CT Construction Digest Friday June 19, 2020
DOT: Replacement of East Haddam bridge to cause long detours
Jim Shay
EAST HADDAM - The state Department of Transportation is planning a $3 million project to replace a Route 82 bridge over Strongs Brook.
Replacement is required based on the findings of the latest bridge inspection report in which the bridge was found to be in poor condition, the DOT said in a release.
The bridge, built in 1924, carries one lane of traffic in each direction. The estimated average daily traffic is 3,100 vehicles.“The new bridge will be a 16’ wide x 6.5’ high reinforced concrete box culvert located approximately 45 feet west from the existing bridge location. The stream will be realigned to the new bridge location accordingly and the roadway profile will be slightly increased. The roadway width will remain the same,” the release said. An eight-week closure of the bridge and a detour of traffic are required to construct the new bridge.
“The proposed directional detour is 10-miles long eastbound and 5-miles long westbound for passenger vehicles and will require the use of local roads.
The proposed truck detour is 32.4-miles along state routes. Alternating one-way traffic will also be required before and after the bridge closure and detour.”
Construction is anticipated to begin in the spring of 2022 based on the availability of funding, acquisition of rights of way, and approval of permits.
The DOT will conduct a virtual public information meeting concerning the proposed replacement of the bridge at 7 p.m. Monday, June 29.
Visit the project webpage for more details: https://portal.ct.gov/DOTEastHaddam40-146
The public comment period is open through July 13. If you would like to leave a comment or ask a question, you may send an email or leave a voicemail.
East Lyme plans to hold referendum on future public safety building
Mary Biekert
East Lyme — The Board of Selectmen unanimously agreed to move forward with plans to renovate and remodel the town’s future public safety building at a meeting Wednesday, while also approving a request to bond an additional $2.17 million needed to complete the project.
Proposed plans now will go before the Board of Finance for approval before voters will have their final say at a referendum, First Selectman Mark Nickerson said Wednesday.
Voters had approved bonding up to $5 million to purchase and renovate the former Honeywell building at 277 West Main St. at a referendum in early 2019. But now that the committee overseeing the project determined an additional $2.17 million will be needed to complete the renovations, voters will weigh in on whether to finish the project. Exact dates for a referendum have not been planned yet.
The town purchased the building for $2.7 million last year and an appointed vision committee, with the input of police Chief Mike Finkelstein, has been working since last summer with contracted architects Silver/Petrucelli + Associates to carefully plan renovations needed to make the building into a consolidated space to house the town's police department, dispatch center and fire marshal's office.
The estimated $7,178,566 renovation plan, as presented to the Board of Selectmen, includes the following: the cost of purchasing the more than 30,000-square-foot structure; three holding cells and a sally port area; an elevator cab; up to $500,000 in information technology infrastructure; a $40,000 estimate to eventually hook up to public water; more than $100,000 in architect fees; $50,000 for a clerk of the works; about $308,000 for contingency costs, as well as other miscellaneous items.
The selectmen on Wednesday hailed the plan as urgent and necessary, as well as the best deal for the town, after they described years of placing the town's police force on "the back burner" to make way for pressing school projects. The selectmen also described two previous, unsuccessful attempts to establish a public safety complex. In 2004, the Board of Finance declined a $6.5 million proposal to build a facility at Camp Nett and in 2007 a $14 million complex was rejected by voters at referendum.
"I've been at this since 1984," Selectwoman Rose Ann Hardy said, before explaining that a medley of school projects have pushed police to the back burner time and time again. "Most of our homes have four-burner stoves and when the stove goes, it's to the microwave, the hot plate or the Crock-Pot. But that doesn't cut it for an agency that's 24 hours, 365 days a year that we all count on. They deserve an appropriate, professional workspace for the professionals that they are."
Town police currently are housed in a small Main Street building, which the town rents from owner Dominion for $1 a year, that has significant flooding, mold and mildew issues.
Selectman Kevin Seery said, "There's no question the current (police) building (on Main Street) is just not safe and healthy for neither our officers or our members of the public. We would never allow our educators or people who work in Town Hall or members of public works to work in facilities like we our asking our officers to work. ... It's time to get our emergency services — the fire marshal, dispatchers and police — centrally located where they can provide the best possible services for the town."
