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Execs: restrictions won't help economy or environment

From restrictions on carbon dioxide emissions to building limits -- government regulations are not helping businesses wade through sluggish times, executives said at a roundtable discussion at The Daily Transcript Monday.

Tom Brown, president of Sierra Pacific West Inc., said new mandates by the California Air Resources Board set to go into effect in April 2009 and April 2010 will require contractors to retrofit their equipment, costing millions of dollars.

“There’s a lot of businesses in San Diego that don’t even know this is coming,” he said, noting it will cost Sierra Pacific $55 million to update 146 pieces of equipment.

Charles Black, left, of CB Urban Development and David Susi of RSI Roofing take part in the Monday morning roundtable. Photo by Cyndy Sullivan

Because of the regulations, pride of ownership is leaving the industry and Brown said Sierra Pacific will likely look into renting expensive equipment when it comes time to replace it.

There is also the possibility that larger out-of-state contracting corporations, who have money to buy equipment with low emissions, could bid on the projects and eventually replace local construction businesses in California, said Ray Carpenter, of R.E. Staite Engineering Inc.

The construction executives believe that the CARB regulations will not do much to curb pollution, either.

“You’re already looking at an exodus of equipment,” Brown said, noting that the equipment is being sold to Arizona or Mexico, where wind will blow the diesel emissions into California.

Regulations are more than just emissions. Charles Black, of CB Urban Development, said numerous city regulations prevent him from developing.

While he may be able to find competitive rates from a bank, he runs into roadblocks because residents don’t want high-rise or high-density employment centers next to their homes, even if the buildings are well-planned, Black said.

Regulations are frustrating Paul Tryon, CEO of the Building Industry Association, said, noting that change needs to come through the political wires. That doesn’t mean that however, that members of the construction industry cannot lobby for change.

“We’re going to have to do a lot more in San Diego than wish we could arrive there,” he said.

Also participating in the roundtable was Rick Hoffman, the president of the Coldwell Banker Residential Brokerage in the San Diego/Inland Empire.

One government regulation he commended was the new FHA loan limits.

“If someone would have asked me five years ago if I would process FHA again, I would have said ‘no chance,’” Hoffman said.

Now, with affordability up 25 percent, and home prices down 30.5 percent from last year, according to the San Diego Association of Realtors, due to a high amount of foreclosures, he said his Temecula office is doing three times as much business as it was a year ago.

He said he believes this market is beginning to heal itself, so much so that he just purchased a home.

He even believes in Fannie Mae (NYSE: FNM) and Freddie Mac (NYSE: FRE).

“I believe they’ll survive,” Hoffman said. “I believe that they’ll become a better quasi-government organization.”

Send your comments to Natalie.Wardel@sddt.com

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