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Patrick pledges up to $200m to jump-start construction

Officials say state funding for 50 projects will help to create jobs, spur private investment

GREGORY BIALECKI The state’s top development official says the aid will result in $1 billion in additional private investment. GREGORY BIALECKI
The state’s top development official says the aid will result in $1 billion in additional private investment.
By Casey Ross
Globe Staff / May 6, 2010

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Governor Deval Patrick will spend up to $200 million in state funds this year to get 50 building projects around Massachusetts off the ground, hoping the money will lead to thousands of jobs for the moribund construction sector and significant additional economic activity.

The money, a mix of already budgeted and new funding, will support construction of hundreds of new homes, stores, and offices.

Among the projects are a 17-acre shopping complex in New Bedford, a new medical office building in Hingham for South Shore Hospital, and an expansion of offices at MathWorks, a Natick software maker.

Patrick’s chief economic development aide, Gregory Bialecki, predicted the government aid will result in an additional $1 billion in spending by private developers.

“This is about trying to create jobs in the construction industry, which has been the most heavily affected sector in this downturn,’’ Bialecki said.

“The statistics are scary not just because of the level of unemployment, but because of how many people have been unemployed for six months or more.’’

Employment in the construction sector has fallen by 42,000 jobs, or 29 percent, since it peaked in the spring of 2006. And joblessness in some career fields has been as high as 30 percent for more than a year, according to government statistics.

“People are just waiting for work, which is really discouraging,’’ said Mark Erlich, president of the 22,000-member New England Council of Carpenters. “Every project that comes up right now is like a little piece of gold.’’

Some economists said, however, that Patrick’s initiative will have a limited impact and suggested the funds would be better spent trying to get businesses to expand in Massachusetts and fill the large amount of vacant commercial space already available here.

“They are targeting the symptom rather than the disease,’’ said Gus Faucher, director of macroeconomics for Moody’s Economy.com. “The disease is really the underlying job losses in financial activities and other sectors. Because of that, demand for commercial real estate is weak.’’

But Patrick administration officials said they want to focus on hard-hit con struction workers as well as on communities where residents have been staring at stalled construction sites and empty storefronts.

In Gardner, for example, the state will spend $345,000 for a parking lot at a new office building that will replace a blighted industrial complex. While officials conceded the project is not a major job generator, they said it will replace an eyesore with a new building in a very visible part of the community.

“To the people there, it’s not just that the site is getting built on,’’ Bialecki said. “It’s a sign that the recovery is coming.’’

But evidence of a recovery has been slow to come in some of the larger private developments funded by the Patrick administration, which has spent tens of millions on large, mixed-use projects in Somerville, Weymouth, Westwood, and Revere.

At Assembly on the Mystic in Somerville, for instance, work underway on roads and other infrastructure has not yet led to construction on any buildings. The situation is similar at SouthField, a minicity proposed on land once occupied by Naval Air Station South Weymouth.

These large projects can’t get started because most banks still won’t lend more than $50 million.

Real estate specialists said that problem is unlikely to ease anytime soon, as a large surplus of vacant property and falling rents have made it harder to justify the cost of new construction.

“Until we see a big jump in employment, there isn’t going to be much demand for additional office space,’’ said Ken Simonson, chief economist of the Associated General Contractors of America. “Overall, the climate is very difficult for any developer trying to finance construction.’’

Instead, the Patrick administration is focusing on more modest projects. Eight are already under construction, including a $12 million complex of 49 homes in Wareham and Riverside Landing in New Bedford, a $21 million shopping complex to be anchored by a Market Basket.

Others to begin soon include the MathWorks expansion, which will be supported by $1.3 million from the state for improvements to Route 9, and the Hingham medical offices for South Shore Hospital, where the state will fund $750,000 in road improvements.

Casey Ross can be reached at cross@globe.com.

Clarification: The funds the state has pledged to MathWorks will only pay for improvements to Route 9.