CT Construction Digest Wednesday December 9, 2020
Trade groups: Amid COVID-19 challenges, construction has performed better than most industries
While construction has struggled through a year of unprecedented challenges, it has also proven to be one of the country’s most resilient industries in light of the coronavirus outbreak.
Contractors have dealt with a range of challenges this year, including layoffs, government shutdowns, canceled projects and the increased costs of keeping sites open during the pandemic. For example, despite enjoying essential business status in most of the country, the construction industry still lost jobs across 58% of metro areas year-over-year through October, due to the broader impacts of the coronavirus pandemic, according to the Associated General Contractors of America this week.
“The pandemic has devastated the finances for businesses, institutions, and state and local governments, leading to widespread postponements and cancellations of construction projects,” said Ken Simonson, AGC’s chief economist, in the statement.
As bad as these numbers are, construction’s job performance relative to other sectors was a bright spot, with unemployment rates for construction lower in 20 states in September compared to February, according to the Associated Builders and Contractors.
“After many bumps and bruises, construction has proven to be one of the better performing sectors of the economy over a difficult period,” said Bernard M. Markstein, president and chief economist of Markstein Advisors, who conducted an analysis for ABC of construction’s recent employment performance through September.
These disparate views of similar data during overlapping periods illustrate the bifurcated impact of the COVID-19 crisis across the diverse $1.3 trillion construction industry. They also highlight how industry leaders have had to walk a tightrope between emphasizing the pandemic’s negative impacts in hopes of garnering more government relief for the sector, while simultaneously showcasing construction’s positive track record with the proactive intent of warding off any new government shutdown orders that could lie ahead.
Consider this nugget from the AGC’s release: Construction employment fell in 209, or 58%, of 358 metro areas between October 2019 and October 2020, while it was stagnant in 40 others. Meanwhile, only 109 metro areas — just 30% — added construction jobs during the same period.
Those bearish data points served as a launching pad for AGC CEO Stephen Sandherr’s comments encouraging lawmakers to get another relief bill passed soon, momentum for which has built on Capitol Hill this week.
“Construction employment is likely to continue falling in many parts of the country unless Congress quickly passes new coronavirus relief measures,” Sandherr said in the statement. “Boosting infrastructure projects, preserving the benefits of the Paycheck Protection Program and protecting businesses from predatory attorneys will help stabilize the economy and demand for construction.”
At the same time, in the current environment where COVID-19 deaths have reached all-time highs, and states such as California are ramping up toward renewed regional stay-at-home orders and restrictions on nonessential businesses as ICU hospital beds fill at an alarming rate, the ABC’s release accentuated the positives of how construction has weathered — and acted responsibly throughout — the pandemic thus far.
“Construction has generally done a good job of taking measures to protect its workers from the risk of contracting COVID-19 in the workplace,” said Markstein, via the ABC’s release. “The impact on construction activity comes more from local increases in COVID-19 cases and efforts to contain these outbreaks.”
What it adds up to is an incredibly uneven impact, both by sector and geographically, across the construction landscape, one that has been both negative and positive at the same time.
On the one hand, the economic uncertainty caused by the pandemic has hit specialty areas of construction hard. Many hospitality, restaurant, retail, entertainment and office projects that were in the works prior to COVID-19 have been put on hold or canceled. Developers have had to recrunch their pro formas on those deals using the pandemic’s new algebra, the common denominator of which is that any project that promotes mass gatherings — such as malls, movie theaters, restaurants, hotels and entertainment venues — gets carried over into the negative column.
From that perspective, construction and its furloughed workers need more help — and fast.
On the other hand, the industry has been relatively fortunate. With its essential status, many projects which were underway at the start of the pandemic were permitted to continue, while providing much-needed jobs during a period when many workers in other industries found themselves on unemployment rolls.
For example, while the overall unemployment rate in the United States was at 7.7% in September, in construction it was 7.1%, according to data that accompanied the ABC release. That shows how construction’s essential status has helped the overall economy, while taking measures to protect workers at the same time.
