school construction a local snapshot -...

A LOC AL SNAPSHOTSchool Construction

2006 2007 2008 2009 2010 2011

W I N T E R B U L L E T I N • J a n u a r y 2 0 1 2

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Greater Houston Area

135 Elections

165 Elections

131 Elections

79 Elections • $1,599,164,995

107 Elections • $3,228,447,000

50 Elections • $1,651,070,000

29 Elections • $1,498,533,033

$ 2 4 6 7 8 9 10 1 12 (Billion)

School Bonds that Have Carried in Texas

$6,164,297,085

$11,148,510,479

$8,686,683,101

Source: www.texasisd.com

NEW YEAR aNEW OUTLOOK

29 Total School District Elections16 Bond Referendums Passed13 Bond Referendums Failed55% Total Bonds Approved

November 2011 Statewide Bond Referendum Results

Nov

May

Has the turbulence and volatility of the Education market settled to calmer waters or is it the calm before the storm?

Is this the new norm for what we can expect regarding budget constraints, volume of school construction and mandates from the state legislature?

You decide. Texas Schools Fight Back on School FinancingThe Texas school financing system is under attack by school districts all over the state and will probably gain momentum throughout the year. Lawsuits have already been filed by the Texas Taxpayer and Student Fairness Coalition (representing 340 school districts), the Mexican American Legal Defense and Educational Fund (asserting the disparities in funding between rich and poor districts), and another coalition of property-wealthy districts. There is no question that the State of Texas will have to address the issues of school financing inadequacy, inefficiency and inequity in the next legislative session.

Many Texas Schools Past Their Life ExpectancyA 2005 survey conducted by the Texas A&M University Bush School of Government and Public Service shows that 15% of all Texas schools had already exceeded their lifetime expectancy of 50 years; resulting in 1,476 general purpose school buildings needing replacement. It is important to note that the ages of the buildings were calculated from the date of their most recent renovation which would lead one to believe the number of schools needing replacement is now much higher than the original 15%. Major renovations and school replacement trends have already started in many districts throughout the state due to aging.

Lake Travis ISD $158,500,000

San Antonio

Dallas

Houston

Austin

North East ISD $399,400,000u

Pasadena ISD $240,100,000v

Lamar CISD $249,159,215w

Mansfield ISD $198,500,000x

y

Five Largest Bond dollar amounts

May 2012 Bond Elections must be called by March 17th (45 days prior to Election Day).

u

u

u

2011 total u

u

79 Elections$3,149,603,033

continued on page 2


Material Cost Rising + Compressed Construction Market = Risk to Construction Companies“Prices are likely to be as volatile in 2012 as they were in 2011,” reported AGC of America chief economist Ken Simonson. A recent press release shows the cost of construction materials climbed 6.2% in 2011. The increase in material costs coupled with the declining public sector investments have put many contractors and subcontractors in a position of deteriorating financial stability. As a result, surety companies issuing Performance and Payment Bonds have tightened their underwriting guidelines based on these concerns.

Declining Birth Rate and People Moving toTexasAccording to the U.S. Census Bureau, Texas’ annual growth rate in births peaked in 2007 at 407,625 followed by a decline in 2008 and 2009. It is unclear as to whether this is going to be a continuing trend or a temporary dip in the growth curve.

Texas has seen an increase in new students entering the education system as a result of people moving to Texas. Although Texas topped the list for migration in 2010 with 75,000 people, this was only 40% of the previous decade average which was 200,000. Consequently, the student population growth should slow down for the short term.

Houston Economy on the RiseOn the brighter side of things, the Greater Houston Partnership is forecasting 84,600 new jobs for the Houston MSA in 2012. Drivers for this increase include energy prices and the current drilling boom. According to the Partnership, each job in energy supports an additional two to five jobs elsewhere in the economy.

It is believed that Houston is now moving from Recovery to Expansion. If this is the case, it is only a matter of time before we see growth in private sector construction, resulting in increased tax receipts.