East Lyme pays Waterford about $46,000 annually to use its holding cells, as East Lyme's current police building does not have such facilities. The town will be able to save that much money annually, the selectmen said Wednesday, once the new public safety building is completed.
As part of the presentation before the Board of Selectmen on Wednesday, architects Bill Silver and Brian Cleveland also outlined the history of planning the renovations, important decisions made along the way and presented a cost comparison of other police buildings being built, renovated or expanded throughout the state.
Silver said compared to renovation and expansions costs for buildings in Brookfield, Newtown and Ansonia, East Lyme’s renovation costs have come in lower. Newtown’s 25,000-square-foot building — the former Taunton Press Building — will cost $15 million to renovate, for example, while a 22,500-square-foot expansion at Brookfield's current police building will cost $8.5 million.
Cleveland also said if the town were to build a new building of the same size for the same uses, it would cost about $12 million.
Plans for the new public safety building show the entirety of the renovations will be contained to the first floor of the building, leaving the second floor — or “almost 14,000 square feet of unfinished space,” Cleveland said — to possibly be utilized by other town departments in the future, which the selectmen argued added to the project's overall value.
During the public delegations section of Wednesday’s meeting, Public Safety Building Vision Committee member Lisa Picarazzi, who helped plan the renovations, cautioned that the proposal does not include a second rooftop air handler at $86,000, according to previous reporting by The Day, nor plans to replace the building’s roof, which was estimated to cost more than $370,000.
“I feel it was inappropriate that (these items) were not included in the estimate as a charge to the taxpayer was to refurbish the building,” Picarazzi said. “We will not see these in this estimate, but shortly, in a year, two or three, somebody will come back to you with a request to replace them, though they should be in this estimate, and at that time they will be more money.”
Cleveland and Silver later said that while one air handler is being replaced, the other still has about five years of life left. They added the roof’s life can be significantly extended "by 10 years or more," Silver said, with patching and repairs planned as part of the $7.17 million estimate.
"The building otherwise is in very good shape," Cleveland said. "It is very structurally sound and it will last for a very long time."
S&P reaffirms Branford’s AAA rating in advance of $13.1 million bond sale
Connecticut’s finances are considerably worse than even the ugly scenario Gov. Ned Lamont’s administration painted in early May, if the analysts behind a new private study are correct.
The coronavirus-induced recession could erode more than $6.5 billion in state revenues next fiscal year — two-and-a-half times the gap administration officials predicted — if researchers from Arizona State and Old Dominion universities are correct.
The last time Connecticut faced a deficit close to $4 billion, in 2011, then-Gov. Dannel P. Malloy and the legislature responded with tax increases worth more than $1.8 billion.
The researchers’ new nightmare scenario hinges on the relationship between unemployment and lost revenue. And economists broadly concede the current job market is facing unprecedented volatility, making any prediction equally uncertain.
The fiscal crisis is unparalleled nationally “given the rapid expansion of a global pandemic, the failure of the federal government to effectively respond to the emerging pandemic, the synchronized economic shock across states” and the variation in state efforts to contain it, wrote economists Christos A. Makridis and Robert M. McNab.
The researchers studied states’ revenue and labor market trends from 1994 through 2019, finding that for every 1% rise in employment, tax revenues, on average, jumped 1.56%. Income and corporation taxes tend to climb even faster relative to job growth.
Comparing these trends with the unprecedented jobs losses during this pandemic, Makridis and McNab projected states, on average, would lose 20% of annual revenues.
Lamont’s budget director, Office of Policy and Management Secretary Melissa McCaw, warned in early May that state revenues — if the current recession were similar to the downturn of 2007-09 — would leave a $2.7 billion hole in the fiscal year beginning July 1. And roughly 90% of that gap is due to eroding revenues rather than cost increases.
A $2.7 billion gap is imposing enough, representing a gap of 13.5% in the General Fund. Administration officials say it would take the entire rainy day fund, plus about $500 million in spending cuts and revenue enhancements to close that gap.
But if the shortfall is close to $6.5 billion, as Makridis and McNab project, one-third of Connecticut’s budget would be unfunded.
