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Getting in with the Big Boise

Somewhere between the foothills and the farmland, Boise rambles, rolls, and races to the horizon. But, so far, there's nothing stopping this burgeoning capital city's inevitable gold rush. Not the flood of newcomers flocking in for a flourishing job market. Not the waves of investors hunting for homes in its recreation-rich setting. And certainly not the shortage of land.

Once upon a time, Idaho may have been nothing more than the sleepy homestead of potato farmers and ranchers. Now, the state—the nation's third-fastest-growing—is shedding its image as the West Coast's “quiet corner.”

An unprecedented building boom has swept throughout the Treasure Valley, home to a half-dozen fast-growing cities including Boise, Meridian, Nampa, and Caldwell. And while it's dominated by smaller local builders today, analyst Stanley Duobinis, president of Millersville, Md.-based Crystal Ball Economics, says the expanding metropolis has just what it takes to entice the big guys.

“I call it ‘California without the ocean,'” says Duobinis, who forecasts up-and-coming housing markets. “Boise has been and will be a pretty strong market.”

Local builders claim that big builders—D.R. Horton, for one—are already blazing inroads into Boise, quietly amassing holdings and acreage. While no foundations have yet been laid by any national builders, many believe the wave's crest will break any day now.

“National builders haven't been in Boise before because the margins weren't enough to make it pencil for the big builders,” says David Hale, president of Boise-based Hale Development, which specializes in the city's expanding infill market. “Last year, we heard the first national builder was coming, but there's no product yet. This [2005] is the year that Boise got put on the map.”

Big builders are reluctant to share their expansion strategies in Idaho.

“Unfortunately, we can't comment on a market until we've gone vertical,” says Shannon Farrell, communications coordinator for D.R. Horton. “We don't count a market until we've got houses going up.”

On paper, Boise and its surrounding locales couldn't look better. The area's population has nearly doubled over the past decade, growing an average of about 4 percent a year, buoyed by a blossoming job market that economists and city leaders say will continue its upward march. Last year, Forbes Magazine named Boise the top place in the nation to do business and pursue a career. With large numbers of educated workers and relatively low costs of doing business, the area has lured such high-tech companies as Intel, Hewlett-Packard, and Compaq, while creating a groundswell of government jobs and careers in health care and education.

“One of the big advantages of the mountain state cities is the fact that they have a good mid-level employment base without the congestion and costs of operating in a big city,” Duobinis says. “Similar to Salt Lake City, Denver, and Phoenix, Boise has enjoyed a good market for manufacturing circuitry because of its dry climate.”

Like other once-overlooked Western regions, the Boise area has benefited from the flight of Californians to more affordable neighboring states. At the end of 2005, the Boise area relished a record low unemployment rate of 3.3 percent—lower than the national average of 4.9 percent—and added 8,900 jobs in one year, a 3.6 percent growth rate that promises to continue, according to Hanley Wood Market Intelligence (HWMI). In addition, Boise-area residents reap higher paychecks than the national average, with a median income of $46,140, according to the Ida-ho Department of Commerce and Labor.

Despite decreasing affordability over the past couple of years, housing prices in Boise's Ada County and neighboring Canyon County remain a bargain. By the end of 2004, the median existing home price in the Boise metro area climbed 4 percent, from $130,600 to $135,900 for single-family detached homes, according to HWMI. Those figures, coupled with another promising statistic—soaring numbers of young people—mean that record numbers of people should be buying homes over the coming years, according to Philip Hopkins, managing director of U.S. Regional Services for Global Insight. By 2010, nearly 31 percent of Boise's population will be between the ages of 25 and 44—prime home buying years—according Hopkins' projections.

“A lot of people have discovered Ida-ho,” says Chris Mooney, executive officer for the Ada County Association of Realtors. “Especially as it relates to Seattle, Portland, and Spokane, we're a much better buy.”

While the Boise area has yet to see many big national builders, local companies and officials have long known that the explosion is just over the horizon.

