by Vince Vasquez
Wednesday, January 27, 2010
When the subject of job creation comes up at San Diego City Hall, too often the discussions are limited to “supporting the clean tech industry” and creating “federal stimulus work” and “green jobs.” In an effort to shine more light on the less vogue job sectors that are struggling in our tough economic times, I submit this first column in a new series on fixing San Diego’s traditional workforce.
Few business sectors in San Diego have been as hard-hit by the economy as the construction industry. As the San Diego Union-Tribune noted this week, the number of residential building permits issued in San Diego County slowed to a trickle in 2009, reaching the second-worst lull since the Great Depression. With financial lending now hard to come by for builders, and the housing bubble still far from correcting itself, industry unemployment has been nothing short of wretched.
An analysis of state labor data reveals that employment in San Diego County’s construction industry has experienced a near freefall over the last two and a half years, dropping from 90,900 jobs in June 2007 to 65,100 in December 2009. Put another way, nearly 1 out of 3 construction workers are no longer employed locally. The true size of industry job losses is likely much larger, as a significant portion of construction projects are completed informally by curbside laborers and entrepreneurial handymen looking for an honest day’s work. How far industry employment will fall is anyone’s guess, but it’s clear that more action is necessary to reverse this destructive trend.
To be sure, local leaders have taken considerable efforts in the last twelve months to address industry woes. In July 2009, the City Council voted to defer the payment of development impact fees and extend the life of building permits, giving more financial and regulatory flexibility for local developers hard-hit by the economy, and last December Mayor Jerry Sanders announced new policy reforms to expand municipal bid opportunities for small contractors. Unfortunately, these gains are tarnished by those walking the corridors at City Hall who wish to use the public promise of new construction jobs as a way to advance costly taxpayer-subsidized public works projects.
From newspaper editorials to civic booster websites, a new Central Library in downtown San Diego is being touted today as a “shovel-ready project” that will spur up to 600 construction jobs, and proponents of a Convention Center expansion say that 6,000 new jobs will be created if their project breaks ground. But in reality, both projects are years away from fruition, as they have yet to secure the necessary financing or receive final approval from local government agencies. Furthermore, both projects (and other potential city projects, including a new Civic Center and Chargers stadium) may be subject to discriminatory, anti-competitive labor union pacts known as “project labor agreements” which will reduce economic opportunity for the overwhelming majority of the industry workforce, which is non-unionized. Rather than depend on politicized, government contracts for construction job growth, City Hall leaders should weigh the merits of empowering homeowners to create new industry work in 2010.
At issue is a “home improvement holiday,” a short-term waiver of permit and inspection fees for common residential property renovation projects that is intended to stimulate new construction work in a community. Home improvement holidays are an innovative, cost-effective way to spur new economic activity that is otherwise hampered by bureaucracy, long waits, and exorbitant surcharges. The earliest known example of a home improvement holiday emerged from Southern California; from March to May 2004, the city of Anaheim held a 100-day Home Improvement Holiday which exempted residents from plan check and permitting fees for eleven different types of renovation projects. The $772,240 in waived government fees resulted in 3,562 residential permits being issued, freeing homeowners to make an estimated $28.3 million in home improvements.
More recently, the City of Denver held a “Home Renovation Bonanza” for the first two weeks in June 2009, giving owners of single-family home and duplexes free, issued-on-the-spot permits for nine major property improvements, including basic interior remodeling chores, roof repair, and photo voltaic system installation. In all, 1,234 permits were pulled by property owners, costing the city $85,773 in lost permit fee revenue, but generating $6.28 million in home improvements that created sorely-needed sales tax revenue and construction jobs.
Both Anaheim and Denver saw a tripling of pulled permits from the same time period the previous year, respectively. Other California cities, such as Corona and West Sacramento, have also held similar holiday initiatives in the last few years.
A home improvement holiday in the City of San Diego is likely to have the same economic benefits as it did for Denver and Anaheim – more opportunities for contractors, more large purchases at home improvement retailers, and more sales tax revenue, all of which can strengthen our flagging building industry at this critical time in our nation’s history. The pivotal question at City Hall is if Councilmembers are able to look past the likely opposition from financial bean counters and see that the greater positive community impact of a holiday is worth sacrificing a relatively small amount of permit revenue.