Economy a dilemma for city leaders

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If Grand Junction city leaders decide against asking voters for a second time to approve a sales-tax increase to fund new police and fire buildings, the primary reason would be seemingly obvious.

The economy.

The worst financial conditions on the Western Slope in at least a quarter century have put people out of work, dried up the real estate market and new construction and caused shoppers to slash discretionary spending.

But even as City Council members say they are mindful of the struggle of local businesses and residents, some of them point to a reason to consider pursuing another ballot measure this fall.

The economy.

The cost of building materials has fallen significantly. Contractors starved for jobs are willing to work for much less than they were a couple years ago, when subdivisions and shopping centers were popping up everywhere and demand was high.

This is the dilemma city officials face: Ask for money now when most residents have less money but project costs are cheaper, or ask later when bank accounts and building price tags rebound.

“I think the economy is a big consideration, but it’s a double-edged sword,” City Councilman Gregg Palmer said. “On one hand, there are some real savings to be had if we built it right now.

This project would put $40 (million), $50 (million) $60 million into the community right now. That would be a great local stimulus. Things will get more expensive as we wait. From an economic standpoint, it really argues to build it right now.”

Merv Heinecke, chairman of the board of directors of the Western Colorado Chapter of Associated Builders and Contractors, agrees.

“Now is the time to do it,” he said, claiming the city would receive a lot of interest if it secured funding, hired a general contractor and broke the project up into several parts. “They would get a great project.”

Heinecke said in the past nine months construction labor wages have dropped 15 to 30 percent, while the cost of materials has fallen 15 to 35 percent.

He said when the recession began to spread into western Colorado last year, roughly half of the contractors in the Grand Valley tried to blunt the effects by cutting wages. It was something they could afford to do because energy companies were laying down rigs and, as a result, workers were no longer fleeing for higher-paying jobs in the natural gas fields.

When it became clear to some that that wasn’t enough, half of those who slashed wages began laying employees off, Heinecke said.

“There’s a huge reduction in forces,” he said. “It’s not just new start-ups.”

Grand Junction Public Works and Planning Director Tim Moore said the price the city is paying for building materials is down virtually across the board this year compared to last. That, coupled with an extended lull in building, has paid dividends for the city in terms of savings.

The city realized savings of more than $700,000 on the most recent project it contracted out, the first two phases of a three-phase project to extend 29 Road over the Interstate 70 Business Loop and Union Pacific Railroad tracks and create an intersection.

City engineers estimated those two phases would cost $3.91 million. Instead, the city awarded $3.16 million in contracts to two contractors.

Moore also noted five contractors bid on each of the two phases. A year or two ago, the project might have drawn only two or three bids.

“We had great prices, we had great competition,” he said.


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