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With $5B in NYC development on hold or dead, could union accord with contractors jump-start projects?

Today the New York Times tells us that, according to the Urban Land Institute (ULI), nearly $5 billion in development projects in New York City have been delayed or canceled--meaning a virtually unchanged landscape for two years.

“There’s no way to finance a project,” the ULI's Stephen R. Blank told the newspaper. (Forest City Enterprises, btw, is active in the ULI.)

That suggests that Forest City Ratner's plan to get an arena started in 2009--or even 2010--is a long shot.

Union/contractor accord?

On Tuesday, Crain's New York Business broke the news, in an article headlined Construction unions may finance building projects:
Ed Malloy, President of the Building and Construction Trades Council, says the unions may put $100 million of pension fund money into a fund that would fund various construction projects. However, he said the unions would seek matching funds from the city and the state to create a fund of $300 million. A proposal will be sent to government officials next year.

“As the days go on you hear about more projects with financial problems and we really want to do something to help,” said Mr. Malloy.

The unions are already negotiating with contractors in an effort to lower labor costs by up to 25%. Louis Coletti, chief executive of the Building Trades Employers’ Association, which represents contractors, estimated that labor accounts for 50% to 60% of a construction job’s cost. Union workers earn an average of $60 to $70 hour.


If the cost of construction goes down--through productivity increases and wage frezes, rather than lowered wages--banks might be more eager to lend.

On Brian Lehrer

Interviewed on WNYC's Brian Lehrer Show on Wednesday, Malloy and Coletti were optimistic when asked to predict the situation with construction jobs in a year.

Coletti said, "There's two scenarios. If we're unable to reach an agreement, I think this could be the deepest recession bordering on depression that we've ever seen in this industry. With an agreement, I think that we can minimize the unemployment. We have to keep in mind, what Ed said before, is we're coming off the best five years that this industry has ever seen."

Malloy was unequivocal: "Recovery under way."

Neither discussed Atlantic Yards specifically; it's likely that even a $300 million fund would be parceled out to many projects. But the labor concessions would benefit many more projects, including AY, lowering the overall cost and speeding the construction timetable.

In other words, if the money were available--and that's hardly a given--maybe the arena could be built in less than 32 months.

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