CT Construction Digest Monday January 31, 2022
Michael Puffer
Eric A. Santini, a principal in Vernon-based Santini Homes, hopes soaring building material costs moderate later this year so he can launch a 240-apartment project currently moving through local approvals in Tolland.
“If we got the approvals last year at this time, with the way things are, I’m not sure we would start,” Santini said. “We would probably do a little bit of a wait and see. We are hoping the supply chain will start to work itself out this year. I think every multifamily developer is starting to give a pause.”
COVID-related production slowdowns and snarls in the global supply chain have delayed building projects, added costs and increased risk. There is disagreement among some Connecticut residential developers — both apartment and single-family homebuilders — as to the impact on project volume.
Santini said developers who have launched projects are finishing them. But he expects some will hold off on new ventures, waiting to see if supply chain problems ease in 2022.
“It’s hard to determine what the margin is going to be when prices are changing so frequently in the construction process,” Santini said. “On the multifamily side, I don’t know anyone starting a new project right now given this environment.”
Some industry experts believe builders are willing, and able, to roll with the punches given continued robust housing demand.
The number of permits issued for single-family houses in Connecticut has continued a steady rise over the past three years, according to estimates by the U.S. Census Bureau.
However, permits for multifamily developments in Connecticut fell sharply year-over-year, according to Census data.
At the end of November, Connecticut builders pulled permits for 1,308 housing units in multifamily developments (five or more units) during 2021.
That’s roughly half the 2,613 multifamily units permitted in the same period for 2020, according to Census estimates.
In the same 11-month period of 2019, builders pulled permits for 2,679 multifamily units in Connecticut.
Last year’s sudden shift downward, however, didn’t occur nationwide.
Permits for multifamily housing of five or more units were up 26.4% nationally in 2021, according to the Census.
Dealing with headaches
Michael Freimuth, executive director of the Capital Region Development Authority, said he’s seen no hint of slacking interest in multifamily development in Hartford, even as supply chain difficulties have brought challenges.
He mused any drop in multifamily development is likely attributable to interruption in the pre-development planning and vetting processes during the COVID-19 lockdowns of 2020.
Still, Freimuth described supply chain problems as “increasingly brutal,” hitting developers on multiple fronts.
“One is price, of course,” said Freimuth, whose agency is helping finance hundreds of new Hartford apartments currently under construction and set to debut this year, including 270 units in the first phase of the North Crossing development near Dunkin’ Donuts Park. “Two is time, which is money, extending the time it takes to build a project, which increases its cost. Third is predictability, risk analysis. If you don’t know when, or if, or at what price, it’s kind of hard to sift through the pieces and see if the deal makes sense.”
So far, developers have proven adaptable and willing to put up with headaches, Freimuth said.
Material costs rising
Meanwhile, homebuilder confidence slipped slightly in December following three months of increases, according to an analysis by the National Association of Home Builders (NAHB) and Wells Fargo.
The NAHB attributes the slip to growing inflation concerns and ongoing supply chain disruptions.
“Higher material costs and lack of availability are adding weeks to typical single-family construction times,” NAHB Chairman Chuck Fowke said. “NAHB analysis indicates the aggregate cost of residential construction materials has increased almost 19% since December 2020. Policymakers need to take action to fix supply chains. Obtaining a new softwood lumber agreement with Canada and reducing tariffs is an excellent place to start.”
Costs for steel mill products rose 125% between August 2020 and August 2021, according to a recent Hinckley Allen analysis of construction material supply chain problems, produced for the Connecticut Construction Industries Association.
Milled copper and brass products were up 45% in the same period, while lumber spiked precipitously and then tapered, ending at 16% up year over year as of August.
“We are not surprised when you see a 5% or 10% increase, but when you see a 40% increase in a product that you bought two months ago, that began to alarm us,” said Anthony Valenti, a managing member of Newport Realty Group, which recently put a roof on a 16-apartment building along Farmington Avenue in Berlin. “And it continues.”
Newport’s three-story property will have 7,000 square feet of retail on the first floor. When complete, the “Steele Center” development will have five buildings and 76 apartments.
Windows began going into the building in mid-January. The sign out front reads “Available FOR OCCUPANCY FALL 2021.”
Work began last March. By July material prices were rising quickly, Valenti said.
