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Political issues, controversy continue to dominate sector in 2012

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The San Diego construction industry grew in some areas, but also took a step back in others as increased employment and alleged contracting corruption highlighted the first half of 2012.

Employment

According to the latest construction employment numbers released by the Bureau of Labor Statistics, May had 55,700 workers, an increase of 1,500 jobs from April, and 900 more than May 2011.

The 55,700 workers in May were the most all year and the highest since December 2011, when there were 55,900 jobs.

Ongoing projects

Ongoing projects at the San Diego Community College District, the San Diego Unified School District and Sweetwater Union High School District — where each had construction bond programs passed by voters to pay for renovations and new facilities — have a major part of the local construction employment.

There are also large construction projects taking shape at the San Diego International Airport with the expansion of Terminal 2; the new central library in the East Village; the San Diego County Operations Center in Kearny Mesa; the new federal building in downtown; the Mercado Del Barrio mixed-use project in Barrio Logan; Palomar Health’s new hospital in Escondido; and a new hospital at Marine Corps Air Station Camp Pendleton.

In the public sector, two big pending projects are the approval of the Convention Center expansion in April and the financial agreement for the Chula Vista Bayfront Master Plan in May.

Housing market

New construction in the residential sector has been harder to gauge this year, with the March closure of the Burbank-based Construction Industry Research Board (CIRB) — which reported construction permits pulled — due to budget constraints.

The last numbers reported were in February and had 212 total housing permits pulled in the San Diego-Carlsbad-San Marcos metropolitan area. There were 156 permits for single-family homes and 56 permits for multifamily housing.

But updated monthly data on new housing construction may be coming back, as the California Homebuilding Foundation has reached an agreement with the Building Industry Association of Southern California (BIASC) to take over the publishing of statewide construction permits that are pulled.

The BIASC said data will only be released to subscribers, and monthly reports will be compiled and published by the California Homebuilding Foundation “in a timely manner.”

So far, the California Homebuilding Foundation has not made construction permitting data available to the public or media.

Corruption and courts

On January 4, the San Diego County District Attorney’s office brought forth criminal charges against current and former Sweetwater Union High School District officials and a contractor hired by the district to oversee Proposition O’s $644 million construction bond measure.

Contractor Henry Amigable, along with former Sweetwater Superintendent Jesus Gandara, current school board members Pearl Quiñones and Arlie Ricasa, and former 16-year board member Greg Sandoval, were charged with 26 felonies that include bribery, perjury, filing false instrument, influencing an elected official and obtaining a thing of value to influence a member of a legislative body.

The District Attorney said Amigable spent more than $10,000 in gifts, meals, wine-tasting outings, sporting events, hotel accommodations and beauty pageant fees since 2008. In some cases, these gifts reached more than $1,000 per outing.

Amigable initially pleaded not guilty to these charges, but on March 21 he changed his plea to guilty after the DA dismissed the initial criminal charges and instead charged him with violating education code section 35230, which reads in part: “The offering of any valuable thing to any member of the governing board of any school district with the intent to influence…is a misdemeanor.”

Gandara, Quiñones, Ricasa and Sandoval all pleaded not guilty in March.

On May 11, the DA’s office added bribery charges to the four current and former Sweetwater Union officials, which the DA said took place between May 2007 and April 2010. All four pleaded not guilty to the new charges.

The DA’s office has called this on-going case the largest instance of public corruption of its kind.

Project Labor Agreements

On June 5, city of San Diego voters passed Proposition A, which bans Project Labor Agreements on city projects, except when a project will receive state or federal funding. The measure also now requires the city to post all construction contracts awarded at $25,000 or more online. The measure passed with 58 percent of the vote.

On June 13, the Southwestern College Governing Board voted 4-1 to place a PLA — titled the Community Benefits Agreement — on Proposition R projects. The school will now negotiate with labor unions on a contract for the remaining work that either have not yet been bid out or have to be rebid on the $389 million Proposition R construction bond measure, passed by voters in 2008,

Among the developments is the Corner Lot Project, which lost its architect, construction manager and the Proposition R program manager due to affiliations with Amigable. The $50 million project calls for a 9.4-acre vacant lot at the main college campus to be transformed into several buildings that would house classrooms, a new food court, offices, a new bookstore and a campus police station.

Wal-Mart and Sherman Heights

In March, Wal-Mart Stores Inc. (NYSE: WMT) announced its “neighborhood market”-style stores would be coming to San Diego County and other parts of California. These neighborhood markets are one-third the size of Wal-Mart’s big box stores.

The first one broke ground in Sherman Heights at the former Farmers Market building between 21st and 22nd streets. The building is being renovated to be an approximately 45,800-square-foot retail and grocery market storefront, with a minimum of 15,000 square feet of “supermarket” use and 106 parking spaces across the street.

On April 17, shortly after construction started, interest and concern over the project emerged when Sherman and Logan Heights residents noticed demolition of the San Diego Farmers Market Building. They said the plans only called for remodeling the inside of the old structure and not a full demolition.

On April 18, the San Diego City Development Services and Neighborhood Code Compliance staff visited the site to respond to community concerns that demolition was being done without a permit. The city’s copy of the approved plans was compared with the plans on site, and both were found to be identical.

The Coalition for Safe and Healthy Economic Progress, a neighborhood overseer, filed a lawsuit against Wal-Mart asking for a temporary restraining order to halt construction. Two separate judges ruled against the coalition. Construction is ongoing and is slated to be completed this fall.

At the beginning of May, Wal-Mart announced it will bring a second neighborhood market storefront to the county, this time in La Mesa. The plan is to renovate a 39,000-square-foot vacant building at 8820 Grossmont Boulevard. No public opposition has been made at this time.

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