Is Lack of Financing Hurting Your Projects? (The Angle)

Is Lack of Financing Hurting Your Projects?

Since the economic crisis exploded onto the front page last fall, the biggest issue facing policymakers has been ensuring that credit is available for businesses, homeowners, and others looking for capital. The Troubled Assets Relief Program (TARP), created by Congress in late 2008 to buy up so-called “toxic assets,” was quickly re-oriented toward injecting liquidity into financial institutions so they would lend again.

Now, nine months later, many banks are healthier, and some are even repaying back their TARP money – but are they lending again?

According to last March’s Architecture Billings Index survey, eight in 10 design firms reported that credit availability was more restrictive in the past. The result is that projects on the board are being stalled, delayed, or outright canceled.

The AIA is looking at proposals to bring to the Treasury Department, the Federal Reserve, and Congress to free up capital for large projects, recognizing that every $1 million spent on design and construction creates 28.5 full time jobs.

We want to hear from you: Have your projects been sidelined because your clients can’t access capital? What kinds of projects and how large? How long have they been delayed? And what is the impact on your bottom line?

Posted by Hannah Wesolowski on July 30, 2009 6:26 PM | Permalink

Comments (6)

alan lampert:

We need to not be so shortsighted and self serving. Let the economic cycle run it's course.

Posted by alan lampert | July 30, 2009 9:23 PM

Posted on July 30, 2009 21:23

Phil Kabza, AIA FCSI:

Our local school district's $400M bond issue is stalled due to the county's inability to secure bonds at a reasonable rate. The culprit? Country sales tax receipts are down (due to reduced retail activity) and country property tax revenues are down (due to foreclosures and delinquincies). Would a Federal guarantee program undo the logjam? Many projects are ready to bid.

Posted by Phil Kabza, AIA FCSI | July 31, 2009 7:52 AM

Posted on July 31, 2009 07:52

Christopher Kirk:

We have a $70-million new replacement regional hospital project in a small town outside Seattle. Last fall the economic crash caused the national non-profit organization that owns the facility to drastically slow down project funding. While the project has not been canceled, the reduced funding has added a year to the construction schedule, $4-million to the cost, and caused us to lose some key team members.

Posted by Christopher Kirk | July 31, 2009 10:03 AM

Posted on July 31, 2009 10:03

Bellomy:

Last year, our two large mixed-use projects in Florida were put on hold for lack of funding. Same happened to one in NE Texas and one in SE Texas, both still on hold. A large mixed-use project in South Texas has the same status. Our designed and "documents complete" county jail project sits in the drawer awaiting funding. Public schools are keeping us afloat as we wait out the recession. We shed 40% of our workforce and reduced all other salaries in order to maintain. We recently rebid a public project first bid last October resulting in a 25% savings to the client. Subcontractors are hungry.

Posted by Bellomy | July 31, 2009 10:34 AM

Posted on July 31, 2009 10:34

Randy:

What hasn't been stalled? In Arizona, everything from retail/commerical, medical, hospitality, schools, etc. have almost stopped. There's a few projects under construction, but next to nothing on the boards. My firm, dropped 70% of employees, dropped everyone else's salaries down 35% to 50%. Over the last year (starting April 08) we have lost, due to funding, over 40 projects totaling over a million dollars in fees. Since I sit on the Planning and Zoning Board in one city, all future large projects are on hold....1 billion dollar resort by an airport; multi-billion dollar mixed use project. State funds are gone except for small, or extremely small projects. Schools can't get bonding, and cities have lost sales tax, property tax, etc. due to forclosures and people leaving the state. Yes, it is bad here. What we don't have now, the contractors and suppliers won't have in 6 months...looks like a death spiral!

Posted by Randy | July 31, 2009 12:04 PM

Posted on July 31, 2009 12:04

Lynn Molzan:

In our work in the national academic library market, close to 85% of potential projects that we are tracking have been postponed or halted altogether. AIA's efforts in promoting "green" architecture are commendable, however what we need are institutional clients who are ready to hire architects to design, "green" or otherwise.

Posted by Lynn Molzan | August 5, 2009 4:14 PM

Posted on August 5, 2009 16:14

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Is Lack of Financing Hurting Your Projects?

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