“Wood has probably been the biggest expense,” Valenti said. “Now we are seeing everything else [increase], there is not one thing that is immune from the increases.”
Design changes and aggressive shopping helped keep the overall increase to the first building’s $4 million budget under 10%.
Instead of shopping through one or two product vendors, Newport now seeks material bids from five or six.
“We are more diligent than ever,” Valenti said. “We are spending an awful lot of time doing that.”
Building materials aren’t just more expensive, they are harder to find. There was a three-week delay in framing due to a behind-schedule delivery of 1,800 steel bolts.
Despite challenges, Newport is pressing ahead with Steele Center. In fact, Mark Lovley, Valenti’s business partner, said high demand is keeping the company as busy as ever.
Newport is building 61 houses in a 55-plus development on the Farmington-Plainville line. Forty-nine sold in 12 weeks. Newport is seeking local approvals for another 12 houses in a separate Plainville location.
Newport is also partnered with Manafort Brothers on a 175-apartment mixed-use development in downtown Plainville. Valenti said he hopes to begin construction in the third quarter of 2022.
Valenti said supply chain woes are probably suppressing development activity. Veteran builders will still launch projects, he said, but they must work harder and be more selective about what they take on.
Valenti said Newport is running multiple pro forma statements on prospective projects these days.
“If it is a good project, we are going to launch,” Valenti said. “But if it is a marginal project, we are going to pass. It has to be a good project to launch today.”
Valenti said he doesn’t expect material prices to ever sink back to 2019 levels, but he predicts an end to price and supply volatility around midyear.
Anticipated interest rate hikes and a tapering of COVID-related federal stimulus will see cash tighten and demand taper, Valenti predicts. He also believes that housing supply will begin to catch up with demand.
Unclogging ports
Tao Lu, an assistant professor at the UConn School of Business who researches the global supply chain, said there is hope for a gradual improvement leading to tangible changes midyear.
COVID-19 has resulted in production slowdowns and labor shortages that have clogged ports, Lu said. That’s translated into shipping costs from China tripling year over year. But vendors are beginning to find new routes and use new ports, he said.
Some larger companies are chartering their own vessels to ship containers, Lu added.
“According to my research, people in the shipping industry believe this will remain for the first half of 2022,” Lu said of the clogged supply chain. “We do see some progress, but it will still take some time to get back to the real normal situation before the pandemic.”
Skyler Frazer
espite two years of a pandemic that has forced the cancellation or postponement of many in-person gatherings, developers of a major new Bristol events center and hotel said they are optimistic about the future as their project gets ready to open next year.
The $25 million Bristol Event Center is expected to debut on Century Drive in the first quarter of 2023, after breaking ground in late 2020.
Dr. Gerald Niznick, a Las Vegas-based serial-entrepreneur who launched and is funding the project, envisions the facility as a “destination” for those who want to host conferences and weddings. The center will open roughly three years after COVID-19 first began shutting down parts of the economy, upending the leisure and hospitality industry in particular.
“I think we’re going to be very busy,” Niznick said in a recent interview. “There’s nothing like [what we are developing].”
Prestige Hospitality Group (PHG), of New York, will manage the property when it’s built. The company owns, develops and manages more than 30 hotels and hospitality properties across the country.
PHG CEO James C. Frenis said the project has made progress since it broke ground two years ago, but was delayed by supply chain issues that made some materials hard to find.
The project includes construction of a new 90-room HOME2 Suites by Hilton hotel and 30,000-square-foot conference/event center that will feature a:
9,400-square-foot main ballroom area
8,100-square-foot pre-function space
2,400-square-foot lecture space;
two 940-square-foot bridal or executive suites
and 8,200 square feet of outdoor gathering space.
The main ballroom, which will have the ability to be divided into two spaces, will have a 30-foot-high ceiling and dance floor. It will accommodate up to 750 people for conferences, sit-down dinners or weddings. Frenis said there will be a 25-foot LED screen on both sides of the ballroom that can be moved around depending on an event’s needs.
The ballroom’s acoustics will also be fine-tuned so that “if you’re sitting in the very first seat or the last seat, you’re going to be able to hear people speaking,” Frenis said.
“Everything in there will be state of the art,” he added.
