Iowa City construction boom to bring jobs, spending but also challenges

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Editor’s note: This is one in a series of occasional articles highlighting collaborative efforts and innovative approaches to addressing shared needs in The Corridor.

By B.A. Morelli, The Gazette

Outside Shawn Wenko’s Williston, N.D. economic development office last week, the wind chill dragged temperatures well below zero.

But frigid winter days haven’t stopped workers from flooding the city — which, Wenko says, is growing by about one resident every four hours.

They come to work in the booming oil industry, in construction or other supportive services necessitated by the city’s explosive growth. Williston’s population has tripled since 2010.

As Iowa City prepares for its own — admittedly, smaller — construction boom, city leaders hope that advance planning and collaboration on Iowa City construction projects will help them avoid many of the growing pains experienced by oil towns such as Williston.

They include housing and labor shortages, dramatic inflation in wages, rent and homeownership, and taxes, significant strain on city resources, public safety, schools and other services.

With an estimated $2 billion of construction on deck or underway, the college town of 70,000 people is bracing for a level of construction unusual for communities of its size. The peak of construction, driven by private development, a comprehensive Iowa City school district building plan and a wave of high dollar projects finally getting underway in response to the 2008 flood, is expected to hit Iowa City around summer, 2014.

By some estimates, the boom will sustain or create thousands of construction jobs. Officials are already expecting a tough time finding skilled workers. Prep space in the downtown area will be in short supply. Housing, parking and transporting workers could be a problem.

“This is something we’ve never experienced before,” said Mark Nolte, president of the Iowa City Area Development Group. “The end result will be fantastic new buildings and a reshaping of our area to make it an overall more attractive place to be, but there is a lot of work to do and we want to get it done in as minimally disruptive way as possible.”
Iowa City leaders have already taken a first step by identifying potential problems and solutions to minimize disruptions, such as starting discussions between stakeholders and exploring training opportunities at the high school and community college level.

Last month, Nolte gathered stakeholders from the university, city, school district, trade unions, design firms, construction, business and other sectors. The goal was to begin a discussion that would hopefully help avoid the horror stories from North Dakota by opening the lines of communication.

The collaboration is just beginning.

FIVE YEARS BEHIND

Sitting on top of an estimated 11.4 billion barrels of oil, the northwest North Dakota city of Williston is at the epicenter of what some call the modern day gold rush.

But officials say the city is five years behind in a race to keep up with growth.

In the early 1980s, developers started several projects in Williston to capitalize on a previous surge in oil activity. The boom busted leaving Williston with debt it was paying off into the 2000s.

City and financial leaders hesitated to make the same mistake when the most recent boom began. Instead, they found themselves behind the curve as the city’s population tripled in about three years to 45,000.“When we solve one problem, something else comes up,” Wenko said.

Along the way, the community has learned some valuable lessons:

  • The mayor convenes a monthly planning meeting with key stakeholders, such as town officials, oil executives and developers, to talk about major projects and upcoming challenges.
  • Residents backed a one-cent sales tax, which eliminated the parks portion of property taxes so the transient community contributed to that fee, Wenko said.
  • A new center at Williston State College supports training for workforce needs.
  • The City of Williston has added staff, offered raises and a housing stipend, which appears to have stabilized staff turnover.


ALL OVER TOWN
A long-awaited release of federal disaster assistance funding has greenlighted at least eight flood recovery projects, including Hancher Auditorium, the school of music building and the art school building. Together those account for about $400 million of the $1 billion in construction and renovation projects on the books for the University of Iowa. Another $350 million in proposed projects are in the works.

Then there’s the Iowa City school district’s adoption of a 10-year, $258 million facilities upgrade that will touch every school in the district and calls for building a new high school and three new elementary schools.

Private development also is flurrying with projects that will change the Iowa City skyline and redevelop a large tract south of downtown into a dense, pedestrian-friendly, mixed-use neighborhood. (see map)

By next summer, eight tower cranes will loom over the city.

Already, there have been signs of increased activity, says Kenneth D. Simonson, chief economist for the Associated General Contractors of America. Construction employment numbers in Cedar Rapids are up 5 percent over last year, and up 6 percent in the Quad Cities, compared to 1 percent in the Des Moines area, 3.7 percent statewide and 3 percent nationally.

Randy Clarahan, a construction executive with Mortenson Construction, which has the Hancher and school of music projects, said they are already seeing shortages of skilled concrete and carpentry workers.

WORKFORCE CHALLENGES
It’s hard to predict exactly how many skilled workers it will take to directly staff all these projects, or the impact the boom will have other area businesses.

Based on a calculator created by George Mason University professor Stephen Fuller, 57,000 local and non-local jobs are created or sustained from $2 billion in construction. This includes one-third or 19,400 construction jobs, 9,200 jobs that service the industry, such as manufacturing, suppliers, quarries, engineers, accountants and architects, and another 28,600 jobs that are created from the ripple effect, such as staff in hotels, retail and food services.

Filling those jobs could be a challenge.

One concern, Simonson said, is that many construction workers appear to have left the trade during the economic collapse, and fewer young people are turning to construction as a career.

