Permit trends may reflect building industry challenges

With grading season under way since Tuesday, South Shore contractors and state economists are eagerly awaiting an upward turn to the construction industry.

In comparison to previous years, the number of city building permits issued appears to be lagging this year leading into the grading season, with 262 issued as of May 2.

The number of basin-wide applications received by the Tahoe Regional Planning Agency show only a slight dip. Nonetheless, the jury may still be out on how the summer will shape up.

Still, the phone activity hasn't been stellar so far for contractors, who are dealing with stricter fire codes, rising fuel prices, increasing costs of building materials and a skittish real estate market.

"Everything adds up. A whole number of circumstances make construction go up and down. And I do believe the market has slowed down," South Shore contractor David Cattaneo said. With more than 25 years logged in the industry, Cattaneo is occupied now with emergency-related jobs such as pipe repairs.

Contractor Ray Fernsten is mostly working on remodels as the new home starts have diminished somewhat.

"The numbers haven't been what they've been before because the spec builders aren't building (as much)," he said. He cited a weakening real estate market - or at least the perception of one - as scaring them off.

Wendy Woods of Yonker Construction has also noticed a drop-off in jobs from home starts.

The rising costs of building materials hasn't helped the industry.

The longtime construction company estimated the cost per square foot of building the average home has tripled in the last decade to about $300. Contractors are having to pass on material expenses and other labor costs associated with workers compensation insurance.

"If you want to be a legitimate contractor, it isn't cheap. It's hard when you could get a guy working out of his truck with a cell phone who you'll never see again," Woods said.

Tahoe Sand and Gravel has been forced to raise its prices by between 4 to 6 percent because the price of fuel that runs the excavation equipment.

Adding to the rising costs, Lowe's is now charging contractors $50 for deliveries. It used to be a $5 fee.

At Meeks, contractor sales manager Buzz Bera said the price of lumber has stabilized - but the price of cement, petroleum and copper has gone up. Thieves are even stealing copper by pulling it out of the telecommunications lines. And steel has skyrocketed by at least 10 percent.

The perceived slump comes as no surprise to the California Building Industry Association's chief economist, Alan Nevin.

"The Bay Area slowed down dramatically. There's no question if you look at the permits," Nevin said, citing the building boom in Beijing and Dubai as absorbing the supply of steel and concrete.

He added the slumping real estate market as a reason "banks are petrified to do spec loans."

Tom Turner, who owns the Riva Grill, estimated building the restaurant today would cost him three times as much from the $5,000 expense incurred a few decades ago.





All South Lake Tahoe building permits issued:

-- 262 (Jan. 1-May 2, 2007)

-- 1,297 (Jan. 1-Dec. 31, 2006)

-- 1,436 (Jan. 1-Dec. 31, 2005)



All Tahoe Regional Planning Agency Application Submittals in the basin:

-- 302 (March 2007)

-- 338 (March 2006)

-- 320 (March 2005)

-- 209 (March 2000)