Las Vegas Review-Journal - Business

Last year's economic downturn crippled local resort and entertainment development activity, causing projects to be canceled, delayed or deferred.

"Southern Nevada's economy is dependent upon discretionary spending," said Keith Schwer, director of the Center for Business and Economic Research at the University of Nevada, Las Vegas. "In an economic downturn, that is the first type of spending that will be cut back."

Construction and design were once the state's second-largest employer behind hospitality, generating 150,000 jobs and $14.7 billion in economic activity, reports Applied Analysis, a Las Vegas-based business advisory firm. It contributed $5.1 billion in wages and salaries annually.

Today, Las Vegas' design and construction industry has an unemployment rate of 65 percent; in Reno, it's 50 percent and growing, a new statewide survey conducted by the Nevada chapter of the American Institute of Architects shows. The nonprofit trade group and its members have launched a campaign aimed at steering much-needed stimulus money toward design work. Contractors and landscape architects, interior designers and engineers have joined the effort, including local chapters of the Associated General Contractors and American Council of Engineering Companies.

"Construction is a major part of our economy that we need to get back on track, gaming alone can't do it," said Larry Carroll, managing principal of Poggemeyer Design Group, a Las Vegas-based planning, engineering and construction services company. "The president's stimulus package put funds in for shovel-ready projects, but due to the time constraints, no attention was put into the design phases. Projects can be in the design phase for years. There isn't a lot in the pipeline for design right now."

The American Recovery and Reinvestment Act's "shovel-ready" projects are designed and ready for construction. It creates an immediate, albeit short-lived, economic benefit. Yet, many of those federal "shovel-ready" jobs entail very little construction; they include such things as landscaping, light-bulb replacement, digital cable boxes and fire trucks. Greater, more sustainable long-term job creation can be realized through design investment, the Nevada chapter of the American Institute of Architects said.

"Contractors know that if we aren't drawing, they aren't building," said Windom Kimsey, principal of Tate Snyder Kimsey Architects, a Henderson-based architecture practice. "Conceptually, we feel it's a more sustainable economic approach that puts a lot of people to work for a lot less money."

Architects work with owners to develop a project from concept to reality. The lengthy undertaking turns a raw idea, a sketch, into a finished office or home, school or church, theater or hotel. Architecture is a multifaceted, multilayered profession with specialized disciplines that define a development's function and form, scale and size, among other things. Architects often hire a cadre of engineers, designers and consultants to formulate a finished building's blueprint.

"For every $100 million of capital funds invested in our state's building infrastructure, we create 6,000 jobs for Nevadans. It's a domino effect," said Las Vegas AIA chapter President Sean Coulter, who also serves as principal of Las Vegas-based design firm Pugsley Simpson Coulter Architects. "Typically, however long it takes to build a project is how long it takes to design it.

Architecture firms now have a three- to six-month backlog of design work, while engineers have even less left to do. The Nevada chapter of AIA, which combines branches in Las Vegas and Reno, launched its "Pencil Ready Projects" program earlier this year to counteract that trend. Industry unemployment is expected to soar once MGM Mirage's $8.5 billion CityCenter development on the Strip opens this December.

The seven-building project, on 67 acres, has employed hundreds of contracting companies, designers and architects for years. CityCenter's construction payroll reportedly exceeded $3 million per day, industry sources said. Nothing exists to take its place.

"Once CityCenter is complete, the construction industry will be at a standstill until design projects are completed by architects," said Eric Roberts, vice president of Las Vegas-based architecture and design company SH Architecture. "By overlooking the lack of work available to architects currently, the construction unemployment numbers will be exacerbated by a lack of 'constructable' projects to fill the future void."

The credit crisis has flooded the private commercial market with empty office and retail space and eliminated the need for new design and construction. In addition, the state capital improvement program (CIP) was cut by more than two thirds during the 2009 Legislature from $600 million to less than $200 million. The 2010 state budget has indicated a CIP program of $9 million, which is barely enough to cover maintenance costs of existing buildings.

"To balance the state's budget, funds were taken from cities and counties around the state through hold backs in the ad valorem tax, severely limiting the local availability of work," Roberts said. "Local governments should establish performance goals for new construction within their jurisdictions that focus on smarter design."

AIA leaders earlier this year met with Nevada's congressional delegation and state legislators to explain the long-term effects of unfunded design. They're lobbying to have projects moved from the state's existing CIP into the stimulus package. Money freed in the CIP could be used for new long-term projects that include design work with a concentration in renewable technologies and green building.

"Even a modest design investments used wisely could yield sizable results," said Mike Del Gatto, principal of Carpenter Sellers Architects, a Las Vegas-based architecture and design practice. "Money spent doing retrofits on existing public buildings could make them operate more efficiently, reducing electrical bills and waste while generating economic activity."

Every dollar spent in commercial and institutional energy retrofits employs nearly three times as many people as residential projects, the AIA says. These projects can entail doing simple things like replacing turf with drought-tolerant plants, installing low-flow plumbing fixtures, adding shading devices or upgrading mechanical systems. Yet, much of the federal stimulus money is geared toward housing projects that yield little economic growth as opposed to renewable investment, AIA argues.

Among other suggestions, the AIA proposes creating a regional clearinghouse that could review and rank projects based on greatest need and highest impact.

"With shovel-ready, the state can get jobs done in a year, but after that there's nothing. Most of those are road projects with very little construction," Coulter said. "There's nothing on the boards in terms of design now, which means contractors will have nothing to build after the stimulus is over. We're trying to get the word out in order to educate and raise awareness."

Contact reporter Tony Illia at tonyillia@aol.com or 702-303-5699.