Even the rainy day fund — which is still expected to hold $2.2 billion after plugging deficit in the fiscal year that ends June 30 — would solve less than half of the problem Connecticut faces in July.
And if revenue losses for the 2021-22 and 2022-23 fiscal years also are larger than the $2 billion-per-annum projected by the Lamont administration, state officials could be eyeing nothing but ugly budget options next spring.
Both the Lamont administration and the House chair of the legislature’s tax-writing panel advised Thursday against panic.
Connecticut’s congressional delegation remains cautiously optimistic that another round of pandemic relief, with a focus on aid to states and municipalities, will be enacted later this year.
Chris McClure, spokesman for the governor’s budget office, said the administration used conservative projections for income, sales, corporation and other taxes during its last forecast. And several revenues have been tracking according to projections in the weeks since.
“However we must remain diligent in monitoring the key economic data to adapt to changes as needed and plan accordingly,” McClure added. “It will be essential to make sure we have a safe re-opening that will hopefully bring with it more employment and economic opportunities to fuel new growth.”
Rep. Jason Rojas, D-East Hartford, co-chair of the Finance, Revenue and Bonding Committee, said no one knows how many of the workers displaced since the pandemic began in March will be returning in the coming weeks and months as the economic reopening continues.
The state Department of Labor officially reported a 9.4% unemployment rate Thursday for the month of May.
But the state’s official unemployment rate must be based on a local business survey conducted by the U.S. Census Bureau. And Connecticut labor officials have said this survey doesn’t accurately reflect jobless totals during the pandemic for several reasons.
“We’ll get through this,” Rojas said. “There will be difficult decisions to be made. We knew that.”
Construction Activity Returning to Pre-Coronavirus Levels in Many Areas
A new survey by the Associated General Contractors of America and data from construction technology firm Procore show that construction activity is returning to pre-coronavirus levels in many parts of the country and some firms are adding workers.
The new economic data, however, also shows some future projects are being canceled and many others are being delayed by supply chain issues and labor shortages, underscoring the need for additional federal recovery measures, association officials noted.
"Many of the immediate economic impacts of the coronavirus have passed and, as a result, activity and hiring are up, a bit," said Ken Simonson, the association's chief economist. "But while the immediate crisis appears to have passed, we are just now beginning to appreciate some of the longer-term impacts of the pandemic on the industry."
Construction activity has returned to pre-coronavirus levels in 34 states, based on data on workers' hours analyzed by Procore. And construction has returned to pre-coronavirus levels in Dallas and Miami, according to Procore's data on 8 large metro areas. Meanwhile, the association's survey found that only 8 percent of construction firms were forced to furlough or lay off workers in June while 21 percent report adding employees, compared to one-in-four firms letting workers go between March and May.
"But it is important to remember that construction activity typically increases quite a bit between March 1 and the end of May as the weather improves and more work gets underway," Simonson commented. "Getting to March 1 levels is a sign of progress, but it doesn't mean things are back to normal."
Simonson added that the AGC survey and Procore's data show the severe toll the pandemic took on the construction industry. For example, 61 percent of firms report having had at least one project halted or canceled because of the pandemic. One in four firms report that construction materials shortages, caused by lock downs and trade disruptions, are causing delays on current projects. Meanwhile, the Procore data found that smaller firms experienced more severe declines in construction activity during the pandemic than larger firms.
"We are living in a time when change seems to be the new norm, but something that will never change is the resilience of the construction industry," said Kristopher Lengieza, Procore's senior director of business development. "To date, a majority of states are experiencing levels of construction activity equal to, or in some cases, much higher than they reported prior to COVID-19."
Simonson added that, moving forward, only 12 percent of firms report they plan to furlough or lay off staff over the next four weeks while 17 percent anticipate adding to their headcount during that time span. Yet even as more construction firms predict they will expand during the next several weeks, 42 percent do not expect demand will recover to normal levels for at least four months, and most of those firms expect recovery will take longer than six months.
Simonson noted that construction firms are counting on additional federal help to improve demand for construction and make it easier to return people to their payrolls. Fifty-five percent of firms report they are counting on Congress and the Trump administration to enact liability reform that protects firms that are complying with coronavirus safety protocols from litigation. And 33 percent are counting on Congress to boost infrastructure spending to offset declining private-sector demand.