Two other projects, a $1.8 billion fertilizer plant in Lee County and a $150 million chemical plant in Osage, also will stress the worker supply.

“We are challenging the construction industry for this small of a demographic,” said Rod Lehnertz, University of Iowa director of planning, design and construction, noting this is the most “transformative” period in the university’s history for such a short time frame.

University leaders have tried to stay ahead of the game by breaking up contracts into smaller packages to keep them manageable, invite more bidding and keep the costs down. So far, it’s working, he said.

Bill Gerhard, president of the Iowa State Building & Construction Council, is turning his attention to recruitment. Gerhard has asked to speak to local high schools and is participating in a “career caravan” of City High students to Kirkwood Community College to explore technical fields related to construction.

“You don’t have to go to college if you don’t want to,” Gerhard said. “There are good jobs to be had right now.”
In many ways, Iowa City is in a better position to handle the workforce and housing needs than Williston was: Iowa has a population of 3 million compared to about 700,000 in North Dakota, and Iowa City can turn to Chicago, Kansas City and the still-suffering Michigan workforces for skilled workers.

Clarahan said crews will be attentive to quality and safety with many new workers coming to construction zones. He recommends creating a matrix that shows when all the steel work is done, all the drywall, all the painting and so on to maximize existing workforce.

“Undoubtedly there will be a shortage of labor, skilled craft labor,” Clarahan said. “The best medicine for that is to coordinate and better plan those activities so all projects can achieve success and be completed when they need to be completed — on time.”

HOUSING SQUEEZE
Still, it’s likely a number of workers will need to be recruited and relocated from other regions — or will find their way here on their own.

“When people know construction is going on in your part of the country, you get regional and national contractors coming in,” said Jonathan Downing, chief executive officer of Wyoming Contractors Association. “If you are going to see $2 billion in construction in Iowa City, people are going to come there.”

Wyoming’s recent construction boom, including well over $1 billion for K-12 and University of Wyoming construction over a 10 year period, has that state leading the nation in job growth, including a 17 percent construction job growth from 2012 to 2013, alone. To meet the demand, Wyoming pushed a short term training program for machinists and craftsman, and also relied on workers coming from out of state, Downing said.

Workers like Paul McGuire, a project executive for Gilbane Building Co., who was working on a Michigan power plant before moving to Iowa City in 2011 to work on portions of the UI Children’s Hospital construction project — the area’s largest single construction project.

After jumping every two or three years between Los Angeles, Detroit, Miami, Dallas, Minneapolis and Washington D.C. to Kalamazoo, Mich. McGuire, along with 10 senior staff members and their families, moved to Iowa City, and see reason to stick around: There will be several years of work.

“Instead of moving job-to-job, this looks like a good place to be,” McGuire said noting the area has good people and a strong work ethic.

McGuire anticipates 320 workers on the construction site of the 14-story children’s hospital tower at its peak. Hancher and the school of music, and potentially others, will all be peaking at the same time, he said. Along the way, all types of skilled labor as well as certain equipment will be in short supply from concrete workers to equipment operators to finish carpenters, not to mention the suppliers, vendors, manufacturers, and truck drivers that bring us the material and equipment for these projects

That raises another important concern: Where will all of these workers stay? With 1 percent vacancy rate for rental units, housing is already in short supply and leases are geared toward the university calendar, which won’t be appealing to many workers.

Surrounding towns, such as Coralville and North Liberty, and up the road in Cedar Rapids, should help fill the void on housing, and hotels along the interstate are already offering construction worker specials.

The Iowa Finance Authority recently launched a rental housing website where landlords and property owners can post listings and prospective tenants can connect.

“I think that is going to be a challenge,” Nolte said. “How do you know where to look to find a place to live? So that could be very beneficial. Anything that is a little more comprehensive will help.”

UNCERTAIN FUTURE
There are different perspectives as to how this will play out.

Tom Markus, the Iowa City city manager who not only is responsible for a number of municipal capital projects, but also for anticipating and managing any added burdens or disruptions to city services that the construction boom will cause, said he believes pressures from a workforce shortage will actually help keep some degree of order. Either more construction employees will relocate to the area (most temporarily) to work on our projects, or we will have shortages. In either case construction prices are likely to go up and force some project managers to reconsider the timing of their projects, he said.

“I think there’s the potential to get into competitive bidding and exceed the architects/engineers estimates,” Markus said. “Then you will see rebidding, refining the scope of work, rephasing of projects or delaying projects, if the costs get too high in comparison to estimates and budgeted costs.” Coordination and communication which has been started by the ICAD meeting will be key to maximizing the number of projects that can be undertaken here at any given time.

Nolte’s goal is that the area won’t have to slow down, but will be able, through planning and collaboration, to seize growth opportunities. Even if concerns about the boom prove overestimated, he said, there is no down side to being prepared.

“I would hope we don’t miss any opportunities because of that situation,” Nolte said. “I don’t want to slow down an existing company that wants to expand because we have to address flood issues that occurred five years ago. If we are coordinated in our efforts we won’t have to have delays.”

Contact the author: (319) 339-3177; brian.morelli@sourcemedia.net. Join the conversation: engage@wecreatehere.net. Follow us on Facebook: wecreatehere

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