Topic: construction
Federal Government Gets Behind Adaptive Reuse
Old Post Office - Trump organization has acquired redevelopment rights for the historic federal structure.
Despite recommending sharp decreases in government spending across the board, President Obama’s budget for 2013 provides for a near-level $93.3 million for the EPA’s Brownfields Program, which provides funding for clean up and reinvestment in brownfield sites.
In addition, in a showing of bipartisan cooperation, the U.S. House of Representatives recently passed the Civilian Property Realignment Act. Intended to be a cost saving measure that would increase the government’s treasury by selling property and reducing building operating costs, the Act also encourages the adaptive reuse of government property. As government buildings, such as former post offices, are put on the market, savvy investors will be able to re-purpose the buildings for hotels, apartments and office structures. When the basic building frame already exists, developers don’t have to construct a project from the ground up, which provides opportunity for significant savings.
The development industry welcomes federal support for adaptive reuse. But enterprising developers can find state and local government incentives as well – incentives aimed at revitalizing urban cores. Watch for future posts detailing some of these programs and opportunities.
TIGER Program Enters 4th Round
President Obama is making good on his State of the Union promise to provide for greater investment in infrastructure. In an announcement by Department of Transportation Secretary Ray LaHood, the TIGER (Transportation Investment Generating Economic Recovery) Discretionary Grant program will enter a fourth round, making another $500 million available for capital investments in surface transportation projects. TIGER 2012, as it is being called, will focus on projects having a significant impact on the nation, metropolitan areas or regions. High-speed rail and intercity passenger rail projects will remain eligible for funding.
Because of high demand, funds will be distributed on a competitive basis. In previous rounds of the TIGER program, the Department of Transportation allocated $2.6 billion toward 172 projects throughout the United States and its territories. This was despite over 3,348 applicants requesting more than $95 billion in funding. The Department of Transportation will evaluate each proposal’s safety, economic competitiveness, livability, environmental sustainability, state of repair and potential for short-term job creation.
Massachusetts Selling $600M in Sales-Tax Bonds to Fund School Construction Grants
The Massachusetts School Building Authority (MSBA) plans to issue $600 million in senior dedicated sales-tax bonds to fund grants to cities, towns and regional school districts for construction and renovation projects. The tax-exempt bonds will be secured by a first lien pledge of one-cent of Massachusetts’ 6.25 cents sales tax receipts.
Weekly Quick Hits
Private Sector Picks Up Slack For Aging U.S. Infrastructure – With federal funds unavailable for infrastructure repair and construction, there are at least 70 privately funded and managed infrastructure projects across the United States in various stages of development. (Washington Post)
China May Have Violated Trade Rules, Says U.S. Solar Panel Makers – Seven U.S. makers of solar panels filed a trade case in Washington, D.C., against the Chinese solar industry, claiming it used billions of dollars in government subsidies to help increase sales in the American market. (New York Times)
California, Leading the Nation in Job Growth – Led by the construction and manufacturing industries, California’s unemployment rate went down, although it’s still the second highest in the nation. (San Francisco Chronicle)
Solar Power Going Mainstream – The days of high cost for solar panels may have dissipated leading commercial and residential builders to more installations of solar energy. (Boston Globe)
California’s $1.8B Bond Sale Creates “Homegrown Economic Stimulus”
This week, California sold $1.8 billion in tax-exempt bonds. Preliminary yields ranged as low as 1.15% on three-year securities. 10-year bonds were priced to yield 3.51%, or 0.34 percentage point more than securities with a comparable maturity in a $2.5 billion sale in September 2011. 30-year bonds were offered at seven basis points more than in September. In addition to the $1.8 billion in tax-exempt bonds, California offered $200 million in taxable debt.
California’s Governor Brown called the bond sale a “Homegrown Economic Stimulus,” touting the ability of the state to put people to work through infrastructure jobs:
“When we invest in infrastructure, we provide a homegrown economic stimulus to create jobs and ensure our state is prepared for the challenges of the future,” said Governor Brown. “Investor confidence in California’s fundamental strengths, combined with an on-time, balanced budget, means that we can make important investments to boost the state’s economic recovery and put Californians back to work.”
The following summary, taken from the Office of Governor website, shows how certain of the bond proceeds, as well as existing fund balances, are being put to work:
- California Department of Transportation - Caltrans will be able to start 26 new projects, with a total (multi-year) construction cost of $1.2 billion. The projects, which are expected to create 30,000 jobs, are designed to increase traffic flow by adding lanes, widening roadways and installing traffic management systems.
