Saturday, June 30, 2012

New Jersey Legislature Bans All Fracking Waste

Mindful of a court ruling in 1978 striking down a law they passed banning waste disposal from other states, New Jersey legislators this week passed a new law banning all disposal of fracking wastewater within its borders, even if the waste water is produced within New Jersey. The new law is aimed at prohibiting shipment of 1.3 billion gallons of fracking waste water already generated in neighboring Pennsylvania from being shipped into New Jersey for deep well injection.

New Jersey environmentalists praised the law prohibiting deep well injection of fracking waste, which they contend contains petroleum hydrocarbons, heavy metals and radioactive materials, into the rock formations beneath their state’s soil. Opponents of the new law say it still violates the 1978 interstate commerce clause ruling. New Jersey Chris Christie last year refused to sign a law banning fracking within New Jersey’s borders, opting instead for a one year moratorium on the oil drilling practice. The newly passed fracking waste ban now awaits either his signature or his veto pen.

Minnesota Court Strikes Local Wind Farm Setback Rules

The Minnesota Court of Appeals struck down a Goodhue County wind farm setback rule earlier this week in favor of less stringent state established setback requirements. Goodhue County commissioners passed a regulation imposing a 2,700 foot setback rule on the project proposed for 5o turbines each 400 feet high, ostensibly to eliminate shadow flicker and turbine noise from neighboring properties. The state permit for the project imposed only 1,500 foot setback.

The Minnesota Public Utilities Commission issued the 1,500 foot setback permit after a three day hearing which found that the county’s larger setback would have made the wind farm impossible to build. County Commissioners has imposed the 2,700 foot setback to completely eliminate noise and flicker from neighboring properties so as to avoid the cost of modeling and measuring any health effects from noise and flicker. The Court of Appeals determined that there was no evidence of any health effects from flicker and noise, and that the county’s rule was unjustified.

AWA Goodhue Wind, developer of the project, still needs to satisfy environmental requirements respecting bald eagles and other local wildlife before construction can commence. Coalition for Sensible Siting, the environmental group opposing the wind farm in the court case, has not yet decided whether to appeal the ruling to the Minnesota Supreme Court.

Orlando VA Hospital General Contractor Faces Termination

Following Congressional hearings on the over budget, behind schedule Orlando VA Hospital, at which VA officials testified that they were “working collaboratively with the contractor” on delays and cost overruns the Veterans Administration has now issued a demand to general contractor Brasfield & Gorrie to provide a new work plan or face termination. House Veterans Affairs Committee Chairman Jeff Miller says the cure notice contradicts that testimony.

Brasfield & Gorrie has now submitted a revised work plan, and awaits VA’s response. The 1.2 million square foot, 134 bed facility was supposed to cost $260.3 million, but the VA’s design changes have pushed that number up to at least $298.5 million, and construction is about a year behind schedule. VA wants construction accelerated for completion by next summer. Brasfield & Gorrie says it is still getting new design changes from the agency.

Chairman Miller’s statement on the cure notice reflects Congressional frustration with everyone working on the Orlando VA project. “Pointing fingers and laying blame will not build the medical center. I expect answers immediately from the VA on the status and cost of this project.”

Southeastern U.S. Politicians and Bureaucrats Debate Tolls For Highway Funding

North Carolina Transportation Secretary Gene Conti says “Tolling is a fact of life for new construction,” when he speaks about his state’s $4 billion proposal to impose tolls all the way along its 182 miles of Interstate 95 during the expansion and reconstruction of this most critical roadway across his state. At the same time, North Carolina House Speaker Thom Tillis is telling truckers, “They’re not going to toll I-95,” as he promotes legislation to preclude the tolling concept, despite the state’s need for investing between half a billion dollars and one billion dollars a year in new road construction for the next 20 years.

In Florida, meanwhile, Transportation Secretary Anath Prasad is crisscrossing his state telling news organizations that “The way we’re funding infrastructure now is not sustainable,” and that all new interstate highway capacity in his state will need to be funded by means of tolls. Florida, however, is adding a new twist to tolling – “managed lanes” which will be built by a public/private partnership and which will charge tolls that vary with the degree of traffic congestion. The biggest proposal for managed lane toll installation is a $2 billion, 20 mile rebuild of Orlando’s Interstate 4.

Whatever the ultimate resolution of the toll highway debate, one thing is clear: somebody has to find a new revenue source to replace motor fuel tax revenues which continue to decline both because of fewer driving miles and greater vehicle fuel efficiency, and find it before the 27 month Highway Trust Fund extension passed yesterday expires.

OSHA Fall Protection Fines On New Jersey Project Proposed At $463,350.

