Jarrod Olsen, a planner for the city of Fresno, backchecks Clovis architect Andy Lucas’ construction plans on Wednesday. Photo by David Castellon
Written by David Castellon
For the past few years, staff at Fresno’s Development and Resource Management Department have gotten increasingly busier as the economy has improved and more plans and permit applications have been submitted.
But for about the past six months, that activity has ticked up even more, said Mike Sanchez, the department’s assistant director.
“We are seeing a tremendous influx of applications,” for new construction, plan checks and subdivision map approvals, he said.
Ahead of the storm?
As to why, Sanchez said in recent months builders and developers have told his staff they’re motivated to begin the construction process not only because of the burgeoning economy following the recent Great Recession, but also the possibility — and even likelihood — that another recession isn’t far off.
As for what’s driving these concerns, the first sentences of an Aug. 3 Forbes online article sums it up: “Here are two safe forecasts, the kind you can count on. First, the U.S. economy will sink into a recession. Second, no one knows when the recession will arrive.”
Such speculation is fueled by statements from a variety of economic pundits that recessions are cyclical, and the U.S. is due for a new one.
The Forbes story notes that despite no current signs the national economy is in trouble, “readers of The Wall Street Journal, The Financial Times, The New York Times and Bloomberg are seeing daily articles weighing the risk of recession. The commentary definitely leans toward the worried, although the favorite year of reckoning is around 2020 (which, if accurate, means the current expansion will become the longest on record).”
Rinse and repeat
“The expectation is this recovery has been going on for some time, and the expectation is that after a recovery like this, the cycle will repeat,” said Mike Prandini, president of the Building Industry Association of Fresno and Madera Counties.
He noted that another Great Recession might not be in the cards, “maybe not a full-blown recession, but a more modest slowdown in the economy.
“But when you have a slowdown you have less demand” for construction, Prandini said.
While many economic experts have shied away from predicting when this might happen, Prandini noted that the Valley is five years into its recovery from the last recession, “and typically, recovery lasts only seven or eight years.”
Sanchez said some developers have told him and his staff they think the current good economy may be good for anther one to two years, while Prandini said, “Everybody expects in two, maybe three years, we’ll start to see a slowdown, but all these people may be wrong.”
Timing is everything
Regardless, he said, property developers don’t want to be in the midst of construction when the economy turns.
“They want to get their projects underway, starting with getting them through the review, approval and permitting process at Fresno City Hall, he said.
“You don’t want to start a subdivision at the end of recovery, but you don’t want to not have a market for those houses,” as another recession would likely reduce the number of people able to buy them, Prandini explained.
“They don’t want the rugs pulled out from underneath them.”
If developers can get through the approval and permitting processes quickly, “then they can decide whether to go forward or let things sit,” holding off construction until the next recovery, Prandini said.
But in Fresno, that’s not so easy. The city recently launched its Business Friendly Fresno 2.0! program to streamline planning and permitting in an attempt to end the criticism of long waits for approval and to make the city for friendly to businesses, but Sanchez noted that those changes still are in the planning stages.
Advances in technology
Still, the launch in late May of an of online system to allow contractors, property owners and developers to apply for city construction permits has speeded things up, but some in the building community have encountered glitches.
Sanchez said technical problems come with incorporating new technology, and the city is working on eliminating them, while Prandini indicated confidence they can be worked out in the coming months.
“I know for a fact that Lee Brand and his staff are dong everything they can, and they’re trying to do better, but its still very slow,” Dror Geron, president of Geron Property Development, a Fresno-based commercial property developer, said of the process to get building approvals from the city.
Since the recovery began, the workload for Fresno’s Development and Resource Management Department has progressively increased, with the number of building plan checks being in the 15,000 range two and three years ago and jumping to more than 17,000 last year, Sanchez said.
And with the added demand from developers trying to get ahead of the next recession, “It certainly has enhanced our workload,” with city staff working hard to get approvals and other work out quickly, he added.
In addition, Sanchez said his department is making more use of outsourced workers to do plan check reviews, but with such a high influx of applications, plan submittals, etc., the system has slowed down, though city staff is keeping those delays down to a “reasonable level.”
But the problem Fresno’s Development and Resource Management staff is facing isn’t occurring in every Valley city.
Darlene Mata, Hanford’s community development director, and Jason Huckleberry, assistant community development director for Visalia, said they hadn’t heard of developers rushing to get projects approved before the economy turns.
“I don’t have a sense of that occurring,” added Christopher Boyle, Madera’s planning manager.
“I’m not hearing that, but they probably wouldn’t tell me that, either,” said Dwight Kroll, director of the Clovis Planning and Development Department.
“We’re not seeing any large influx of activity at this time. Were seeing steady activity — nothing unusual,” Kroll added.
It’s much the same for Fresno County.
“No applicant is no more intense than another,” added Will Kettler, the Development Services Division manager for the Fresno County Department of Public Works and Planning.
Mike Washam, associate director of the Tulare County Resource Management Agency, said there has been a steady increase in new construction projects over the last couple of years in his county, but no recent jump that appears to be associated with fears of a fast-approaching recession.
For his part, Geron, the Fresno developer, said he doubts developers are so worried the economy might soon take a dive.
“I think that’s absolute nonsense. The market is strong and should stay strong for years to come.”
And, Geron noted, the demand for new commercial buildings is strong, to the point that “Right now, we can’t get [them] built fast enough, and there are guys wanting to sign, five-, 10- and 15-year leases, so that tells you the market is strong.”