where we started.

Monday, September 11, marks the fifth anniversary of the terrorist attacks on America. Take a minute from your schedule to remember those innocent souls who lost their lives that day, as well as those who still struggle with those memories today.

This posting is courtesy of Bill Young, Metro Capital Mortgage, Boise.

Wednesday, September 06, 2006

Valley No. 2 for home price rises

Joe Estrella
The Idaho Statesman | Edition Date: 09-06-2006

Observers differ on what 2nd-quarter national ranking means for housing market

Treasure Valley home values in the second quarter were up 29 percent from the same quarter a year ago, resulting in the second-fastest rate of increase in home prices among metropolitan areas in the nation, according to a federal report released Tuesday. Bend, Ore., was first at nearly 37 percent.

Among the 50 states, Idaho finished third, with a 20.14 percent increase. Average Idaho home prices have risen 55 percent in the past five years and 229 percent since 1980, the report said.

Nationwide, however, the increase in home prices showed the biggest slowdown in three decades. "These data are a strong indication that the housing market is cooling in a very significant way," said James B. Lockhart, director of the Office of Federal Housing Enterprise Oversight, which released the study. The office oversees the big mortgage-finance companies Fannie Mae and Freddie Mac.

"Indeed, the deceleration appears in almost every region of the country," Lockhart said. But in the Treasure Valley, the report proves the housing market remains strong despite a drop in sales since the second quarter ended June 30, said Dan Givens of Windemere Capital Group, a Boise-based real estate firm specializing in residential resale and new construction.

Givens said he expects local 2006 sales could still exceed the 13,074 transactions record in 2005. "I'd be surprised if we didn't catch that by the end of the year," he said.

Not everyone views the local market so positively. George Tallabas, a veteran real estate agent with ReMax Advantage in Nampa, said second-quarter data is already too old to reflect the softening local market. Quoting statistics compiled by the Intermountain Multiple Listings Service, which tracks area home sales, Tallabas said 1,247 new and existing homes were for sale Tuesday in the popular $250,000 to $350,000 price range — and they are sitting on the market an average 45 days. "That was unheard of a year ago," Tallabas said. "A year ago it was two or three weeks (on the market) at most. And what I'm hearing from (real estate) agents is that they're struggling, that their (sales) numbers are clearly down."

Ted Martinez, president of Tradewinds Building Co. in Boise, and a local representative to the National Homebuilders Association, predicted that housing sales will pick up again because area homes remain affordable compared with other markets. "What the market is doing is going through a correction, which it really needed," Martinez said. "It's getting down to where it's reasonable."

The federal report said second-quarter home values in the Treasure Valley rose 5.64 percent, which translates to an annualized rate of 22.56 percent. Idaho's quarterly rate of 3.78 percent translates to an annual rate of 15.12 percent.

Average U.S. home prices rose 1.17 percent in April, May and June, compared with 3.65 percent in the second quarter of 2005 — the biggest decline in price growth since the government started keeping track of home prices in 1975, the report showed. The agency cited higher interest rates and rising inventories of homes for sale as possible reasons.

Tuesday, September 05, 2006

New bus route to link Middleton, Star, Eagle to Boise

Article published Sep 5, 2006
by Sandra Forester @ Idaho Statesman

New bus route to link Middleton, Star, Eagle to Boise
Valley Regional Transit to start Idaho 44 service April 1

Residents of Middleton, Star and Eagle who drive to work in Boise could be riding a commuter bus by April 1 — the first bus service to the three communities in at least two years.

Valley Regional Transit officials hope the planned route — the only one to serve the Idaho 44 corridor — will become as popular as the Caldwell and Nampa runs, which carry more than 5,600 people a month and saw a dramatic jump in trips in the past year.

From October 2005 to July 2006, the intercounty routes recorded 56,077 one-way trips — a 40.8 percent increase from the same period the previous year, with 39,823 trips. One round-trip commute counts as two trips.
"I saw the advantages," said Jan Sales of Nampa, who rides the 5:30 a.m. bus from behind Nampa's Karcher Mall to her government job near Maple Grove and Overland roads in Boise each day.

Sales said she started riding two weeks ago because of the convenience when a new route opened and passed by her workplace. Others in her office are considering the bus as she talks it up, she said.
"I love it," she said, adding that she looks forward to the addition of another route to Canyon County. Others catching the Nampa bus last week said they became bus riders when gas prices topped $2 a gallon. Now that prices hover near $3, they are happy with their decision.
About 100 people turned out to recent meetings Valley Regional Transit held in Middleton, Star and Eagle, and 84 responded to an online survey, leading transit officials to believe the new route will be a hit, VRT spokesman Mark Carnopis said.

Carnopis said he gets at least one call a week from Eagle residents requesting bus service or asking where they can catch a bus.
Middleton residents who attended the recent public meetings about the proposed Middleton-Boise route said traffic congestion and gas prices were driving their support for the commuter bus.

"We are definitely looking forward to it," said John Millington, an accountant who commutes from Middleton to Downtown Boise.
"Traffic's getting worse and worse," Millington said. "I don't necessarily think I'm going to save money, but I'll be able to read the paper and save wear and tear on the car."