Following up on OSHA’s fall prevention campaign, developed in conjunction with NIOSH and its National Research Agenda program, and intended to reduce the 250 fall related construction worker deaths and 10,000 fall related injuries in 2010, OSHA is cracking down on construction sites where construction companies fail or refuse to implement fall protection for tradespeople and laborers. This month the agency issued fall protection citations with proposed fines of nearly half a million dollars against four companies involved in a Jersey City, New Jersey project located at 837 Jersey Avenue.

The OSHA citations were issued based on a site inspection December 7, 2011 in which OSHA inspectors discovered workers on the fourth floor of the 20 story project working without fall protection. Concrete subcontractors Altura Concrete, for the foundation, and Nathill Corp., for the superstructure, face proposed fines totaling $355,000.00 for working with open sides and edges on six levels of the project, working around open holes, and other violations. General contractor White Diamond Properties faces proposed fines of $95,400.00 for willful fall protection violations, failing to have shoring drawings on site, and other violations.

The balance of the proposed fines were assessed against masonry subcontractor Blade Contracting for failing to provide fall protection, improper scaffolding use, and scaffolding inspection failures. OSHA is on the warpath, so have your workers tie off every day.

Congress Passes Long Term Highway Trust Fund Measure

On the eve of the shutdown of road, bridge and other transportation construction projects all across the nation, Friday Congress passed and sent to President Obama a 27 month, $109 billion extension of the federal highway Trust Fund, for the present resolving all the political wrangling over the details of federal infrastructure funding, as well as some tag along issues which had hoped to hitch their wagons to this star piece of “must pass” legislation. The House voted 373-52 in favor of the conference committee bill, and the Senate followed with a 74-19 vote with one Senator voting “present.” This is the first time since 2005 that Congress has agreed on a long term Highway Trust Fund bill.

According to Senate Environment and Public Works Chairman Barbara Boxer and House Transportation Committee Chairman John Mica, the bill will save more than 2 million jobs in the heavy civil construction sector of the American economy.

The last second compromise coming out of the conference committee dropped the House Republican’s pet provision intended to fast track construction of the Keystone XL tar sands oil pipeline, and in return Democrats on the conference committee agreed to drop $1.4 billion they hoped to allocate for environmental conservation. The bill also permits state highway departments to reallocate funds formerly set aside for bicycle paths and highway beautification programs.

The hoopla surrounding successful passage of this bill is masking the reality that even funding national infrastructure construction at the $54 billion per year level will woefully underfund road building during the remainder of this decade. The bill will provide infrastructure funding far less than the Obama Administration meekly asked for early in this Congressional session - about $80 billion annually. The nation’s needs for simply maintaining our current transportation infrastructure require a minimum of $100 billion every year. Real modernization and expansion of transportation facilities, and the concomitant reinvigoration of the nation’s construction economy, would have required appropriation of $200 billion each and every year for the rest of the decade.

So, while our leaders in Congress are busy trumpeting their passage of a woefully inadequate and truncated long term Highway Trust Fund reauthorization measure, what they are really doing is using smoke and mirrors to defer any real action on the nation’s transportation infrastructure needs until well after the November elections.

Thursday, June 28, 2012

What Does The Supreme Court Obamacare Decision Mean For Construction Businesses?

In a 5-4 judgment accompanied by 193 pages of a very confusing network of concurring and dissenting opinions, the United States Supreme Court this morning upheld all but one part of the Obama administration’s signature health care reform initiative passed by Congress in 2010. The Court’s judgment strikes the Obamacare provision penalizing states which decide not to join in the new law’s expansion of Medicaid assistance to the needy. Everything else is left intact.

Of course, the Republican Party’s political attacks on Obamacare are continuing, with presidential candidate Mitt Romney vowing to sign legislation repealing Obamacare in its entirety should he be elected and his party take control of both houses of Congress in the November election and send a repeal bill to him in the Oval Office. Unless that happens, Obamacare is now clearly the law of the land, and it’s time to think seriously about how it is going to affect your construction business.

Here’s the scoop:

1.    The already effective prohibitions on denying coverage to children for pre-existing conditions, and requiring insurers to let parents keep their children covered until age 26 remain in effect.
2.    As of 2014, everyone will be required to buy health insurance – individually or through an employer – or pay a penalty about equal to the cost of obtaining health insurance.
3.    As of 2014, no one can be denied coverage due to a pre-existing condition.
4.    As of 2014, annual policy limits on coverage are eliminated.
5.    As of 2014, lifetime policy limits on coverage are eliminated.

If you are in the construction business, and employ union skilled labor, you will still have to pay into union health and welfare funds, but the per-tradesperson cost of participation may go down a little bit. If your company already provides health insurance for you and your family, and the non-union employees in the office and in the field, your per-person and per-family premiums may also go down a little. If your company does not currently provide health insurance for non-union employees, it might become economically feasible for you to do so when the penalty for not having coverage kicks in in 2014. If everybody in the company needs to participate, your group may get large enough to save everyone some money on health coverage through the company rather than in the individual market.