Indeed, last year was Boise's best building year in the past five, says Jenifer Gilliland, the city building division manager. The city issued 953 permits for single-family dwellings and a total of 16,564 overall building permits, which include multifamily units and a surge in various types of infill.

“We've been booming almost nonstop for the past 10 years, so things are definitely going on here,” Gilliland says. “We're seeing that some of the new housing [is] getting more expensive.”

But, as building officials throughout Southwestern Idaho note, the real growth is in Boise's suburbs, where Gilliland says, the residential surge is “going gang-busters.”

In bedroom communities like Meridian, Nampa, and Caldwell—all of which are within a few miles of Boise—building officials report record-breaking numbers of permits issued in 2005. According to HWMI, building permits issued throughout the region, which includes five counties and the city of Boise, increased by 14 percent in 2004 to a total of 8,895 for both single-family and multifamily homes. For 2005, HWMI expects permits for single-family dwellings in that area alone to have risen to 9,337, up from 7,843 at the end of 2004.

Most of the new homes outside Boise are taking root in sprawling 100-plus-acre subdivisions, replacing former farmland and selling out before the projects have broken ground. The hottest products at the moment are low-density, single-family detached homes in large, planned communities, says Dennis Davis, building official for the City of Nampa, about 20 miles away. At the moment, most of the building in Boise is taking the shape of single-family homes on infill lots, while several planned communities within city boundaries have yet to break ground.

“A lot of people commute to Boise [from Nampa],” Davis says. “The lots are all sold before the housing is even built. The developers are buying them as fast as they can. And we're processing them as fast as we can.”

It's a familiar tale across the region, with innumerable acres of farmland ripe for the picking. In Nampa, city officials are just beginning to plat an additional 5,000 lots on the city's north side, Davis says. Just outside of the Boise city limits, Arizona-based SunCor Development is master planning a new community called Avimor on 27,000 acres of land stretching across three counties, according to company officials. Within Boise, the city's first master planned community of roughly 3,000 homes is shaping up at Harris Ranch (see sidebar at left).

“With the growth, the market succeeds for buyers and sellers,” says Aaron Dressen, operations manager for Pioneer Homes—one of Boise's top five builders—which constructs about 250 homes a year. “Everything is busy.”

So far, Treasure Valley, which unfolds between the Boise Foothills to the southwest and includes the Boise River and miles of flat lowlands, has plenty of room to grow. While more than half of Ada County is public land, there are still many acres of land held by private landowners, best tapped through local agents who know the entitlement process, say building officials.

“We're not completely built out,” says Gilliland, “but certainly the most easily developed land is already developed, and we're trying to keep from getting completely landlocked. Still, there's room to grow.”

Despite a generally positive attitude toward growth in Idaho, not everything is smooth sailing. For one, having a large amount of undeveloped land means having a lot of undeveloped facilities and infrastructure.

The single largest barrier for home developers, says Ron Minegar, director of project development for Boise-based Group One Real Estate, is inadequate roads leading to large parcels of land. “Much of the speculation for land is contingent on infrastructure,” says Minegar, who oversees 180 real estate agents who specialize in making deals for large, planned communities. “A lot of developers are faced with inadequate connecting roads, with some municipalities having a road impact fee. That has a significant impact on upfront costs.”

Across the state, impact fees are assessed at the rate of about $1,300 a dwelling, which goes to parks, fire, and police departments. But some municipalities charge an additional impact fee for other services, including irrigation and sewer capacity. In Nampa, Davis estimates that impact fees can cost from $5,000 to $6,000 a home.

Infrastructure, sewer, and facilities challenges can slow the entitlement process up for months. There is no average time frame due to the relatively remote areas that developers are now searching, Minegar says. “The entitlement process depends on the proposal. From the time a landowner and a developer shake hands, I see that it takes on average about one year to see wood on the property.”

Like most communities going through a boom, another hurdle to clear is escalating land prices. In the Boise area, some fear that a flood of out-of-state investors may be creating an artificial bubble, most evident in the rising cost of homes and land. In the first nine months of 2005, Boise ranked fourth in the nation for its share of home loans taken out by investors, according to LoanPerformance, a company that tracks mortgage data.

