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Costs, rules threaten deconstruction plan

By Sean Ryan

Higher costs and new permit rules stand in the way of Milwaukee’s plan to start an eco-friendly program for tearing down buildings.

The city plans to use part of a $25 million federal housing grant it received in January to start a training program based on deconstruction.

The program is intended to create jobs and recycle. But deconstruction — in which crews take apart buildings piece by piece instead of bulldozing them — can cost twice as much as the typical $10,000 to demolish a house, said Alex Runner, staff assistant to Milwaukee Common Council President Willie Hines.

Plus, Runner said, the city’s construction permit system lacks a category to authorize deconstruction work.

The cost of deconstruction projects can vary greatly depending on whether workers must be paid state or federal prevailing wages, Runner said.

Prevailing wages — often higher than the $10 to $20 an hour generally paid to trainees in Milwaukee — require contractors to pay a rate based on the local wages and benefits workers are paid on private projects.

Milwaukee is awaiting a response from the U.S. Department of Housing and Urban Development, which provided the $25 million grant, on whether prevailing wages would be required on deconstruction projects.

“Prevailing wage is all well and good,” Runner said, “but if no contractor can succeed paying the wage, then you are really doing yourselves a disservice.”

The higher cost of prevailing wages could derail a project by making deconstruction too expensive, Runner said. The city a year ago issued a request for proposals for a deconstruction pilot program that required prevailing wages, he said.

“No deconstruction firm bid on it,” Runner said, “because it was cost-prohibitive.”

Chicago, which runs deconstruction programs using HUD grants, does not pay prevailing wages to trainees on the projects, said Ken Ortiz, regional manager for The Reuse People of America, an organization that supports deconstruction training programs. Workers in Chicago make about $12 to $18 an hour, he said.

“We are not doing prevailing wages because, quite frankly, it is not a union job and it does not qualify for prevailing wages,” Ortiz said, “and it’s a training job. You are doing it with emerging people.”

Madison-based Deconstruction Inc. is a union company that pays prevailing wages on deconstruction projects, said President Roxanne Seeliger. But the company uses experienced workers who have higher productivity than trainees, she said.

“You have a lot of upfront costs of labor processing your product,” Seeliger said, “but you want to find out in the end if you have enough product to cover the higher wages.”

Before taking on a project, Seeliger said, she calculates the money available from reselling fixtures, flooring and other parts to make sure it exceeds the cost of labor and equipment. Materials from older houses, such as most of the stock in Milwaukee, are worth more than those from homes built in the 1970s and later, she said.

In addition to managing the higher costs of deconstruction, Milwaukee must develop a permit for the process, Runner said. A demolition permit is inadequate because the processes differ, he said. For example, demolition permits require water to be sprayed on a house before the structure is torn down. That would ruin some of the building materials that deconstruction is intended to save, Runner said.

“It’s like trying to set up a round peg in a square hole,” Runner said.

Chicago wrestled with the same permitting issues, Ortiz said, and there was a period when builders seeking authorization for deconstruction were offered only demo permits.

“There was a learning curve for everybody,” he said, “and there were some funny moments in the building office trying to get permits.”

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