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Housing bust has damaged wider LI economy

1. Economy hammers LI building The drop in

1. Economy hammers LI building
The drop in new-home construction reached deeply and widely into communities across Long Island, shrinking the building industry and damaging many other parts of the economy, according to the newest U.S. Census Bureau data. The impact is far-reaching. Towns and villages lost revenue from building fees as well as from taxes. Developers and subcontractors faced layoffs or closing. Businesses ranging from furniture-makers and landscapers to stores and restaurants suffered. Although building slowed dramtically, it didn't stop. LI Builders Institute preisdent Ira Tane stands in the yard of a project in Melville. (Dec. 15, 2010) Photo Credit: Newsday / J. Conrad Williams Jr.

The dramatic drop in new-home construction that swept across the region in the last several years reached deeply and widely into communities across Long Island, shrinking the building industry and damaging many other parts of the economy, according to the newest U.S. Census Bureau data.

An analysis of the American Community Survey, released earlier this week, showed new-home building in Suffolk County fell 75 percent comparing the 2004-to-2008 period with the 2005-to-2009 period. In Nassau, it dropped by 61 percent.

And in some communities once considered the center of Long Island's building boom, including Smithtown and Brookhaven, construction nearly halted after 2005.

"There's never been anything like this," said Bob Weiboldt, a consultant and former executive vice president of the Long Island Builders Institute. "This is the worst recession I've ever seen."

Builders and other construction industry experts attribute the drop-off mostly to the overall economic downturn, as it became more difficult to get credit to build new homes and more difficult for potential buyers to obtain mortgages. The lack of available credit and, in some cases, complicated local approval and permitting processes, hurt the industry further, said Ira Tane, president of Benchmark Home Builders in Huntington Station.

While evidence of the construction decline was visible at the time, the extent of the drop revealed in the survey data surprised many industry and local government officials.

"Basically, home building fell off a cliff all throughout Long Island," said Brookhaven Town Supervisor Mark Lesko. "And as the town with . . . the most available developable property, it particularly hit Brookhaven hard."

Mortgage tax revenue for the town fell from $37.6 million in 2004 to $10.6 million in 2010, Lesko said.

The largest percentage drops in home building occurred in Smithtown and Huntington, the census data showed. But for number of units, nothing compared with Brookhaven, which saw an estimated 12,485 housing units built from 2000 to 2004, and just 2,578 from 2005 to 2009.

Manorville, once the epicenter of single-family home growth in eastern Suffolk, saw new construction drop from an estimated 958 units from 2000 to 2004 to just 10 after 2005, the data showed.

The impact is far-reaching. Towns and villages lost revenue from building fees as well as from taxes. Developers and subcontractors faced layoffs or closing. Businesses ranging from furniture-makers and landscapers to stores and restaurants suffered.

"It's going to ripple throughout the economy," said Steven Klar, president of The Klar Organization, an East Meadow-based developer. Weiboldt pointed to a 2006 Long Island Builders Institute study that reported new housing and its ripple effects made up 13 percent of the Island's overall economy. "Now, we're probably a tenth of that," Weiboldt said.

Some builders said a perceived anti-development mentality and a tough approval process remain barriers to an industry recovery. Others said they're trying to focus construction on communities with train stations or those close to the New York City border.

Builder James Neisloss, a co-developer with Meadowood Properties in Islandia, in the past worked in Manorville and other growing Suffolk County communities. Now, he's sticking to Nassau hamlets closer to New York City where the housing bust had less of an effect.

Yet many builders are still waiting for looser credit, an improved job market and buyers who can close the deal. Even then, building won't return to its heights, they said.

"There was an extreme bubble, and now there was an extreme burst," said Neisloss, who has been building in Rockville Centre and West Hempstead. "It has to equalize somewhere in between."

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