Capitol Update June 2, 2023

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from Mark Smith, Advocate, California Builders Alliance

California Moves to Streamline Infrastructure Project Approvals

To streamline the process of greenlighting state infrastructure, California Gov. Gavin Newsom (D) signed an executive order May 19 that creates an “infrastructure strike team” to identify and expedite key projects through better coordination among government agencies. He also unveiled plans to introduce a series of 11 trailer legislative bills that would speed up state review processes and reduce time for legal challenges to approved projects. The move is intended for California projects to gain a greater share of funding from federal legislation such as the Infrastructure Investment and Jobs Act and the Inflation Reduction Act, Newsom said at a press conference. He estimates the state will invest $180 billion, including state and federal funding, in infrastructure projects over the next decade. “It’s about saving time, saving money and addressing bureaucratic malaise,” Newsom said.  According to the order, the strike team consists of state officials who include the secretary of transportation, finance director and planning and research director. The initiative focuses on projects in areas such as broadband and clean energy supported by the new federal funding laws, according to Antonio Villaraigosa, Newsom’s infrastructure advisor. The executive order directs the strike team to create working groups geared to expediting projects in transportation, energy, hydrogen, environmental remediation, broadband, water, the federal CHIPS and Science Act and zero-emission vehicles.  The legislative package would promote project delivery strategies such as progressive design-build, as well as permit reform and changes to state administrative records laws and the California Environmental Quality Act.  Peter Tateishi, CEO of Associated General Contractors of California, praised Newsom's efforts to make CEQA more effective by limiting lawsuits that have in some cases delayed projects for years." We look forward to reviewing the proposal's details and scope and stand eager to partner with the governor and legislators to move projects faster and keep Californians working on necessary infrastructure and housing our state desperately needs," Tateishi said in a statement. Newsom’s announcement came the day after Villaraigosa and the group California Forward released a report with a series of recommendations to accelerate state infrastructure projects  “Things are taking 33 months that we know only have to take 11 months,” Newsom said. “We actually want to get it down, ultimately, to six months.”

‘What recession?’ Nearly all sectors see strong construction spending

National construction spending increased 1.9% in April to a seasonally adjusted annualized basis of $1.05 trillion, according to new Associated Builders and Contractors analysis. That growth stems from gains in almost every nonresidential building category. Thirteen of the 16 nonresidential categories jumped in April, led by an 8.6% growth in manufacturing construction. “What recession?” said Anirban Basu, ABC chief economist, in the release. “Despite a slew of headwinds, including higher interest rates, prominent bank failures, a near-miss debt ceiling crisis and pervasive fears of recession, money continues to flow into the U.S. nonresidential construction segment.”


Proposed debt ceiling deal would speed project reviews

A proposed deal between the Biden administration and House Republicans to avert a breach of a debt ceiling would set a one-year deadline for environmental impact assessments and a two-year limit for environmental impact statements for infrastructure projects. The agreement also sets the stage for faster project permitting. Full Story: E&E News

Payroll employment increases by 339,000 in May; unemployment rate rises to 3.7%

Total nonfarm payroll employment increased by 339,000 in May, and the unemployment rate rose by 0.3 percentage point to 3.7 percent. Job gains occurred in professional and business services, government, health care, construction, transportation and warehousing, and social assistance.

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Survey: Highway construction is becoming less safe

More than 50% of contractors responding to an annual highway work safety survey by the Associated General Contractors of America and HCSS say vehicles have crashed into their work zones during the past year, and 97% of contractors say work zones are as dangerous as or more dangerous than they were a year ago. AGC wants more states to approach work zone safety as Oklahoma does: Oklahoma is the first state to require a work zone safety course to obtain a driver's license. Full Story: KNXV-TV (Phoenix)   The Baltimore Banner  Engineering News-Record (tiered subscription model)

Changes in permitting one step closer to being codified

The Senate's passage of a bill to avert a breach of the debt ceiling makes measures to expedite permitting for infrastructure projects one step away from becoming law. The legislation is a major victory for proponents of the Mountain Valley Pipeline in the Virginias, while the White House touts the legislation's ability to fast-track renewable energy projects. Full Story: Insider

Consumer confidence falls for 4th time in 5 months

Consumer confidence declined in May, mainly because of inflation concerns and increased pessimism among older Americans about the labor market. The Conference Board has reported a drop in its consumer confidence index for the fourth time in five months, with consumers' view of current conditions and six-month outlook falling compared with April. Full Story: The Associated Press   Reuters  The Conference Board

Residential investment eases as GDP perks up

A decrease in residential fixed investment tempered better-than-expected first-quarter GDP growth, which reached an annualized 1.3%, as measured by the Bureau of Economic Analysis. The residential element reflects factors including high interest rates and materials costs, as well as labor constraints. Full Story: Dodge Data & Analytics

Construction job openings increase 68K

The U.S. construction industry recorded 383,000 unfilled jobs in April, up 68,000 from the previous month, according to Bureau of Labor Statistics data released Wednesday. In spite of multiple economic challenges, demand for construction workers remains elevated, said Anirban Basu, chief economist for Associated Builders and Contractors. “There are signs that higher interest rates have dampened demand for construction services, especially in the residential segment, yet contractors continue to struggle to fill open positions,” Basu said in a press release. In April, 4.6% of positions went unfilled, according to the BLS, a much higher rate than the pre-pandemic average rate of 2.2%, Basu noted. But that isn’t just a construction problem. Nationwide, there were 10.1 million job openings in April, which means there are roughly 1.7 jobs per unemployed American, according to Yahoo Finance.

