Capitol Update February 24, 2023

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from Mark Smith, Advocate, California Builders Alliance

Construction starts down 27% in Jan., but don't fret

A 38% decline in nonresidential building starts highlights a 27% decline in overall starts in January compared with December. However, economist Richard Branch says the numbers "should not be taken as the beginning of a cyclical downturn in the industry," as the start of various megaprojects over the past few months is likely masking the industry's underlying market resilience. Full Story: Dodge Data & Analytics

 

Slower construction seen amid high interest rates

The challenge posed by soaring interest rates in 2022 is unlikely to diminish this year, leading to slower construction across the residential, public and commercial sectors, according to consulting firm Turner & Townsend. "It may not necessarily be a contraction, but definitely the rate of growth will slow down as people look at their projects in a much more focused lens," says Darren Cash, director of cost management for Turner & Townsend. Full Story: Daily Commercial News (Ontario)

 

Economists predict higher peak fed funds rate of 5.25%

Economists surveyed by Bloomberg expect the Federal Reserve's peak interest rate to be higher than what had been projected, after recent data showed inflation had remained high. The economists expect policymakers to raise the federal funds rate to a peak of 5.25% and hold it there through year-end.

Full Story: Bloomberg

 

Analysis: South led way as US construction grew in 2022

The South led all four US regions in increased construction starts last year, but each region performed well, combining for an overall 16.7% increase in new starts at a total of $912 billion. The US saw a record 31 projects valued at more than $1 billion, buoyed by strong demand for oil and gas projects, semiconductor fabrication facilities and electric vehicle battery factories. Full Story: Daily Commercial News (Ontario)

 

OMB seeks comment on Buy American guidance

Comments will be accepted until March 13 on the proposed guidance offered by the Office of Management and Budget on implementation of provisions under the Build America, Buy America Act. The act applies to all federally funded infrastructure projects and may cover more construction materials to be produced domestically, with some exceptions, as Julie Strupp explains. Full Story: Construction Dive

 

How to retain workers when a megaproject comes to town

This year, the $1.2 trillion Infrastructure Investment and Jobs Act and the CHIPS and Science Act, which allocates $39 billion to build and expand semiconductor manufacturing plants, will create thousands of new construction jobs — on top of what Ken Simonson, chief economist for Associated General Contractors of America, called “an unusually large concentration of really large projects right now.” “A remarkable number of multibillion-dollar projects are showing up in many states,” Simonson said. “In many cases, the owners of these projects, while not insensitive to cost, may have more flexibility and willingness to pay and offer a range of benefits that smaller companies can’t.”  When projects compete for the top available labor, “it gets messy,” said Portland, Oregon-based Eric Grasberger, construction and design group chair of national law firm Stoel Rives. 

https://www.constructiondive.com/news/how-to-retain-workers-when-a-megaproject-comes-to-town/643411/?utm_source=Sailthru&utm_medium=email&utm_campaign=Issue:%202023-02-24%20Construction%20Dive%20Newsletter%20%5Bissue:48327%5D&utm_term=Construction%20Dive

 

Biden administration bullish on chip investment

Semiconductor companies will soon have an opportunity to apply for federal subsidies to help expand production in the US. The Biden administration believes the $39 billion it is offering in manufacturing incentives could lead to at least a tenfold investment from the private sector, but the success of that plan hinges largely on robust workforce development partnerships between academia and industry. Full Story: The Associated Press

 

New Calif. dam needs costly repairs due to design flaw

Flawed design has damaged California's Folsom Dam after just its first use when it released water from winter storms last month. Replacing 12 metal rods that open and close the spillway's gates may cost $16 million, after coating cracks were discovered that could lead to corrosion. Full Story: KOVR-TV (West Sacramento, Calif.)

 

Google village project moving ahead with demolitions

Google's plan for a transit village in downtown San Jose, Calif., is advancing as crews near completion of the first of several demolitions. The company may adjust the timeline for the project amid economic uncertainty, but officials say commitment remains secure. Full Story: San Jose Mercury News (Calif.) (tiered subscription model)

 

California Civic Structure Opts for Timber and Reaps Rewards

When San Mateo County set out to build a new office building, the goal was to make an impression but not break the bank. The solution was to create the country’s first net-zero energy and low-carbon civic building with timber as the primary building material. Located in California’s Bay Area near the heart of downtown Redwood City, the San Mateo County Office Building 3—better known by its acronym COB3 —is the county’s equivalent of a city hall. Initially the plans were for a concrete structure, but budgetary concerns led officials to request alternative options.

https://www.enr.com/articles/55907-california-civic-structure-opts-for-timber-and-reaps-rewards?oly_enc_id=9829D7674890B4D

 

Calif. study suggests areas for wind turbine port

Cost and logistic concerns could make San Luis Obispo County, Calif., an unideal destination to assemble floating offshore wind turbines, according to a new study. The study points instead to sites at well-developed ports such as those in the San Francisco Bay Area, Los Angeles, Long Beach and San Diego. Full Story: The Tribune (San Luis Obispo, Calif.)

 

Developer Hires Stantec for $25B Sustainable Freight Hub in California 

A Moreno Valley, Calif., developer is moving forward with plans to build what it says will be a $25-billion Inland Empire freight hub east of Los Angeles, recently selecting Stantec to lead design and engineering for the 40.6-million-sq-ft warehouse space over 4 sq miles. Construction is slated to start this year. Highland Fairview plans to add 6 million sq ft per year until the build-out in 2030.  Stantec is working on “future-ready and highly sustainable infrastructure” for the project, a spokesperson says. The plan for sustainability has “not yet been tackled on this scale in the U.S,” Brianna Daniels, principal-in-charge at Stantec, said in a statement.

https://www.enr.com/articles/55930-developer-hires-stantec-for-25b-sustainable-freight-hub-in-california?oly_enc_id=9829D7674890B4D

 

Mark Smith
Advocate
California Builders Alliance
5370 Elvas Avenue ǀ Sacramento, CA 95819
Cell: 916.335.5072
Email: 
mark.smith@calbuilders.org 
Email: mark@smithpolicygroup.com 

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