Infrastructure projects proposed to boost state's economy

NC Governor Mike Easley announced this week he is putting projects totaling $722,035,444 on the Council of State’s January 6, 2009 agenda for approval.

This is welcome news to NC contractors.

The governor noted that going to the market with these projects now is cost effective since interest rates and building costs are lower. Economists estimate that for each dollar spent on a construction project, $2.28 is pumped into the state’s economy, and that every $1 million spent on a project results in 36 new jobs, meaning these projects will produce nearly 26,000 new jobs.

The projects are listed by agenda, facility and amount:

- Dept. of Correction - Women’s Health and Mental Health Facility - $45,170,500
- Dept. of Correction - Minimum Security Addition - Scotland - $13,010,000
- Dept. of Correction - Medium Security Addition - Bertie - $18,950,000
- Dept. of Correction - Minimum Security Addition - Tabor - $13,010,000
- Dept. of Correction - Medium Security Addition - Lanesboro - $18,950,000
- State Ports, Morehead City - Port-wide Berth Structure Construction - $2,000,000
- State Ports, Wilmington - Berth 8 Replacement Phase I - $5,000,000
- Dept. of Agriculture - Southeastern NC Agricultural Center Pavilion - $3,700,000
- Dept. of Agriculture – Truck Shed & Restroom Expansion at WNC Farmer's Market - $650,000
- Dept. of Agriculture - Davis Arena Renovation & Expansion WNC Agricultural Center - $7,450,000
- Dept. of Cultural Resources - CSS Neuse Phase I (20,000 sq. ft. bldg.) - $2,925,000
- Dept. of Environment and Natural Resources - Research Oyster Hatchery - $4,303,944
- Dept. of Environment and Natural Resources - Zoo Polar Bear Exhibit Addition and Renovation - $2,700,000
- Dept. of Environment and Natural Resources - Green Square Complex - $107,000,000
- East Carolina University - School of Dentistry - $69,000,000
- East Carolina University - Family Medicine and Geriatric Center - $36,800,000
- Elizabeth City State University - School of Education Building - $18,000,000
- A&T State University - Horse Barns, Upper Piedmont Research Station - $2,438,000
- A&T State University - General Classroom Instructional Facility - $20,490,000
- N.C. Central University - School of Nursing Building - $24,500,000
- N.C. School of the Arts - Central Storage Facility - $11,100,000
- N.C. School of the Arts - Film School Production Design Facility - $12,900,000
- N.C. State University - Centennial Campus Library - $109,100,000
- N.C. State University - 4-H Campus Improvements - $4,000,000
- UNC Chapel Hill - School of Dentistry Addition - $69,000,000
- UNC Charlotte - Energy Production Infrastructure Center - $57,218,000
- UNC Greensboro - Academic Classroom and Office Building - $42,670,000

Governor Easley has also instructed Commerce Secretary Jim Fain to be even more aggressive than usual on job recruitment, since in a tough national and global economy, the state can use its incentive programs to create future jobs. The governor expects to make several new job announcements soon.

While the state has suffered some job losses because of the decline in the national economy, the number of people employed in North Carolina has actually increased three of the past four months, according to the N.C. Employment Security Commission.

To view the governor's news release click here.

Retool the tax code to take on N.C. infrastructure

Guest editorial by Anita R. Brown-Graham. Graham is director of the Institute for Emerging Issues at N.C. State University.

North Carolina faces contrasting challenges: our population is growing and our economy is shrinking. The first challenge is causing tremendous strains on our transportation, water, sewer and school systems, while the second threatens the very funding mechanisms needed to repair and expand these critical systems. Both challenges are substantial, and yet they may share a common solution.

An investment in infrastructure is both an elemental investment in a stable economy and essential to supporting population growth. Indeed, entire countries, as different as China and the Czech Republic, are banking their future prosperity on infrastructure-based economic stimulus activity that provides water, roads, rail, airports, schools and housing for their populations. Our own federal government is exploring its version of an infrastructure-based investment boost.

Is there a compelling case for a North Carolina infrastructure strategy?

I think so. Projections suggest that North Carolina can realistically expect to reach 13 million residents by 2030, making it the nation's seventh most populous state. The numbers are already causing growing pains.

Today more than 175,000 students learn in mobile classrooms while funding is sought to build 260 new schools over the next five years; our major water systems require more than $16 billion in upgrades over the next 25 years; and estimates for new road construction and road improvements are well over $25 billion for the same period, as congestion in the state's urban areas costs individual residents hundreds of dollars annually in delays and excess fuel costs.

Noth Carolina is at a critical juncture that demands new approaches to infrastructure.

