Photo: Aerial of Bay View Crossing project. ReArch Company photo.
As long as a tight workforce, inflation and supply chain problems don’t get in the way
by Timothy McQuiston, Vermont Business Magazine Just try and find a contractor to install a new kitchen, or to even just fix a crack in your chimney, or a tradesman to do just about anything around the house, and you’ll begin to understand what it’s like to run a general contracting business in Vermont.
Labor is tight, supplies are expensive, if they’re even available, costs for fuel and any petroleum product are high, wages are up, and for all those reasons and more, many projects had to be re-bid and thus delayed.
But underlying all that is undeniably good news for the industry.
Backlogs are stretching out two or three years into the future, if not more, giving confidence that the industry will be in good shape at least into the near future.
Federal money keeps flowing. The number of projects seems unlimited, from back porches to highways and bridges, to housing and affordable housing.
There are even commercial projects under way or about to be.
Meanwhile, construction employment has grown to about 16,700 now.
Richard Wobby, executive vice president of the Associated General Contractors of Vermont, said the goal is to have 17,500-18,000 working in the trades, given the workload.
Pre-pandemic in 2019 there were 15,464 employed in construction. In 1989 there were 18,069, according to the Vermont Department of Labor.
Photo: Intrenchment Creek WRC Decommissioning and South River WRC Primary Clarifiers. PC Construction photo.
There are, of course, plenty of jobs and good pay, as market forces have driven up wages.
“No one is talking about the $15 minimum wage anymore,” said Wobby.
And the public-private relationship, emphasized by the COVID-19 pandemic, is crucial, Wobby said.
Governor Scott pushed for $250 million for housing, which the Vermont Legislature passed in in the FY23 budget.
Wobby also praised Senator Patrick Leahy (D-Vermont).
“When you look at the amount of money that man has brought to Vermont in the last 12 months.”
And more is on its way to Vermont.
Bumps in the Road
Despite all the money flowing into the state and the backlog of work, inflation and supply chain issues are causing delays.
He said even piping, fencing and paint for road striping can hold up projects.
The need to re-bid projects because of inflation has caused delays.
While there is now a stronger “buy American” movement, some products simply aren’t made here or aren’t made in sufficient quantities or are more expensive.
And of course petroleum products are a huge expense.
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“Fuel costs are killing us,” Wobby said, even though they’ve come down nearly a dollar a gallon from their peak in June at almost $5. They’re still about a dollar higher than a year ago.
It is also hard for firms to stay ahead of the expense curve, even as funding flows and they can’t keep up with the contracts they have, Wobby said. Between supply and workforce, costs are up 25-30% in the last two years.
Along with the traditional construction of roads, bridges, and housing, the broadband buildout and electric vehicle infrastructure will keep contractors busy for years, he said.
Governor Scott’s administration was also able to secure additional funding to the tune of $7 million that will go towards Buildings and General Services projects in Chittenden County.
The final budget bill to pass this session was the $8.3 billion, which provides the funding for general government spending and the major policy bills this session. It provided $50 million for the Vermont Housing Conservation Board, a $20 million investment in the missing middle home ownership development program and manufactured housing, and $20 million for the Vermont Housing Improvement Program to update rental housing units.
- $98 million for broadband buildout across the state
- $90 million for affordable housing
- $215 million for climate initiatives, including $80 million for home weatherization alone
- The state’s Transportation Fund for the current fiscal year (FY2023) increased 17.4% to $838.1 million (up $124 million) from last year.
In an ongoing effort to improve the workforce situation, Governor Phil Scott has been pushing, even pre-COVID, for Career Technical Education (CTE) and Career Technical Curriculum (CTC) programs.
Wobby acknowledges that it’s not an easy sell as school counselors are focused on students going on to college rather than looking at a career track like construction.
“We’re trying to steer them into it.”
In August, Scott traveled to Lamoille County to emphasize the value of CTWE programs and career development opportunities.
At the Green Mountain Tech and Career Center in Hyde Park, the governor said: “Over the last two years, we’ve put over a billion dollars – let me repeat that – one billion dollars into infrastructure projects.
