Where is Construction on Pause due to COVID-19?

By: , Editor

Published on: Mar 26, 2020 | Updated on: Mar 29, 2020

Is construction an essential service? It depends on your state and local government.

One of the great debates happening currently due to the COVID-19 outbreak is what constitutes an essential service that can remain in operation during stay-at-home rulings. With no universal federal ruling in place, cities and states are scrambling to determine whether construction is essential.

On March 18, the U.S. Chamber of Commerce sent a letter to the White House asking for clarification on the terms "essential infrastructure" and "essential businesses and services." A similar letter from the Association of General Contractors requested that construction workers be deemed as essential. While infrastructure and public works construction make sense to be considered essential, whether housing construction is essential is currently up for debate.

As with other COVID-19 rules, a mixture of city and state executive orders and rulings create a bit of a complicated patchwork as to what is and is not allowed to take place. One note about much of the information below is that it applies to existing projects currently under construction. With so many local government and city planning offices closed or not fully staffed, obtaining necessary permits is extremely complicated right now and so most completely new construction projects are essentially at a standstill.

Cities and states debate what is essential

Boston was one of the first cities to suspend construction activity, issuing an order on March 17. Boston Mayor Marty Walsh announced that only emergency work would be allowed for at last two weeks. The neighboring city of Cambridge also joined the moratorium and will allow construction only with permission from either the Commissioner of Inspectional Services or the Commissioner of Public Works. So far the governor of Massachusetts has not called for a statewide halt to construction.

Pennsylvania Governor Tom Wolf has taken the stance that construction is nonessential and has stopped all projects. Businesses working on all non-life-sustaining projects are required to shut down. Companies that are working on life-sustaining projects can apply for a waiver. The rules have led to confusion about what construction sites would fall under the rubric of life-sustaining. Pennsylvania is the only state where construction is completely shut down.

For some areas, construction goes on as usual

In California, Gavin Newsom's executive order on March 19 deemed construction an essential service. The State Building and Construction Trades Council of California has advised builders to add sanitary facilities and deep clean job sites as well as prevent group gatherings and practice social distancing as much as possible. Six counties of California's Bay Area are under shelter-in-place rules. Construction is allowed for housing projects there, but many commercial construction sites have paused building.

New York City has been one of the areas hardest hit by the coronavirus outbreak. Mayor Bill de Blasio has indicated that the city is working within Governor Andrew Cuomo's orders, which allow construction. However, some industry sources have said that some projects are considering pausing work for the time being. Update: as of March 27, New York state banned all but non-emergency construction.

If construction is essential, does this include the businesses that serve the construction industry? The Northeastern Retail Lumber Association has been lobbying to have lumber and building materials businesses classified as essential services during this time period. Again, what is essential varies by state. Pennsylvania has classified companies that supply building materials as essential but wholesalers and manufacturers were deemed nonessential.

With state and local rules sometimes at odds with each other, it's hard to know what to follow. We are not alone in this. In the U.K. Prime Minister Boris Johnson's lockdown orders allow construction workers to be on job sites. However, London Mayor Sadiq Khan has said that he does not think construction sites should be open.

As outbreak numbers continue to shift, rules may change again. Right now, construction is deemed relatively safe because workers are mostly outside and can maintain safe social distance. It would only take a report of an outbreak at a site to change that picture.

Get the 'Dirt on the Real Estate Market

Are you looking for the next hot real estate market? Want to know how new rules and regulations could impact your next home purchase or real estate investment? Would you like to find out which improvements to your property will get you the most bang for your buck? We cover all these things and more in our newsletter, Paydirt.

Sign up here to get our best insights delivered to you.

The Motley Fool has a disclosure policy.

Popular Articles On Millionacres