Our state response should be threefold. First, in the short- and longer-term, we will have to invest in our infrastructure.

While finding the funding will be no easy task in the midst of a global economic crisis, opportunities exist and others are emerging. There is likely to be a second national economic stimulus package passed by Congress this year, this time with funding available to states for infrastructure. Our voice should be heard on the economic package and other related legislation, such as the effort to create a National Infrastructure Bank.

Additionally, our state should be a leader in larger dialogues about the nation's crumbling infrastructure, including Building America's Future, a national coalition led by Govs. Arnold Schwarzenegger and Ed Rendell and New York Mayor Michael Bloomberg.

But the promise of federal funding will have its limits, and the state itself must be willing to make investments.

Like almost all states, North Carolina operates under a constitutional requirement to balance its budget. One consequence is that during recessions, like the one taking shape before our eyes, states are forced to reduce all spending, including capital spending, as their revenues fall. The reduction, in turn, accelerates the downturn.

To push back, North Carolina will need to strategically fund capital projects that have significant implications for job creation. Even at time when many are justifiably wary of private funding instruments, innovative, public private partnerships must be pursued by our government leaders.

Second, North Carolina's enormous potential to be "the good growth state," does not lie solely in finding dollars to build more roads, schools and water systems. Much of our innovation must take the shape of reforms to how we do business.

We must rethink what we build and how we build it. We must re-engineer the way we maintain and operate our critical infrastructure systems. And we must reprioritize protection of our green infrastructure even as we prepare to accommodate 4 million new residents.

All of these changes will require strong political will. As new faces take the helm not only in the governor's mansion and halls of the legislature but across the state, we have a golden opportunity to require that our leaders spearhead these fundamental changes of approach.

Finally, it is clear that North Carolina will need to tackle its outdated tax system in order to generate on a sustained basis the revenue needed to provide the infrastructure and quality of life its citizens expect. Our existing system of revenues, which dates back to the 1930s, is volatile, slow-growing and poorly matched to the needs of a 21st century economy.

To remain competitive, we need to tax income at lower rates and consumption more broadly. It is also imperative that we thoroughly re-evaluate the division of revenues and responsibilities between state and local government. Because meeting our infrastructure challenges will place new responsibilities and new burdens on counties and cities, they will need new tools to pay the bill. We must take action, now.

From the News & Observer. Click here for complete article.

Gov Easley wants to give state building projects go-ahead

The News & Observer reports Gov. Mike Easley wants to get a two-month head start on about $722 million in building projects to create jobs and take advantage of low interest rates.

Easley announced that he will ask the Council of State, a panel of elected executive branch officials, to give the go-ahead in January to a list of projects that includes new buildings on university campuses, new space in prisons and renovation of the N.C. Zoo's polar bear exhibit.

The projects could lead to 26,000 new jobs and would pump millions of dollars into the state's economy, Easley said. The legislature had previously approved the projects, which were scheduled to go before the Council of State in March.

"North Carolina is holding her own in job creation, but we are not immune from national economic trends, which means we have to take aggressive steps to minimize any hardships," Easley said.

The state has already seen revenue fall short by 5 percent this year, and economists and forecasters say the state's revenue shortfall could grow to $1.6 billion out of a $21.5 billion budget. Adding that shortfall to potential new expenses could leave a hole of $3 billion in next year's budget.

State Rep. Mickey Michaux, a Durham Democrat and key budget writer in the House, said that since the projects were already approved by the legislature, starting them early wouldn't change what the state expected to have to pay in debt payments.

"We've got the money. We set the money aside to do it," Michaux said. "What you're doing is providing employment for a whole lot of people who are losing jobs."

The projects will be financed through a mix of bonds that do not require voter approval. No interest or principal payments would be due for six months, said Charlie Perusse, the state budget director. The money would be borrowed a portion at a time so the state would be paying interest only on what it spends.

The Council of State meeting in January will be one of Easley's last official events as governor. Gov.-elect Beverly Perdue is to be sworn in four days after the meeting. She said on Wednesday that she supports Easley's plan.

"These projects matter because they create construction jobs in the short term at a time when private development has slowed and rates and labor costs are low," she said. "Done right, they add the roads, rail lines, labs and university buildings we need to spur growth in the long run and transition our economy."

For the complete News & Observer article Click Here.

Gov.-elect Bev Purdue listens to NC business leaders

Hilda Gurdian, (left) publisher and CEO of La Noticia, a Spanish-language newspaper, greets Gov.-elect Bev Purdue, before the start of the Charlotte Regional Economic Roundtable at UNCC on Tuesday. More than 30 Charlotte-area business leaders attended the roundtable.