The center will be able to host everything from company conferences to car and boat shows, Niznick said. He said he thinks the facility will become a “destination” location for people wanting to get out of the city for their weddings and events.
“We’ll be able to accommodate them with first-class facilities, first-class catering and technology,” said Niznick, a prosthodontist who became a pioneer in the dental implant field, having amassed a few dozen patents and founded and sold multiple companies. “I think of the saying ‘build it and they will come.’ I’m feeling very good about my decision to do this.”
Niznick had no significant ties to Connecticut but in the early 2000s he said he made a loan to an investor who purchased the former Bristol Clarion Hotel on Century Drive, which he eventually took over, renovated and rebranded as the DoubleTree by Hilton, after it fell into foreclosure in 2007.
In 2019, Niznick acquired three long-vacant parcels immediately west of the DoubleTree that will house part of the new development, which he said he’s self-financing without bank loans.
Frenis said he envisions the center’s customer base to be 60% social gatherings like weddings, galas and fundraisers, and 40% corporate and business events.
The four-story, 90-room HOME2 Suites will have an underground parking and walkway connecting the new hotel with the event center and existing DoubleTree hotel. The DoubleTree currently has a 5,100-square-foot ballroom space that can be divided into three rooms, so there will be several large event spaces on-site.
Niznick said he expects major construction to be finished by July, and he hopes to start taking bookings by January 2023.
In the meantime, PHG has been hiring key staff for the center.
Frenis announced earlier this year that Julia Miller had been appointed general manager of the Bristol Event Center. She was previously director of catering for the Connecticut Convention Center for 10 years.
Industry in flux
Robert Murdock is the president of the Connecticut Convention and Sports Bureau. The state-funded bureau works to find spaces for events, meetings and trade shows in the state.
Murdock said that throughout the last two years during COVID-19, different sectors of the events and meetings industry have been negatively impacted more than others. Sports has been the strongest sector, he said, mainly because many games and matches are held outside.
“We’ve been able to have sports using the safety protocols that the state and federal government have in place,” Murdock said.
Still, corporate events have struggled through the pandemic because many companies haven’t returned to in-office work, Murdock said. As a result, larger hotels in cities like Hartford have experienced prolonged near-record low occupancies.
“That corporate business really drives a lot, and the bigger hotels that relied on that are hurting more than the smaller, boutique hotels without meeting spaces,” Murdock said.
Murdock said the new event center in Bristol will fill a need in Greater Hartford, after several hotels in the area — including The Red Lion Hotel in Cromwell and Farmington Marriott — closed over the past few years.
“It’s always great to have more venues in the area. There is a need out there,” Murdock said.
The timing of the Bristol Event Center’s planned opening could be fortuitous. Many in the events industry predict a bounce back at the end of this year and early 2023, as long as new COVID variants don’t provide further setbacks.
“We’re bullish on 2023,” Frenis said. “People want to get out. There’s something about looking someone in the eye, shaking their hand, and doing business face-to-face.”
He said it’s a good sign that many events are being postponed rather than canceled as new COVID-19 variants come out. By 2023, Frenis said he’s confident demand will be there.
Murdock said the bureau has a positive outlook going forward this year and into 2023.
“People want to get back together,” Murdock said.
New $100M state grant program aiming to jump-start economic development gets strong response
Michael Puffer
he town of Windsor recently signed off on a $2.5 million state grant request, seeking support for a private redevelopment of a downtown strip mall into 100 apartments and ground-floor retail.
Windsor officials expect the transit-oriented development to breathe new economic vitality into the downtown, providing housing for a growing workforce and taking full advantage of nearby passenger rail.
It is one of 52 applications submitted to the state’s new Connecticut Communities Challenge Grant program ahead of the Jan. 14 deadline.
“I am thrilled with that response and I’m happy with that number,” said Alexandra Daum, deputy commissioner for the Department of Economic and Community Development (DECD). “It is certainly competitive enough that we are going to be able to identify extremely strong projects.”
Announced in October, the challenge grant program is one of the first initiatives springing from Gov. Ned Lamont’s ambitious five-year, $750 million Economic Action Plan that aims to create 80,000 new jobs. The administration plans to pump $100 million into the challenge grant program within five years, resulting in 3,000 jobs.