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Source: Houston Area Realtors

Houston Population

Source: Institute for Regional Forecasting, updated annually

GROWTH PROJECTIONS:

Counties include: Brazoria, Chambers, Fort Bend, Galveston, Harris, Liberty, Montgomery & Waller

2010: 5,828,8392015: 6,408,1172020: 7,294,0452025: 8,118,1892030: 8,888,9912035: 9,567,2342040: 10,145,645

Total Growth 2010-2040: 4,316,806

Avg. Growth per year 2010-2040: 143,893

% increase in growth 2010-2040: 74.1%

Avg. % growth/year 2010-2040: 2.5%

continued from page 1

Houston Housing INDICATORS:

� Sales volume is up 11.4% compared to last year

� Total property sales are up 10.6% from a year ago

� Foreclosure sales are up 9.2% year over year

� 6.2 months inventory of single-family homes is the lowest level since January 2010 (compares favorably to the national average of 8 months).

Houston MSA Nov 2010 YTD Nov 2011 YTD % ChangeConstruction Contracts Source: McGraw-Hill Construction

Non-Residential $3.00 B $2.96 B -1%Residential $4.56 B $4.68 B 3%YTD Total $7.56 B $7.64 B 1%

City of Houston Construction Permits Source: GHP

Nov 2010 YTD Nov 2011 YTD % Change

Non-Residential $2.02 B $2.23 B 10.8%Residential $905 M $1.08 B 20.2%YTD Total $2.92 B $3.32 B 13.7%

PMI - Houston Indicators Index Source: Purchasing Managers Index Monthly

Nov 2010 YTD Nov 2011 YTD % Change

Monthly 58.2 61.6 5.8%YTD Average 54.5 59.9 9.9%

The PMI is a leading indicator of economic conditions for Houston. An index number below 50 represents a contracting economy; readings above 50 indicate an expanding economy. The PMI has been above 50 since October 2009 which indicates a continued expansion in Houston’s economy.

Oct 2010 Oct 2011 % Change

West Texas Intermediate Spot Market Price

$77.71 $94.91 22.1%

Henry Hub Natural Gas Price $4.11 $4.18 1.7%

Source: Baker Hughes, Energy Information Administration

Oil & Natural Gas Prices

Source: Texas Workforce Commission, November 2011

10

5

0

Houston8.4%

Texas 8.2%

National9.0%

Unemployment Rate


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Construction Career Collaborative -- C3 --

* This Bulletin is posted on both the AGC and CEFPI websites. Your feedback/suggestions are appreciated.

The success of the previous three AGC/CEFPI joint task forces on developing best practices handbooks for CSP, CM@Risk and Hiring an Architect, have led to the creation of the current joint task force to produce a recommended practices handbook focusing on successful project close-out.

Project Close-out has been considered by many in the construction industry the most difficult phase of a project because it requires a coordinated effort of all parties involved in the construction of the project.

Succinctly put, project close-out is the phase of a project as a facility nears completion where a number of procedures are involved in closing out a project: construction work punch lists are being completed, the project is prepared for occupancy and use, and the design team and contractor complete their contractual obligations to the Owner. This process strives to reconcile many competing interests:

� an Owner who wants the project finished

� the resolution of all outstanding claims or disputes

� a maintenance staff that needs to be trained on how to operate the facility

� a contractor, multiple subcontractors and suppliers who want to finish the work, provide warranties and receive final payment.

The purpose of this handbook is to provide an overview of best practices and strategies for managing an effective project close-out effort. The goal is to keep the close-out process collaborative and efficient to minimize the stress normally associated with project close-out and to reduce the amount of time required to achieve final project completion.

The Close-Out Handbook is near final draft form and will be reviewed by the AGC and CEFPI boards early this spring. Be on the lookout - both organizations’ websites will release of the final document later this spring.

Best Practices Handbook for Project Close-out New Handbook Coming Soon!


The Construction Career Collaborative (C3), an alliance of Owners, Contractors and Specialty Contractors in Houston, was established in 2010 to positively affect the growth of a sustainable workforce for the commercial construction industry in the Greater Houston region. In November 2011, C3 took another major step in advancing its mission by gaining the support and participation of privately-owned Texas Children’s Hospital and publicly-owned M.D. Anderson Cancer Center. Both institutions have agreed to include the Collaborative guidelines in their specifications for upcoming projects. The specifications that will be added include the C3 requirements regarding hourly and overtime payment standards, safety and craft training. “Because private and public owners sometimes go to market with different requirements, it was important that we have one of each to test our data collection and audit process. We are very excited that two such prestigious owners would join us in launching this program”, said Jim Stevenson, W.S. Bellows CEO and Chairman of the C3 Management Committee. “We look forward to additional owners and contractors joining with us in our efforts to ensure a more responsible construction industry workforce.”