With the economy firmly in a funk as the holidays approach, more than 30 Charlotte-area business leaders gathered Tuesday at UNC Charlotte for an economic roundtable with Gov.-elect Bev Perdue.

The Charlotte Observer reports the diverse roster included executives from Fortune 500 companies, privately owned enterprises and other key groups, such as the president and CEO of the Urban League of the Central Carolinas and the publisher and CEO of La Noticia, a Spanish-language newspaper.

Instead of concrete or creative ways to reverse the downturn, participants spent most of the session discussing key elements of the economy and reminding Perdue of Charlotte's big role in the state's overall economic health.

Flanked by Charlotte Bobcats majority owner Bob Johnson and Duke Energy chairman and chief executive Jim Rogers, Perdue said Tuesday her goal was to listen after spending several months on the campaign trail.

“I've got the tools to make things happen,” she said. “I just need the advice from some of the best business leaders in America.”

Moderator Ferrel Guillory, director of Program on Public Life at UNC Chapel Hill, said Tuesday's conversation would be captured in a memo that will go to Perdue's office.

Participants heard an overview of national and regional economic conditions from two experts: Jeff Kane, senior vice president of the Charlotte branch of the Federal Reserve Bank of Richmond, and Jeff Michael, director of the UNC Charlotte Urban Institute. Declines in jobs, retail sales and home sales have rocked the economy, both said, and have even dampened the “tremendous and unprecedented growth” that Michael said is “the story of Charlotte.”

Michael said Charlotte accounted for 27 percent of the state's private industry employment in the first quarter of this year, and he shared a quote from UNCC economist John Connaughton that the region was responsible for one-third of N.C. gross domestic product.

Yet Charlotte hasn't had a comparable level of representation in previous governors' cabinets and on key state boards, said Mark Erwin, president of Erwin Capital, a Charlotte investment company. Erwin said it has been several years since a Charlotte-area resident served as secretary of a major state department, and that only 5 percent of board members for those departments are from Charlotte, which has 25 percent of the N.C. population.

“We have one member of the transportation board out of 19,” Erwin said. “Our transportation needs are desperate. … There are some really good folks who are willing and able to serve.”

Perdue said anyone will be able to apply for state jobs and board positions through a Web site, and that her team is “aggressively working the Charlotte metro area.”

Allen Tate Jr. – founder, chairman and chief executive of the real estate company that bears his name – also pleaded for more attention to Charlotte-area roads. “We need help, governor,” he said, adding that the transportation department “needs to be rebuilt from the ground up. … I'm overwhelmed at how difficult it is to get a project going.”

When it comes to creating jobs, the state needs to build on key industries such as banking and motorsports, while also pursuing growing industries, roundtable participants said.

Rogers said Charlotte can be a center for clean energy technology. Robert Stolz, CEO of the U.S. Wood division of the Wurth Group International, said Perdue's administration should target defense and aerospace – two areas in which she already has helped win jobs, he said.

North Carolina also could win more competitions for projects by being a leader in tax credits for new investment, said Marcus Smith, president and general manager of Lowe's Motor Speedway and president and chief operating officer of Speedway Motorsports. Click here for complete Charlotte Observer article.

NC doing OK despite budget shortfall

Governor-elect Beverly Purdue
says she will ask for federal aid
to pay for infrastructure needs

North Carolina has reined in state government spending to narrow a budget shortfall, a year after many other states began feeling the nation's economic crunch.

Outgoing Gov. Mike Easley has ordered spending cuts of up to 5 percent and held up building repairs to locate up to $1.2 billion the state will need later. But he and other leaders in Raleigh for now are more optimistic than they were eight years ago, when Easley's began his term amid a recession.

Lawmakers discussed the budget shortfall in a recent Associated Press story.

"I think we'll be OK through the end of this budget year," said Sen. Linda Garrou, D-Forsyth, one of the Senate's chief budget-writers. "We're going to have to tighten our budget and be good stewards."

At least 41 states face or have faced budget shortfalls for this year and next, according to the Washington-based Center on Budget and Policy Priorities. But North Carolina is in a better position than many.

As other states experienced shortfalls last year due in part to the severe mortgage lending crisis and slowdowns in manufacturing, North Carolina recorded a revenue surplus for the fifth consecutive year. The state's foreclosures were below the national average.

"Revenues were supported by strong investment in the Research Triangle and by the financial institutions that moved there," said Philippa Dunne, who tracks state tax revenues for the New York-based Liscio Report. "Although housing prices were up and there was certainly a lot of new construction, (NC) didn't fall prey to a full-blown housing bubble."