Minegar says that during the past six years, he's seen land prices go up eight or 10 times. The average price for raw land in the Boise region is about $100,000 an acre, he says. “The leak in the bubble may be because land prices have gone up so much,” Minegar says. “If you're paying $100,000 an acre, which will yield three homes, you'd expect that there will be some improvements or services nearby. That's not always the case.

Growing Pains

Boise's growth spurt has ignited talks of creating a regional land-use plan that could add up to more restrictions on where builders lay their foundations. While still on the drawing board, the “Blueprint for Good Growth” and “Communities in Motion” are two long-range plans now being weighed by city, county, and transportation officials that could drastically transform Southwest Idaho. While the impact of such regional planning efforts is still unknown, some of their goals include designated growth areas, higher design standards, denser development, and more public space.

“These efforts came out because the highway department said, ‘You people are growing so fast, we can't even keep up with the maintenance, let alone build new roads,' ” explains Terri Schorzman, who works for COMPASS, the Community Planning Association of Southwest Idaho, which is spearheading the efforts. “We're trying to manage the growth and find the best use for our transportation dollars.”

The Blueprint for Good Growth, a land-use and transportation study, sketches out development patterns in Ada County's six cities—Boise, Eagle, Garden City, Kuna, Meridian, and Star—and will pinpoint highway and infrastructure needs. Communities in Motion is a transportation plan mandated by the federal government that extends throughout the Treasure Valley's six counties—Ada, Boise, Canyon, Elmore, Gem, and Payette—and will direct potential policy changes.

When could these policies be put in place? The timeline is uncertain, as city and county leaders across jurisdictions will all have to jump on board in order for the plan to work. According to Schorzman, that could take place as early as 2007—or not at all.

“We've had really good public involvement and public response, but we can't go out and mandate all the cities to adopt ordinances,” Schorzman says. “There's still a lot of unknowns as to whether these plans will come alive or sit on the shelf and get lost.”

But some say that there is growing momentum behind the plans, not to mention an ever-evident need to have a regional approach to growth. The Boise area's boom has led to congested roadways, over-taxed sewage systems, and political battles between city and county officials. Growing alarm among residents has led to stepped-up neighborhood opposition to development.

“We're really in an antagonistic situation right now,” says Hal Simmons, Boise's planning director. “There's no agreement between jurisdictions where the growth should go.”

In Boise, housing developments are eating into the city's growth boundary, which had been set aside to accommodate up to 20 years of growth. Now, says Simmons, that land will probably only accommodate about a decade's worth before the city will have to expand further. “We are now in a position of competing for who's going to control the development out there,” Simmons says. “We always thought we'd deal with when we got there, but now we will have to make it part of all our efforts to coordinate regionally.”

Regardless of when the changes take place, Jon Barrett, coordinator of Idaho Smart Growth, believes that new ideals are sweeping the Boise area—new ideals that promote greater mixed-use development and sustainable building practices.

“I think most people agree that we need a real transit system and more compact and mixed-use developments,” Barrett says. “We all agree we need healthy downtowns. We want to change the way that this valley is growing.”

Corey Barton, president, Corey Barton Homes BRIEF BIO: A native of Treasure Valley, Barton started as a one-man business, operating out of his pick-up truck in 1992. Since then, Idaho's largest builder has completed more than 7,000 homes in 35 communities throughout the area. Last year, Barton, who started as a framer, built more than 2,000 homes, almost twice as many as his nearest competitor. His homes range in price from $115,000 to $350,000.

David Hale, president, Hale Development (infill specialist) BRIEF BIO: Hale moved to Boise nine years ago from Portland, Ore., where he grew frustrated by urban growth restrictions. In Boise, he found the opportunity to carve out a niche in infill development. While most builders scope out large, sprawling tracts for subdivisions, Hale hunts for small, urban lots with central locations, bound to skyrocket in value.

