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Voters Overwhelmingly Approve Bonds

Thu December 04, 2008 - National Edition
Giles Lambertson

On Nov. 4, American voters seemed to shrug off the financial crisis that hammered the nation in the days leading up to the election. In state after state, ballot referendums on transportation, water and sewer projects were decided in favor of new construction and rehabilitation.

“The public’s willingness to approve significant investment in infrastructure in difficult economic times is a testament to voters’ awareness of our national infrastructure needs, demonstrated by their willingness to tax themselves and borrow to fund it,” said Stephen Sandherr, CEO of Associated General Contractors of America.

Most of the new funding authority is for mass transit and road work, or for water and sewer projects, but public building and pedestrian traffic projects also were endorsed.

In respect to transportation-specific tax and bond measures, nearly three-quarters not only won voter backing, they did so comfortably; the average rate of approval for such ballot issues was 63 percent, according to post-election analysis by staffers at American Road and Transportation Builders (ARTBA).

As referendums go, this election day was one for the record books. The financial publication Bond Buyer reported that 696 bond issues were on the ballot, which was “the second largest amount ever for a single election day.”

In California, voters considered the single biggest bond issue ever placed on that state’s ballot — $9.95 billion for planning and initial construction of a high-speed rail system.

The historically large ballot measure won approval, but by a much narrower margin than in the average bond vote across the country: Just 52 percent of voters said “OK.” That was enough for Judge Quentin Kopp, chairman of the high-speed rail authority.

“In turbulent economic times, this vote is particularly satisfying,” he said immediately after referendum results were announced. “The voters have demanded we face the future by planning for continued population growth at a time in which airports and freeways have reached capacity.”

Kopp is the godfather of high-speed rail in California. He first rode France’s high-speed train, which rockets between Lyon and Paris, in 1984, just three years after the train’s inaugural run. Kopp stepped from the train impressed. He returned to California and shortly introduced legislation to establish a high-speed rail commission.

In ensuing years, Kopp continued to collect information and to promote the project, riding the French train a half-dozen more times, as well as fast trains in Japan and Germany. In 1995, a legislative report on the desirability and practicality of a high-speed rail system for California concluded that it was a good idea; the next year, Kopp, as chairman of the state senate transportation committee, authored a bill creating the high-speed rail authority.

Kopp left the legislature in 1999 when he was appointed to the state Superior Court system, retiring in 2004 from full-time bench work. An exception in the state’s canon of judicial conduct allows anyone on the bench working in the system’s part-time assigned judge program to hold appointed public office. Subsequently, Kopp was appointed to the authority in 2006 and immediately named chairman.

That long start-up scenario is a prelude to what will be a long rollout of the 800-mi. (1,280 km) train system. Engineering design and environmental studies, along with the first acquisition of property along the route, will eat up much of the next two years. The first scoop of dirt won’t be moved until late 2010 at the earliest. Not until 2016 or 2018 will the first trains begin speeding along a 150-mi.-long (240 km) segment between Merced and Bakersfield, Kopp said. “That will be our test.”

If the test is passed, the longest phase — San Francisco to Anaheim — will be undertaken in earnest, not to be completed for eight years. In the following five years, end segments from San Francisco to Sacramento and Anaheim to San Diego will be tacked on.

The high-speed train’s tracks will run through cities, across desert-scape and through mountainous terrain. That means construction of numerous grade separation structures at urban highway intersections and tunneling through mountains. Artists’ renderings show massive, airy station structures with 1,300-ft.-long (394 m) passenger platforms and expanses of track running to the horizon — all of which adds up to lots of work for contractors. An estimated 150,000 construction-related jobs will be created over the next 20 years by the massive project.

Bidding is “wide open,” Kopp said, with international firms having high-speed rail experience possibly joining the queue.

The nearly $10 billion ponied up by voters in November is less than a third of the projected overall cost of the project. The rest will come from the federal government and from the private sector, making this project one of the first large-scale public-private partnerships in the country. Private investment groups are expected to plunk down anywhere from $5 billion to $7 billion.

Water and Sewer Projects

Public works bond issues approved elsewhere around the country pale in scale to California’s whopper, but they nevertheless represent significant new funding sources for local contractors.

In Pennsylvania, for example, 62 percent of voters approved $400 million in new bonding for drinking water and storm sewer projects. Some of the money targets 183 publicly owned water systems that federal authorities have mandated must clean up their outflow; the polluted discharge is entering the Susquehanna and Potomac River basins and finding its way to the Chesapeake Bay.

But all urban and rural municipal systems in the state will draw from the bond pool, half of which will be disbursed as grants, the rest as loans. When all $400 million is in the system and spurring new construction, an estimated 12,000 general contractor employees will be working on the projects.

Bob Glancy welcomes the infusion of new money. He is chairman-elect of the 170-member Associated Builders and Contractors of Western Pennsylvania, a region of the state where, he said, infrastructure funding has gotten “a little tight.”

Glancy is president of R.A. Glancy and Sons, a general contracting firm principally involved in university, community college, homeland security and Air National Guard projects. He said because of the nature of his company’s work, the water bond issue will have minimal impact on him directly.

However, it is the biggest pool of construction money available at the moment and, as such, will have a measurable impact on work in the region. “This will open up the bidding competition considerably more,” Glancy said.