State government revenues, while growing in the first quarter ending Sept. 30, dipped at least $230 million below the estimate lawmakers used in crafting their $21.4 billion annual budget.

State government economists predict the shortfall could reach $800 million to $1.6 billion before the end of the fiscal year in June, with Easley's office predicting it will likely reach no more than $1.2 billion.

The state, meanwhile, has some cushion. A rainy-day reserve fund now stands at nearly $800 million and could help cover future gaps. He said the economy relies less on textiles and tobacco business than it once did.

The NC legislature convenes in January. Governor-elect Beverly Perdue said, "there is no doubt I will have some very tough decisions to make." Perdue has asked for federal aid to pay for infrastructure and Medicaid. Click here to read the complete AP article.

Military construction boom prompts pleas for builders

Army, Navy and Marine officials are begging civilian contractors to help them tackle the massive amount of military construction in southeastern North Carolina in coming years, the Fayetteville Observer reports.

“The bottom line is, we need your help,” Brig. Gen. Joseph Schroedel told about 500 construction professionals at the 2008 N.C. Military Construction Summit at the Durham Marriott Convention Center. The Fayetteville-based N.C. Military Business Center and North Carolina Military Foundation of Raleigh sponsored last week's event, which was sold out.

Army growth at Fort Bragg and Camp Mackall, along with Marine growth in eastern North Carolina, will create $5 billion to $7 billion in military construction projects.

“I wish I had an ‘Uncle Sam needs you’ sign right now, because we need you,” Schroedel said. “We need every one of you. We’ve got more work than we can handle. So we’ve got to help you get in there to help us.”

Schroedel is commanding general of the South Atlantic Division of the Army Corps of Engineers, which oversees building at Fort Bragg and around the southeastern United States.

Fort Bragg has a building boom due in large part to base realignment and initiatives to increase special operations forces and the Army overall. The Army is continuing to replace the 82nd Airborne Division’s barracks that were built in the 1950s.

Groundbreaking is scheduled for Dec. 8 at Fort Bragg for the $288.5 million complex for the headquarters of Forces Command and U.S. Army Reserve Command. The 2005 Base Closure and Realignment law mandates that the commands must move from Fort McPherson in south Atlanta in less than three years.

Greg Bean, Fort Bragg’s director of public works, said the Army post has about $2.8 billion of construction between 2005 and 2015. There is repair and restoration work to be done, which can serve as “starter projects” for contractors who are unfamiliar with working with the federal government.

There is no tolerance, Bean said, for time delays or cost overruns. Barracks that are being built or renovated must be ready for soldiers to occupy immediately upon their return from Iraq and Afghanistan. Under federal law, the BRAC projects must be finished by Sept. 15, 2011.

The Navy has a high demand for builders, with projects at Camp Lejuene Marine Corps Base at Jacksonville, New River Marine Corps Air Station and Cherry Point Marine Corps Air Station at Havelock. The expansion of the Marine Corps, officials said, will bring more than 11,000 more Marines to North Carolina.

In recent years, civilian contractors have been less willing to take on military projects, said Scott Dorney, executive director of the N.C. Military Business Center (NCMBC). “There was a lot of work going on in the commercial sector, the industrial sector, K-12, universities, etc.,” Dorney said. “With the downturn in the economy, we’ve seen a whole lot more interest among contractors in North Carolina in military construction.”

The NCMBC is a state-funded business development agency that disseminates information to NC-based contractors and subcontractors about military business opportunities. Contractors can get daily project leads by registering with www.matchforce.org.

For free help about how to win government business, visit www.ncmbc.us or call 877-245-5520. Click here for the article on the 2008 N.C. Military Construction Summit.

Choate Construction wins ABC of the Carolinas 2008 project of the year

Choate Construction Company’s ZMax Dragway project won the Associated Builders & Contractors of the Carolinas 2008 Project of the Year Award at the Excellence in Construction Awards Banquet held November 20 at the Grandover Resort & Conference Center in Greensboro.

The ZMax Dragway at Concord is the newest and largest dragstrip ever built. Choate Construction assisted with the design and was the general contractor on the project. Awarded the project in late January of this year, Choate completed the work in less than 5 months.

Adams Electric Company was the winner of the 2008 Specialty Contractor Project of the Year. Adams Electric served as the electrical contractor for the David H. Murdock Core Laboratory Building which is the crowning institution for the North Carolina Research Campus located in Kannapolis.


The 2008 Carolinas Green Award was presented to Eagle Award winner Bovis Lend Lease for outstanding sustainable construction and design practices to the Carolinas. Bovis Lend Lease won the award for The Home Depot Smart House at Duke University.

