As we look at the Macro Consequences of Florida’s growth in the next two to three decades, it is easy to get lost in the very comfortable idea that there will be sufficient profitable work for every construction company domiciled in Florida. As true as that may be, the unintended consequences of the hyper growth we are facing will be the extreme changes that will have to take place in the construction entities that now play a leading role in Florida infrastructure projects.
Looking at the potential growth (Florida’s population could double in the next 25 years), there is no way that the current construction infrastructure that is available for Florida’s growth could even marginally undertake the multi-billions of roads, water, sewers, electric grid upgrades, public and private institutional structures, etc. that will have to be built to accommodate the ‘hoards’ that are looking to make Florida home. The additional available work will bring into our market National, International, and Regional competitors which will create additional competition on all levels and eventually make our great local contractors who have been “big fish in a relatively small pond” – “little fish in a huge pond”. Not all bad, but certainly not all positive.
Those of us that are associated with the construction or real estate market should be very grateful. It has been projected that Florida will grow more in raw population (number of new bodies calling Florida home) than any other State in the Union in the next 20-25 years. Florida is the third most populated state with approximately 23 million people behind California’s approximately 38 million and Texas with approximately 27 million. In the next 25 years, our population will not likely catch either California or Texas, but the gap will definitely be narrowed.
Right now, Florida has an average of more than 800 people moving to the state on a daily basis. The pace is expected to accelerate in the next two decades. Demographic projections have suggested that somewhere between 15-30% of all “Baby Boomers” will end up retiring in Florida. There are 74.6 million “Baby Boomers”, so if 30% move to Florida, that alone will almost double our population. For the next two to three decades, Florida will be the best construction market in the country, possibly the world.
Never has so much been given with so little information or effort…as part of the CARES Act, Congress has enabled the SBA to issue 100% federally guaranteed loans to businesses and entities in operation on February 15, 2020. These loans have been given to small business concerns, non-profits, individuals operating as sole proprietorships, eligible self-employed individuals and Tribal concerns through participating banks with no credit risk to the banks.
Considering the enormity of the project and related processes, the SBA has done and continues to do an outstanding job of working with the participating banks in establishing the processes for determining and getting the money in the bank account(s) of literally millions of companies under what is being called the PPP (Paycheck Protection Program). The maximum loan is the average monthly payroll costs incurred during the 12-month pre-funding period multiplied by 2.5 (250%). The maximum loan is around $10 million. The terms and conditions are historically unheard of for government loans (grants):
- NO GUARANTEE – No personal guarantee required.
- NO COLLATERAL REQUIREMENT NON-RECOURSE – The SBA has no recourse against any individual shareholder.
- NO FEES – The SBA will not collect a fee from the recipient of the loan.
- COMPLETE PAYMENT DEFERMENT RELIEF of principal, interest and fees for a period of not less than 6 months and not more than a year.
- FOR AMOUNTS NOT FORGIVEN, the maximum loan term in 10 years, the maximum rate is 4%, zero loan fees and no prepayment fees.
Based on the rate in which the economy seems to be rebounding, the PPP has served us all very well.