“This is money that’s going towards housing, building out thousands of miles of broadband, weatherizing tens of thousands of older homes, installing water, sewer and stormwater infrastructure and repairing our roads and bridges – and this is all on top of the normal maintenance we do every year.
“The bottom line is, we have an incredible amount of work to do – work that will change the lives of Vermonters and transform our state. And the people who are going to do it are people trained in the trades.
“And we’re in desperate need of more of them, which is why – as I said in my State of the State Address in January – it’s just as important, valuable and impressive to become an electrician, welder or EMT as it is to get an Ivy League education.
“So, we have to get serious about doing more to point students toward these great careers. And that’s what we’re doing.”
Scott said he took machine trades classes while at Spaulding High School, then went off to UVM to be a CTE teacher before eventually running a construction firm.
Wobby added that such training and career development in high school will help keep Vermonters in Vermont after they graduate.
Don Wells is the eponymous founder and chairman of DEW Construction in Williston.
Photo: Don Wells, founder and chairman of DEW Construction. Courtesy photo.
“Really, really busy,” he said. “We have the biggest backlog next year we’ve had in our company’s history.”
They also have an office in New Hampshire and have three major projects over there as well as two- to three in Vermont. He’s also waiting on CityPlace Burlington to get going so DEW can start working on that big project.
“We’re excited to be part of it,” he said. The owners are still waiting on financing on what would be, all told, about a $175 million development.
Wells said they’ve been working on the $200+ million Cambrian Rise project in the New North End of Burlington.
They’re also waiting on a Winooski project that includes a $12 million garage, $18 million for housing, plus a hotel.
“There’s a lot of money floating around out there,” he said.
Workforce, of course, is an issue. He said the Vermont contractors have a difficult time recruiting against the union shops in Massachusetts and elsewhere that can pay higher wages.
Wells said they’ve been loyal to their workers and, “We have a lot of great people, some since day one.”
He said he didn’t go to college and instead, “The internship I went through was an invaluable program.”
Since he started his firm 25 years ago, they built a company that boasted revenues of $96 million last year, and still growing.
Inflation caused lumber to spike to about $2,000 per thousand board feet; it’s come down to the $700-$800 range. But it was around $500 before the pandemic. Steel, meanwhile, was at its highest cost, but he expects the supply to improve and costs to edge down.
Still, because of the money and pent-up demand, DEW has had to turn down good opportunities more than at any time in the firm’s history.
Even at the height of the pandemic business “wasn’t horrible” for DEW and the industry as a whole, he said.
DEW Projects
Burr & Burton Academy – Founders Hall – Manchester, VT. Completed October 2021. Photo by: Ryan Bent Photography VERMONT REGION: UNDER CONSTRUCTION:
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More Federal Funds for Affordable Housing
In August, Senator Leahy (D-Vermont), Senator Bernie Sanders (I-Vermont) and Representative Peter Welch (D-Vermont) applauded the Biden Administration’s announcement that it removed barriers to states and localities investing American Rescue Plan Act (ARPA) dollars in new housing.
The new guidance will make it easier to build affordable housing by allowing states and local governments to make long-term housing loans with ARPA funds.
This change opens up access to Low-Income Housing Tax Credits, a key source of funding for affordable housing production. The change reflects the intent of the bi-partisan, bi-cameral LIFELINE Act introduced by Leahy and Sanders in the Senate and cosponsored by Welch in the House.
Nationwide, states and local governments have budgeted $4.2 billion through the ARPA State and Local Fiscal Recovery Fund for affordable housing production and preservation.
Vermont plans to invest $119 million in federal dollars received through ARPA to build homes for Vermonters shut out of the state’s increasingly tight housing market. By loosening restrictions and allowing ARPA dollars to leverage tax credits, the new guidance will help to attract 30% more equity into affordable housing production resulting in over 150 additional homes produced for vulnerable Vermonters.
Leahy, who chairs the Senate Appropriations Committee, said: “When Vermont’s affordable housing partners said there were significant barriers to using ARPA dollars for housing production, I knew something needed to change. Too many Vermonters struggle to find a home in their community that is safe and affordable. Allowing ARPA dollars to flow into building affordable housing as long-term loans will simplify the financing of affordable housing production and ultimately result in more homes for more Vermonters.”