Eagle Award winner BE&K Building Group was also the winner of the 2008 Free Enterprise Award for the Greer Memorial Hospital project in Greenville. BE&K employed the largest number of ABC member subcontractors, suppliers and associate members working directly on the project.

Chris Harrington of Gaylor Electric was recognized as the 2008 Rookie of the Year.

ABC of the Carolinas celebrates its 10th anniversary this year. It is the fastest growing ABC chapter in the country. Click here for a complete listing of 2008 Eagle and Merit Award winners. Charlotte Construction News and Triangle/Triad Construction News will publish a full color supplement in the January issue with photos and descriptions of the award winning projects.

Marketing your brand in a recession

By Mark Buckshon, President, Construction News and Report Group of Companies

Times are changing. The heady, fun and sometimes overwhelmingly good times in the construction economy are finally ending, and many people in this business, who started during the relatively long 'up' cycle have little experience with the other side of the coin. Others (myself included) who have been through a few downturns know the drill: You survive and even thrive by keeping your eyes on the basics, taking decisive action whenever you need to, and always you must watch that red line – the point of no return where if you pass it, you cannot recover. At these difficult, critical points, you need to prepared to respond decisively.

Things of course won't be that bad for most of us. If you are good enough at your trade or profession to succeed in good times, you can likely do well in difficult ones; if you are marginal, you may have more problems (but then, should you be in the business in the first place?) But how do you adapt to the circumstances – especially since you haven't needed to 'market' your business in the past?

The answer here is to remember that, if you previously had a great backlog of work because of repeat and referral business, you have a really good brand – the cornerstone of effective marketing. The brand, by the way, is your clients' perception of you and your business – if they trust you to deliver top-quality work at a fair price, they call you back, and you are busy.

Your challenge in a recession is to realize that your brand remains your greatest asset, and desperate moves outside of this brand 'comfort zone' are likely to be disappointing failures. Chasing blindly after bidding opportunities and RFPs where you don't have experience or previous relationships will be daunting and frustrating – your energies spent on preparing proposals and traveling great distances to hope to win work, will probably lead to limited if any new business.

Your best bet is to look closely at your current and previous clients and see if you can develop a recessionary-value based add-on or supplemental service; to prime the pump for more referrals and so on. You can also gain value, I think through your trade associations, especially the stories of successful peers in other communities. These businesses are not your competitors and should be able to guide you with effective suggestions. Click here to view other valuable Construction Marketing Ideas blog entrees by Construction News group publisher Mark Buckshon.

US non-residential construction index falls

The American Institute of Architects (AIA) announced today that last month's index of U.S. nonresidential construction activity fell to the lowest level in its 13-year history.

The Architecture Billings Index (ABI) fell more than 5 points to 36.2 in October, the architect's trade group said. A reading below 50 indicates a decline in billings. Spending has slumped on healthcare and educational facilities.

A separate measure of inquiries for new projects fell to 39.9, from 51 in September, also reaching a record low.

"Governments and nonprofit agencies are having difficulties getting bonds approved to finance large-scale education and healthcare facilities," AIA chief economist Kermit Baker said. "Until recently, the institutional sector had been somewhat insulated."

The AIA's survey is considered a leading indicator of construction activity about nine to 12 months in the future. President-Elect Barack Obama has indicated that he will push an agenda of addressing America's infrastructure. Click here for additional details on the ABI index reported on Forbes.com.

Forbes says NC economy in better shape than most states

Forbes.com reports NC is doing okay economically compared to many states. Forbes wrote, "North Carolina has finally had to rein in state government spending to narrow a budget shortfall, a year after many other states began feeling the nation's economic crunch."

The publication noted that outgoing Gov. Mike Easley ordered spending cuts of up to 5percent and held up building repairs to locate up to $1.2 billion the state will need later. He and other leaders in Raleigh for now are more optimistic than they were eight years ago, when Easley's began his term amid a recession, Forbes said.

"I think we'll be OK through the end of this budget year," the magazine quoted Sen. Linda Garrou, D-Forsyth, one of the Senate's chief budget-writers. "We're going to have to tighten our budget and be good stewards."

At least 41 states face or have faced budget shortfalls for this year and next, according to the Washington-based Center on Budget and Policy Priorities, a liberal think tank. But North Carolina is clearly in a better position than many.

As other states experienced shortfalls last year - due in part to the severe mortgage lending crisis and slowdowns in manufacturing - North Carolina recorded a revenue surplus for the fifth consecutive year. The state's foreclosures were below the national average.

"Revenues were supported by strong investment in the Research Triangle and by the financial institutions that moved there," said Philippa Dunne, who tracks state tax revenues for the New York-based Liscio Report. "Although housing prices were up and there was certainly a lot of new construction, (North Carolina) didn't fall prey to a full-blown housing bubble." Click here to see the entire Forbes.com article.

