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AGC of America seeks salvation for private sector

Paul Snyder

Speculation dies when there’s no one around to buy.

That is the message more than 200 contractors and chapter leaders from the Associated General Contractors of America will take to Washington, D.C., next week when they ask lawmakers to save a choking private sector market that, in good times, accounts for about 60 percent of the nation’s construction work.

According to national employment numbers released Wednesday, construction employment in the past year declined in 324 of 337 metropolitan areas. Stephen Sandherr, AGC of America’s CEO, said much of that stems from a lack of work in the private sector.

“We’re not asking for a bailout,” he said. “We just want recognition of the importance in investing in construction.”

The investment must come from a confident private sector, said Brad Binkowski, principal for Madison-based development firm Urban Land Interests Inc.

“Until everybody feels comfortable spending again,” he said, “you’re just not going to see the levels of development you used to.”

The AGC-led group will urge legislators to extend tax breaks and credits for small businesses, development firms and builders in an attempt to renew spending. The idea is part of a 12-page, 30-point plan AGC unveiled Wednesday to help revive the national construction industry.

The group’s proposals include easing nuclear regulations, increasing federal spending for highway projects and calling for more federal building upgrades.

Builders and developers would happily accept tax breaks, said Mike Vilstrup, president of Cross Plains-based TimberLane Builders LLC. But he said that won’t guarantee more construction.

“Look, you ask me how the building market is right now, I’m going to say it’s great,” he said. “I can build as many homes as I want. But I’m not building them because I’m not sure I can sell them.”

To encourage spending in a consumer-driven economy, Vilstrup said, the government should enact more programs like the $8,000 credit for first-time homebuyers. The program deadline, he said, generated a near panic as people bought homes and real estate agents moved acres of vacant property.

“The incentives have to go to the end-buyer,” Vilstrup said. “You give incentives to develop land, and it can end up as nothing to builders because developers aren’t going to pursue it unless they know they can sell it.”

Binkowski agreed, but said the extended tax breaks for development companies helped his firm pursue the redevelopment of the 33 E. Main Street building in Madison.

But if banks are still too nervous to lend money or those in the market are still too cautious to commit to buying new properties, any opportunities developers might pursue will be hamstrung.

Ken Simonson, AGC’s chief economist, acknowledged a full rebound in the construction market could take up to 18 months beyond the nation’s overall economic recovery. But he said if federal lawmakers do not provide the tools to stabilize the economy, already dire unemployment numbers will worsen.

If people in all fields of the construction industry understand that, Binkowski said, AGC’s efforts are worthwhile. But even if Congress pulls together and passes an omnibus bill containing all the recommendations, the American public still has to spend.

“Every little bit helps,” Binkowski said. “But it’s still a matter of everyone feeling confident again.”

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