The construction and real-estate industries, which make up an integral part of the Puerto Rican economy, are already feeling the effects of the government shutdown that started May 1. While the closing of various agencies like ARPE, the Planning Board and the Property Registry has effectively paralyzed day-to-day operations in a myriad of companies, the financial implications of the shutdown could also lead to heavy setbacks and substantial job losses, according to industry leaders.

The government shutdown could mean further delay on payments for government projects made by developers, which already take from 90 to 120 days. If the government decides to postpone payments until July, companies in the construction and development industry will in effect be waiting up to six months to be paid for their work, and few businesses can survive that, said Roberto Rexach, president of the Engineers & Surveyors Association. “In other words, the industry would end up financing half of its own work in the government sector, which amounts to $1.4 billion a year,” he added.

Presidents of the Puerto Rico Home Builders’ Association and General Contractors Association, Puerto Rico chapter, among others, have also expressed their outrage and dismay at what the government’s fiscal debacle would entail for the industry, stating it would have a domino effect on the entire private sector that would result in the closing of many companies and even higher levels of unemployment.

“With the government shutdown, our business is effectively paralyzed because we depend on agencies like Property Registry, CRIM and the judicial courts in our day-to-day work,” said Katherine Figueroa, president of the Puerto Rico Realtors’ Association. Meanwhile, the permits process at ARPE, which is one of the bloodlines for developers, has been put in limbo, as well as many other agencies that are vital to the construction sector.

To underline what’s at stake, Rexach listed some hard facts about the local construction industry, such as the $6.7 billion generated during 2005, out of which $2.7 billion was as a result of government work. The industry also directly employs some 69,000 people annually, 30,000 of whom work on government projects.

Lastly, industry leaders emphasized the impression such a debacle is causing in the mainland U.S. and the rest of the world, where outside investors are surely thinking twice about investing in construction and development in Puerto Rico.