With the summer of 2020 upon us, construction throughout the state has been largely unaffected by COVID-19. As coronavirus limitations were imposed, construction was deemed essential. In early April, OSHA released project site guidelines for protecting construction workers and most employers provided additional sanitation and protective equipment for their workers. These measures appear to have kept most projects moving and on schedule. But in a few isolated instances, particular contractors and projects were impacted by COVID-19 illnesses.
Although COVID-19, thus far, has not directly slowed construction, the question on everyone’s mind is will it have a delayed or longer-term impact? Perhaps, depending on the macro-economic effects of coronavirus. For example, if unemployment remains high through 2020 and into 2021, depressed levels of spending on housing will slow that sector of the industry, which is typically followed 12 to 24 months later by a commercial construction slowdown.
Two significant indicators of the foreseeable health of the construction industry will be Utah legislative decisions during the interim and in the 2021 legislative session on construction spending. That is because state construction spending on roads, highways and buildings accounts for a substantial portion of the annual gross construction spend. Moreover, state spending is based on projected tax revenue. Accordingly, if the state budget hawks foresee depressed tax revenues, the state will slow its spending in anticipation of less tax revenue. Less tax revenue means Utahns will not only have less money to pay in taxes, but they will also have less to spend on housing and consumption that drive the construction of stores, strip malls and other commercial construction.
Finally, what about commercial office property? With the advent of coronavirus, we became familiar with “telecommuting” — working from home via VPNs and other remote connections to office servers. As companies adjust to this, will workers return to the office, or will we see an increased number of workers working from home? If telecommuting increases it will directly affect the need for office space, and indirectly affect businesses that support office workers, such as restaurants, fuel, fast food and other business and commuter- related businesses.
In short, the faster the unemployment drops, the less COVID will affect the construction industry.
What about major projects underway in Utah?
Salt Lake City International Airport: Completion, September 2020
Serving more than 26 million passengers a year with 50-year-old facilities is not feasible. The new terminal, parking and concourses provide current and ongoing needs for Delta’s Western hub and growing regional demand.
The Salt Lake Airport Authority has been clear that no local tax dollars are being spent on the project, which will be paid for using a combination of airline and passenger user fees. But with an 80 percent reduction in air travel due to coronavirus, will the airport authority be able to keep this promise with fewer passengers and planes passing through? According to the airport, yes.
With reduced travel now, the rate at which air travel returns to pre-COVID levels dropped a two-year, $300 million bundle of joy in the airport’s lap. How, you may ask? The slowdown allowed the old terminal and concourses to be demolished at once instead of in phases. Reduced travel means fewer planes and fewer planes mean the new terminal and concourses will be able to accommodate demand until the east concourse is complete.
Utah State Prison: Completion, Spring 2021
Like the airport, the Utah State Prison’s aging buildings are inefficient and expensive to operate. The Draper facility also sits on some of the most valuable remaining land in the Salt Lake Valley. These factors, in combination with low-interest rates, allowed the state to acquire property in 2016 and begin construction in 2019. As a result, taxpayers will realize significant cost savings over time with a new, efficient, state-of-the-art complex.
Savings will be realized from such things as state-of-the-art surveillance technologies, eliminating the need for staffing watchtowers and more-effective direct supervision.
UDOT
If you feel like I-15 along the Wasatch Front has been under construction since they announced the Olympics, you are not alone. Since the beginning of the millennium, all of I-15, from Hill Field Road in the north to Payson in the south, has been rebuilt. In fact, the I-15 Timpanogos Highway interchange has been rebuilt twice. But, by the end of next year, drivers will be able to travel all Wasatch Front counties without encountering a major highway reconstruction project when the following two projects are complete:
• David-Weber Express (Lay-ton Parkway to Riverdale Road), completion 2021. Removing the last original I-15 concrete and providing new, widened lanes, bridges and ramps at Church Street and 200 South.
• Technology Corridor (Lehi Main Street to Timpanogos Highway), completion late 2020. Widening I-15 to six lanes in each direction from Lehi Main Street to Timpanogos Highway, one-way frontage roads system, interchange reconstruction at Timpanogos Highway, new bridges, ramps and bike and pedestrian paths.
Facebook was already building a data center in Eagle Mountain, when, in December 2019, it announced plans for expanding the unbuilt data center by 50 percent. Facebook agreed to spend at least $100 million on Eagle Mountain’s infrastructure to accommodate the facility. The social media giant also hopes that the new data center will be 100 percent renewable energy.
Downtown Salt Lake City
Three major projects are underway in the heart of the capital: the Salt Lake City Temple reconstruction, the Salt Palace Convention Center hotel and 95 State at City Creek. The completion of these projects is slated for 2022 and beyond. In that time, other high-rise residential towers are expected to begin. Instead of dodging orange barrels on I-15 year after year, Utahns will be dodging them downtown.
Dana T. Farmer is a member of litigation section of Durham, Jones & Pinegar In Salt Lake City. His practice focuses primarily on the preparation and filing of construction notices, reviewing and negotiating contracts and resolving contract and payment disputes, among other common legal issues for subcontractors and suppliers.