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Energy Crisis May Put a Crimp in Building

May 20, 2001

Article by Emmet Pierce

The state's ongoing energy crisis is making itself felt in the building industry.

A shortage of power and rising costs could force California builders to postpone or even shelve some housing projects, according to a group of real estate executives who met with business and political leaders recently in Santa Barbara. The April 29 and May 1 discussion of economic, real estate and environmental issues took place at a retreat hosted by the University of Southern California's Lusk Center for Real Estate.

A survey of conference participants found that the prospect of energy shortages and blackouts was among the most serious problems facing construction businesses.

The ability of builders or developers to supply electricity to subdivisions or commercial projects is becoming as important an issue as providing roads, schools and other infrastructure, said Stan Ross, the Lusk Center's chairman.

The availability of power also has become a factor in deciding where to invest in real estate, officials said. Those at the retreat offered a variety of solutions for solving energy problems. They ranged from a state takeover of power plants to a free market for the purchase and sale of electricity.

According to Stuart Gabriel, executive director for the Lusk Center, the energy shortage is closely tied to California's decline in infrastructure spending over the past four decades. He noted that the state is experiencing "explosive population growth" that could worsen the problem.

"We need to address our pressing infrastructure problems -- not only power but water -- if California is to maintain its economic competitiveness," Gabriel said.