Santa Fe New Mexican

GROWING PAINS

Carlsbad struggling to meet demand for housing, lodging, teachers as boom creates new pressures in Permian

- By Jens Erik Gould jgould@sfnewmexic­an.com

As Eddy County’s planner drove through oil country on a recent day, he passed a makeshift RV park and let out a groan.

The small gathering of trailers he saw near the side of the road wasn’t permitted by the county. In fact, it wasn’t there at all several weeks earlier, the last time Steve McCroskey drove through the area.

Only about one-third of the estimated 180 RV parks in the county have a permit, and new ones are popping up so fast that officials don’t have time to send them all violation notices. There are only two code enforcemen­t officers to cover the county’s 4,200 square miles.

“We don’t have the manpower to cover them all,” McCroskey said as he pointed out several more unlicensed parks amid the droves of oil and gas facilities south of Carlsbad. “If you hear me grumble, that’s why.”

The recent proliferat­ion of RV parks is a byproduct of the lack of affordable housing — just one of the many effects the Permian Basin oil and gas production boom is having on local communitie­s in southeaste­rn New Mexico. Some are positive, providing local residents with greater economic opportunit­y, while others are persistent problems yet to be solved.

Spend any time in the city of Carlsbad, and it’s obvious there’s an absolute boom in progress.

At Allsup’s, customers stand 10 deep before getting to

the cashier’s counter. You’ll hear people chatting in line with accents from faraway places, such as Louisiana.

Restaurant­s are packed when it isn’t even meal time. Some people avoid shopping at grocery stores between 4 and 7 p.m. because there’s nowhere to park.

Throngs of full-size pickups and semis whiz by at high speeds on county and city roads, dwarfing those who dare to drive sedans. Traffic clogs roads at rush hour, while certain intersecti­ons have become infamous for bad accidents. Heavy-duty trucks are wearing out county roads and highways that weren’t built for such loads.

Hotels are either sold out or exorbitant­ly priced. On one day this week, more than half of the Carlsbad hotels on Expedia.com were sold out. Some, such as the Holiday Inn, were charging more than $300 a night for a date in late September.

By comparison, several of Holiday Inn’s locations in downtown Manhattan in New York City were charging less than half that on Expedia for the same date.

There are upsides and downsides to these developmen­ts, a sentiment expressed by the CEO of Carlsbad’s Chamber of Commerce at a recent housing expo. Robert Defer rattled off a laundry list of challenges the city is facing, and after nearly each one repeated that while these are good problems to have, they are problems nonetheles­s.

“Please, I’m not complainin­g, these are good issues,” he told an audience of city officials and housing developers. “But they’re issues we have to face.”

Of course, this burgeoning demand for labor raises incomes and purchasing power for local residents.

On the other hand, a labor shortage persists even when businesses raise wages because they can’t offer the kinds of salaries energy companies can.

Labor and housing shortages

Defer said the chamber of commerce itself has lost half of its employees to the energy industry.

“It’s an issue for all the companies in Carlsbad,” he said.

The city of Carlsbad is having trouble finding enough people with commercial driver’s licenses to drive waste collection vehicles because they can earn more in the oil fields.

“It’s really hard to compete,” said Carlsbad City Administra­tor Mike Hernandez. “We’re surviving, but it’s been a challenge.”

The same goes for state agencies in the area. The State Land Office created new positions for district resource managers in Carlsbad, Roswell and Hobbs earlier this year to handle the additional workload fueled by growth in the Permian. But it hasn’t been able to fill them yet.

“If one of those positions is $65,000 and an oil company can pay them $80,000 or $90,000, it affects our ability to compete,” said Angie Poss, a spokeswoma­n for the office.

Like Defer, Poss spoke of the dual nature of the boom. “The competitio­n for talented employees in Lea and Eddy Counties is a welcome problem to have,” she said.

Perhaps the biggest challenge of all is the lack of affordable housing, which underpins many of the other problems.

The sharp spike in oil and gas activity in the area has led to an influx of workers, which in turn has led to a shortage of housing and driven up rents and home values.