The challenge grants allow municipalities, regional councils of governments and economic development agencies to apply for up to $10 million for projects improving the vibrancy and appeal of communities. The state aims to grant at least half its funds to projects in distressed municipalities.
Applicants also get extra points for proposals that involve:
transit-oriented projects
using existing properties in downtowns and major hubs
upgrading infrastructure essential to future development
upgrading mobility for pedestrians, cyclists and the disabled
upgrading amenities in community spaces
creating housing that supports affordability, accessibility and the local workforce.
Another big selling point for the state is projects that partner with private funders, including developers.
“These applications are much stronger the more private-sector participation they include,” Daum said.
Sustainable, attractive development
Enfield is also among the applicants, seeking $4 million to upgrade Higgins Park, according to the Journal Inquirer. When completed, the park will include fitness stations, playscapes, walking trails, a basketball court, pool, splash pad and band shell.
Hartford also applied, seeking millions of dollars in challenge-grant support for mixed-use redevelopments of the former Fuller Brush Co. headquarters at 3580 Main St., which is owned by major city landlord Shelbourne Global Solutions, and the former Arrowhead Café at the corner of Main and Ann Uccello streets.
Windsor developer Greg Vaca has partnered with Torrington construction firm PAC Group for the Windsor project. He envisions returning a corner of Windsor’s downtown to high-density residential, transit-oriented development that prevailed in Northeast urban centers until the sprawl of the 1950s.
Vaca said this type of development is the aim of recent zoning changes in Windsor, and the new state grant program. It is also a sustainable and attractive development that can be replicated in other town centers, he said.
“The intention of the grant program is to create area vitality and contribute to vibrancy in these areas,” Vaca said. “That is exactly what we’ve tried to achieve here.”
The state Bond Commission recently authorized $25 million in borrowing for the challenge grant program, Daum said. DECD is hoping for another $25 million in bonding authorization for the first round of grants before awards are announced in March or April.
Daum said DECD aims to launch a second grant round immediately after the first round of awards. She urged “anyone” with good ideas for the program to reach out to relevant municipalities.
“I think this is a very good opportunity for the private sector to work with municipalities to make these applications much stronger,” Daum said.
Infrastructure programs on hold until Congress passes budget to fund them
Ian Duncan and Tony Romm, The Washington Post
Nearly three months after President Joe Biden signed a roughly $1.2 trillion infrastructure bill into law, federal transportation officials say much of their work is on hold - stuck in limbo as a result of an unresolved congressional fight over federal spending.
The result is billions of dollars unable to be spent, blunting the immediate impact of one of President Biden's signature accomplishments.
"A significant portion of our highway, transit and safety programs are limited" by caps in the existing federal budget, said Carlos Monje Jr., the Transportation Department's third-highest-ranking official. "Without congressional actions, we aren't going to be able to move on many of the new programs funded in the bill."
Among them is $1.2 billion to help reduce carbon emissions and $1.4 billion to protect roads and bridges against the effects of climate change. And while the Federal Railroad Administration is in line to receive $66 billion in the next five years, Monje said the agency can't hire the staff it needs to manage the significant infusion of money.
Some states, meanwhile, are putting off projects until Congress approves $9 billion in additional highway money.
The issues stem from what Monje called a "wonderful dance" between lawmakers who authorize federal spending and those who appropriate the money. The infrastructure bill authorized the money to be spent, but in many cases, it still needs a second round of approval in the form of an appropriation. Congress hasn't been able to agree on spending for the budget year that began in October, and instead has been rolling forward last year's appropriations. That approach does not include the increase in transportation spending.
The Transportation Department's budget is not being held up over any dispute tied to the agency's funding, and with promised money on hold, frustration is rising among lawmakers who helped shape the infrastructure package, federal officials and groups representing segments of the transportation industry. A Friday bridge collapse in Pittsburgh served to heighten the urgency of restoring the nation's infrastructure.
The delay, a coalition of more than 60 transportation industry groups wrote to congressional leaders Monday, is "wholly unacceptable and will cause significant project disruptions, reduced construction and manufacturing employment, and delays in delivering critical transportation infrastructure improvements - just when Americans were promised the most ambitious infrastructure package of our time."