Many firms also are hoping that Congress will not extend the unemployment supplement that is currently set to expire at the end of July. Notably, 34 percent of firms that called back employees who had been furloughed report having some personnel refuse to return to work because of those unemployment supplements.
"Extending the supplement will only make it harder for more employers to bring people back onto payrolls," Simonson cautioned.
"Without additional help from D.C., the few gains this industry has made during the past few weeks will likely be fleeting," Simonson added. "That is why we will continue to push Congress and the Trump administration to enact the kind of long-term economic recovery measures this industry needs to truly rebound from the coronavirus."
The association's new survey is based on responses from more than 630 firms collected between June 9 and 17. Procore's data is based on the transactions logged via the company's software by tens of thousands of construction firms across the country.
Click here for the association's survey results. Click here for Procore's new construction data.
Jim Shay
EAST HADDAM - The state Department of Transportation is planning a $3 million project to replace a Route 82 bridge over Strongs Brook.
Replacement is required based on the findings of the latest bridge inspection report in which the bridge was found to be in poor condition, the DOT said in a release.
The bridge, built in 1924, carries one lane of traffic in each direction. The estimated average daily traffic is 3,100 vehicles.“The new bridge will be a 16’ wide x 6.5’ high reinforced concrete box culvert located approximately 45 feet west from the existing bridge location. The stream will be realigned to the new bridge location accordingly and the roadway profile will be slightly increased. The roadway width will remain the same,” the release said. An eight-week closure of the bridge and a detour of traffic are required to construct the new bridge.
“The proposed directional detour is 10-miles long eastbound and 5-miles long westbound for passenger vehicles and will require the use of local roads.
The proposed truck detour is 32.4-miles along state routes. Alternating one-way traffic will also be required before and after the bridge closure and detour.”
Construction is anticipated to begin in the spring of 2022 based on the availability of funding, acquisition of rights of way, and approval of permits.
The DOT will conduct a virtual public information meeting concerning the proposed replacement of the bridge at 7 p.m. Monday, June 29.
Visit the project webpage for more details: https://portal.ct.gov/DOTEastHaddam40-146
The public comment period is open through July 13. If you would like to leave a comment or ask a question, you may send an email or leave a voicemail.
East Lyme plans to hold referendum on future public safety building
Mary Biekert
East Lyme — The Board of Selectmen unanimously agreed to move forward with plans to renovate and remodel the town’s future public safety building at a meeting Wednesday, while also approving a request to bond an additional $2.17 million needed to complete the project.
Proposed plans now will go before the Board of Finance for approval before voters will have their final say at a referendum, First Selectman Mark Nickerson said Wednesday.
Voters had approved bonding up to $5 million to purchase and renovate the former Honeywell building at 277 West Main St. at a referendum in early 2019. But now that the committee overseeing the project determined an additional $2.17 million will be needed to complete the renovations, voters will weigh in on whether to finish the project. Exact dates for a referendum have not been planned yet.
The town purchased the building for $2.7 million last year and an appointed vision committee, with the input of police Chief Mike Finkelstein, has been working since last summer with contracted architects Silver/Petrucelli + Associates to carefully plan renovations needed to make the building into a consolidated space to house the town's police department, dispatch center and fire marshal's office.
The estimated $7,178,566 renovation plan, as presented to the Board of Selectmen, includes the following: the cost of purchasing the more than 30,000-square-foot structure; three holding cells and a sally port area; an elevator cab; up to $500,000 in information technology infrastructure; a $40,000 estimate to eventually hook up to public water; more than $100,000 in architect fees; $50,000 for a clerk of the works; about $308,000 for contingency costs, as well as other miscellaneous items.
The selectmen on Wednesday hailed the plan as urgent and necessary, as well as the best deal for the town, after they described years of placing the town's police force on "the back burner" to make way for pressing school projects. The selectmen also described two previous, unsuccessful attempts to establish a public safety complex. In 2004, the Board of Finance declined a $6.5 million proposal to build a facility at Camp Nett and in 2007 a $14 million complex was rejected by voters at referendum.