“Today, in Vermont and across the country, we are facing nothing short of a crisis in affordable housing,” said Sanders. “Parents can’t find an affordable place to raise their kids. Working people, older Vermonters, and people living on fixed incomes know they simply cannot afford food, heat, transportation, health care, prescription drugs, education, childcare, and other basic human necessities when more than half of their income is going to pay rent or the mortgage. As Chairman of the Senate Budget Committee, I was proud to pass the American Rescue Plan – one of the most significant pieces of legislation to benefit working families in the modern history of this country – and to ensure that the U.S. Department of the Treasury released the funds from that law into our local communities as quickly and effectively as possible. It is great news that after a year of hard work, Treasury is taking new steps to enable these funds to be used for long-term loans for the construction of new affordable housing. This important change will go a long way in improving and creating new housing stock, which is absolutely critical if we are going to be successful in ensuring that every Vermonter has a safe, decent, accessible, and affordable place to call home.”
Photo: DEW Construction employees. DEW Construction photo.
Welch said: “Far too many families in our state have struggled to find secure and affordable housing. This new guidance from Treasury will allow our state to use American Rescue Plan funding to build more affordable housing units across the state, making it easier for families to find housing that meets their needs, and curbing the affordable housing crisis. This is a critical step for folks in Vermont and across the United States.“
Gus Seelig, Executive Director of the Vermont Housing and Conservation Board that oversees the investment of the federal housing dollars, said: “Vermont and affordable housing developers across the country owe a great thanks to our congressional delegation for introducing the LIFELINE Act and working effectively with the Treasury to revise guidance to allow the efficient use of ARPA funds with the Low-Income Housing Tax Credit program. Vermont faces the most severe shortage of housing it has seen in the last 40 years. The additional capital raised will free up essential funding to build homes in communities across the state.”
Various programs are making efforts to revitalize affordable housing across the state.
The Community Development Block Grant program in July awarded the Randolph Area Community Development Corp $850,000 to construct 12 new affordable rental housing unites and the infrastructure needed to support it.
The City of South Burlington and Ascend Housing Allies were jointly awarded $1 million to develop 94 units of new mixed-income apartments in two separate 47-unit buildings.
“The Community Development Block Grant award from VCDP will allow Summit Properties, in partnership with subgrantee Ascend Housing, to move forward with one of the State of Vermont’s most ambitious affordable housing projects to date,” said Tom Getz, chief executive officer of Summit Properties. “Especially in today’s construction environment, affordable housing requires leadership and support from the State of Vermont, its partner agencies, and local municipalities. VCDP’s and the City of South Burlington’s support for this project puts that leadership on full display and will make an impact on more than 100 people seeking an affordable housing option to live and work in Chittenden County.”
Nationwide, states and local governments have budgeted $4.2 billion through the ARPA State and Local Fiscal Recovery Fund for affordable housing production and preservation.
Vermont plans to invest $119 million in federal dollars received through ARPA to build homes for Vermonters shut out of the state’s increasingly tight housing market. By loosening restrictions and allowing ARPA dollars to leverage tax credits, the new guidance will help to attract 30% more equity into affordable housing production resulting in over 150 additional homes produced for vulnerable Vermonters. Nationwide, this change, led by Vermont advocates and the State’s congressional delegation, will increase the number of homes built helping communities recover from pandemic shortages.
Gus Seelig, Executive Director of the Vermont Housing and Conservation Board that oversees the investment of the federal housing dollars, said: “Vermont and affordable housing developers across the country owe a great thanks to our congressional delegation for introducing the LIFELINE Act and working effectively with the Treasury to revise guidance to allow the efficient use of ARPA funds with the Low-Income Housing Tax Credit program. Vermont faces the most severe shortage of housing it has seen in the last 40 years. The additional capital raised will free up essential funding to build homes in communities across the state.”
Last winter, Vermont Housing & Conservation Board Awarded $4.6 million in state funds and $5.82 million in federal funds to purchase, construct, and rehabilitate housing in Putney, Monkton, St. Albans, Essex, Williston, St Johnsbury, and Bennington and to plan for housing development in West Brattleboro.
