Stalled construction projects look for government jump start

No major metropolitan region in the nation has been hit harder with construction job losses than Reno-Sparks - and the ripples have been felt in neighboring communities as well.

The Reno metropolitan area lost 35 percent of its construction jobs from August of 2008 to 2009, the Bureau of Labor Statistics reports. Construction job losses have been felt especially hard in Carson City, Douglas and Lyon counties.

New housing starts are virtually nonexistent, and speculative commercial and retail construction, as well as industrial and medical construction, long ago ground to a halt. Development of new real estate shows no signs of picking up any time soon, either, due to high vacancy rates in each category.

The Associated General Contractors of America last week used a stalled parking garage and condominium project at Sparks Marina as a backdrop to unveil a plan to spur construction across the nation. The stalled construction project was started by Carson City's Metcalf Builders Inc.

Stephen Sandherr, chief executive officer of the AGC, said nationwide construction investment is forecasted to drop $193 billion, an 18-percent decline from 2008. All but 13 of the nation's 337 largest communities saw declines in construction employment. Reno; Tucson, Ariz.; Wenatchee, Wash.; and Duluth, Minn., all experienced job losses in excess of 30 percent of the construction workforce. The 13 areas that did see improvement accounted for just 2,800 new jobs - but during the same time, the industry lost more than 1 million jobs.

"While the nation continues to suffer through a recession, the construction industry is experiencing a depression," Sandherr said.

AGC's blueprint to reinvigorate the nation's construction industry includes:

• Repealing the alternative minimum tax and increasing and extending a series of tax credits and cuts to boost investments in real estate development.

• Initiating new incentives on global real estate investment to make it easier for international investors to put Americans to work.

• Removing trade barriers to boost demand for new domestic shipping and manufacturing facilities.

• Calling for new public and private investments and infrastructure to boost construction and enhance the nation's ability to compete globally.

Sandherr said that every billion dollars worth of non-residential construction activity supports more than 28,000 jobs, boosts the gross domestic product by $3.4 billion and raises personal earnings by $1.1 billion.

"You can't fix our economy until you fix the construction industry," he said.

Tom Metcalf, chief executive officer of Metcalf Builders, said his company has won a decent amount of work but still had to pare its staff from 50 employees a year ago to just 25 today.

The company's largest projects in Carson City include an extensive remodel of Carson Lanes, construction of Michael Hohl Honda Subaru facilities, and a remodel of the facades at Southgate Shopping Center. MBI also has resumed work at the long-delayed Ormsby House. MBI has $20 million under contract and is chasing another $20 million. Metcalf said his bread-and-butter has been building Jack in the Box restaurants in Colorado.

"We have a couple hotel projects ready to go, they are just tied up in financing," Metcalf said.

One of the keys to spurring construction in the Carson City and surrounding counties, he said, is pushing through capital improvement projects. In the private sector, banks need to release funds for failed projects and get them back in the construction pipeline.

"Whatever price it comes out, whether it is a failed shopping center or office building or residential lots, they are still balled up in the banking system," Metcalf said.

Receiving federal stimulus monies under the American Recovery and Reinvestment Act for public works projects also is key. Thus far, stimulus money flowing into the greater Carson City area has been slow to arrive.

"The government said money was ready for shovel-ready projects, but we haven't seen it," Metcalf said. "It is huge for government to bring money to the construction industry. That money gets cycled through the local economy - workers get paid, and they buy services and goods."

Buzz Harris, assistant executive director for the Nevada Chapter of Associated General Contractors, agrees that public works projects are central to the construction industry's recovery.

"There is a lot of stuff that we don't see, such as sewer, water and technology for better communications," Harris said. "For us to build a better place to bring businesses, we need to maintain as much of the public works as we can. It all needs to be repaired and updated."

Another key to get construction back on its feet is to copy initiatives such as RTC 5, the Washoe County voter-approved tax change that will generate about $250 million during the next three years for road construction by allowing increases in the fuel tax linked to inflation in construction costs.

"That is a great example of thinking out of the box," said Frank Lepori, Nevada Chapter AGC president.

Another example of forward thinking is the Carson City Board of Supervisor's recent vote to lower sewer and water hookup fees on new construction by 90 percent. Metcalf says he's starting a restaurant project that is moving forward in part to the large reduction in fees.

"For a restaurant hookup it is close to $30,000 or $40,000," he says. "We have to give Carson City a lot of credit for doing that. Not only does it help residential like new apartments, but it really helps with water-intensive commercial projects like restaurants."