And both views, given what passes for a rational approach to business — or life — during a pandemic that shows no sign of abatement before a vaccine is widely distributed next year, ring true.
In 2020, taking both a pessimistic and optimistic view on similar data seems to be a way to hedge construction’s wide-ranging bets.
State could save $100 million annually
In response to the recent CT Mirror report “Transportation Infrastructure could be key to inclusive economic recovery, but investment has languished” on November 30, I would like to add to Keith Phanuef’s piece with suggestions on how to improve our transportation infrastructure in a fiscally responsible way.
The article cites a decade-long lack of transportation spending, but does not address a key piece of the equation, the Department of Transportation (DOT) wastes over $100 million annually through outsourcing key engineering services. Recent cost analyses, that the DOT must submit annually by statute, indicate wasteful spending of between 58 to 62% when the Department outsources construction inspection and engineering design services. For Fiscal Years 2016, 2017, and 2018, the state could have saved $325 million had this critical work been performed by state employees.
So why does the state continue to waste this much when reports and audits show it can be done more cost effectively with in-house personnel? Politics.
A political shell game takes place because some politicians love to show a reduction of state employees, in lieu of any actual savings. The number of state employees and the state budget’s personnel line item receive the most scrutiny every budget cycle. But when quasi-state employees hired by private companies perform the same work, the public does not have access to the number of employees being hired. In addition, the tax dollars spent by outsourcing fall under the operating expenses budget line item, which is hardly ever scrutinized.
Also to blame is the hiring process Connecticut uses for state employees. The Department of Transportation is not in charge of hiring engineers but instead uses a centralized hiring dinosaur called Department of Administrative Services (DAS). Even as the DOT performs strategic planning for the next five years, they have no authority or control of how many employees they can hire at the department and are subject to the whims of politicians and DAS.
One of the critical services our engineers provide is oversight and inspection of the construction of our roads and bridges. Our priorities are keeping the roads safe and contractors honest. When we do not have enough staff to perform these duties, our work is outsourced to high priced, for-profit companies, many of which are not even based in Connecticut, often taking jobs away from our residents. Having a no-bid contractor oversee a low-bid contractor is like having the fox guard the henhouse. When these construction contracts run over their allotted contract time, these private consulting engineers are rewarded with their own contract extensions, meaning more cost to taxpayers.
With changes coming to the state employee’s pension plan looming in July, 2022, you would expect the state to be staffing up in order to retain qualified lower-costing state engineers ahead of the “silver tsunami.” Instead, it is business as usual in Connecticut. The position count of DOT engineers has not changed and while some hiring of new employees has taken place, it is not nearly enough to counter the expected retirements.
It appears the politicians in control are quite content with doubling down on their addiction to outsourcing, at the cost of the Connecticut taxpayers.
Catherine Shen NEW BRITAIN – Downes Construction Company, an employee-owned company, continues to deliver professional construction services even amid a pandemic.
“We know many companies, businesses and their projects have had their ups and downs this year. We’ve been very fortunate that none of our projects have been delayed,” said Nicole DeMaio, marketing director for Downes Construction Company.
The company, in fact, has gone through several milestones this year. One of the major events include becoming an employee-owned company in May.
“The transition to an ESOP benefits both our clients and the Downes employees. Our employees are the heart and soul of Downes Construction. As vested shareholders they will be rewarded as we continue the legacy of Downes. At the same time, our clients will benefit as the ESOP will allow us to retain our dedicated, experienced and talented team members and recruit new talent,” said Dave Patrick, president of Downes Construction Company.
Founded in 1934 and located in New Britain, the business is proud of their regional heritage and maintains a vested interest in the surrounding communities. This presence provides current knowledge of codes and regulations, key subcontractors and market trends for the region. Some of their services include project feasibility studies and planning, general contracting, financing, construction administration and management, purchasing and cost control, project management and scheduling.