For more information, please visit: www.constructioncareercollaborative.org

u p c o m i n gFeb 17 Best Practices SessionMar 22 Chapter Meeting/Facility Tour

April 12-14 CEFPI Southern Conference; Omni-Houston Innovate Not Amputate - Turning Challenge Into Opportunity

Jan 26 BIM 101: An Introduction to Building Information Modeling

Jan 27 CM-BIM Exam and Risk Allocation

Feb 21 BIM Unit 2: Technology

Mar 21 BIM Unit 3: Contract Negotiation and Risk AllocationA

GC

CE

FP

I


Report on the 2011 Texas Legislative Session City of Houston Residential Plat Submittals

5,796 Bills were introduced in the 2011 Texas legislative session. 1,378 were passed. At least 13 are significant to the Construction Industry in Texas. Probably the three most important are:

(1) anti-indemnity bill, which voids broad form indemnity agreements, affects additional insured status

(2) the new Public-Private Partnership Bill (“P3” for short)

(3) the lien release bill, which mandates use of new forms for releases

So, which of these will affect construction of public schools in Texas, and when?

HB 2093 limits broad form indemnity clauses and additional insured requirements. It is codified in Ch. 151 of the Insurance Code. Offending clauses are declared void to the extent that they violate the statute. [So an indemnity clause which does not follow the new law will be void, and there may be no indemnity left in the contract at all.] It similarly affects additional insured requirements in the contract. Will it affect school construction? This Bill excludes “a public work project of a municipality” from its application, but it does not expressly exclude school construction. “Municipality” is not defined in the statute. Since a school district is not a “municipality,” we believe that this new law does apply to school construction. Effective 1/1/12.

SB 1048 allows governmental agencies to request proposals or to receive unsolicited proposals. But there is a sunshine requirement, and public notice must be given and a hearing conducted before a proposal can be approved. This adds Sec. 2267 to the Texas Government Code. It is known as Public-Private Partnership, or “P3.” It authorizes:

(1) competitive bidding

(2) competitive sealed proposals

(3) Construction Manager-Agent

(4) Construction Manager at Risk

(5) Design-Build

(6) Job Order Contracting

See also Education Code Sec. 44.0351 and .0352 (re: other competitive bidding and CSPs). Contracts should be awarded on a best value basis. Effective 9/1/11.

HB 1456 declares void to any releases which differ substantially from the forms set out in the new statute. But it only applies to private projects, and not to public schools. Texas Prop. Code Sec. 53.281.

Source: David Peden, Chair of the Construction Law Group, Porter Hedges LLP

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School District Single Family Multi-Family Total Units Share of Units

Aldine 176 0 176 1.2%Alief 70 0 70 0.5%Channelview 6 0 6 0.0%Clear Creek 0 0 0 0.0%Conroe 311 0 311 2.1%Crosby 0 0 0 0.0%Cypress-Fairbanks 2,703 0 2,703 18.4%Dayton 0 0 0 0.0%Fort Bend 1,685 0 1,685 11.5%Galena Park 0 0 0 0.0%Houston 1,079 311 1,390 9.5%Huffman 131 0 131 0.9%Humble 730 514 1,244 8.5%Katy 3,197 0 3,197 21.8%Klein 418 0 418 2.9%Lamar 0 0 0 0.0%Magnolia 0 0 0 0.0%New Caney 560 0 560 3.8%North Forest 0 0 0 0.0%Pasadena 134 0 134 0.9%Royal 0 0 0 0.0%Sheldon 0 228 228 1.6%Spring 2 0 2 0.0%Spring Branch 522 0 522 3.6%Tomball 1,847 0 1,847 12.6%Waller 42 0 42 0.3%