Unlike the Ada County van-pooling services that charge a flat fee for the month regardless of whether you ride or not, the bus would allow riders to pay as they go, said Mike Dittenber, a Middleton resident who commutes to work in Boise and often travels on business.

"I'm just tired after 15-16 years of driving to Downtown Boise," Dittenber said, adding that he likes the bus services offered in many larger cities. "It's a healthy part of community."
The new VRT route will have stops in Middleton and Star, two stops in Eagle and several in Boise. Buses will make two runs in the morning and two in the evening. Times have not been set.

Valley Regional Transit has received funding commitments for the new service from Ada and Canyon counties, Middleton and Eagle, Carnopis said. Star has tentatively budgeted the money for the service, and the City Council will decide today whether to spend it.
The city had only one rider on the previous commuter coach service that had high fares of $4 and $5 per trip and wound through Caldwell, Nampa and Middleton. The City Council found it wasn't worth the funding, Star Mayor Nate Mitchell said.

However, Mitchell said, "We're cautiously optimistic that we can find enough riders to support the service."

Valley Regional Transit plans to add two daily runs between Middleton and Boise, at a cost of $159,595 per year, Carnopis said. Of that, $102,857 would come from federal funds, with $48,738 in local match. City and county governments have committed enough funding to cover the local match, he said.
Like the other express routes from Canyon County, the fares for the new Middleton line will be $2 per trip or $50 for a monthly pass.

Employment picture improves (Boise, ID)

Article published Sep 2, 2006
by Joe Estrella @ The Idaho Statesman

Idaho jobless rate drops to 3.3 percent in August

Idaho's jobless rate fell three-tenths of a percent in August to 3.3 percent, reversing a slow rise since March. The Treasure Valley jobless rate fell one-tenth of a percentage point to 2.9 percent.

Idaho Commerce and Labor Director Roger Madsen called the August report "one of the best I've seen in 30 years in Idaho."

"Population growth, especially in-migration from other states, is having a dramatic effect (on unemployment)," Madsen said in a statement.
Statistics compiled by Commerce and Labor showed that 6,100 more people found jobs in August, pushing Idaho employment to 735,100. Employment has exceeded 700,000 for 17 consecutive months.

The drop is significant because normally the state's jobless rate moves only one-tenth of a percentage point, up or down, in August, said Commerce and Labor spokesman Bob Fick. “We won’t know if it’s a trend for a few more months, but it’s a good start,” Fick said.

Idaho unemployment reached a low for the year in March, at 3.2 percent, and crept up to 3.6 percent in July. The economy’s strength has left many employers scrambling to fill jobs.

Fick said the abnormal number of new jobs was the result of hundreds of Idaho firefighters hired by the federal government last month, as well as an uptick in new teaching positions resulting from an increase in public school enrollment.

The Meridian School District, for example, this week reported that it had enrolled about 2,000 new students this year, while Nampa and Caldwell added 539 and 234, respectively. Boise school enrollment was unchanged from 2005.

“The more students you have, the more teachers you need,” Fick said.
Nationwide, employers added 128,000 jobs last month, pulling the unemployment rate down a tenth of a percentage point to 4.7 percent, according to the U.S. Labor Department’s monthly jobs report.

The national snapshot was brighter than expected, fueling hopes that the Federal Reserve will leave interest rates unchanged when it meets Sept. 20.

“Today’s report was solid and indicates that the economy is not falling away very quickly but it certainly wasn’t so spectacular that it renewed oversized fears of inflation,” said Carl Tannenbaum, chief economist at LaSalle Bank. “The report is right on the mark. Goldilocks may be coming. The economy is not too hot nor too cold.”

Wall Street responded to the national employment picture with a rise of 83.00 points, or 0.73 percent, to 11,464.15.

However, other federal reports indicate there are still obvious weak spots in the U.S. economy, including:

* Construction spending falling in July by the largest margin in nearly five years, according to the Commerce Department.

* The Institute for Supply Management reporting that the manufacturing sector grew at a slower clip in August than in July.

The Labor Department announced that wages grew by a strong 3.9 percent in the August, the largest one-month increase since June 2001.

The Associated Press contributed to this report. To offer story ideas or comments, contact reporter Joe Estrella at jestrella@ idaho statesman. com or 377-6465.

Saturday, September 02, 2006

A Mellow End to Summer

Although the actual end to summer is still weeks away, the turn of the calendar to September signals the end of long, lazy days. Along with the economy, mortgage rates spent most of the summer on a softening trend, and the final week of August was no exception. According to the nation's widest survey of retail mortgage rates, the average 30-year fixed rate mortgage (FRM) eased back by a single basis point, closing the week at an average 6.55% -- about a half-percentage point better than the peaks of early July. Five-one Hybrid ARMs edged downward, too, ending the week at 6.29%.

