As pleas to stay home to stop the spread of the coronavirus grow louder, construction workers and developers find themselves in a new and uncertain territory.
State and local orders directed at whether and how construction workers can continue building are untested and vary dramatically.
Pennsylvania imposed a strict ban on all business activities that are not deemed “life-sustaining,” including construction in all forms. New Jersey Gov. Phil Murphy’s “stay-at-home” order excludes construction workers. New York Gov. Cuomo mandated that 75 percent of the non-essential workforce work from home to further reduce density across the state to slow the spread of COVID-19.
However, New York City mayor Bill DeBlasio said he will “continue to consider how to handle this” and pointed to San Francisco, which continues to allow some construction while closing other businesses.
Seven California counties exclude some construction from mandated business closures, deeming building an “essential” business operation. The county orders are some of the most nuanced in spelling out activities related to the construction of housing. Each contains language similar to the following:
The orders allow workers to leave their residence to provide any services or perform any work necessary to the operations and maintenance of “Essential Infrastructure,” including, but not limited to, public works construction, construction of housing (in particular affordable housing or housing for individuals experiencing homelessness), airport operations, water, sewer, gas [and] electrical . . . provided that they carry out those services or that work in compliance with Social Distancing Requirements as defined this Section, to the extent possible.
Exemption of services associated with housing construction continues to be interpreted. The California Building Industry Association (CBIA) is taking the position that permit, inspection and other services are also “necessary” to accomplish the construction of housing and therefore exempt. This includes plan checks, issuing permits, inspections for permits and certificates of occupancy, utility hook-ups, and recording documents like liens and easements.
On social media, the #stopconstruction hashtag is bringing focus to working conditions at construction sites that are at odds with public health directives to stop the spread of the coronavirus.
At a time when housing demand is at its highest and there is a shortage of construction workers, how housing development plays out during the pandemic matters.
Before the coronavirus outbreak, homebuilder confidence was soaring and represented one of the strongest sectors of the U.S. economy.
Now housing developers warn that construction bans could trigger penalty clauses that threaten the completion of projects and require state and federal intervention. Affordable housing projects could be the first to feel the effects, because they rely heavily on federal low-income housing tax credits.
The National Association of Home Builders (NAHB) is forecasting declines for 2020 housing construction (particularly in the spring), however low interest rates and policy help for the labor market, could position housing to lead the economy into a needed recovery.
“The challenge right now is uncertainty and the immense number of job losses occurring in such a short period of time,” NAHB Chief Economist Robert Dietz said. “Certainty can be provided by a slowing of the number of virus cases. The economic downturn in the second and third quarters is unfortunately a requirement of social distancing and virus mitigation. If those efforts are successful, then the economy should begin the process of rebounding shortly thereafter. In the meantime, monetary and fiscal policy are working to ensure the system will be prepared for such a recovery later in the year.”
How moratoriums and restrictions on construction are interpreted and applied over the next few weeks will have long term workforce and economic consequences.