“As my building and development philosophy has evolved over time, so have my environmental practices,” Hale says. “Infill building is good for Boise and good for the community as a whole.” Hale takes underused and under-developed property and transforms it into row-houses, townhouses, or detached single-family homes, an evolution that's greeted with open arms by Boise planning officials. Notable projects: Hale recently purchased six blocks in downtown Boise, where nothing but dilapidated buildings used to sit. He renamed the area “The Linen District,” and he now plans to build a mixed-use commercial, retail, and residential project with an art gallery, a restaurant, and coffee shops adjacent to a redeveloped boutique hotel. The project is the first of its kind in Boise and has won acclaim for its innovation by city leaders.

Chuck Miller, president, Chuck Miller Construction (the only home builder in Idaho participating in the U.S. Department of Energy's Building America program) BRIEF BIO: A Chicago native, Miller started framing houses his sophomore year in high school. When he moved to Boise, he started building homes for various companies, eventually starting his own company in 1989. While Miller only builds about 17 homes a year, everything he builds is energy-efficient.

In 2004, he was recognized by NAHB's Research Center as the Energy Value Housing Award Builder of the Year. In addition to Builder of the Year, Chuck Miller Construction was recognized as a Gold Winner in the production home/cold climate category and a Silver Winner in the custom home/cold climate category.

“It's the only way we'll build,” Miller says. The average gas and electric bill for one of his 3,000-square-foot homes is about $100 a month, Miller says. While Idaho has a reputation for having some of the nation's lowest energy costs, as those costs have risen, “we're seeing more and more interest in energy efficiency,” Miller says.

Hal Simmons, planning director, City of Boise

BRIEF BIO: Simmons has worked for the City of Boise for 13 years and watched the area blossom. During his time as planning director, downtown Boise has seen a renaissance, as once-blighted areas have been transformed. For the first time, housing developments are taking root in the city's core.

“What's been missing downtown has been a housing component,” Simmons says. “We've been trying to get housing developments for a long time. Now, suddenly there's at least a dozen condo projects going or about to break ground.”

Breaking New Ground at Harris Ranch

With a shovel of dirt, Idaho's largest subdivision, Harris Ranch, broke ground in 1999, ushering a new era of planned communities into the Boise city limits. But the development—with 3,125 units on 1,803 acres of family-owned land—has since proved to be a testing ground for large developers entering unknown territory.

The project, spearheaded by the Harris family and now being built out by a variety of local builders—most notably, Brighton Homes—stood in a deadlock for three years due to government regulations. And with conditions that included paying for an expensive bridge across the Boise River, the Harris family pulled the plug on the project in 2003—the city approved the project in the early 1990s, but ground wasn't broken until 1999—with only 419 homes completed.

Just recently, city officials renewed talks with the family to bring the project back on line. Harris Ranch project manager Doug Fowler says the discussions to continue with the project show signs of promise and a better working relationship.

“The three-year hold had to deal with the bridge,” Fowler says. “We're looking forward to getting back on track.”

Harris Ranch brings to light the unique challenges developers face when building in Boise, which has yet to see any large, planned communities completed. When it's finished in 2018, Harris Ranch will encompass hundreds of single-family homes, townhouses, and apartments in a self-contained community. Plans call for a bed-and-breakfast, resort, office park, wellness center, and 910 acres of open space.

But city building director Hal Simmons says Harris Ranch is just a taste of what's to come as the area continues its explosive growth, despite the lack of infrastructure.

“I have no doubt that Harris Ranch will sell,” Simmons says.

• Demand/supply ratio (Jan.-Dec. ‘05): .67
• Housing growth ratio (Jan.-Dec. ‘05 per 1,000 residents): 16.41
• Job growth (last four quarters): 3.6 percent 2004: 241,700 jobs 2005: 254,100 jobs
• Permit growth (last 12 months vs. previous 12): 29 percent 2004: 8,895 permits 2005: 11,477 permits

- Source: BIG BUILDER Magazine
Publication date: February 15, 2006

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