In October, along with the Hospital for Special Care, city officials and community members, the company celebrated the grand opening of the new $13 million inpatient and partial hospital facility at the Hospital for Special Care.
The new state-of-the-art facility is only one of 11 in the country and will provide service to families and children with autism. The 12-bed inpatient unit will provide single-patient rooms, in a care environment designed by the hospital’s clinical staff to meet children’s needs, and maximize opportunities for parent education and training. The new Partial Hospital Program will offer the first step-up and step-down level of care, an entirely new option in care to help bridge difficult transitions, divert inpatient stays and maximize continuity in care. In addition to meeting urgent community need for access to autism care, this project has been a regional economic driver throughout the pandemic and creates new employment opportunities.
Downes served as the construction manager at risk for the project. Despite the challenges of the pandemic, the Downes team delivered this project weeks ahead of schedule and under budget, according to the company.
“This is a huge accomplishment for the hospital, for the city and for us,” DeMaio said. “The fact that it’s located right here in New Britain is amazing and great for those who need the care.”
The company has done about 12 to 15 projects this year, the majority of which are in Connecticut.
Killingly leans into larger school renovation project with higher state reimbursement
John Penney KILLINGLY - Presented with a time-sensitive – and higher state reimbursement - opportunity to apply for a top-to-bottom school renovation project, the Town Council on Wednesday agreed to withdraw a previous application that would only have demolished portable classrooms and added a new wing at the Killingly Memorial School.
The option came to the council just days before the today's deadline when Town Manager Mary Calorio needs to give an answer to the state Office of School Construction on which way the town wishes to proceed with the new offer.
The “renovate-as-new,” state-favored plan calls for replacing an antiquated heating system at the Main Street school with a combination heating-cooling system; re-doing the facility’s electrical system; adding a fire-suppression system to the main building; renovating the cafeteria’s kitchen area; and conducting asbestos abatement throughout the structure.
The cost for the main building work is estimated at approximately $15 million with a state reimbursement rate of 72%. When combined with the previously approved $16.5 million cost to remove the school’s portable classroom and the addition of a single-story wing, preliminary costs for the entire project are pegged at about $34 million, with the town’s share estimated at $9.5 million.
The smaller project came with a 60% reimbursement rate and would have required the town to bond $7.5 million. If the town opted to tackle the main building work separately in the future, there would be no incoming state reimbursement money.
“Yes, it’s an additional $2.2 million the town would be paying, but we’re talking about $2.2 million for more than $15 million in renovations,” Council Chairman Jason Anderson said during the council’s special meeting. “That’s $13 million covered by state reimbursements.”
Calorio said a recent conference call with Konstantinos Diamantis, director of the Department of Administrative Services’ Office of School Construction Grants & Review, changed concerning the portable classroom project, which was slated to be reviewed by the state in anticipation of being placed on priority grant status.
“The conversation very quickly switched gears to concerns with the main building,” Calorio said, with Diamantis favoring a comprehensive overhaul of the school. “The idea was one of cost-efficiency.”
The state’s stance is having workers concentrating on just one comprehensive renovation project is more efficient than doing piece-meal work over the course of several years.
The council did not approve authorizing any new funding on Wednesday – that will have to be determined after conversations with the Board of Education and, depending on Gov. Ned Lamont’s executive orders, town council action or the normal public approval process.
Calorio said both the school district's interim and new incoming superintendent are in favor of the more comprehensive project, though the Board of Education has not yet been formally consulted on the option.
The downside to pulling the current renovation application is one of timing, Calorio said. By withdrawing the previous application, the town must reapply for the larger project by June, likely pushing any work at the school until 2022.
If the town opts not to approve the larger project, the bonding money previously approved for the portable classroom work with still be available.
Calorio said the state taking such a specific interest in a school renovation project is rare, but not unprecedented.
“This director has done that more and more frequently lately in other communities, including Groton,” she said.