There is a race against the clock on Capitol Hill because the existing federal spending agreement is set to expire Feb. 18. By that point, lawmakers must pass another short-term measure, known as a continuing resolution, or come to a deal on a larger plan. If they don't, the U.S. government - public-works projects and all - would come to a halt.
Democrats and Republicans in the House and Senate began talks at the end of last year, hoping to finance federal operations perhaps until the end of the fiscal year, which concludes Sept. 30. Both sides have expressed a desire to reach a deal and avert a showdown.
Yet lawmakers long have been divided over the specifics of the budget. Democrats hope to approve massive boosts to federal domestic agencies, no longer capped by a law that limited such spending for a decade. To that end, Rep. Rosa DeLauro. D-Conn., the House's top appropriator, led her party toward approving about a dozen spending bills that financed Biden's proposals to expand federal health care, education and science programs.
But the appropriations process became bogged down in the evenly divided Senate. Republicans, led by Sen. Richard Shelby, R-Ala., have rejected the scope of Democrats' spending plans, opposed some of Democrats' policy priorities and sought, instead, to boost the budget at the Pentagon.
Talks between the two sides have continued into this year, according to congressional aides, who in recent days have expressed optimism about a deal. Absent an agreement, Congress would need to adopt another short-term measure - further delaying parts of the infrastructure law.
Rep. David Price, D-N.C., the top Democrat on the House's transportation-focused appropriations committee, said the effects of the delay have been "significant."
"The infrastructure initiative is greatly hampered by the failure to pass a regular appropriations bill," he said.
A top aide to Sen. Patrick J. Leahy, D-Vt., the leader of the Senate Appropriations Committee, pointed to the potential for disruption as the reason the senator has been seeking a full-year budget since May. The official, who spoke on the condition of anonymity to describe the panel's discussions, said Leahy hopes to strike a deal by Feb. 18 so infrastructure work can move forward.
Given the political stakes, transportation industry leaders say it's a matter of when, not if, a deal will be reached and money will flow.
Jim Tymon, executive director of the American Association of State Highway and Transportation Officials, said inaction hurts what should be one of Congress's and the Biden administration's signature accomplishments.
"If they're not able to make good on the promises ... then that no longer is an accomplishment," he said.
If lawmakers can't agree on a year of spending, transportation groups are urging Congress to include special provisions to unlock the infrastructure money as part of any short-term deal.
Mollie Timmons, a spokeswoman for Sen. Rob Portman, R-Ohio, one of the leaders of a group of senators who crafted the infrastructure deal, said he was continuing to work with colleagues "since completion of the appropriations process is critical in order to fully implement the infrastructure law."
But Rep. Peter A. DeFazio, chairman of the House Transportation Committee, laid blame for the holdup on Republicans, noting that only 13 GOP members in the House backed the bill.
For Democratic congressional leaders and the White House, the situation is a delicate one. Monje, who spoke at a virtual meeting to relaunch a left-leaning future-of-transportation caucus in the House, said officials have not spoken much in public about the challenges.
"We have the Congress and we have the presidency," he said. "And so this is our challenge to work together on."
The infrastructure bill draws on several sources of funding for transportation. In an unusual step, lawmakers appropriated billions of dollars upfront, allowing the administration to begin work on some of the signature programs in the law. That includes a $27 billion investment in bridges that Biden announced this month.
Asked about the constraints Thursday as he announced new road safety initiatives that will be bolstered by money in the package, Transportation Secretary Pete Buttigieg there was still much his department is moving forward on.
"Every operation of government, including ours, does best, of course, when we have the certainty of a full budget and normal appropriations," he said. "But I can also tell you there is so much going on and so much on our plate right now that we are keeping very busy delivering on the resources that are actionable in the moment."
But many programs still require the second round of approval. The infrastructure law pumped $118 billion into the Highway Trust Fund, which can no longer cover expenses from gas tax revenue. That money is ready to be spent, but under the terms of the continuing resolution, it is available only at levels that have been rolled forward from 2020 - a gap of about $9 billion this year for roads and $3 billion for transit.
Tymon said that means some state transportation departments, which are responsible for determining how much of the money is spent, are delaying plans at a time when they could have been seeking bids on projects. That translates into construction firms hiring more slowly and putting off other investments.
"This time of year is when state DOTs are laying the foundation to be able to put shovels in the ground," Tymon said. "With the uncertainty at the federal level, it's really causing some states to have to push that schedule back."