Economic outlook: NC has advantages

Michael Walden is the William Neal Reynolds Distinguished Professor in NCSU's Department of Agriculture and Resource Economics and the author of a new book, North Carolina In The Connected Age.

Michael Walden, sees the potential for the NC unemployed rate to be worse than in 1983 but with a silver lining.

In an interview appearing in the Nov 16 News & Observer, Walden said, "I think we could, by 2010, see North Carolina's unemployment rate reach double-digit levels before we begin to see an improvement."

Walden wrote, "We are of course tied into the national economy, and we are looking at a very severe recession at the national level,... potentially the worse economic downtown since World War II."

However, he observed, "On the good side, North Carolina has dramatically restructured its economy since the early '80s. We have shifted away from many of our traditional manufacturing sections to new sectors. That shift is largely complete. While I am somewhat pessimistic about the immediate trends in employment, I don't think North Carolina will suffer more than the nation, as we did in the last recession."

Walden predicts that people who are at the lower end of the economic ladder will struggle the most to find work because they are often those with lower levels of training and education. "High school dropouts and high school graduates will suffer more than college graduates with advanced degrees. The economy is putting much more emphasis on advanced training, and workers with advanced training tend to be the most important workers. Walden observed.

NC contractors have been reporting that developers are putting projects on hold because of the credit situation or weakening demand for stores, offices and other facilities. Meanwhile, state and local governments have postpone construction bond issues or defer budgeted projects in order to meet balanced-budget mandates.

NC contractors are preparing for a rough road ahead. Our suggestion is to do what you need to do. Avoid careless and irresponsible expenses. If you have talented people, keep them at all costs. Maintain and expand your association involvement, especially at the client level. This is one thing you should not cut, even if you think it a non-essential expense.

NC ranked 29th in foreclosures

In data released today, North Carolina ranked 29th in forclosures in October.

The News and Observer reported that the number of homeowners caught in the wave of foreclosures in October grew 25 percent over the same month in 2007.

In North Carolina, where a recent law requires lenders to give borrowers an extra 45 days before filing a default notice, the total fell 20 percent in October from last year, according to RealtyTrac, a California research firm. The Raleigh-Cary metro area saw a 26 percent decline.

Nationally, more than 279,500 U.S. homes received at least one foreclosure-related notice in October, an increase of 5 percent over September. One in every 452 housing units received a foreclosure filing, such as a default notice, auction sale notice or bank repossession. More than 84,000 properties were repossessed in October, RealtyTrac said.

Strict lending standards, falling home values and a tough economy is filtering through the housing market. By the end of the year, the RealtyTrac expects more than a million bank-owned properties to have piled up on the market, representing around a third of all properties for sale in the U.S.

In RealtyTrac's report, three states -- Nevada, Arizona, Florida -- had the nation's top foreclosure rates. Nevada posted the nation's highest rate for the 22nd consecutive month in October. North Carolina ranked No. 29. For additional details click on the RealtyTrac website.

Sustainable building to be big next year

An on-line poll on the Associated General Contractors of America’s (AGC) SmartBrief e-newsletter asks, "Will Sustainable Building Practices Be Big Next Year?" A majority of SmartBrief reader-poll respondents, 57.14% to be exact, said yes, it will be "considerable." That is in comparison to 33.33% that said it will be "the same as last year," 9.25% that said "moderate," and none said it will be "minimal."

In May the North Carolina General Assembly passed legislation setting stringent energy conservation standards for all new construction and major renovations of state-owned buildings including those of the UNC System and the NC Community College System.

Provisions of the legislation cover all contracts signed after September 30, 2008. The new law limits the scope of projects to “major facilities.” For new construction that means buildings larger than 20,000 square feet.The intent of the legislation is for buildings to be designed, constructed and renovated using sustainable energy-efficient methods that will save money, reduce negative environmental impact and improve the performance and productivity of state employees and students.

Hardly a project breaks ground these days in the Tar Heel state without seeking to attain LEED certification. Whether you're new to green building, working on a registered project, becoming a LEED Accredited Professional, or seeking industry-specific information on green building, the U.S. Green Building Council, which sets LEED standards, can help. For details check out the USGBC website.

NC picked for top business climate

Photo of North Carolina Gov. Mike Easley behind the wheel of a race car is on Site Selection magazine

North Carolina once again has the best business climate in the country, according to Site Selection magazine.

For the fourth year in a row -- and seventh time in eight years -- North Carolina received top honors for its ability to lure companies.

