WASHINGTON, DC-As Monday wears on, there is little sign that sequestration will be averted at the end of the week.
While this falure to act will result in straight-across-the-board cuts to virtually all government agencies, for the commercial real estate industry the cuts will mean a $4 billion reduction this year in federal construction spending. That is according to a recently released report by the Associated General Contractors of America, “Sequestration and Its Possible Impacts on Construction.”
Earlier today we reported on the overall impact the cuts will have. We are updating our story with more statistics on exactly where the construction spending cuts will be made in select agencies. The charts that appear throughout this story are new and provided by the AGCA.
The original story appears below:
WASHINGTON, DC-The General Services Administration is exempt from sequestration–but that doesn’t mean the commercial real estate industry won’t be impacted if the cuts go into force at the end of this week, as many people expect that they will. “It will be more of an indirect impact, but there will definitely be a significant impact with sequestration,” Jimmy Christianson, director of Government Affairs of the Associated General Contractors of America, tells GlobeSt.com. The sequestration threatens to cancel an estimated $4 billion worth of publicly-funded construction projects this year, according to the AGCA. To put it another way, in any year there is generally between $100 billion to $125 billion in federal construction spending, Christianson says. The sequestration is calling for about 4% in federal construction cuts.
The projects span the spectrum of government agencies, according to AGCA, from military housing ($1.5 billion) to a $135 million reduction in drinking water and wastewater facilities and infrastructure investment.
Affordable housing will take a hit as well, due to cuts scheduled for the Department of Housing & Urban Development. HUD will lose losing $194 million, or 5.9% of its Community Development Fund; $57 million or 5.7% from its Home Investment Partnerships Program and $107 million, or 5.8% from its Public Housing Capital Fund.
The Community Development Fund in particular will hurt affordable housing; it provides assistance for low-income community revitalization initiatives by funding the Community Development Block Grant program that provides annual grants on a formula basis to cities, urban counties and states.