“Developers are hesitant to come in and invest in developmen­t because they’re afraid of another boom and bust,” said Tracee Bentley, CEO of the Permian Strategic Partnershi­p, a group of 19 energy companies that aims to solve local problems like housing.

The numbers are impressive. Median housing values more than doubled from $61,500 in 2000 to $184,000 in 2018, according to a report by the city of Carlsbad.

In terms of rentals, Eddy County had a vacancy rate of 1.1 percent, the lowest of all counties in the state, and down from 6.7 percent in 2017, the report said.

The undersuppl­y and higher prices show no signs of abating if significan­t new housing isn’t developed — especially as large oil companies are announcing large expansions in investment, office space and personnel in the area.

“They’re not just coming to do an overnight operation for a day or two,” City Administra­tor Hernandez said. “It’s for many years to come.”

The housing trends affect many industries because new hires are often reluctant to move to the area if they can’t find a decently priced home for their families.

As a result, Carlsbad has seen rapid growth in temporary workforce lodging facilities, also known as “man camps,” which offer shelter to energy workers and even employees of stores like Walmart who have been hired from other cities.

But, as the nickname might suggest, these facilities lack families.

They “meet a need that we have right now to be able to house the people, but we still want to see the families come,” Defer said. “But you can’t do that without the housing.”

‘Strained’ public schools

Perhaps the hardest hit is the public school district, Carlsbad Municipal Schools.

On a recent afternoon, Superinten­dent Gerry Washburn sat in his office wearing a football-themed tie. Nearly every other person in the office — and all around the city, for that matter — was wearing the colors of the Carlsbad High School Cavemen ahead of the football team’s homecoming game that night.

Yet the conversati­on in his office wasn’t about football, and it wasn’t about education, either. Instead, the superinten­dent and human resources director were poring over real estate data.

Human Resources Director Therese Rodriguez was examining housing data, noting that the number of active listings of single-family homes in the city fell from 166 on Aug. 9 to just 64 in early September.

She also pulled out a list of rental properties from a local real estate company, showing that three-bedroom, two-bathroom properties were renting for between $3,000 and $3,500 per month. Upscale homes were renting for between $4,000 and $6,000 a month, they said.

Washburn’s cool demeanor belied the sense of urgency in his words. Recruiting has been difficult, he explained, because new hires can’t afford to rent a place.

“The reality is, operationa­lly we’re going to be strained,” Washburn said.

A starting salary for a teacher in the city is $41,000 per year, yet the school district estimates that in order for a person to live in the city, they need an income of between $72,000 and $74,000 a year.

With prospectiv­e hires unwilling or unable to fill that gap, the school district started the year in August with a shortage of 15 teachers. So, Washburn’s office hired 24 internatio­nal teachers on work visas.

“As of today, we still probably have half of those needing to show up and we don’t have housing for them,” Washburn said. “We’re scrambling like crazy to figure out what we’re going to find for them.”

Some teachers are living with their parents, while others are commuting from Roswell and Hobbs. One teacher resigned after the start of the year because she couldn’t afford to live in Carlsbad, he said.

To make matters more complex, enrollment is up and is projected to continue increasing. Over the past 10 years, total enrollment has risen 19 percent to 7,051 students for elementary, middle school and high school. It’s projected to increase another 14 percent to 8,012 by 2023.

The solutions

With all these dilemmas, what are the solutions and who’s providing them?

For some matters, the private sector has responded.

Hotel chains are putting in new locations. Just across the highway from an oil and gas summit taking place earlier this month, work crews were pouring concrete and building window framing for a new Hyatt hotel.

On the same day in the center of the city, dozens of workers were connecting air ducts and installing a deli counter inside a new Albertsons grocery store. Sticking to a fast-paced schedule, they operated numerous scissor lifts inside, and a telescopin­g forklift outside.

In January, the company broke ground on the new, larger store right next to the old one, which will be demolished later in order to expand the parking lot. It will have new amenities such as a Starbucks, a dining area and a pizza oven, and the opening is already scheduled for next month.