"I've been at this since 1984," Selectwoman Rose Ann Hardy said, before explaining that a medley of school projects have pushed police to the back burner time and time again. "Most of our homes have four-burner stoves and when the stove goes, it's to the microwave, the hot plate or the Crock-Pot. But that doesn't cut it for an agency that's 24 hours, 365 days a year that we all count on. They deserve an appropriate, professional workspace for the professionals that they are."
Town police currently are housed in a small Main Street building, which the town rents from owner Dominion for $1 a year, that has significant flooding, mold and mildew issues.
Selectman Kevin Seery said, "There's no question the current (police) building (on Main Street) is just not safe and healthy for neither our officers or our members of the public. We would never allow our educators or people who work in Town Hall or members of public works to work in facilities like we our asking our officers to work. ... It's time to get our emergency services — the fire marshal, dispatchers and police — centrally located where they can provide the best possible services for the town."
East Lyme pays Waterford about $46,000 annually to use its holding cells, as East Lyme's current police building does not have such facilities. The town will be able to save that much money annually, the selectmen said Wednesday, once the new public safety building is completed.
As part of the presentation before the Board of Selectmen on Wednesday, architects Bill Silver and Brian Cleveland also outlined the history of planning the renovations, important decisions made along the way and presented a cost comparison of other police buildings being built, renovated or expanded throughout the state.
Silver said compared to renovation and expansions costs for buildings in Brookfield, Newtown and Ansonia, East Lyme’s renovation costs have come in lower. Newtown’s 25,000-square-foot building — the former Taunton Press Building — will cost $15 million to renovate, for example, while a 22,500-square-foot expansion at Brookfield's current police building will cost $8.5 million.
Cleveland also said if the town were to build a new building of the same size for the same uses, it would cost about $12 million.
Plans for the new public safety building show the entirety of the renovations will be contained to the first floor of the building, leaving the second floor — or “almost 14,000 square feet of unfinished space,” Cleveland said — to possibly be utilized by other town departments in the future, which the selectmen argued added to the project's overall value.
During the public delegations section of Wednesday’s meeting, Public Safety Building Vision Committee member Lisa Picarazzi, who helped plan the renovations, cautioned that the proposal does not include a second rooftop air handler at $86,000, according to previous reporting by The Day, nor plans to replace the building’s roof, which was estimated to cost more than $370,000.
“I feel it was inappropriate that (these items) were not included in the estimate as a charge to the taxpayer was to refurbish the building,” Picarazzi said. “We will not see these in this estimate, but shortly, in a year, two or three, somebody will come back to you with a request to replace them, though they should be in this estimate, and at that time they will be more money.”
Cleveland and Silver later said that while one air handler is being replaced, the other still has about five years of life left. They added the roof’s life can be significantly extended "by 10 years or more," Silver said, with patching and repairs planned as part of the $7.17 million estimate.
"The building otherwise is in very good shape," Cleveland said. "It is very structurally sound and it will last for a very long time."
S&P reaffirms Branford’s AAA rating in advance of $13.1 million bond sale
The bonds included $5.4 million in refunding bonds previously issued through the state Clean Water Fund, which will mature in 2025, Finance Director James Finch said Tuesday.
Those bonds were priced at an effective rate of 0.48 percent — compared to a previous rate of 2 percent — saving the town $195,000 in debt service costs over the life of the bonds, according to Finch and the release.
The remaining bonds will mature in 2037 at an effective rate of 1.87 percent, the release said.
The bond proceeds will be used to finance part of the town’s share of the $68.5 million renovation and reconstruction of Walsh Intermediate School, said Finch. It also will be used for other improvements to the town’s infrastructure, including sewer system improvements, townwide drainage project and reconstruction of the Stony Creek Wharf, he said.
The town previously sold $55.6 million in bonds for the Walsh project, Finch said.
Financial health
Branford’s debt is attractive to municipal bond investors during uncertain times because of Branford’s strong bond rating and reputation in the market, the release said.
First Selectman James Cosgrove said Branford’s financial strength distinguishes the town from other public entities. He called it “refreshing that Branford’s financial health is consistently recognized by a national rating agency whose reports and analysis are utilized by investors and institutions,” the release stated.
