CARLSBAD — 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 far-away 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.
The 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.
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.
On Saturday, 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.”