Come January, the city will take a close look at its books. Chief Administrative Officer Bruce Bender said he wouldn't be surprised if a projected annual income of roughly $800,000 in transportation impact fees turns out to be high.
“If we don't get the money, then we don't build the improvements,” Bender said.
The building and construction slowdown is widely visible and affecting many. Some developers are positioning themselves for an eventual upswing, but others are bracing for more hard times.
Among them is Brady Nelson, who will lay off his seasonal workers six to eight weeks early this year.
Nelson owns AAA Construction, which is seeing its second-worst year in a decade. He said business has dropped 30 percent to 40 percent this year for nearly everyone in the building industry.
“It's been a pretty crummy year, a pretty bad year,” Nelson said. “I've seen a lot of people give it up.”
Single-family housing starts in both the city and the county are down more than
30 percent, as they are on average across the state, according to the Montana Building Industry Association.
The city already has collected less money in transportation impact fees, too. The fees brought in $149,269 this fiscal year compared with $167,310 the same period last year, said the city finance director. So far, the construction value of building permits issued has fallen by roughly half this fiscal year compared with last.
“This has been a slow year for us, slower than normal,” said Don Verrue, building official with the city Building Inspection Division.
The market has slowed in real estate and new developments alike, said Ruth Link, with the Missoula Organization of Realtors. That means fewer people may be selling homes in 2009.
“Next year, we are anticipating a drop in membership,” Link said.
Approved subdivisions aren't going up quickly, either, according to the Office of Planning and Grants. After the Missoula City Council or Board of County Commissioners OKs a subdivision, developers have only so much time to finish the preliminary work. Director Roger Millar said they typically have three years, but they can ask for an extension. The extension requests are a normal part of the process, but the office has seen a few more of them lately.
“We are seeing the last six months or so a little uptick,” Millar said. “It's not like a huge, thundering avalanche. But it's noticeable.”
The cooling market doesn't have every developer in a panic. Lloyd Twite, who built Linda Vista, said he's an eternal optimist. In any market, developers face a slow political process and he figures the economy will get rolling again. The longtime developer offered some words of wisdom to new kids on the block, though.
“Go to the pharmacist and get ‘patient' pills. It's a real, real, real slow process,” Twite said.
Some people's pocketbooks can't stand the strain that comes with waiting for the upswing. Ryan Morton, with the Missoula Building Industry Association, said some builders are considering early retirements or different fields altogether.
Already, he said the supply market is in a crunch. Some businesses that sell things like siding, windows, granite countertops - anything that'd go in a home - have laid off half their workers.
“All those people get affected,” Morton said.
He said he fears the market will hurt local building professionals and bring out-of-staters to replace them. Nelson, with AAA Construction, said smaller companies feel the most pain.
That's because government jobs are the only ones bidding, he said. Those projects are too big for him to take on because they're larger than he can bond. Plus, the insurance companies have cut back, too.
“There's very few projects in the range for the real, smaller-type outfits to bid,” Nelson said. “I mean, that's a real problem.”
Many others face challenges similar to Nelson's, and the economy is taking a front seat in the presidential election. Nelson hears both Obama and McCain pledging support for small businesses like his, but he considers their promises empty, or, as he says, “baloney.”
“Everything is against you from the start. There's no easy way to do this,” Nelson said.
Still, optimists and opportunists are keeping their chins up and their eyes wide open for signs of better days. Verrue, who said the city has seen a slow year, is waiting for spring.
“Come spring, it just may bust wide open,” he said.
At OPG, Millar said activity on the front end of development is picking up, and related fees are steady as well. That's evidence of smart people setting themselves up for a turnaround.
“When the economy comes back, they want to be ready,” Millar said.
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