Health care construction emerges as economic bright spot

Many sectors are experiencing weaker commercial planning activity, but economists at Dodge Construction Network see health care as one of the more promising construction markets, with planning for institutional projects up 17% year over year in April. One notable example is the recent groundbreaking for a $630 million addition to the National Institutes of Health's campus in Bethesda, Md., that Hensel Phelps will build. Full Story: Construction Dive

Survey: Economic growth to gradually pick up

Growth is expected to slow or turn negative for real estate before improving during the next two years, according to a survey of 41 economists and analysts for the Urban Land Institute's semiannual Real Estate Economic Forecast. Real GDP growth of 0.9% this year is expected to improve to 1.5% in 2024 and to 2.5% in 2025, topping an eight-year pre-pandemic average. Full Story: Daily Commercial News (Ontario) 

Construction technology, sustainability go hand in hand

The ability to gather and analyze huge amounts of data is the key to using construction technology to achieve a sustainable future in the built environment, writes May Winfield, global director of commercial, legal and digital risks at Buro Happold. "This speed of understanding and assessment of alternative scenarios with real-time outcomes, better transparency and greater stakeholder collaboration and engagement can lead to more informed, evidence-based decision-making that optimises solutions and has a reduced risk of errors and waste," Winfield writes, citing two Buro Happold examples. Full Story: PBC Today (UK)  

California contractor makes CFO, IT appointments

As part of its expansion plans, San Jose, California-based Blach Construction has added two new roles to its finance and information technology teams. Alice Chuan was named CFO and John Kern was named the director of information technology. Chuan is a veteran of the construction industry finance and accounting management space, most recently working as CFO of San Carlos, California-based general contractor Rudolph & Sletten. Prior to that, she spent many years as controller for other California contractors, first at Level 10 Construction in Sunnyvale and then at Dome Construction in San Francisco.  As she takes on the CFO role, she will work closely with long-time Blach Vice President of Finance Laura Bold, who is retiring at the end of 2023. “Alice’s financial prowess married with valuable background knowledge will undoubtedly enable her to take Blach’s financial systems to the next level,” said Blach President Dan Rogers in a press release. Kern joins the firm from global digital communications giant Cisco Systems, where he spent 24 years in various IT-related management roles. For the last four years, he served as senior director, IT, HR digital experience and global workforce data privacy officer.  In this capacity, he was responsible for worldwide development and implementation of people-data privacy policies and the 2006 global release of the Workday human capital management software system for human resource pros. Prior to that, he oversaw global IT services for Cisco’s Corporate Mergers & Acquisitions group, a role he assumed after having responsibility for company-wide enterprise software deployment.  At Blach, Kern will lead the evolution, development and implementation of technology architecture, including applications, infrastructure and data management. He will oversee the entire Blach backbone, ensuring the security of systems, networks and enterprise information across Blach’s headquarters, regional offices in Monterey and Costa Mesa and many jobsites across California.  “I am thrilled to have John’s vast experience at-hand to ensure that our IT infrastructure not only keeps pace with, but also facilitates our expansion efforts,” said Rogers. Founded in 1970, Blach Construction builds a variety of education, housing, institutional, mixed-use and workplace building types, translating into a diverse portfolio that includes civic/community, healthcare, K-12 and higher education, hospitality, life sciences, professional services and technology facilities, as well as housing developments such as the recently completed Gateway at Millbrae Station in Millbrae, California.

HDR to lead next round of upgrades at LAX

HDR has been chosen to lead a design-build team for the landside portion of an ongoing modernization of Los Angeles International Airport. The $15 billion project includes reconfiguring runway exits and taxiways and constructing a terminal with up to 18 gates. Full Story: Engineering News-Record (tiered subscription model)

Calif. water agencies seek $3.2B for flood control

California water officials want an initial commitment of $3.2 billion over five years for a 30-year flood control project in the Central Valley. The funding would come from federal, state and local sources, ultimately amounting to $25 billion to $30 billion. The project includes repairs and upgrades for 361 miles of urban and 120 miles of nonurban levees. Full Story: Engineering News-Record (tiered subscription model)

$265M loan advances life sciences project in San Diego

Sterling Bay and Harrison Street have secured a $265 million construction loan for the first phase of the Pacific Center life sciences project in San Diego. The funding goes toward 500,000 square feet of research space and a 28,000-square-foot amenity center, as well as parking. Completion of the remainder of the $650 million campus is expected during the next four years. Full Story: Commercial Observer

Leaky canal at center of Nev. water rights dispute

For decades, farmers and ranchers near Fernley, Nev., have relied on water leaking from the unlined Truckee irrigation canal, and they're now legally contesting federal plans to line the canal and prevent further issues. A recent court ruling gave Fernley until June 12 to file an amended complaint even as the Bureau of Reclamation continues the lining process. Full Story: The Associated Press

Mark Smith
California Builders Alliance
5370 Elvas Avenue ǀ Sacramento, CA 95819
Cell: 916.335.5072

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