The local construction industry is reeling from a confluence of forces that have significantly reduced activity in the region. Decreased funding from the federal and state governments have put a dent in highway and bridge work, while the recession and a lack of available financing have stalled most private construction projects.
As some pundits forecast a continued economic recovery, the construction trades, suffering from high unemployment, face an uncertain future as state and federal leaders try to find new revenue sources to pay for deteriorating infrastructure.
State labor department statistics show that industries such as education, health and business services have all created jobs from March 2010 to March 2011. The construction industry, however, is second only to the government sector in lost jobs during that period, having shed 13,500 jobs statewide.
Ross Pepe, president of the Construction Industry Council of Westchester and the Hudson Valley Inc. (CIC) of Tarrytown, at a May 12 meeting of the Building & Realty Institute of Westchester & The Mid-Hudson Region, detailed the issues facing the construction trades.
For example, Congress has failed to pass a new federal highway funding bill since the $286-billion Safe, Accountable, Flexible and Efficient Transportation Equity Act, or SAFETEA-LU, expired on Sept. 30, 2009. Since then, Congress has passed funding extenders and has begun the debate on a new six-year funding bill that could come to a vote later this year.
The divide is deep between the Obama administration and ranking Republicans in the House on highway funding. President Obama has called for $556 billion in spending for six years, significantly higher than the prior SAFETEA-LU legislation. However, reports have surfaced that current House Transportation and Infrastructure Chairman John Mica, R-Fla., intends to have the committee author a bill that limits spending to estimated receipts from the federal Highway Trust Fund, which could put the committee proposal at some $250 billion, a $36-billion decrease from SAFETEA-LU and less than half the funding proposed by the Obama administration.
Pepe, who is also treasurer of the statewide transportation advocacy group the New York Roadway & Infrastructure Coalition, said the transportation industry is also faced with uncertain funding levels from state government for both highway and mass transit.
He said state government has only partially funded what were multi-year capital programs for the New York State Department of Transportation and the Metropolitan Transportation Authority. In fact, both agencies face a projected $10-billion funding gap for the final three years of their respective capital programs.
“Without infrastructure we are really no better than third world,” Pepe told attendees of the Builders Institute meeting at the Crowne Plaza in White Plains. “So infrastructure is the key to this society”™s importance and growth.”
”˜We have difficult times”™
Pepe said many of transportation”™s funding sources have dried up. For example, $2.9 billion was realized when New York state voters passed the Transportation Bond Act in 2005. However, the proceeds ran out at the end of last year. The region also benefited from Obama”™s stimulus program, but again most of those funds that were earmarked for shovel-ready projects have been spent.
He added that the state”™s Dedicated Highway and Bridge Trust Fund has been raided by state lawmakers with its future solvency in question. In fact, in a scathing report released in October 2009, state Comptroller Thomas DiNapoli charged that “back-door borrowing” had caused the trust fund to incur significant debt. In fact, he stated that projections are by fiscal year 2013-2014, a total of 72 percent of the trust fund”™s dedicated tax and fee revenues will go toward debt service. He also said approximately $3.9 billion will need to be transferred from the state”™s General Fund to the Highway and Bridge Trust Fund over the next five years to meet the trust fund”™s obligations.
“We have difficult times,” Pepe said. “We are continuing to lobby our government officials at all levels. We need to get the support of the business community. People have to speak up and say the infrastructure is not performing well and without that infrastructure we cannot grow our economy.”
Aaron Donovan, an MTA spokesman, said the agency”™s capital program is fully funded for the remainder of the year. However the agency faces a projected $10-billion gap for its capital program for the next three years. A total of $400 million is unfunded from the federal government for future Metro-North capital work and $635 million worth of capital improvements is unfunded from the state. Major capital projects under way by the MTA include: East Side Access, Second Avenue Subway, Extension of the No. 7 Subway Line and construction of the Fulton Street Transit Center.
Current highway work reduced
Gov. Andrew Cuomo”™s recently enacted budget for fiscal year 2011-2012 kept highway funding virtually intact from the previous year. However, a budgeting decision by the state DOT to fast track a more than $72-million project in Orange County to last year”™s letting program has resulted in a significant cut in highway funding for Region 8 (a seven-county region in the Hudson Valley that includes Westchester) from now until March 30, 2012.
According to the CIC, of the 2,279 bridges in Region 8, more than 45 percent are either “structurally deficient” or “functionally obsolete.”
Normally, annual state DOT highway letting programs have run from $180 million to more than $200 million, according to the CIC.
DOT Acting Region 8 Director William Gorton said that because the Route 17/Exit 122 reconstruction project in Orange County was bid out and is to be funded as part of the department”™s 2010-2011 program, this year”™s highway letting program has been reduced. DOT said it has deemed Lancaster Development”™s low bid of $67,819,137.30 as “informal” and is now seeking approval of the second low bid by the joint venture A. Servidone/B. Anthony of Castleton, NY at $72,349,638.19 for the Exit 122 project. With that accounting change, the 2010-2011 Region 8 highway letting program was approximately $194 million.
Gorton said program has been reduced to $64 million for fiscal year 2011-2012 and in fact since two projects worth a total of approximately $20 million have already gone out to bid, the program has some $44 million left until March 31, 2012.
“We wish we had more to spend this year,” Gorton said. He said the last two years the program averaged some $129 million, which he said was “below what we would like it to be, but that is currently where the funding levels allow us to be.”
When asked if the current level of funding will allow DOT to properly maintain the road system, he said, “The pavement condition is declining with that of the investment. It doesn”™t allow us to maintain a good level of pavement condition as we had when we had more money.”
CIC”™s Pepe said this year”™s funding amounts to about a 35 percent to 45 percent cut from regular highway spending levels.
I-287 in the spotlight
There are two major road/bridge projects under way in Westchester. Tutor Perini Corp. of Peekskill is working on a $148.8-million contract with the state Thruway Authority to re-deck a portion of the Tappan Zee Bridge.
In addition, Ecco III Enterprises is working on the latest phase of the Cross Westchester Expressway improvement project. The Yonkers-based firm won a bid last year at more than $53 million for the work in the White Plains area around Exit 8 of I-287.
The multi-phased I-287 project has come under fire of late due to a series of articles in The Journal News that chronicled what it charged were “multimillion-dollar mistakes, design flaws and obstacles for which state engineers failed to account” that caused estimated cost overruns of $67 million and delays in completion.
A number of area politicians, including U.S. Sen. Charles Schumer, have called for investigations into the project by federal and state transportation agencies.
In a prepared statement, Pepe, while critical of some portions of the published reports, said: “Could the cost for this work have been less? Perhaps. But when removing mountains of rock, replacing or realigning underground or exposed utilities and other unknown factors that occur in projects so enormous, the final quantities of materials removed or trucked in to replace roadbed are a design engineer”™s nightmare.”
He added, “Could the DOT”™s price targeting of these projects improve? Yes, but that assumes a full-partnership role with the state Legislature in Albany and the Congress to fund the site-analysis and testing of soils and other conditions pre-bid.”
The construction industry did get some welcome news when it was announced on May 9 the state had been awarded $354.4 million in funding from the U.S. Department of Transportation for three high-speed rail projects. The funds were part of $2 billion that were redistributed to other states after Florida rejected the funding.