At a meeting of the Transportation Research Board this month, the heads of federal highway, railroad and transit agencies said they were limited in what they could do until a full year of appropriations is in place.
Like state transportation departments, Ward McCarragher, vice president for government affairs and advocacy at the American Public Transportation Association, said transit agencies are in a wait-and-see mode as the construction season looms, reluctant to finalize plans.
"These are public entities that are very conservative in their approach," he said.
The programs affected most are those that weren't provided with money upfront and aren't included in the existing budget. That includes funds for some of the administration's top priorities on the environment, safety and racial justice.
"A lot of people have been celebrating the fact that this bill is going to make real progress in addressing climate change, yet we're not able to move forward," Tymon said.
Bassick High project back on state’s priority list for funding
Brian Lockhart
BRIDGEPORT — The roller coaster ride that has become the Bassick High School construction project this week took another swerve — but one that is good for the city.
After failing to make Connecticut’s school construction priority list in December, which would ensure the state covers the bulk of the building costs, a group of state lawmakers added Bassick back.
“It’s great news, obviously,” said City Councilman Marcus Brown, who helms Bridgeport’s school construction committee. “We should be ready to actually break ground this summer.”
As reported earlier this month, the already delayed, $129 million effort to relocate the aged Bassick from the West End to a new South End site faced another setback when the proposal did not in December make it onto the school construction priority list because of questions from Connecticut’s Department of Administrative Services. The department oversees grants for school projects.
That list is scheduled to be approved for funding by members of the General Assembly during their upcoming session. With Bassick left off of it, Bridgeport legislators had been considering a Plan B — trying to pass a special bill to get the school tens-of-millions in state dollars.
But earlier this week, when the leadership of the General Assembly’s education, finance and appropriations committees convened to review that priority list, they added a handful of schools from Hartford and also Bassick.
“We, at the end, included Bridgeport,” confirmed state Sen. Henri Martin, R-Bristol, ranking Republican on the finance committee.
Martin said it helped that Bridgeport’s City Council this month addressed one of the outstanding issues related to Bassick — approving the city’s new share of the increased cost and authorizing the borrowing of those funds. Due to various changes and delays, the $115 million construction price tag has increased to $129 million, with Bridgeport on the hook for $32 million of that versus the previous $28.5 million.
Martin said the philosophy is that if municipalities are working hard to deal with any lingering paperwork, “We’re not going to penalize you for missing the (December) deadline” to make the school construction priority list.
The effort to replace the nearly 100-year-old Bassick has suffered fits and starts.
In 2019 Gov. Ned Lamont’s administration and the General Assembly agreed to spend $90.8 million on a new Bassick, which at the time was to be built in the same West End neighborhood for $115 million.
Then in summer 2020 the city abruptly announced it would instead relocate Bassick to the South End on property Mayor Joe Ganim’s administration purchased from the University of Bridgeport for $6 million. Last year that plan was further expanded to include the Bridgeport Military Academy.
But that South End site is in a water-logged area of the city requiring necessary flood-mitigation work — mainly elevating the property. While a slow-moving, federally-funded, state-managed initiative to alleviate storm water damage in the South End would eventually encompass the Bassick acreage, city officials do not want to wait.
All of the above changes to the original, West Side-based proposal, coupled with inflation in building supplies, boosted Bassick’s total price tag to $129 million. And those substantial alterations to the plan’s scope and costs, along with the fact that little progress on Bassick had been made as the state’s two-year deadline for starting work approached, resulted in the Department of Administrative Services last spring recommending Bridgeport reapply for the state money and to make the school construction priority list.
State Rep. Antonio Felipe, D-Bridgeport, is a member of the legislature’s education committee and also represents the South End. He said this week city lawmakers had been hoping Bassick might be added back to the list.
“We’d been making sure everyone was aware of how far along in the process we were,” Felipe said. “I definitely think it’s because of our advocacy that this gone done.”
While submitting and getting a special bill for Bassick passed was the next option, Felipe said he is glad that lengthier process no longer appears necessary.
“The longer we drag this out, the longer kids have to sit in that old, dilapidated Bassick High School,” Felipe said.
Next phase of Ponemah Mill redevelopment approved in Norwich