13,613 1,053 14,666 100.0%

29332

City of Houston Residential Plat SubmittalsNovember, 2010 to November, 2011

Source: Dr. Pat Guseman, Population and Survey Analysts

School District Single Family Multi-Family Total Units Share of Units

Aldine 176 0 176 1.2%Alief 70 0 70 0.5%Channelview 6 0 6 0.0%Clear Creek 0 0 0 0.0%Conroe 311 0 311 2.1%Crosby 0 0 0 0.0%Cypress-Fairbanks 2,703 0 2,703 18.4%Dayton 0 0 0 0.0%Fort Bend 1,685 0 1,685 11.5%Galena Park 0 0 0 0.0%Houston 1,079 311 1,390 9.5%Huffman 131 0 131 0.9%Humble 730 514 1,244 8.5%Katy 3,197 0 3,197 21.8%Klein 418 0 418 2.9%Lamar 0 0 0 0.0%Magnolia 0 0 0 0.0%New Caney 560 0 560 3.8%North Forest 0 0 0 0.0%Pasadena 134 0 134 0.9%Royal 0 0 0 0.0%Sheldon 0 228 228 1.6%Spring 2 0 2 0.0%Spring Branch 522 0 522 3.6%Tomball 1,847 0 1,847 12.6%Waller 42 0 42 0.3%

13,613 1,053 14,666 100.0%

29332

City of Houston Residential Plat SubmittalsNovember, 2010 to November, 2011

Residential platting activity for the City of Houston is split among 26 school districts – shown below – for the 12 months ending in November, 2011.

Residential platting activity for the City of Houston


Near-Term Trends in Houston’s Planned Housing DevelopmentsSchool districts offer the best means of assessing residential and population growth – since they have immutable boundaries. And, schools typically rank highest among other quality of life factors – as residents seek a good place to live – ironically, whether these residents are 22 or 82.

As seen on the previous page, residential platting activity for the City of Houston is split among 26 school districts for the 12 months ending in November 2011. Platted housing units have increased by 8% relative to the end of year summary in November 2010 – slightly lower than annual counts 6 months ago. Katy ISD had almost 22% of all new housing units platted, followed by Cy-Fair ISD, Tomball ISD, Fort Bend ISD, Houston ISD, and Humble ISD. Together, these six districts captured 82% of the total 14,666 newly platted residential units.

Current Student Trends and Their Impacts on School Construction NeedsPASA assessed student growth trends based on Fall 2011 telephone interviews with the 64 school districts (in the Houston-Sugar Land-Baytown metro statistical area). For this 2011-12 school year, Cy-Fair ISD, followed by Conroe ISD, and Katy ISD, all gained between 1,200 and 1,900 students, despite continued economic stagnation.

Big districts, such as Houston ISD, lost over 1,600 students and Fort Bend ISD gained only 250 this past school year, based on PASA’s survey. It is important to understand the extent to which a district is “built-out” in order to assess future school construction needs. In sum, mature districts offer less construction potential, other than the important needs to replenish old infrastructure and update school facilities. The districts that could be labeled as “mature” include Fort Bend ISD, Alief ISD, Spring Branch ISD, Pasadena ISD, Houston ISD, and other highly dense districts in or near the urban core.

In the past five years, the increase of students in the Houston metro area has formed a crescent-shape. From Humble ISD on the east, up through Conroe ISD, and over to Klein ISD, Cy-Fair ISD, Katy ISD, and down to Lamar CISD – the school districts in this crescent each added more than 4,000 students.

Also in the past five years, Alvin ISD had the highest percentage increase at 28%, with Sheldon ISD at 26%, followed by Katy, Lamar, and Montgomery – all three increasing by 21%.

In evaluating school planning and construction needs, any growth of 3% or greater per year is considered high growth in our “new normal” economic environment – whereas 6% was considered high growth for Houston area school districts in the boom years of 2001-2007. This past year, Alvin ISD, followed by Sheldon ISD led in percent growth.

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Near-Term Trends in Houston’s Planned Housing Development


The Locational Configuration of Houston Area Growth in the Long-TermWith a continued improvement in unemployment rates -- and the highest increase in new jobs in the U.S. – Houston area residents are growing more positive regarding their economic futures. But, the demographics of area school districts suggest that Houston is simply better than elsewhere, with several years of economic recovery down the road. Also, the high level of immigration and the use of easily-accessible mortgages, both of which spawned one of the Houston region’s biggest booms, will not be seen again.

One way that PASA estimates the locational configuration of future housing and population growth is via near-term, major infrastructure improvements. The new construction of the Grand Parkway from I-10 northward to US 290, and the 2008 completion of the Parkway down to SH 146 in Baytown (i.e., Goose Creek CISD) will create thousands of new homes as the economy improves. Also, the Parkway’s future impact on Spring ISD and Klein ISD (after the 2014-15 completion of the ExxonMobil complex) will open up the last large parcels in that Houston sector which have been long-ignored.

