Keeping The Pipeline Full
photos by L.G. Patterson
Warmer weather is conducive to the construction of new buildings, roads and infrastructure, and the stakeholders coming together for the summer CEO roundtable at the Broadway Hotel are the designers, builders and growers of the Columbia community.
Inside Columbia Publisher Fred Parry welcomes the group to the luncheon that features Broadway Hotel’s Chef de Cuisine Ben Randolph’s take on the lighter brighter flavors of scallop ceviche with avocado and Fresno hot sauce to start; a roasted strip loin with steamed asparagus and scalloped potatoes and a simple pound cake, fresh strawberries, sweetened crème fraîche and rhubarb jam to finish.
Prior to the meeting, a survey of those in attendance revealed common optimism and concern. The majority shared the view that improved economic conditions would have the most positive impact on the industry, while a majority also agreed governmental regulations could have the greatest negative impact. Despite their generally positive outlook on their industry, the reality the new planning and zoning codes have brought to the market temper much of the conversation.
THE INTRODUCTION OF THE UDC
As the architects, builders and real estate professionals settle in, Plaza Commercial Realty Owner Paul Land puts their shared market outlook in order.
“The market’s very good. Activity is up. Inventory is down,” Land states simply, but he is quick to note, “we’re going to have to see some speculative development because the inventory is pretty tight.” While business seems to be good right now, he raises concern about new city zoning ordinances.
“We don’t have experience with it yet,” Land continues. With some 60 years of experience with the old code, 40 days into the new code comes with a steep learning curve. Land is referring to the Unified Development Code (UDC), which was adopted by the Columbia City Council in March and sets new comprehensive zoning and development codes for the city — something that had not been done to this scale since the 1950s.
John States, a partner at Little Dixie Construction, refers back to Land’s mention of speculative market needs and the code’s possible negative influence. “The problem is the cost of doing a speculative building in Columbia, Missouri. That’s why you don’t see any right now. With the new UDC, there are so many restrictions before you can even break ground or even think about developing a set of plans, that you stop as soon as you start putting a pencil to it.”
Certainly, the architects present admit they haven’t had much exposure yet. Bill Oswald, architect and principal at Simon Oswald Architecture, and architect Stuart Scroggs agree it will be different.
From a realty perspective, Land says, “it’s going to introduce more cost at the front end because those of us that had experience with the old code could make certain assumptions, and we’re going to have to engage the architect or the engineer earlier in the process, which is a cost. It could end up no project, and the cost is sunk.”
Cost aside, he says, some of the appeals for use no longer go before the Board of Adjustment, but before the Planning and Zoning Commission, which can add two to three months onto the process and brings in a political element rather than the appeal being a business decision.
INDUSTRY STABILITY AND UNCERTAINTY
The general state of the industry is promising, though, says Reinhardt Construction President Jerry Daugherty. Their slate is full at the moment, given the size of their team and their contracted projects. Reinhardt is in the last phase of a project at the Zeta Tau Alpha sorority and is beginning a major renovation at Kappa Kappa Gamma.
Indeed, while the individuals around the table and the companies they represent have workloads underway that keep them busy, Coil Construction President Randy Coil says the industry is still recovering from the economic downturn almost a decade ago.
“Our industry lags behind the general economy maybe a year or so before we really start feeling things, but it also doesn’t go down hill,” Coil says. “We have things in the pipeline even as the economy goes down for at least a little while. We were still recovering in 2012, and the numbers were starting to go up pretty dramatically. Now, nationally, it looks like we’re trending more level or slow … It was very robust in the last couple of years, actually terrific, but nationally, the numbers are starting to slow.”
Emery Sapp and Sons President Billy Sapp describes their current outlook as “robust.” Emery Sapp and Sons just completed a million-square-foot project for Amazon in Kansas City. Three large commercial jobs in Columbia are underway, and more coming. He is also optimistic about the housing market.
“The housing market is phenomenal at the moment” Sapp says. Houses are selling, and there is a shortage of lots. It’s hard to explain why, he says, but ventures that several factors could contribute: medical access, the University of Missouri, retirement appeal.
With that, Scroggs tempers the enthusiasm. “I don’t want to be gloom and doom,” he says, “but everybody at this table knows that our industry is cyclical, and we’re way up here.” His hand juts up above his head.
Coil agrees there is much uncertainty caused by several variables.
“We don’t know the effect yet of political aspects,” Coil says. “We don’t know yet where our taxes are going to be. We don’t know yet where all the deregulation is going to come from with the EPA and other things. We’re not sure how that’s going to affect us. Hopefully very positively, but that’s not built in to any of the models from most of the forecasters.”
Uncertainty carries over into skilled labor issues for some in the group.
“We’re fortunate we have a long history with a lot of our workforce. They’ve been with us a long time,” States says. Finding new workers in the area is challenging.
Wages are becoming a moving target. “Our state legislature is going to cause us problems moving forward because they are actively trying to lower the denominator of wages for construction workers,” says Huebert Builders President Wayne Huebert. “That will have a negative effect as we move forward.
“Whether you’re a proponent of prevailing wage or not, it’s irrelevant to another issue and that is that we need to have a workforce that is making a living wage and getting paid decently,” he adds.
The group, however, felt workforce issues also arise from the appeal of construction work to the generation currently in the educational system.