- Local Streets and Roads – Approximately $38 million in bond proceeds will be used to start roughly 70 local street and road projects, including mainly general maintenance projects on local roads, such as sealing and resurfacing. Many cities and counties have combined these funds with other local or federal funds to complete larger road projects.
- K-12 School Construction – Existing funding for K-12 school construction will be fully expended by December 2011. The additional $1 billion provided in the fall 2011 bond sale will fund the start of approximately 450 new projects, which are anticipated to consist of approximately 250 modernization projects, 130 new construction projects and 70 other projects.
- California Community Colleges – Community Colleges will be able to start five new construction and modernization projects with the $24 million in additional bond proceeds.
CALGreen Enhancement Signed by CA Governor Brown
Governor Jerry Brown recently signed a bill intended to strengthen California’s green building standards. Co-authored by Assemblyman Rich Gordon and Senator Ted Lieu, AB 930 requires that at least one member of California’s Building Standards Commission (BSC) be experienced and knowledgeable in sustainable building, design, construction and operation.
“With the implementation of our new green building standards, CALGreen, it is crucial that the Building Standards Commission membership reflects the various constituencies represented in the building codes. Adding this requirement to the Commission’s make-up will improve the integrity of future adherence to CALGreen,” said Assemblyman Gordon following the passing of AB 930.
A Tale of Two Housing Markets
Some observers have recently described the housing market as bi-polar. For luxury housing, prices and sales are rising and the housing crisis is a memory. For low and moderate income housing, the market is stagnant and, in some sectors, declining. According to Zillow, prices for homes valued at $1 million or more have risen 0.7% since February 2011, while prices for homes under the $1 million benchmark have declined more than 1.5% during the same period. The continued decline in non-luxury housing defies precedent, especially in light of historically low mortgage rates.
According to Chad Moutray, the chief economist for the National Association of Manufacturers (NAM): “Housing market challenges continue to serve as a drag on manufacturing growth in a number of ways, both direct and indirect. First and foremost, housing starts are down from 2.1 million homes being built per year a few years ago to around 600,000 today. That means less demand for building materials for construction, and appliances and furniture for furnishings. But it also means that we have that many fewer people employed in the construction sector – all potential customers for manufactured goods.”
Recap of @BarackObama’s Speech to Congress
With the nation’s unemployment rate at 9.1 percent, President Obama addressed a joint session of Congress to share a plan to create jobs and grow the economy. His $447 billion plan, the American Jobs Act, includes the following measures:
- $50 billion for infrastructure development such as repairing roads and bridges.
- $10 billion to capitalize a national infrastructure bank to help finance such projects.
- payroll tax cut to put an additional $175 million into the pockets of working Americans.
- extending unemployment benefits, which were lengthened to the current 99-week maximum in 2009.
Other provisions in the president’s proposal include money to refurbish schools and provide state aid for teachers and first responders. For greater detail on the American Jobs Act, download the fact sheet here.
P3 Victory in California
In a recently decided case, Professional Engineers in California Government v. Department of Transportation, the Professional Engineers, a public employee labor union, challenged the ability of the California Department of Transportation (“Caltrans”) to appoint an outside engineering firm for engineering services. Relying on the new public-private partnership provisions of California Streets and Highways Code Section 143, Caltrans awarded an engineering contract to a private firm rather than utilizing its engineering staff. The plaintiffs filed suit, seeking to set aside the contract and enjoin the action. The trial court denied relief, which decision was affirmed on appeal. In its holding, the court noted that, under the applicable law, Caltrans is permitted to delegate certain functions so long as it remains responsible for the performance of the work, even if it does not actually do the work.
LEED Pilot Credit for “Demand Response” Revised
Pilot Credit 8: Demand Response, introduced in 2010 under the LEED Pilot Credit Library, USGBC’s mechanism for testing proposed credits that have not yet been formally vetted, has been revised. The credit attempts to incentivize participation in automated demand response (“DR”) programs that are important to developing a smart grid. DR refers to the ability to control consumption of electricity to better correspond with supply conditions.
Projects will earn a point toward LEED certification if they can show a 10% shift in their energy consumption away from peak energy periods. Extra points may be earned by projects that employ semi- or fully-automated demand response programs in their buildings. Education and market feedback are also incorporated into the program to help promote the sharing of information and to gauge the effect that the building community can have on the grid and the environment.
Read more about how the credit works here.
