Posted: January 01, 2012

Small biz: A bold new path for New Town Builders

Mike Taylor

It started with an email to Perry Cadman asking the chief operating officer of New Town Builders if he'd consider building a "demonstration" house framed with wood from pine-beetle timber.

A meeting followed, during which, Cadman says, "I just looked at everybody and said, ‘If I'm going to go through the brain damage of one house, why wouldn't I just build all of them with it?'"

Why not, indeed. While the notorious pine beetle injects a fungus that cuts off nutrients and eventually kills the tree, it does no damage to the wood itself. "And it's going to create jobs in Colorado," Cadman reasoned. "It's Colorado-sourced material. And we need to clean up the forests. So we started down that path."

Thus, beginning in early October with a three-unit row house, New Town Builders has been framing all its houses - about 20 so far - with beetle-kill timber harvested from Colorado forests and milled into 2 x 4 and 2 x 6 framing studs at Intermountain Resources in Montrose.
New Town Builders was already at the forefront of energy efficiency. In 2009 it became the first production builder in the Denver area to offer solar energy systems standard on all new homes.

The Denver-area homebuilder views the use of beetle-killed timber as an extension of that sustainability mindset. Although the new-home construction business has been anything but robust, Cadman says it is improving for New Town Builders. In all of 2010, Cadman says New Town built 43 homes. As of early December in 2011 it was up to 82 new homes for the year.

"Our goal is to have one of the most energy-efficient houses out there," Cadman says. "But secondarily, we try to use products that are environmentally ... beneficial, I guess you could say."

Until New Towns' initiative, the bluish-gray wood had been put to creative if limited use in the making of furniture, picture frames and even caskets. But that's an infinitesimally small dent in the more than 3 million acres of Colorado timber that the beetle is estimated to have killed.

"The mountains are such a huge piece of why people move to Colorado and to Denver," says Cadman, 51, who earned a dual degree in corporate finance and real estate construction from the University of Denver and has worked in the building industry ever since.

Previously New Town Builders sourced 95 percent of its vertical framing materials from out of state. Now all of its framing studs come from beetle-killed lodge pole pines harvested in Colorado. Cadman says that beetle-infested timber still standing can be harvested for up to eight years after the tree dies; fallen timber must be harvested within about three years.

"We're not paying any more or any less for this material," Cadman says. "The incentive we have is there's a state sales tax exemption on this material. That makes it competitive for us to use it."

The wood is graded by West Coast Lumber Inspection Bureau to ensure it meets construction standards for strength and durability.

The initiative by New Town Builders is of obvious benefit to the Montrose lumber mill, Intermountain Resources, which had fallen on hard times and has been in receivership since May 2010 but has continued to operate. With 90 employees itself and another 100 to 120 contract loggers and haulers, the mill provides about 200 jobs in Southern Colorado.

"We are hoping to find a buyer for the mill's assets, and we're well along that path," says Pat Donovan, managing director at Cordes & Co. and the court-appointed receiver for the mill. "In terms of what it means to have New Town Builders as a customer, it's great."

Although Cadman says he hopes other builders will join New Town in using the blue-stained lodge pole pines in their framing, Donovan says that building codes in some Colorado municipalities pose an obstacle.

"They call for Hemlock fir and Douglas fir as framing material, and we grow little to no Hemlock fir in the state and very little Douglas fir," he says. "We're hopeful there will be changes in the building codes encouraging the use of beetle-kill lumber because its properties are the same as the Hemlock fir or the Douglas fir that's called for in building codes."
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Mike Taylor is the managing editor of ColoradoBiz. He writes about small-business money issues and how startups are launched. Email him at mtaylor@cobizmag.com.

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Readers Respond

If the wood is normally discarded and yet it provides almost the same structural integrity, I say why waste it? It's good business sense to make use of the pine beetle wood, and getting tax incentives for using it. By Mark Richards on 2012 06 19

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