New construction that in prior years boosted city tax revenues was sluggish in 2009, yet there are signs that developers are seeing opportunities and speculators are looking to make profits from depressed real estate values.

It could mean Warwick will see more new development this year, although city planners believe it will be superseded by redevelopment.

“Balise was the big one,” city Tax Assessor/Collector Kenneth Mallette says of the auto dealer whose new building contributed most of the additional $100,000 in taxes the city realized from commercial development. The new Washington Trust branch on Warwick Avenue also helped boost taxes for the year.

Actually, the city’s largest construction project for the year is the $266 million intermodal facility, but because it is a state project it doesn’t affect city taxes. However, its presence is seen as spurring other development that could significantly add to the tax base in years to come.

For the moment, though, the picture isn’t rosy.

The $100,000 in additional taxes for ’09 compares to $400,000 for ’08. That year the city saw the completion of the NYLO Hotel, the Stop & Shop on Greenwich Avenue, the Davol building and the completion of Lowe’s on Greenwich Avenue.

“This year the bottom fell out,” Mallette says of 2009. In the building boom of 2003, annual growth in the city’s tax base was about 2 percent. The city was seeing two and even three new hotels a year not to mention multiple condominium complexes as well as a few office buildings.

In 2009 new growth was a tenth of what it had been five years before, if even that, says Mallette.

New home construction took a nosedive for the year. As of the end of November, the building department had issued 17 permits for new houses as compared to 32 in 2008. No apartments or duplexes were built in 2009. One condominium unit was built. Seven new commercial permits were issued in 2009, or the same as in ’08. The value of those projects was $7.2 million in ’09, or $3 million less than the year before. Commercial additions for ’08 were $24.7 million as compared to $4.9 million as of November of ’09, or an 80 percent drop.

The total value of permitted work in the city was $79 million in ’08. For the first 11 months of ’09 the amount is $42.3 million.

Overall, the impact of the recession is reflected in the dramatic decline in permit fees.

“We’re off 50 percent from where we were in 2007 and ’08,” says building official Ted Sarno. He estimates fees for 2009 will total about $700,000.

But there are indicators of change.

The department is witnessing an up-tick of rehab as buyers of foreclosed and short sale properties invest in improvements and flip the properties for profits or occupy them. Sarno cites the example of a friend who “couldn’t pass up” a house on Uncas Street in Oakland Beach. The house sold for $28,000 at a foreclosure auction.

Since March of 2008, there have been more than 720 foreclosed properties in the city. Donald Morash of Abbott Properties, who does a lot of foreclosure work for Fannie Mae and the banks, says the state has worked through properties foreclosed because of sub prime mortgages and now the economy and the loss of jobs is prompting a second wave of foreclosures. He sees first-time homebuyers benefiting from lower home prices and the government programs providing up to $8,000. But speculators are also on the watch for good buys and the building department is seeing a consistent level of electrical and plumbing permits.

Sarno believes the economy is in a precarious balance.

“As long as money stays cheap we’ll be all right,” he says.

He says a rise in mortgage interest rates or inflation could put the brakes on the market. He believes the rising cost of gasoline, especially if it hits $3.50 a gallon, could “throw fear into everyone” and commence the downward spiral.

The largest private construction project on the drawing boards at the moment is Michael D’Ambra’s plan to convert his construction business and asphalt plant on Jefferson Boulevard into a complex housing 500,000 square feet of office space, hotel and parking garage. D’Ambra has moved ahead with city approvals for the project and has an agreement with the Rhode Island Airport Corporation so the project can be tied into the intermodal facility with its skywalk connection to the airport and rental car agencies.

But D’Ambra has said he won’t move ahead with the project until the economy improves and he has prospective tenants.

William DiPasquale, the city’s principal planner, is optimistic the intermodal facility will spur other redevelopment, especially in the corridor between Post Road and the railroad opposite the airport terminal.

Whereas developers once came into the planning office with sketches and engineering designs, DiPasquale says inquiries he gets are of a general nature and more frequently involve the reuse of existing property. As examples of those inquiries are proposals to alter the use of buildings on West Shore Road and Post Road for strip developments. There has even been a recent inquiry about building condominiums, a sector of the new housing market that has been non-existent for the past several years.

DiPasquale has also seen some pressure lately for development on undersized lots from developers who have picked up parcels at depressed prices and are looking to turn them around for a quick profit.

He said he would fight hard against such re-division of land, as it would adversely impact neighborhoods.

“We can’t be giving away undersized lots,” he said.

The advent of MBTA rail service to Warwick, which is projected to commence about six months after completion of the intermodal facility in September of this year, DiPasquale calls “a very positive thing for the city’s future.”

It is an element that will be considered as the city updates its comprehensive master plan this year.

But for all the simmering interest in development and redevelopment, DiPasquale sees the airport as the major unknown. How RIAC moves ahead, whether a runway will be extended and how properties surrounding are reused will serve to set how the city will grow.

After a decade of proposals, 2010 could be the year of an airport plan. How that plays out will unquestionably be a factor along with interest rates, land values, available credit, market demands and city receptiveness as to whether and what kind of development takes place.