In its report issued in advance of the sale, S&P Global Ratings noted Branford has “a very strong economy, with access to a broad and diverse metropolitan statistical area,” as well as “strong management, with good financial policies and practices under our Financial Management Assessment ... methodology.
S&P, formerly known as Standard & Poor’s, also said the town has “very strong budgetary flexibility, with an available fund balance in fiscal 2019 of 28 percent of operating expenditures.”
The town has “very strong liquidity, with total government available cash at 42.6 percent of total governmental fund expenditures” and has “strong budgetary performance with balanced operating results in the general fund,” S&P said.
In addition, it said Branford has a “strong debt and contingent liability position, with debt service carrying charges at 6.7 percent of expenditures and net direct debt that is 69.1 percent of total governmental fund revenue, as well as low overall net debt at less than 3 percent of market value.”
Finch said he was very satisfied with the rating.
The coronavirus-induced recession could erode more than $6.5 billion in state revenues next fiscal year — two-and-a-half times the gap administration officials predicted — if researchers from Arizona State and Old Dominion universities are correct.
The last time Connecticut faced a deficit close to $4 billion, in 2011, then-Gov. Dannel P. Malloy and the legislature responded with tax increases worth more than $1.8 billion.
The researchers’ new nightmare scenario hinges on the relationship between unemployment and lost revenue. And economists broadly concede the current job market is facing unprecedented volatility, making any prediction equally uncertain.
The fiscal crisis is unparalleled nationally “given the rapid expansion of a global pandemic, the failure of the federal government to effectively respond to the emerging pandemic, the synchronized economic shock across states” and the variation in state efforts to contain it, wrote economists Christos A. Makridis and Robert M. McNab.
The researchers studied states’ revenue and labor market trends from 1994 through 2019, finding that for every 1% rise in employment, tax revenues, on average, jumped 1.56%. Income and corporation taxes tend to climb even faster relative to job growth.
Comparing these trends with the unprecedented jobs losses during this pandemic, Makridis and McNab projected states, on average, would lose 20% of annual revenues.
Most of the states facing a larger-than-average drop are heavily reliant on income tax receipts to fuel their respective budgets.
Connecticut is projected to face a 32.7% drop, 10th-worse of all states, with neighboring New York ranking first at 40%.Lamont’s budget director, Office of Policy and Management Secretary Melissa McCaw, warned in early May that state revenues — if the current recession were similar to the downturn of 2007-09 — would leave a $2.7 billion hole in the fiscal year beginning July 1. And roughly 90% of that gap is due to eroding revenues rather than cost increases.
A $2.7 billion gap is imposing enough, representing a gap of 13.5% in the General Fund. Administration officials say it would take the entire rainy day fund, plus about $500 million in spending cuts and revenue enhancements to close that gap.
But if the shortfall is close to $6.5 billion, as Makridis and McNab project, one-third of Connecticut’s budget would be unfunded.
Even the rainy day fund — which is still expected to hold $2.2 billion after plugging deficit in the fiscal year that ends June 30 — would solve less than half of the problem Connecticut faces in July.
And if revenue losses for the 2021-22 and 2022-23 fiscal years also are larger than the $2 billion-per-annum projected by the Lamont administration, state officials could be eyeing nothing but ugly budget options next spring.
Both the Lamont administration and the House chair of the legislature’s tax-writing panel advised Thursday against panic.
Because income and several other state tax filing deadlines were pushed back from April 15 to mid-July, analysts say Connecticut won’t have a clear picture of tax revenues until September or later.
It also remains unclear how many of the 269,000 jobs Connecticut lost in late March and early April have been permanently eliminated.Connecticut’s congressional delegation remains cautiously optimistic that another round of pandemic relief, with a focus on aid to states and municipalities, will be enacted later this year.
Chris McClure, spokesman for the governor’s budget office, said the administration used conservative projections for income, sales, corporation and other taxes during its last forecast. And several revenues have been tracking according to projections in the weeks since.
“However we must remain diligent in monitoring the key economic data to adapt to changes as needed and plan accordingly,” McClure added. “It will be essential to make sure we have a safe re-opening that will hopefully bring with it more employment and economic opportunities to fuel new growth.”
