NorthBay biz profiles the Construction Coalition, an organization created to jumpstart the North Bay’s construction industry.
“We believe it’s particularly necessary to move forward with previously approved, publicly funded projects,” says Coalition co-chairman John Bly. “Santa Rosa, in particular, needs to upgrade its old water lines—in the downtown area, around Cherry Street—and these jobs need to be put out to bid as early as possible. The sooner those monies—monies that have already been approved—are put into those jobs, the sooner they start circulating within the community. I know times are tough, but we’ve already paid for these much-needed projects with our utility bills.
Formed out of necessity
Bly, a native of Avenal (near Coalinga) who grew up in Santa Rosa (Montgomery High), then earned his degree in civil engineering at UC Berkeley, grew up immersed in the construction business. “My dad, Cassius Bly, was co-founder with Jim Kirkwood of Kirkwood-Bly, back in 1959. They were involved with public works in the community—pipelines, underground construction—for nearly half a century. They sold the business in 2003. My father is in the North Coast Builders Exchange Hall of Fame. I worked for Kirkwood-Bly for nearly 30 years myself, doing public works projects for sewer, water and storm drainage. I’ve also served as president of both the Northern California Engineering Contractors Association and the North Coast Builders Exchange.”
He sets the stage for the Coalition: “When the Home Builders Association closed its office here in 2008, Keith Woods [CEO of NCBE] and I were approached by HBA members to see if there was some way their issues could be incorporated into the NCBE. I worked closely with Keith, Willie McDevitt—he was then the president of NCBE—and HBA members to work out a new steering committee, consisting of four members from each of those two groups plus three members, selected by the eight, who weren’t members of either.
“The idea was to create a new group to speak on behalf of the entire construction industry, not just the 1,750 members of the NCBE and not just the home builders. We had our first meeting on March 17, 2009, identified six issues we felt were common to the community and to the construction industry and crafted policy and action statements for each. The Construction Coalition began contacting and speaking at city council and county supervisors meetings in late November 2009.”
One of the most inspiring parts of the Coalition’s platform is its insistence that new building and construction projects be environmentally sensitive in their approach. “Green,” of course, is a magical word these days, especially in the North Bay. “No question,” agrees Bly. “Green building practices are important, essential elements of all residential and commercial construction in the North Bay. “Home builders, like everyone else, have to be aware of lowering their carbon footprint, both in the building itself and in the consequences of what’s being built. We have to find ways to be better stewards of the land, and we have to find better ways to conserve the resources we have—not waste them frivolously. It’s important to the city, to the county, to the state…to the planet. Everyone knows this. But acting upon that knowledge is the hard part.”
A big part of the Coalition’s concern also has to do with the rise in fees for new construction projects around the county. “It’s a tough subject,” admits Bly, whose expertise is in water delivery and treatment systems. “For years, the supply and demand circumstances were such that cities kept increasing the fees for single-family, detached homes. Things got so bad that, a few years ago, a basic 1,500-square-foot home was selling here for well over $500,000. Now, when prices are less than half that, the fees haven’t gone down even a little. So, as a percentage of the overall selling price, the fees are skewed all out of proportion. Five years ago, the fee costs represented a little more than 12 percent of the overall cost of a home. Even then, most people felt 10 percent was a more equitable number. Today, the fees represent more than 20 percent of a home’s cost.
“They’re a severe detriment to new construction. We’d like to see, at the very least, a freeze on fees. Or, better still, something of a rollback, a deferment or a suspension on them. San Luis Obispo is doing something like that, as is American Canyon.
“Fees are complicated, and they’re definitely a political hot potato, but something simply has to be done about them. I mean, there are fees for checking plans, building permit fees, fees for electrical and plumbing, sewer and water fees, traffic mitigation fees, path fees, ‘area impact’ fees, administrative fees, school fees, capital facilities fees and, of course, the ever popular ‘miscellaneous’ fees, whatever those are. In Petaluma, for a home that would be built for around $200,000, the fees will add close to $75,000 to that price. Yikes!”
A strong foundation
As co-chairman of the Construction Coalition, Craig Lawson works closely with Bly. President of Pinnacle Homes and Home Performance Services, Lawson begins his assessment of the newly formed organization by citing the quality of its board members, which include Greg Hurd (BKF/Carlenzoli), Rob Cantu (Western Builders), Mark Soiland (Stony Point Rock Quarry), J. T. Wick (Berg Holdings), Vin Smith (DVC Group), Beth Tuxhorn (Tuxhorn Company) and Joe Ripple (Schellinger Bros.). “These are people who, like me, love what they do and care deeply about the industry we work in,” he says. “When HBA closed its local office, there was a void in terms of local presence and representation. There’s a great need to speak up about the issues impacting the homebuilding industry, in particular, and the construction industry as a whole.”
Lawson is a local guy who’s wholeheartedly enmeshed himself in his community. A graduate of Santa Rosa Junior College, he attended Sonoma State University, is a graduate of the Dale Carnegie Public Speaking and Human Relations course and was a member of Leadership Santa Rosa’s 10th class. He’s intensely involved in the Santa Rosa Chamber of Commerce and HBA, is chairman of the Santa Rosa Board of Community Services and has been the assistant varsity softball coach at Montgomery High School for more than a dozen years. Two years ago, he was a recipient of the “Spirit Award,” presented by the Sonoma County Economic Development Board.
