Inflation Running Up Construction Costs for Local Governments 

With local governments wanting to spend big on construction projects because of low-interest rate borrowing, new inflationary pressures are popping up. Costs are now going up 10% annually in some places.

Here’s one example in Lewisville, TX:

But workers and available materials remain limited, driving prices up. Lewisville residents approved $71.6 million for street improvements in 2015 as part of a $140 million bond package, but with construction costs increasing by as much as 10 percent annually, that money isn’t going as far as the city expected it to.

The multi–generational center approved in that same bond election, for example, was initially budgeted at $35 million, but now looks to cost around $45 million, community relations and tourism director James Kunke said.

“No one predicted this pricing anomaly would hit so hard, or last so long. Remember, these projects were budgeted when we were still in a fairly flat or slightly rising marketplace, so to carry 10 percent annual inflation just wouldn’t have seemed reasonable at the time,” he said.

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