The rankings are based on a survey of consultants who help businesses decide where to put operations combined with quantitative measures of states' actual success in luring expansions. They come at an opportune time for the state, which is seeing a slowdown in recruiting amid the economic slowdown.

"Corporate executives know North Carolina is listening to them and we understand what they need to succeed," Gov. Mike Easley, who is featured on the magazine's cover this month, said in a statement. The state is "the top choice for companies looking to grow."

Site Selection's editor Mark Arend said those surveyed cited financial incentives, low taxes and an effective economic development team as keys to North Carolina's success.

Among the state's most prominent victories in the past year were Spirit AeroSystem's decision to build an aircraft manufacturing facility in Kinston that will create more than 1,000 jobs and GE Hitachi's expansion near Wilmington that will add 900 jobs at a plant that makes equipment for nuclear energy generation.

The Site Selection story also mentions Reliance Industries' expansion in Kinston. India's largest company in June announced plans to buy a resin plant there and said it would employ as many as 200 workers. But that deal fell apart in September.

Being at the top of Site Selection's list could get the companies' attention, said Donald A. Donadio, a lawyer at Womble Carlyle in Raleigh who helps companies choose where to locate. They might "read a headline and say, 'They might be doing something right, let's put them on our short list,' " Donadio said.

But the rankings don't mean everything, he added.

"You've still got to make the cut," he said. That means having a qualified work force, plentiful resources -- such as water -- and cheap operating costs.

Rounding out the top five on Site Selection's list were Tennessee, Alabama, Texas and Indiana. The article about North Carolina's No. 1 selection can be seen at siteselection.com.


jonathan.cox@newsobserver.com or (919)

NC Governor-elect says economy is top issue

In her first public appearance as governor-elect, Bev Perdue yesterday pledged to invest in Charlotte's roads and turn around the state's economy.

It's going to be a tough road ahead statewide, where the unemployment rate, 7 percent in September, is higher than the 6.1 percent national average. Today's unemployment report from the U.S. Bureau of Labor Statistics showed the unemployment rate for construction workers jumped to 10.8 percent last month.

Purdue promised the crowd at the Charlotte Chamber's annual meeting to work for and with the city, mining local talent and pushing for a strong Wells Fargo presence, she said. The San Francisco-based bank is buying Wachovia.

Perdue also plans to work with Charlotte on its transportation needs, especially because the city, a driving economic force for the state, has stepped up to help other parts of North Carolina in the past, she said. “I'm ready to give you the tools you need and then work in partnership with you,” Perdue said.

While infrastructure and public schools are priorities, the economy is her top concern, she said. Perdue has already talked to Erskine Bowles, president of the University of North Carolina system, about how to turn things around and plans to compile a 10-step plan with specific goals for the state. She said she will work with private groups and the business community and ask the federal government for help rebuilding North Carolina.

“We need to work together on a rebuilding plan, and it has to include all of us,” Perdue said. “It has to be about prosperity in all 100 counties. There are no sections that are unique to this recession – I think we're in a deep recession, and I think sooner or later, this federal government's going to admit that we're in a recession – so I'm looking for the best minds in the state to put together an economic recovery package."

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Bipartisan efforts needed to fix the economy

The people of the United States have spoken. President-elect Barack Obama will take the oath of office in January to lead this nation in troubled times.

He is no longer a candidate. He must campaign again, not for victory, but for unity to deal with a slumping economy and rising unemployment.

In a spirit of bipartisanship, The Associated General Contractors of America (AGC)reacted to the presidential and congressional election results with plans to continue its 90-year history of working in a bipartisan fashion to promote the needs of the nation's construction industry.

"The construction economy supports the American economy," said AGC chief executive officer, Stephen E. Sandherr. "In the next administration, AGC will focus on targeted spending initiatives as it works in support of construction priorities that will boost the overall economy and create jobs."

There is growing concern that the weak economy will cause state and local governments to cut back on spending, making the downturn more severe. Congress is considering a second economic stimulus bill that would include money to support spending on highways, bridges and other infrastructure projects.

The Commerce Department reported that construction spending dropped by 0.3 percent in September, less than the decline many economists had been expecting. Spending had risen by 0.3 percent in August after a huge 2.4 percent plunge in July.

The weakness in September was led by a 1.3 percent drop in housing construction, which has fallen every month but two over the past 30 months. Spending on government projects fell by 1.3 percent, the biggest setback since January.

For September, the 0.3 percent fall in overall construction was the third drop in the past four months. It left total building activity at an annual rate of $1.06 trillion in September, down 6.6 percent from the level of a year ago.

