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Builders Bemoan Washington's Status As One Of 4 States Banning Residential Construction

Washington is one of only four states in the country to define residential construction as nonessential during the novel coronavirus crisis.

In an attempt to slow the spread of COVID-19, Gov. Jay Inslee ordered all nonessential businesses — including commercial and residential construction — to close March 25 for two weeks. He later extended the order until May 4. The other states to deem residential construction nonessential as of Monday are New York, Pennsylvania and Michigan.

Construction on this multifamily development on Sixth Avenue in Tacoma was shut down on March 25 due to concerns over the spread of COVID-19.

Because of social distancing rules already put in place, Washington state is beating coronavirus predictions. The state passed its peak on April 2, 10 days earlier than was predicted, according to statistics issued by the University of Washington’s Institute for Health Metrics and Evaluation.

It also now estimates that Washington will not run out of ventilators or intensive care beds and decreased the estimated mortality rate from 978 to 632.

The progress has come at the cost of a sudden spike in unemployment. In Seattle, the downtown core’s offices emptied as early as March 4, when many companies told employees to work from home. By March 16, 83 customer-facing businesses in downtown Seattle had closed. That was just the beginning.

During the two weeks between March 15 and March 28, new unemployment claims in Washington grew by 311,000. Unemployment claims in the construction industry rose by 28,021 for the week ending March 28, a 1,315% increase in two weeks. 

Some public-private partnerships can continue construction, such as work on the $958M Seattle Center arena, but almost all other projects in the state have closed.

In a letter obtained by Bisnow, Peggy Lewis Fu, executive director of the Washington state chapter of NAIOP, urged Inslee to reconsider not allowing residential construction to continue. The letter points out the Department of Homeland Security’s guidance on residential construction states that workers building additional units the combat the nation’s existing housing supply is considered essential.

Bill Bruch, a property manager and candidate for the 10th District in the Washington House of Representatives, circulated a petition urging Inslee to reconsider the residential construction ban. At last count, the petition had nearly surpassed 18,000 signatures within a matter of days. In a letter, Bruch asked Inslee to consider lifting the ban on residential construction by April 9 or sooner, saying those in the residential construction industry believe this to be unfair since most can easily social distance due to the nature of the work.

In a press conference last week, Inslee warned businesses that if they failed to comply with the closures they could face penalties or loss of business licenses, though they would receive a warning first. 

Inslee’s office, through a spokesperson, said emergency residential construction is still deemed essential and staffers are engaged in ongoing discussions with legislative leaders and industry representatives. The governor’s directive said construction of publicly financed, low-income housing is considered essential.

Warren Hughes, who runs a multifamily construction business in Arlington, said the situation will become financially devastating for many in the industry in a few weeks.  

“The virus is something to be taken seriously,” he said. “But this industry lends itself to not working in close proximity. We typically follow suit with California, and they did not shut down residential construction.”

Hughes said if the residential construction is forced to shut down too long, many construction companies will struggle, especially those with loans out.

Vibrant Cities CEO and co-founder  James Wong doesn’t expect Inslee to change his mind and open construction up any sooner than May 4. 

“Our goal is for it not to extend beyond May 4,” he said.

Wong does, however, see reasons for optimism. His friends in China have told him business there is almost back to normal after a 60-day lockdown. 

“I look at China as an indicator of what we can expect here,” he said. “Life will get back to normal here just as it did in China.”

Wong also believes that the $2 trillion stimulus package and the Paycheck Protection Program will help companies weather the storm. 

“I am a great believer that the stimulus money will be a great booster to our economy,” he said. “We didn’t have any fundamental big issues with our economy before COVID-19. It will take a little bit to boost back our consumer confidence, but that’s where the government’s stimulus package should help.”