Rep. Jason Rojas, D-East Hartford, co-chair of the Finance, Revenue and Bonding Committee, said no one knows how many of the workers displaced since the pandemic began in March will be returning in the coming weeks and months as the economic reopening continues.
The state Department of Labor officially reported a 9.4% unemployment rate Thursday for the month of May.
But the state’s official unemployment rate must be based on a local business survey conducted by the U.S. Census Bureau. And Connecticut labor officials have said this survey doesn’t accurately reflect jobless totals during the pandemic for several reasons.
Census bureau staff often can’t collect data in person, making the sample sizes particularly low. There also have been a high degree of inaccurate responses with many workers identifying themselves as sick when they’d actually been laid off.
State labor officials had pegged the actual unemployment rate for May at about 19%.“We’ll get through this,” Rojas said. “There will be difficult decisions to be made. We knew that.”
Construction Activity Returning to Pre-Coronavirus Levels in Many Areas
A new survey by the Associated General Contractors of America and data from construction technology firm Procore show that construction activity is returning to pre-coronavirus levels in many parts of the country and some firms are adding workers.
The new economic data, however, also shows some future projects are being canceled and many others are being delayed by supply chain issues and labor shortages, underscoring the need for additional federal recovery measures, association officials noted.
"Many of the immediate economic impacts of the coronavirus have passed and, as a result, activity and hiring are up, a bit," said Ken Simonson, the association's chief economist. "But while the immediate crisis appears to have passed, we are just now beginning to appreciate some of the longer-term impacts of the pandemic on the industry."
Construction activity has returned to pre-coronavirus levels in 34 states, based on data on workers' hours analyzed by Procore. And construction has returned to pre-coronavirus levels in Dallas and Miami, according to Procore's data on 8 large metro areas. Meanwhile, the association's survey found that only 8 percent of construction firms were forced to furlough or lay off workers in June while 21 percent report adding employees, compared to one-in-four firms letting workers go between March and May.
"But it is important to remember that construction activity typically increases quite a bit between March 1 and the end of May as the weather improves and more work gets underway," Simonson commented. "Getting to March 1 levels is a sign of progress, but it doesn't mean things are back to normal."
Simonson added that the AGC survey and Procore's data show the severe toll the pandemic took on the construction industry. For example, 61 percent of firms report having had at least one project halted or canceled because of the pandemic. One in four firms report that construction materials shortages, caused by lock downs and trade disruptions, are causing delays on current projects. Meanwhile, the Procore data found that smaller firms experienced more severe declines in construction activity during the pandemic than larger firms.
"We are living in a time when change seems to be the new norm, but something that will never change is the resilience of the construction industry," said Kristopher Lengieza, Procore's senior director of business development. "To date, a majority of states are experiencing levels of construction activity equal to, or in some cases, much higher than they reported prior to COVID-19."
Simonson added that, moving forward, only 12 percent of firms report they plan to furlough or lay off staff over the next four weeks while 17 percent anticipate adding to their headcount during that time span. Yet even as more construction firms predict they will expand during the next several weeks, 42 percent do not expect demand will recover to normal levels for at least four months, and most of those firms expect recovery will take longer than six months.
Simonson noted that construction firms are counting on additional federal help to improve demand for construction and make it easier to return people to their payrolls. Fifty-five percent of firms report they are counting on Congress and the Trump administration to enact liability reform that protects firms that are complying with coronavirus safety protocols from litigation. And 33 percent are counting on Congress to boost infrastructure spending to offset declining private-sector demand.
Many firms also are hoping that Congress will not extend the unemployment supplement that is currently set to expire at the end of July. Notably, 34 percent of firms that called back employees who had been furloughed report having some personnel refuse to return to work because of those unemployment supplements.
"Extending the supplement will only make it harder for more employers to bring people back onto payrolls," Simonson cautioned.
"Without additional help from D.C., the few gains this industry has made during the past few weeks will likely be fleeting," Simonson added. "That is why we will continue to push Congress and the Trump administration to enact the kind of long-term economic recovery measures this industry needs to truly rebound from the coronavirus."
The association's new survey is based on responses from more than 630 firms collected between June 9 and 17. Procore's data is based on the transactions logged via the company's software by tens of thousands of construction firms across the country.
Click here for the association's survey results. Click here for Procore's new construction data.