Depending on how long the federal government shutdown lasts, the uncertainty resulting from the federal furloughs could have serious impacts on commercial projects in the Bay State.
The most visible results that would likely be felt would be delays – and delays in commercial real estate projects can be costly.
Large construction projects can require approvals from the Environmental Protection Agency and Federal Highway Administration, among others. But if there’s no one around to review or approve permit applications, that could delay construction timelines, which could in turn impact a developer’s attempts to secure financing, said Robert Buckley, a senior partner with law firm Riemer & Braunstein in Boston. The same, he said, would result for projects awaiting federal housing or historic tax credits. If the shutdown persists, it will create a log jam of delays that will need to be cleared away.
"Delays create uncertainty, and uncertainty translates into cost, and it’s a spiral," Buckley said.
Some agencies, like the Federal Aviation Administration, are still feeling the effects of sequestration. When a developer wants to build taller than 12 stories in Boston, that project triggers FAA review, said Thomas O’Brien, head of the HYM Investment Group that is planning to redevelop the Government Center Garage in downtown Boston.
But many senior FAA employees are not working full weeks already, so if the shutdown continues, there could be delays in gaining those approvals, O’Brien said. That could throw off the timing of developers attempting to secure construction loans in the next month or two. Luckily, O’Brien is not currently in that position, he said.
Other areas that could be affected are federally funded cleanups of industrial waste sites in the state, said Ken Whittaker, a partner at the Bernkopf Goodman law firm in Boston. Without federal funding available to pay them, engineers and other contractors involved in those projects would likely slow the pace of their work, Whittaker offered. That, in turn, could delay site remediation and other progress made on the sites.