The 1.3 percent fall in housing construction left activity at a seasonally adjusted annual rate of $336.5 billion, down 27.7 percent from a year ago, underscoring the severity of the slump in this industry. After enjoying record sales for five consecutive years, housing has been struggling over the past two years with falling sales and prices and rising mortgage foreclosures.

Private nonresidential building activity rose 1.2 percent in September to an annual rate of $415.2 billion following two months of declines. But economists are worried that the spreading weakness in the overall economy and a severe credit squeeze will depress nonresidential building activity going forward.

For September, office buildings and the category which includes shopping malls both showed gains. Spending for public building projects dropped by 1.3 percent in September, the biggest setback since January, leaving spending in this category at an annual rate of $308.4 billion. Spending on federal projects fell by 7 percent to an annual rate of $22.7 billion while spending for state and local projects was down 0.8 percent to an annual rate of $285.7 billion.

AGC’s Chief Executive Officer Steve Sandherr will conduct a conference call on November 6 to discuss the results, impact and transition plan for the 111th Congress. The one hour call will assess the outcome of the election in the context of construction and report on AGC’s ongoing and new legislative priorities given a new political and legislative environment. For more information on the conference call or to request the call-in number please contact Jim Young at 202-547-0133 or youngj@agc.org.

Credit freeze chills construction spending

“Nonresidential construction is on the verge of a potentially long slide,” reports Ken Simonson, chief economist for The Associated General Contractors of America (AGC) in a press release sent today to NC Construction News. Simonson’s comments followed reports from the Census Bureau on construction spending in September and the National Association for Business Economics (NABE) on third-quarter and expected activity.

“The Census figures show nonresidential spending eked out a gain in September of 0.1 percent,” Simonson noted. “But private nonresidential spending was down nearly 1 percent from its high-water mark in June, while public spending tumbled 1.3 percent in September alone.

“Contractors have been reporting that developers put lots of projects on hold because of the credit freeze and weakening demand for stores, offices and other facilities,” Simonson observed. “Meanwhile, states had to postpone construction bond issues or defer budgeted projects in order to meet balanced-budget mandates.

“The NABE survey, conducted October 10-23 among corporate economists, found that companies on balance plan to trim spending on structures in the next 12 months,” Simonson stated. “That’s a reversal from the July survey.

“Construction has a lot riding on tomorrow’s election results—at local, state and national levels,” Simonson concluded. “There are many school and other bond issues up for a vote. And the next President and Congress will need to work promptly to enact long-term highway, transit, airport and water funding bills. AGC has urged immediate action on infrastructure spending as part of any stimulus bill this year or next.”

The Census report is at www.census.gov/constructionspending; the NABE survey at www.nabe.com. NC Construction News will regularly report on current credit and market conditions.

Infrastructure is a viable fiscal stimulus

Engineering and business scholars urged the Bush administration to take a page from FDR’s New Deal and invest in infrastructure.

Transportation projects are ready to go in several states that could generate up to $20 billion in economic activity, according to a letter from eleven professors from public and private universities sent to Federal Reserve Chairman Ben S. Bernanke and Treasury Secretary Henry Paulson. The academic group included Clemson University engineering professor Lansford Bell. Email: Lance.bell@ces.clemson.edu.

The letter responds to earlier comments by Bernanke raising concerns that infrastructure investment would take too long to make a meaningful change in employment and the economy.

Policy makers have said they are reluctant to invest in the nation’s infrastructure as a fiscal stimulus because shaping, approving, planning, and developing of infrastructure projects takes too long. The professors say while this may have been true during the Great Depression era, it is simply not true today at a time when hundreds of billions of dollars of infrastructure projects across America have already been approved but are sitting on the shelf due to funding shortfalls.
They project that there are $15-20 billion worth of transportation projects that could be put out to bid in the next 30 days, leading to contractors on site in the next 60-90 days—and generating a considerable flow of money back into the economy. This amount could be increased dramatically by adding ports, airports, hospitals, roads, rails, sewers and water systems.

The letter urges government officials to "endorse the idea of a new New Deal" to channel infrastructure spending through state and local governments. They claim it would, among other things, create immediate employment, generate a high multiplier effect, remove growth roadblocks and spur more college graduates and young people to work in the "real" economy rather than in financial services, despite the lure of high salaries.

They concede that their infrastructure investment jumpstart program still faces challenges, including contracting lead time, the advent of winter conditions in parts of the US and industry capacity constraints. However, the letter offers suggestions for a phased investment approach.

The professors are affiliated with Leadership and Management in Engineering and the Construction Working Group, which are compiling a list of projects in various infrastructure sectors that are approved, permitted, and waiting for funding and could be "effective" economic stimulants.