The Lawrence Chamber of Commerce believes the city’s sewer problems are starting to create signs of an economic downturn.

Chamber leaders have analyzed city building permit data and found that building permit fees from December through February were down 16.5 percent from the same period a year ago. If that slowdown continues for a full year, the chamber estimates that there will be $20.3 million in construction projects that won’t happen in the community. That would lead to an approximately $500,000 loss in tax revenue and building permit fees, according to calculations by the chamber.

Lavern Squier, president and chief executive officer of the chamber, said the calculations show the need for the city to quickly address concerns about whether the city’s sewer system in the northwest area can handle projected growth.

“This industry plays a pretty large role in our economy,” Squier said.

Chamber leaders said a building slowdown impacts more than just builders. The ripple effect of less building activity is felt by furniture stores, paint stores, banks and a host of other businesses that support the construction industry.

“Aside from those employed in construction, all of Lawrence benefits from continued growth,” Mark Andersen, a local lawyer wrote in a report to the chamber. “New construction is the city’s largest tax generator.”

Bobbie Flory, executive director of the Lawrence Home Builders Assn., said her organization hadn’t yet compiled any numbers on the effect the sewer situation may be having on the construction industry.

But there has been at least one report of a builder, Tim Stultz, of Highland Construction, laying off a handful of workers because a project that was slated for final approval was told by city officials that it must wait until questions about sewer capacity in the area were answered.

Flory, though, said builders were more concerned about what may happen in the next couple years. That’s because many of the projects that are having their approval delayed are for building lots that would not be used this year but would be used in the next two to three years.

“We’re still able to soak up the inventory of lots that we have, but when that is soaked up, I’m afraid there will be a real supply issue,” Flory said.

Whether the entire slowdown in building permit activity can be attributed to the sewer issue is an open question. Building permit activity fluctuates depending on the strength of the market. The largest recent decrease was in 2004, when the total value of permits declined by about 20 percent compared to 2003. That decline was well before the city started slowing any projects because of sewer concerns.

Squier said he understood that the building permit numbers weren’t a perfect way to measure the economic impact of the sewer situation, but said common sense suggests the numbers would be better if the sewer situation was resolved.

“What we can say with some certainty is that the situation won’t get better until we make it better,” Squier said.

City commissioners conducted a special sewer summit on Friday and expect to review within the next two weeks a preliminary plan to get projects in the northwest part of town moving again.