“It’s construction, in general,” Sapp says. “Nowadays, the kids go to college and they want to sit at a desk and work on a computer and manage a billion-dollar trust fund.” Blue-collar workers are elusive. While there are tech schools that serve the industry, he says, they have entertained the idea of starting a tech school of their own on multiple occasions, just never pulled the trigger.
Huebert mentions the Columbia Area Career Center and the tech-savvy, food-service orientation of some of its coursework, and a desire for more construction-based curriculum and student interest.
The conversation turns back to city regulations and relationships with the UDC as the overarching issue.
“The Unified Ordinance is over 400 pages long.” Huebert says. “I was trying to read it before the vote was taken and the page count was literally changing less than 48 hours before the vote was taken, maybe 72 hours. … I couldn’t get it read before the vote.”
“One of the supposed benefits of the new code is that we will get away from planned districts.” Land says. “It’s going to be interesting to see if that really happens, or if somebody who has a planned district will go in and try to get it rezoned.”
Mel Zelenak, broker-salesperson at Maly Commercial Realty, brings up Addison’s South as an example of a planned district. It was zoned C-P, planned commercial. When Addison’s bought that site, they had the assumption based on its zoning that a restaurant was permitted, he says.
With a planned district, city council has the opportunity to comment on your plan. Addison’s ended up not getting approval from the Planning and Zoning Commission; however, after outreach to the surrounding residential community and adjustments to the plan were made, the council approved the plan. The process allows for more project delays and hinderances.
Developers are also timid about submitting subdivision projects because of the uncertainty of possible issues. Sapp has one in progress that he has one word for: scary.
States reinforces the point. “There’s not going to be any because people are going to say, ‘There’s not a chance we’re going to submit anything right now until something gets worked out.’”
WATER, SEWER, ELECTRIC, OH MY
Before the group gets too far down the path on zoning, infrastructure comes up. With two new major employers coming to Columbia next year and the growth of downtown, the debate of its adequacy is timely.
In terms of power, Coil says, some things are in the works, but sewer is going to be the key.
After four years since the 2013 sewer bond passed, the city council voted in May to approve the Henderson Branch sewer project. Delays were a result of higher than anticipated project costs, more than double the initial estimate of $2 million. Coil says it should have been in progress, but ultimately, it will expand Columbia’s west side for residential and commercial development.
Grove Construction General Contracting Owner Tony Grove, who sits on the Mayor’s Task Force on Infrastructure, says the task force faces difficult challenges without answers always being forthcoming. But, he agrees, sewer is, without a doubt, the largest problem.
Finding ways to make it economically viable can be done, Grove adds. “There are sins from the past that we’ve got to pay for, but we’ve got to move forward.”
Finding solutions won’t be easy, but Sapp says, “Attitude of everything comes from the council. It comes from the top.”
Keeping Columbia moving forward is going to have to be a joint effort on several fronts.
“One of the things the county’s been good at doing is keeping a lot of the work local, whether it was trustees or the county, whether it was the 911 center, things we’ve done for the hospital and others,” Coil says, but city project bids are often awarded elsewhere.
“We all buy local — our steel, our concrete, our lumber,” he adds. “We buy everything locally, here.” The economic impact, in turn, of those dollars stays in the community.
Beyond economic impact, Sapp notes physical issues like area traffic flow need to be addressed. Currently, he’s working on a design-build project in Liberty, Mo., which will cut a new road across a cow pasture to connect two highways.
“It’s the cheapest it will ever get done because there’s nothing in the way,” he says. “Here, we wait until it’s almost impossible to get built before we ever do anything.” He cites the intersection of Forum and Nifong, Stadium Boulevard and Grindstone Parkway as missed opportunities to be proactive.
Funding challenges exist but having a plan would be optimal should the funds materialize.
THE ROLE MU PLAYS
Within the group, nearly half have current projects underway on the University of Missouri campus, and more than a couple express a desire to better support the university.
When campus unrest occurred last year, Huebert admits his remorse about not trying to do more. “I didn’t do anything but just throw my hands up. My kids both went there. I went there. I’ve got strong connections to it, and it is a driving factor in this community. When it goes a little bit south — we’re growing like a banshee in Columbia with just our population — but if the university goes south, we all go south to some extent. Personally, they’re a big driver in my workload.”
“Mine, too,” Oswald says, “but not right now. We used to have three, four projects going all the time, but right now we’ve got two.”
It’s a cautionary tale, according to Zelenak, for all of the pomp and circumstance in the discussion about how great everything is. “There’s concern with what city council’s representing with UDC and some of the unknown of how the UDC will be interpreted, but I think with what the university has on the horizon with the decline in enrollment and some of the layoffs,” he says, “there’s very real probability that we’re going to feel some pain from a general economic feel across the city of Columbia as a whole.”
Prior to 2015, Zelenak says, Maly was working on north of $15 million in land acquisition costs alone for developers who were looking at Columbia, and after some of the events that transpired, all of those have gone away.
“There’s worry, obviously, we’re having issues right now with filling even downtown product,” Zelenak says. “What’s going to happen with the Highway 63 corridor? And Grindstone? Some of those projects, if you’ve held the note long enough, you can probably withstand what’s coming. I’d be willing to bet every dollar I have that some of those folks in the not-too-distant future — I know what those notes look like and when they’re going to be called — they’re in trouble. Then again, what that will do and how that will change, time will tell. … If you have an opportunity to promote the university in whatever capacity possible, that’s one thing that is going to be important long-term.”