A majority of Arkansas residents who entered a polling booth Nov. 4 also hit the “Yes” button on a statewide bond issue, approving $300 million for water projects. The new bonds actually are a continuation of a bonding program begun in 1981 and periodically re-approved thereafter. The program was only interrupted in 1996 when the bond issue was defeated at the polls. Voters authorized the program again in 1998 and this year’s referendum seamlessly continues it.

“When we found out how easily our question passed, I was surprised,” said Mark Bennett, chief of water development for the Arkansas Natural Resources Commission, which administers the program. Sixty-six percent of ballots were marked in favor of it.

The money — of which no more than $60 million can be issued in each two-year period — is eligible for just about anything to do with water, including water systems, wastewater projects, water pollution control, irrigation, flood control and wetland mitigation.

Bennett said the typical funding application is for water lines, storage tanks or treatment plants. “The average project might be a quarter-of-a-million-dollar elevated water storage tank, I suppose. That’s not huge by Philadelphia standards, but it’s good sized for Arkansas. Actually, it is getting to where we don’t see many projects that are below a half-million dollars.”

Irrigation projects also are a popular application. Some of the bond money will be diverted to the ongoing Grand Prairie area demonstration project supervised by the U.S. Corps of Engineers in the east-central part of the state.

A hundred years ago, irrigation turned that region into a highly productive agricultural region. However, before long farmers were pulling water out of the ground faster than it was being replenished. Only in the past 20 years did the dire drop in the water table spark action from authorities.

To supplement the water left in the region’s aquifers, the corps is overseeing construction of reservoirs that eventually will cover some 8,800 acres (3,520 ha). A pumping station on the White River also is part of the rescue plan. (Unfortunately, work slowed on that station after an ivory-billed woodpecker was spotted; it heretofore was thought to be extinct.)

Bennett said bidding for water system work generally is “extremely” competitive. The exception is water tank projects. “The number of bidders on tanks seems to be well down,” he said. “A lot of times we have two, and no more than three. But now that steel prices have somewhat come back to normal, whatever normal means, we hope we will see more bidders on tank and pipe projects.”

Mass Transit

and Street Repair

In Rhode Island, an overwhelming 77 percent of voters approved a transportation bond. It will provide $87 million for bridge and highway projects and will ensure that more than $400 million in matching federal funds will stay in the state. Some $20 million will boost work on the Warwick Intermodal Facility, partly because that money also guarantees $80 million in matching federal funds.

The Warwick project will connect busy T.F. Green Airport with Massachusetts Bay Transportation Authority commuter trains linking Providence, Rhode Island and Boston. Train service is scheduled to begin in 2010.

“It [the bond issue] is a good thing,” said Eric Anderson, executive director of Rhode Island Associated General Contractors. “Probably in a year or so we’ll see the impact of the money. It takes time to put the financial package together.”

Anderson’s AGC chapter has 32 contractor members. He said the new bonding authority could be the last for the foreseeable future.

“I think this is it for a while,” Anderson said. “We’re all up against it. There are not going to be a lot of public works projects for a while, and a lot of people depend on them to keep busy.”

In Tulsa, Okla., infrastructure contractors on Nov. 4 also were inoculated against a work shortage. Residents approved both street repair bond issues on the ballot.

One asked to continue two sales tax revenue programs producing almost $170 million for repair of main streets that crisscross the community. The other ballot issue was for general obligation bonds raising $285 million for residential street repair. Together, the ballot proposals represented funding for five years of street and bridge work.

Mayor Kathy Taylor congratulated voters afterward for their cumulative good judgment — 60 percent of voters approved each issue — and for backing city council’s decision not to put off street repair any longer. “This plan will reverse decades of neglect and provide one of the most significant public investments in our infrastructure in Tulsa history.”

An online site operated by Citizens for Tulsa Streets that promoted the ballot issues offered a reason for the infrastructure’s neglect: expansion of the city limits. Over the past 40 years, the city grew some 300 percent but the population increased just 12 percent. The deferred maintenance was blamed on insufficient revenues.

“Streets have been pretty much ignored over the last 15 to 25 years and we’re paying the consequences now,” said the city’s communication’s director, John Durkee.

Chris Cox said it simply was a matter of priorities. “There were other needs that had to be taken care of,” said Cox, who is Tulsa’s transportation rehabilitation manager. “That was true throughout the whole country. Everybody has needs. The city leaders here finally said, ’We need to significantly fund our streets.’”

So now the city has a pot with $160 million in it for arterial streets, $254 million for residential streets and about $30 million for bridge work. Some work will begin immediately, using existing tax revenue, but street repair and renovation will not seriously get under way until next summer. Cox said 88 lane mi. (14. 2 km) of asphalt main streets and 202 lane mi. (32.5 km) of asphalt neighborhood streets are targeted for upgrading — some in each of the city’s nine council districts — as well as 41 lane mi. (65.9 km) of concrete streets.

That is a ton of work and city officials expect plenty of bidding for it, perhaps especially because of current economic conditions. At least five bids from “good-sized” contractors are the rule, Cox said. More than five are expected when bids begin to be solicited in 2009.

“I think it [the street overhaul program] will be significant for contractors,” Cox said. “When it gets up and running, it will greatly add to what is already out there. Some of our sales tax revenue will be tapering off and this will be picking up.

“Overall, it probably is significantly more than what contractors have had in the past. Bond issues here have not been that large in that past.”

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