It is these types of overall improvements, as well as the localized new arterials, that will help forecast more specifically high growth locations in the near future. Significant growth in school districts is increasingly dependent on major new infrastructure projects – to encourage the creation of future neighborhoods, and commerce, in 2012 and beyond.

Growth Trends in Houston Area School Districts – 2012 and BeyondSource: Dr. Pat Guseman, Population and Survey Analysts


Source: Texas Education Agency, Public Education Information Management System Division

Galveston

Montgomery

Waller

Harris

FortBend

BrazosISD

2.3%

SplendoraISD

3.9%

Katy ISD21.1%

ShepherdISD

TomballISD

HoustonISD

-0.2%

GalenaPark ISD3.1%

KleinISD11%

Deer ParkISD

3.1%

New CaneyISD

La PorteISD

Coldspring-OakhurstCISD

Cypress-FairbanksISD

17.2%

Pearland ISD18.3%

PasadenaISD

6.2%

Willis ISD14.2%

Alief ISD-0.2%

SpringBranch ISD

4.6%

ConroeISD

18.5%

BarbersHillISD

CrosbyISD

7.5%

BolingISD

TarkingtonISD

-3.9%

HuffmanISD

6.8%

RoyalISD

7.6%

FriendswoodISD1%

SheldonISD

26.1%Channelview

ISD5.3%

NorthForest

ISD

RichardsISD

ClearCreek ISD

5.5%

MontgomeryISD21%

WallerISD

10.8%

MagnoliaISD

14.3%

Anderson-ShiroCISD

Hitchcock ISD

La MarqueISD

-21.9%

Alvin ISD27.8%

AngletonISD

Needville ISD1.6%

LamarCISD21.4%

NavasotaISD

0.4%

GooseCreek CISD

6.2%

ClevelandISD

7.6%

Dayton ISD-0.1%

StaffordMSD

SantaFe ISD0.7%

HempsteadISD

HumbleISD

14.3%AldineISD9%

Spring ISD13.7%

FortBend ISD

3.3%Water BodiesCounties

Percent Change< -2%-1.9% - 0%0.1% - 3%3.1% - 7.5%7.6% - 15%> 15%

Population & Survey Analysts0 6 123 Miles[

5-Year Change: 2006-07 to 2011-12Percent Change in School Distr ict Enrol lment

Houston(based on pre-PEIMS estimates in September 2011)

School District Enrollment DataSeptember 2011

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Source: Texas Education Agency, Public Education Information Management System Division

BrazosISD

3.04%

SplendoraISD

0.26%

Katy ISD1.98%

Shepherd ISD

TomballISD

4.27%

HoustonISD

-0.81%

GalenaPark ISD

1.16%

KleinISD

1.91%

Deer Park ISD1.72%

New CaneyISD

La PorteISD

Coldspring-OakhurstCISD

Cypress-FairbanksISD

1.79%

Pearland ISD2.35%

PasadenaISD

1.37%

Willis ISD0.45%

Alief ISD-0.41%

SpringBranch ISD

2.13%

ConroeISD

2.96%

BarbersHill ISD

CrosbyISD

-0.98%

BolingISD

TarkingtonISD

-0.58%

HuffmanISD

3.54%

RoyalISD

0.34%

FriendswoodISD

-1.31%

SheldonISD

4.35%Channelview ISD

1.18%

NorthForest

ISD

RichardsISD

ClearCreek ISD

-2.43%

MontgomeryISD

0.84%

Waller ISD3.06%

MagnoliaISD

1.16%

Hitchcock ISD

La MarqueISD

-2.08%

Alvin ISD4.91%

AngletonISD

Needville ISD2.5%

LamarCISD2.57%

NavasotaISD

1.5%

DickinsonISD

2.38%

GooseCreek CISD

1.26%

ClevelandISD

-3.23%

Dayton ISD0.75%

StaffordMSD

SantaFe ISD2.06%

HempsteadISD

HumbleISD

-0.25%AldineISD

1.54%

Spring ISD0.97%

FortBend ISD

0.36%Water BodiesCounties

Percent Change< -2%-1.9% - 0%0.1% - 1%1.1% - 2%2.1% - 3%> 3%

Population & Survey Analysts0 6 123 Miles

Percent Change in School Distr ict Enrol lment

School District Enrollment DataSeptember 2011

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