‘Real concerns about parking’: Proposal for downtown Bethel apartments faces obstacles
Julia Perkins BETHEL — Providing enough parking may be the biggest obstacle facing a proposal for 18 apartments and commercial spaces in the downtown.
The plan calls for offering 27 parking spots for an expanded 155 Greenwood Ave. building and four other buildings between Greenwood and School Street. Also proposed is an at least eight-foot pedestrian walkway on the west side of the development.
That’s enough parking for the studio or one-bedroom apartments, but some residents and property owners are worried it wouldn’t be adequate for the businesses that would occupy the proposed 6,525 square feet of commercial space.
“It’s a beautifully designed project, but I have some real concerns about parking,” First Selectman Matt Knickerbocker said. “As it is, we already have trouble with people who live in the apartments downtown not having any (parking spots).”
The Planning and Zoning Commission will hold its third public hearing on the project during its virtual meeting at 7 p.m. Tuesday.
The developers are still negotiating to purchase the 155 Greenwood Ave. property, which is a doctor’s office, project attorney Peter Olson said.
Developers plan a second-story addition to that building, which would have two apartments. Four other buildings would be constructed with four apartments each.
The 155 Greenwood Ave. building was mentioned on the town’s application for the Greenwood Avenue Historic District to be on the National Register of Historic Places.
But the nearby buildings have also been updated over the years, said Pat Rist, chair of the Planning and Zoning Commission and president of the Bethel Historical Society.
Bethel has encouraged projects like through its transit oriented development plan, which focuses on creating a downtown where people can live and take the train into work or walk to local shops and restaurants.
This project meets these goals, one commission member said at the last public hearing.
“Bringing in new businesses, new opportunities, new residents, that will help to grow our downtown area,” Linda Curtis said. “That’s what we all wanted.”
The project calls for an eight-foot walkway with plantings and pergola structure above it. Developers hope nearby Wells Fargo will agree to extend the pathway by another eight feet.
This walkway appears to be similar to what the town referred to as a “skinny street” in its Bethel Forward plan. Under this plan, a pedestrian passage lined with retail shops and small restaurants would connect Greenwood Avenue and School Street.
Beth Cavagna, town planner, told the commission that she likes the walkway’s concept.
“It invites a warmness to the downtown area that’s lacking,” she said at the latest public hearing.
The coronavirus pandemic has had little impact on the town’s efforts to encourage development, with commercial building on pace and residential construction booming, Knickerbocker said.
“The disease seems to have an economic impact that hits some people harder than others,” he said.
But Knickerbocker said he would like to see more development on Durant Avenue from the train station to CVS.
“That’s where the biggest opportunity is,” he said.
What’s holding that back is the need for pedestrian bridge that would connect the west side of the tracks to the train platform, he said. The town has applied for grants for the project.
DeMarco Construction, the developers, initially proposed 16 parking spots, but added more after facing criticism from residents. Two handicap spots are part of the 27 spaces.
But the revised plan still does not have enough parking, said Beth Camp, the property manager for 153 Greenwood Avenue and 8 School Street. Those businesses, which includes H&R Block and a doctor’s office, already lack parking, especially handicap accessible spots, she said.
“You would definitely be harming the businesses that operate at 8 School St. and 153 Greenwood Ave,” Camp said at the latest public hearing.
The developers have requested a special permit to allow them to bypass parking requirements, arguing there will be space for customers to park when tenants are gone during the day.
“At the end of the day, there is no more room on site for parking,” attorney Peter Olson told the commission. “There is no way to provide more parking.”
Town officials have discussed approaching private property owners to create shared parking lots, but have yet to do so, Knickerbocker said.
But one resident, who said he walks downtown frequently, said he has seen no parking shortages.
“We have a wonderful downtown,” said Kevin Mccloskey, who lives on nearby Wooster Street. “This is going to be a great addition to that huge eyesore that’s down there right now, so I’m excited to see downtown grow.”
CORRECTION: This article was corrected to reflect that the development is near School Street.