The downshift in economic growth since early 2006 has allowed the Federal Reserve to stop lifting interest rates for at least one meeting, and while there's little to suggest that an increase will come at the next meeting, the nation's central bankers are feeling a bit nervous. The minutes from the August FOMC meeting, at which the decision to pause was made, revealed not only some dissent (one voting member preferring another quarter-point increase in rates) but a general sense that the "risks to upside inflation were significant." Recent revisions to previous inflation estimates found that the Fed's preferred measure of core inflation has run above 2% for over two years now. This is thought to be above their level of comfort for price increases.

In the latest revisions to growth, the preliminary reading for the Gross Domestic Product for the second quarter of 2006 was moved upward to 2.9% for the period (up from 2.5% in the 'advance' measure). This puts us somewhat closer to the economy's "potential" or ability to grow without producing inflationary pressure. In the report, Personal Consumption Expenditure (PCE) measurement revealed that 'core' inflation run at a 2.8% clip in the second quarter, and higher when food and energy costs are factored in. We expect that it will take several months of slower than 'potential' growth to pull in the reins on inflation, and while we seem to be headed that way, we're certainly not there yet.

As growth has eased since the first quarter, hiring patterns have become more subdued, too. In the employment report for August, the Commerce Department noted 128,000 new hires, about as expected and continuing a pattern of mild increases begun in April. Average hourly earnings, the key "wage component" of the report rose just 0.1%, matching the smallest rise of 2006, diminishing worries that spiraling wages would foster a more permanent bout of inflation, which might require more Fed intervention. We have been under the impression that more sizable increases throughout this year were most likely worker requests to offset sizable increases in energy costs. Now that oil and gasoline prices have stabilized, perhaps wage increases will level off as well. In a separate report, the nation's official unemployment rate ticked back down one notch to 4.7%.

Near-full employment is good, but soft increases in hiring and still-high (if not increasing) prices don't exactly inspire confidence, especially when you factor in the troubles around the world, the widely-publicized one-year anniversary of government failure after Katrina and the approach of the fifth for the September 11 terrorist attacks on America. All measures of consumer attitudes have turned down in recent weeks. The ABC News/Washington Post poll of Consumer Comfort went decidedly south during the week ending August 27, slumping five points to -19; from the Conference Board, the report covering Consumer Confidence declined from 107.0 in July to 99.6 for August; and the final monthly look at Consumer Sentiment from the University of Michigan moved down to 82.0 for August after posting a meager 84.7 in July. Certainly, it's possible that some easing of happiness has come from softening real estate markets, leaving homeowners feeling somewhat less wealthy.

Incomes are rising, however. Personal Incomes rose by 0.5% in July, fresh on the heels of a 0.6% lift in June, but our spendthrift ways ate up all of that and more, as spending rose by 0.8% for the month. The nation's savings rate sported another negative reading: -0.9% for July, but revisions to that measurement made the picture over the past few years somewhat less bleak.

Of course, spending by consumers powers the economy forward. During July, Factory Orders eased less than expected, sliding by 0.6% where a full one-point decline was forecast. Like other series covering orders for goods, this one runs hot and cold. For example, July's decline came after a 1.5% lift in June. Regardless, three measurements of manufacturing activity pointed to solid if unspectacular growth. Regional reports from the New York and Kansas City Federal Reserve banks saw faster expansion in August, and a Chicago-area survey of Purchasing Managers noted just a minor easing in strength from July to August. Their index edged down to 57.1 from 57.9 during the month, with 50 being a break-even point (and readings toward 60 denoting pretty fair strength). On the broadest basis was the national look from the Institute for Supply Management, whose index of factory health held just about steady in August at 54.5, just a whisker below the 54.7 seen in July. The percentage of firms reporting higher input costs remained elevated but trailed back a little.

With the weakening real estate market becoming a central feature in the economic slowdown, and high levels of unsold inventory still weighing on the market, it's unsurprising that Construction Spending would slump. During July, spending for new projects fell by 1.2%, with residential spending falling by a full 2%, the fourth consecutive negative reading for homebuilding. According to the most recent reports, inventory levels are still rising, so it may be a while before building projects add much to economic growth.

While hiring has been tepid, at least layoffs have been pretty level. For the week ending August 26, some 316,000 new applications for unemployment benefits were filed, about the same number as the last few weeks. As well, a long-standing measure of help-wanted advertising gave a darker picture of potential job openings over the last two months, so it appears that low levels of hiring will probably persist as we wend our way deeper into this economic expansion.

The collective sigh of relief seen in the market a few weeks ago when the Fed decided to pause is continuing, and probably will for a little while yet. Despite the wide slate of news above, bond markets barely budged as it appears that everything is proceeding as expected, at least for the moment. Inflation seems to be leveling, growth has settled at moderate levels and with a little luck going forward, we could be setting the stage for a very solid period just ahead. That's a bit off into the future. Next week is a holiday-shortened one as we celebrate the American Worker. How fitting that perhaps the biggest report due next week is the one covering worker productivity?

With the "big sigh" over and the reinforcing data for such a relaxed stance in place, there isn't much more room for mortgage rates to fall, sans a downturn in growth. For next week, anyway, rates might wobble by a basis point or two, but not enough to get excited about. Any patterns likely to emerge are at least a couple weeks away, if history is any guide.

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