Despite slump, Palmdale sees flurry of activity: hotel, shopping projects highlight construction.

The slowdown in the overall economy isn't necessarily slowing down Palmdale.

Last month ground was broken for a new Embassy Suites hotel, a seven-story structure that will be the tallest building in the city when completed.

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Not far away work continues on the multi-story Palmdale Regional Medical Center expected to open later this year. New shopping areas remain under construction, including one on the east side of the city that includes one of the first Super Target stores in southern California.

The city has big plans on the horizon--a power plant and a conference center to host large meetings.

All this activity takes place as a drop in retail revenues, building permit fees and property tax revenue forced two rounds of layoffs of city staff--11 workers in February, and 39 in March. An additional 20 unfilled positions remain vacant.

Like other areas of the region the real estate market has nosedived, leading to notices of default on mortgage payments and foreclosures. Empire Land, master developer of the Anaverde community filed for bankruptcy protection, raising doubts on the construction of an agreed to school and fire station.

Still, Palmdale Mayor Jim Ledford remains confident that future is bright, stating that the long-term projects of the power plant and conference center" will not sink or swim on an upturn or downturn in the economy.

"We are the beneficiaries of an area growing outside of its boundaries," Ledford said.

It's a scenario Palmdale has been through before.

In the early 1990s, the aerospace and defense contractors making up some of the largest employers in the Antelope Valley lets thousands of workers go due to cutbacks in defense spending.

Job loss is less a factor in the current downturn as much as the real estate bust and the credit crunch.

The difference between a stock market slowdown and one involving real estate is the length of the recovery, which is longer for real estate, said Mel Layne, president of the Greater Antelope Valley Economic Alliance.

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A year ago. about 70 percent of Valley homeowners receiving notices of default on a mortgage payment redeemed themselves. That number dropped to 40 percent in the first quarter of 2008 which indicates to him that owners either cannot re-work the loan or cannot sell their home, Layne said.