Doing the business of building in a bi-state region has always been a challenge, and no more so than right now as the construction community wrestles with an order from Gov. Jay Inslee that shut down countless construction projects in Washington, while in Oregon, construction is considered essential.
“There’s quite a bit of confusion with the governor’s order about who can work and who can’t work,” said Nelson Holmberg, executive director of the Southwest Washington Contractors Association.
Because exemptions to the order are based on what types of projects are considered essential, some types of work that could be done safely are still considered non-essential.
Nelson cites the story of one contractor who digs trenches. The contractor emailed Holmberg, explaining that he is a sole proprietor who works alone is a trenching vehicle.
“He wanted to know, ‘Can I go to work?’ And I had to say, ‘By the letter of the law, no you can’t.’ If he’s doing a trench for a wastewater line, yes, sprinkler systems, no,” Holmberg said.
An extension of the Stay Home, Stay Healthy order until May 4 has simply compounded the issue.
“I am unfortunately not optimistic that construction’s status as non-essential will change prior to May 4,” said Holmberg.
“Companies that work in both states are not sure what they can and cannot do because of the confusion surrounding both Stay-at-Home orders. If the project is in Washington, they must follow Gov. Inslee’s order (construction is “non-essential” except for in certain circumstances) and if the project is in Oregon, they must follow Gov. Brown’s order (construction considered “essential”),” said Avaly Scarpelli, BIA executive director, in an email. “We’re lucky that we have partners at the Home Builders Association of Metropolitan Portland to help field questions specific to Oregon.”
Construction guidance on the Stay Home, Stay Safe order released on March 25 in Washington states that, “In general, commercial and residential construction is not authorized under the Proclamation because construction is not considered to be an essential activity. However, an exception to the order allows for construction in the following limited circumstances: a) Construction related to essential activities as described in the order; b) To further a public purpose related to a public entity or governmental function or facility, including but not limited to publicly financed low-income housing; or c) To prevent spoliation and avoid damage or unsafe conditions, and address emergency repairs at both non-essential businesses and residential structures.”
The BIA of Clark County has released interpretation on the guidance that includes the following telling advice to contractors: You do not want to be a front page headline as the business that is defying the order while everyone else is staying home to protect our community.
The BIAW, Clark County’s state counterpart, “is actively negotiating with the Governor’s office, although no changes have been made to-date,” said Andrea Smith, BIA of Clark County’s Communications and Education program manager. “While we’re hopeful Gov. Inslee will review his classification of most construction as ‘non-essential’ we can’t really anticipate if and when a determination will be made.”
The state and local BIA chapters, along with SWCA and AGC of Oregon Columbia, have been collaborating and sharing information throughout the crisis, so the regional construction community – while operating under different orders – can stay on the same page.
In a silver lining, Holmberg said SWCA’s plan center is a “barometer for what’s happening,” and numbers have held steady. In fact, filed plans and center users increased in March.
In February, 51 plans were loaded to SWCA’s plan center and in March, 58 were. Users increased from 119 to 129 and bid results were up from 35 to 36.
Even though tax season deadlines have been extended, Barrett and Co., a Camas-based CPA firm that largely works with contractors, is working constantly to offer their clients the latest information and financial advice available. New financial programs, including SBA loans and statewide grants, extended deadlines and reprieves are announced daily. Most of the questions are regarding the Coronavirus Aid, Relief and Economic Security (CARES) Act, including relief options from the Small Business Administration: Paycheck Protection Program, Economic Injury Disaster Loan Emergency Advance, SBA Express Bridge Loans and SBA Debt Relief. On Tuesday,
Gov. Jay Inslee announced a new $5 million Working Washington Small Business Emergency Grant program to assist small businesses impacted by the COVID-19 outbreak. The grant program will provide a limited number of businesses in Washington’s 39 counties with a grant up to $10,000.
Founder and Managing Partner Lance Barrett and Business and Firm Development Manager Drew Barrett are tracking changes closely and sending out information to their clients when the details become clear, which can take time with each new roll-out. For example, news of the Paycheck Protection Program was released, but then the SBA had 15 days to establish regulatory requirements. Meanwhile, for contractors in Washington, it’s a guessing game.
“We have to keep them informed and ready to submit their loan applications,” said Lance Barrett. “Every day is a new day.”
“All small businesses under 500 employees are impacted one way or another, and we need to give these companies the best chance to succeed long term,” said Drew Barrett. “Right now our role is as trusted advisers. Our clients need to be focused on their balance sheet, collecting on receivables, and focused on good relationships with customers.”
Echoing Holmberg, Lance Barrett anticipates construction in Washington will pick up quickly where it left off. “Most of our clients have really big backlogs of projects,” he said.
“Construction activity was healthy up until the coronavirus pandemic hit. With a lot of uncertainty, it’s hard to make any sort of forecast for what the industry will look like when this is all over; it largely depends on how long the virus outbreak affects the ability of businesses to operate fully,” said Scarpelli. “We hope that this won’t last too long to where companies are faced with the decision to close for good.”
The BIA’s Top Five Member Concerns
- Organizations like the Building Industry Association of Clark County and the Southwest Washington Contractors Association are being flooded with calls from members seeking advice. Avaly Scarpelli, executive Director of the BIA, said the following are the biggest worries she’s hearing.
- Not being able to finish presold houses for customers who need to close by a certain date because of their current living situation and/or loan terms.
- Cash flow due to missing milestones. Construction loans are not released in a lump sum but gradually as the project reaches certain milestones, usually aligned with permits and inspections. Although the work has been done and the product paid for, companies can’t get paid for the work because they can’t get the appropriate inspection completed.
- Not being able to secure the site for protection from the elements or vandalism and/or theft.
- Not being able to complete enough of their projects to minimize public safety concerns.
- Uncertainty surrounding the timeline of the coronavirus playing out and our potential economic position is certainly impacting buyer’s confidence and project schedules.
