Coronavirus quiets the boom of Philly construction

The constant cacophony that has trumpeted Philadelphia’s remarkable construction boom has quieted. Towering cranes are still, jackhammers are silent, and construction vehicles have stopped their beeping back-up warnings.

And thousands of people in construction-related jobs are out of work.

As part of sweeping business closures to slow the spread of the coronavirus, Gov. Tom Wolf ordered construction sites across Pennsylvania to shut down by last Friday evening. Pennsylvania is one of only a handful of states to stop all active construction, except sites granted waivers for medical-related work, emergency repairs, and limited residential work.

States such as New Jersey and Delaware that have similar stay-at-home orders have carved out construction as essential and allowed it to continue with safety precautions.

Pennsylvania House Speaker Mike Turzai (R., Allegheny) plans to introduce a bill Friday to require the state to grant a waiver to allow all public and private construction work that can be done following social distancing and other guidelines to prevent the spread of the coronavirus.

In a letter to fellow lawmakers, Turzai said that infrastructure jobs are vital and that stopping these open-air projects “makes no sense.”

“Halting home building sites and commercial construction sites has resulted in homes and other structures sitting half-finished and, as a result, poses risks to public health and safety that must be immediately addressed,” Turzai wrote. “Leaving partially built homes and other construction sites exposed to the elements will compromise the integrity of building materials and add additional financial loss.”

Partially completed job sites could invite illegal activities or squatters, damaging stormwater runoff, or mold, which could mean a half-finished house might have to be torn down, builders said.

Philadelphia has up to 20,000 construction jobs, and for every one of those, at least two indirect support jobs involving suppliers, engineers, architects, surveyors and others, said Leo Addimando, president of the Building Industry Association of Philadelphia, an organization of mainly residential developers. Tens of thousands of jobs are in danger of furlough or elimination during the pandemic.

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Owners of construction businesses are faced with “a very personal and difficult set of decisions,” including how long a company can carry which part of the workforce and whether to cut salaries, said Addimando, founder and managing partner of Alterra Property Group, a real estate investment, development, and management company based in Philadelphia. Some companies have taken a “swift approach” and laid everyone off, he said.

"There’s been a tremendous amount of job loss already,” he said.

Building industry groups have been encouraging members to apply for waivers. The state Department of Community and Economic Development is accepting requests “on a case-by-case basis” and is encouraging any company that is unsure whether its work is considered life-sustaining to apply, a spokesperson said.

Addimando said he thinks halting construction but granting waivers is a “smart move” for Wolf.

“It sends a strong message he believes very strongly in the health and welfare of the people of Pennsylvania, but that has to be balanced with the need for housing," Addimando said. “My understanding is that the state is looking favorably on housing as something that is essential to life in every respect.”

The state had granted more than 4,900 waivers to businesses in various industries as of Monday evening and denied more than 7,700. It plans to continue to “review and refine” the waiver process, a spokesperson said. But confusion among construction companies abounds as to who qualifies, why, and for what work.

“If people are refused a waiver, many applicants are mystified,” said Dan Durden, chief executive officer of the Pennsylvania Builders Association. The association is not arguing that all construction should continue, he said, but wants members "to carry out the work they’re allowed to do for as long as they’re allowed to do it.”

A department spokesperson said that while general construction is suspended, residential construction projects that are “substantially completed,” meaning they have final occupancy permits, can continue.

Emergency repairs also are allowed, but builders would like clarity on what constitutes an emergency, Durden said. An association member wondered: If a house has cracked windows but they’re not yet leaking water into the house, does that mean there’s no emergency?

Even if a builder gets a waiver, it doesn’t mean work can continue if a site needs permits or inspections that the pandemic has made difficult to get or if ancillary businesses are closed. Some businesses that got waivers have decided to halt work due to restrictions or safety concerns. In some cases, homeowners have asked contractors to stay away.

Wolf gave companies a few days last week to secure work sites, but "more time would have been a huge amount of help,” Durden said.

James Gallagher, a construction industry consultant based in Marlton, predicted that there are “going to be issues later on about whether there were ill effects to their projects that might have caused cost overruns.”

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Remodeling companies can do emergency repairs and projects that pose an imminent hazard, such as fixing a roof or stabilizing unfinished structures from weather, said Will Giesey, president of the Chester and Delaware County chapter of the National Association of the Remodeling Industry.

Some homeowners living in Airbnbs or other temporary housing during remodeling will have to extend their stay for months. "They are obviously the hardest hit,” he said.

Giesey, founder and general manager of Philadelphia-based Bellweather Construction, said his company develops projects for months before starting, so his designers can continue working with clients. But a third of the clients have put projects on hold. Giesey said he has furloughed some workers and hopes to hire them back after the pandemic ends.

He has not applied for a waiver.

“It’s a balance of managing the risk of infection vs. the benefits to all the suppliers, trade partners, homeowners, all the stakeholders that are affected by this,” he said. "Everybody would like to stay in business, but it may not be appropriate to do so.”

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Companies with just a few employees will be hardest hit, and owners who can borrow money will have to figure out how much debt they can take on to keep their businesses stable for an unknown period of time, Giesey said.

“For small businesses, it’s very difficult to determine how to survive," he said.

He said "it seems a little unfair” for the state to grant waivers to specific firms "just because they’re a little better at negotiating.”

“It’s so individual," he said. "And if you spin it in a way that makes it appear your case is urgent, then you’re a great negotiator, you’re probably a good salesperson, but I don’t know that should be the reason you can continue working and others shouldn’t.”