The Baton Rouge and Lake Charles areas will remain the state's construction hotspots for at least the next two years, but a recent $2.4 billion federal settlement with New Orleans could mean "unprecedented" infrastructure work, panelists at the South Louisiana Construction Economic Forum said Thursday.
Economist Loren Scott moderated a wide-ranging discussion by panelists Robert Boh, president of Boh Bros. Construction Co.; Steve Carville, chairman of Milton J. Womack Inc.; Saun Sullivan, senior partner of DSLD Homes; and Stephen Toups, senior vice president of Turner Industries Group. The panelists touched on a number of topics including the potential impact of President-elect Donald Trump's administration on the industry, the August floods' impact, increasing the state's gasoline tax to fund major infrastructure improvements and what percentage of the $80 billion megaprojects announced will actually be built.
The forum was hosted by the Construction Financial Management Association and the Pelican Chapter of Associated Builders & Contractors Inc.
"Nobody really has any idea what's going to happen, what's coming down the pike," Sullivan said of Trump's presidency.
However, homebuilders are already facing a workforce shortage, and what they need is a visa program for Hispanic workers, not the removal of millions of those laborers as Trump proposes, Sullivan said.
Toups said the immigration policies won't have much effect on commercial construction, which is much more tightly regulated than home construction, and that Trump will be good for business.
The businesses that drive the economy will have "a fighting chance" under the new administration, Supreme Court and leadership at federal regulatory agencies, he said.
Carville said there's been a short-term spike in materials and labor costs since the flood, but he expects that to level out in three to six months.
Sullivan said the flood hammered the area's balance sheet. The money that people would have spent on groceries and other goods will go to repair their homes, he said. It will take a long time to make those repairs because people don't have the money to do them.
Boh said the flood had no impact on commercial construction in New Orleans, which remains very busy.
There are a number of hotels and condominiums underway, he said. Louis Armstrong New Orleans International Airport has announced a new $650 million terminal. The Federal Emergency Management Agency's settlement with New Orleans could generate "an unprecedented" amount of work.
The city and FEMA finalized a $2.4 billion settlement for damage to the city's sewer, water and drainage lines during Hurricane Katrina. In 2017, New Orleans plans roughly $871 million in public construction projects.
All of the panelists said Louisiana needs to find a solution to fund its infrastructure needs, with a higher gasoline tax the most likely solution expected from the governor's Task Force.
Carville said he doesn't like taxes, but Louisiana's is antiquated — it has been 20 cents per gallon since 1989 — and needs updating.
"We need to do something. In this community, we're choking ourselves to death," Carville said. Baton Rouge alone needs a loop and at least two Mississippi River bridges to solve problems 40 years in the making.
Toups said it will be difficult to convince voters to support more taxes, especially given state government's past poor management of funding. Scott said voters might support a tax increase if they know which projects will be funded. That's what the state did in 1989 to add 4 cents to the gas tax.
The panelists and Scott agreed that Baton Rouge and Lake Charles will remain the biggest beneficiaries of proposed megaprojects.
Toups said he expects commercial construction to peak in 2018, with double-digit increases in employment compared with 2016 levels.