Leveling things out
Another of the Coalition’s six primary concerns is how to best build in a more equitable array of housing allocations. “If a community desires a certain percentage of affordable housing in its mix,” says Lawson, “then the community should participate financially in creating that mix. For example, the city of Santa Rosa real estate transfer fee used to go 100 percent toward affordable housing. It helped the city create affordable housing through its nonprofit builder relationship with firms like Burbank Housing. The City Council began using these funds for other things, but the burden to fund affordable housing shouldn’t be placed on the unrepresented, the market rate homebuyer. They’re the ones who pay the cost of affordable housing, not the builder.
“These have always been and will always be pass-along costs, much as concrete and lumber are pass-along costs,” he continues. “If the costs become too high—to the point where the market can’t, or won’t, accept the increased costs—then nothing can or will get built. Ask any local commercial lender and they’ll verify this.”
Lawson points to a newspaper article written by Ollie Speraw, a one-time state senator who’s a past president of the Oceanside Chamber of Commerce. A realtor and home builder, Speraw writes against what he calls a “disguised tax on a few new home buyers”: “Too many of our lawmakers, at all levels, fear that the voters would not support a tax-based program. So instead, they invented “inclusionary housing” to ease their consciences while choosing to believe that the end justifies the means. Therefore, we burden only new-home buyers with its cost…[these are] residents who own their own homes and have arrived at a point where they can afford something more modern or that better fits the needs of their family. They will pay the fee for their new home while the buyer of their old home pays nothing. Ask yourselves, why should new-home buyers be penalized while the rest of [our] citizens escape participating?” A prickly issue.
Water ways
As far as water issues, Lawson asserts quality and delivery trump supply as the primary issues: “Water supply isn’t the issue, there’s enough water behind the Warm Springs Dam to supply all of the cities that contract with the Sonoma County Water Agency for their projected growth on approved general plans. The big issue is delivery. Water can’t come down Dry Creek at too high a velocity because of the Endangered Species Act. We’ve built a state-of-the-art, world-recognized pipeline that sends reclaimed water to the Geysers facility to create clean, green energy. That project was 43 miles long, it crossed under the Russian River twice, and it had multiple pump stations. It was built at the peak of the economy at a cost of less than $250 million, including the necessary environmental documentation. Why can’t we build a 13-mile—or less—gravity-fed pipeline down Dry Creek Road to bring water from Warm Springs Dam to the confluence of Dry Creek and the Russian River for a fraction of that cost, making good use of all of the at-present underemployed construction workers? It begs the question of whether the political will exists.”
Speed things along
To help move things forward, the Coalition is working to connect local officials with those in other jurisdictions, where construction proposals are approved or denied in a short, guaranteed timeframe. The hope is to motivate local departments to work faster and more dependably. This is one of the Coalition’s main courses of action and could really break the current logjam.
“For years, knowledgeable local builders have pointed to the city of Sunnyvale’s Building Department as the standard of excellence in terms of how efficient and timely its planning department is in guiding contractors, owners and developers through the process of getting plans approved and permits issued on construction projects,” says Bly. According to its website (www.sunnyvale.ca.gov), “Through the One-Stop Permit Center, the city of Sunnyvale is able to provide streamlined plan review and building permit issuance with more than 90 percent of all building permits issued at the counter.”
“The Construction Coalition will continue to support communication and learning between our local officials and the city of Sunnyvale to improve what we see as a less-than-acceptable local process,” Bly continues. “Although we understand the quality of submitted plans plays a large part in any department’s ability to process a proposal quickly, we also feel our local departments, despite a talented and hard working staff, can improve the process of development in the North Bay region.”
Follow through
Service levels at planning departments, of course, is a real hot button issue. I asked Lawson what can reasonably be done to maintain or improve the situation and how many potential jobs are lost (or going away) due to the more limited current economic circumstances. “While we appreciate the institutional knowledge in our Community Development Departments,” he says cautiously, “the reality is, they can’t maintain current staffing levels if we’re not providing enough new projects and getting them into the pipeline. Outsourcing might be one way for them to deal with the wildly fluctuating workloads if current staffing levels are unable to be maintained. It’s a difficult issue.”
Formerly executive director of the Northern Division of the HBA, Charlie Carson is currently a consultant to the business community, advising prospective developers on the “processing maze” in our local governments in addition to tracking adjustments to infrastructure impact fees and other direct costs to project applicants. “The closing of the HBA last year highlights the very slow activity of new housing,” he says. “The number of short sales and foreclosures has significantly lowered the prices of existing housing, and it’s going to be a while before new housing can compete with those prices.
“But we’re still seeing a lot of movement at city hall, with new or revised ordinances, policies and fees that are affecting the building industry. So the formation of the Construction Coalition is very important to maintain the visibility and presence at our city councils and boards of supervisors. For example, I know a lot of the visionaries are pushing for higher-density housing to be centered around rapid transit hubs—and that’s a laudatory goal—but it’s a plain fact that it’s not what the majority of the market is interested in.”
Solution-minded
The issues are out there, and they’re thorny and devastatingly difficult. It’s good to know there are folks willing to work those issues through and attempt to come up with workable solutions. “Right now, we’re focused on Sonoma County,” says Lawson. “But we’re looking to expand to the same areas that the NCBE and HBA cover—Sonoma, Napa, Marin, Lake and Mendocino counties.” Expanding a vision to bring better focus to construction issues in our area will certainly help get the message across that something needs to be done—and the sooner the better.
For more information about the Construction Coalition, contact (707) 542-0645.
