Other reforms which take effect immediately include the implementation of a centralized tracking system for construction bids on city projects and a move to "operationalize" changes to the Wicks Law that were approved this spring by the New York State Legislature. One of the Wicks Law changes raises the dollar threshold for mandating multiple prime contracts on city projects from $50,000, a figure that was set in 1961, to $3 million. Lieber said the city is considering other reforms, including changes to the bonding requirements on city projects.

Discussing the NYBC report, Anderson pointed out that there's "no single reason" why costs have escalated 400% in 35 years. "It's a lot of things," including labor costs and commodity prices. On the other hand, he noted that while base costs are higher in New York, they've escalated more slowly over the past couple of years than in Las Vegas, Los Angeles, San Francisco or Seattle.

According to the report, costs rose 32% between the first quarter of 2004 and the first quarter of 2007. General contractors in New York City reported a 5% to 6% increase in 2004, an 8% to 10% increase in 2005, and a 12% increase in 2006. The rate of escalation moderated to 11% annually in 2007 and is expected to reach 1% a month over the next two to three years. At present, construction in New York City is more than 60% more expensive than in Dallas; 50% more than Atlanta; 25% more than in Seattle; and 20% more than in Los Angeles.

Some of the report's findings include:

• Construction costs today represent a 50% increase from four years ago and reflect a 150% differential over the trade costs for a comparable office building in Chicago.
• In 2007, the hard costs of constructing a high-rise office building in New York City ranged from $285 to $375 per sf, compared to a $230 per sf average in 2003 and roughly $120 to $130 per sf in the mid-1990s.
• When contingencies, general conditions, insurance, subcontractor bonds and construction management fees are added, total project costs of high-rise office buildings in New York can exceed $400 per sf--exclusive of soft costs, land costs and developer profits. This compares to $150 in Atlanta; $180 in Chicago; and between $200 and $300 in other major cities.
• In January 2008, the Bureau of Labor Statistics estimated a 3.3% increase in office building construction costs nationally over 2007. By comparison, New York City contractors currently report a 10% to 12% increase.
• Total hard costs of school construction in 2007 were $512 per sf in New York City, compared to $289 in Chicago.
• Hospital construction currently averages $600 per sf in New York City, compared to Boston and Washington, DC, where costs range from $500 to $555 per sf, and Los Angeles and San Francisco, where costs range from $380 to $400 per sf.

Lieber called rising construction costs "an incredibly important issue for all of us." Borrowing a term from the world of economics, he said there's a "crowding out" effect that results from a finite supply of labor and materials coupled with heavy demand. Even with the reduced number of housing permits, the pace of construction here is still three times that of the recession of the 1990s.

New York City and its construction industry are "poised for growth, not just today, but in the long term," Lieber said. PlaNYC, a comprehensive rezoning program and a push to create affordable housing are all steps the Bloomberg administration is taking to spur that growth. The city's infrastructure is in "dire need" of investment, Lieber said, noting that much of the infrastructure will reach the century mark between now and 2030, when the city's population is expected to reach nine million.

As for price hikes in fuels and building materials, "who knows if that's sustainable?" Lieber asked. "But it's the reality we have to deal with." New York City feels the pain of rising construction costs more than other markets, he said, because it's "the center of the universe." He drew a laugh when he suggested that building costs are not as high in other cities "because nobody wants to live there."

During a Q&A session following Lieber's presentation, Anderson expressed concern that some of the reform programs being implemented by the Bloomberg administration could be hobbled by the bureaucracy that will remain in power after Bloomberg leaves office. He suggested that the city push for legislation that will make some of the reforms more permanent.