“The oil workers love pizza,” store director David Beaty said, touring the constructi­on site in a hard hat. “It’s going to sell out.”

The city of Carlsbad has drafted a plan to address as many of the problems as it can, including encouragin­g more housing developmen­t, investing in infrastruc­ture and reducing traffic.

Deputy City Administra­tor John Lowe said several new housing projects are currently under constructi­on, and “the challenge is to be able to get those done in a timely manner.”

As for the schools, there’s a plan to develop a 34-unit developmen­t that would house teachers at a subsidized cost. It’s a start, but it won’t be enough, the superinten­dent said, because there are around 74 teachers in Carlsbad near the age of retirement who will have to be replaced in the coming years.

Then, there’s the Permian Strategic Partnershi­p, which advocates for, and in some cases invests in, projects aimed at addressing some of these problems.

The companies have contribute­d a total of $180 million that the group can spend over a five-year period, and company employees meet with city and county officials about the issues throughout the Permian.

The group has met with officials in Washington, D.C., Santa Fe and Austin, Texas, to advocate for more spending on roads; helped the state apply for federal grants; and helped fund a teacher housing subsidy in West Texas.

This month, it announced a $10 million investment toward the constructi­on of a new $50 million career technical education high school for Hobbs Municipal Schools. The new school will have a capacity of up to 700 students and will offer programs in oil and gas, informatio­n technology, constructi­on, hospitalit­y, manufactur­ing and transporta­tion.

Still, it’s going to take a lot more investment and planning from all sides — public and private — to meet the demand.

“Our planning and engineerin­g department is nonstop,” Hernandez said. “It’s just busy times.”

 ?? LUIS SÁNCHEZ SATURNO/THE NEW MEXICAN ?? Gerry Washburn, superinten­dent of Carlsbad Municipal Schools, says recruiting teachers has been difficult because new hires can’t afford to rent a place in the area, where housing prices have surged as a result of the oil boom.
LUIS SÁNCHEZ SATURNO/THE NEW MEXICAN Gerry Washburn, superinten­dent of Carlsbad Municipal Schools, says recruiting teachers has been difficult because new hires can’t afford to rent a place in the area, where housing prices have surged as a result of the oil boom.
 ?? PHOTOS BY LUIS SÁNCHEZ SATURNO/THE NEW MEXICAN ?? An unauthoriz­ed, makeshift RV park this month in Eddy County. Only about one-third of the estimated 180 RV parks in the county have a permit, and new ones are popping up so fast that officials don’t have time to send them all violation notices.
PHOTOS BY LUIS SÁNCHEZ SATURNO/THE NEW MEXICAN An unauthoriz­ed, makeshift RV park this month in Eddy County. Only about one-third of the estimated 180 RV parks in the county have a permit, and new ones are popping up so fast that officials don’t have time to send them all violation notices.
 ??  ?? In January, Albertsons broke ground on a larger grocery store right next to an existing one that will be demolished later in order to expand the parking lot. The new store will have amenities such as a Starbucks, a dining area and a pizza oven, and the opening is already scheduled for next month. ‘The oil workers love pizza,’ store director David Beaty said, touring the constructi­on site in a hard hat. ‘It’s going to sell out.’
In January, Albertsons broke ground on a larger grocery store right next to an existing one that will be demolished later in order to expand the parking lot. The new store will have amenities such as a Starbucks, a dining area and a pizza oven, and the opening is already scheduled for next month. ‘The oil workers love pizza,’ store director David Beaty said, touring the constructi­on site in a hard hat. ‘It’s going to sell out.’
 ??  ?? A crew with Southwest Ready Mix and Pumping works at the site of a future Hyatt hotel in Carlsbad on Sept. 12. The hotel will have 106 rooms and is scheduled to open in May.
A crew with Southwest Ready Mix and Pumping works at the site of a future Hyatt hotel in Carlsbad on Sept. 12. The hotel will have 106 rooms and is scheduled to open in May.

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