Either way, if you have coverage through your company for yourself and your family, but not for other non-union employees, you still won’t be able to deduct health insurance premiums as a business expense on your business tax return.

Lawyers, politicians, pundits and other folks will be debating the intricacies of the Court’s 193 pages of legal jargon for weeks and months to come. The law will remain a campaign issue right through the November elections, with Republican candidates hollering for repeal, and Democratic candidates screaming doomsday for health care if Republican’s win the election. Whether or not the new law is repealed after November, the effect on your construction business will be minimal either way: if Obamacare remains in effect, your business might save a few bucks on health coverage for you and your employees; if not, nothing changes except that preexisting condition exclusions, annual policy limits and lifetime policy limits won’t be going away. All in all, it’s much ado about nothing.

Tuesday, June 26, 2012

Round Four TIGER Grants Leverage $1.7 Billion In Construction Spending

Last Friday the US Department of Transportation announced $485 million in round four TIGER grants for infrastructure construction across the nation. The list includes 47 projects in 34 states and Washington, D.C. Thus far, the TIGER program has handed out a total of $3.1 billion funding 218 infrastructure construction projects. The 47 round four grant winners were chosen from among 703 applications requesting $10.2 billion. The federal grant dollars are leveraging a total of $1.7 billion in construction outlays by state and local governments.

The third largest grant among round four projects is a $20 million grant to the Chicago Transit Authority, to partially fund construction of $140 million in improvements to the CTA’s 95th street rail and bus terminal on Chicago’s south side. The Chicago area is also getting a second grant of $10.44 million for completion of railroad switching and signal improvements along the Western Avenue rail corridor, which will speed both Amtrak travel between Chicago and St. Louis, and commuter rail traffic in the METRA Heritage Corridor between Chicago and Joliet. The $17.7 million project also includes construction of interconnecting rail tracks between BNSF, Norfolk Southern and CSX, to reduce conflict between commuter passenger trains and freight rail traffic.

TIGER is one of the most popular programs among the infrastructure construction programs passed through Congress in 2009 as part of the Obama administration’s economic stimulus legislation. Unfortunately, the stimulus appropriations for “shovel ready” construction have not been spent at the anticipated rate, and the construction economy continues to suffer as a result.

Saturday, June 23, 2012

Highway Legislation Hoopla Mutes The Really Bad News

A flurry of activity late last week surrounding the conference committee negotiations over terms of a much needed two year reauthorization of the federal Highway Trust Fund is masking the reality that even if the Senate’s $109 billion version of the appropriations measure passes and gets signed into law, infrastructure construction in this nation will be woefully underfunded in the remainder of this decade. June 19 in Speaker Boehner’s office, Boehner met with Majority Leader Reid, Senate Environment and Public Works Chairman Barbara Boxer, and Ranking Member James Inhofe, and House Transportation and Infrastructure Chairman John Mica at what can only be characterized as a pep rally to get something more than a six month band aid extension through Congress before the current temporary legislation expires June 30. Following that meeting, Boxer and Mica told the press that Boehner and Reid directed “stepped up efforts” to reach a deal before the month end deadline.

Wednesday, June 20, the House voted 386 to 34 to instruct its conferees to produce a compromise bill within two days. Thursday, June 21, Boehner and Reid held separate press conferences to announce that conference committee negotiations were “moving along.” Reid’s comments were cautiously optimistic: “Now, I can’t guarantee anyone here we’re going to get a highway bill. But, we’re certainly in much better shape than we were 24 hours ago. There’s significant progress being made. We hope that we can get this over the finish line.” Boehner’s remarks were equally reserved: “House Republicans want to get a highway bill done, and our colleagues are working toward producing a bill.” Then he followed up that mild endorsement of progress with announcement that House Republicans still want fast track provisions for the Keystone XL tar sands oil pipeline in a final measure – provisions which President Obama has already promised to veto.

All this hype, including a joint statement from Boxer and Mica that “The conferees have moved forward toward a bipartisan, bicameral agreement,” only serves to conceal the sad facts about the legislation they are working on. Any two year bill coming out of this process will provide infrastructure funding of only $50 billion a year, while the Obama Administration meekly asked early in this Congressional session for about $80 billion annually, and the nation’s needs for simply maintaining our current transportation infrastructure require a minimum of $100 billion every year. Real modernization and expansion of transportation facilities, and the concomitant reinvigoration of the nation’s construction economy, would mean appropriation of $200 billion each and every year for the rest of the decade.

So, while our leaders in Congress are busy trumpeting their paltry progress toward a woefully inadequate and truncated longer term Highway Trust Fund reauthorization measure, what they are really doing is using smoke and mirrors to defer any real action on the nation’s transportation infrastructure needs until after the November elections.

Shame, shame on them all!

Thursday, June 21, 2012

Illinois Tollway To Award No Bid $70 Million Program Management Contract

On June 28 the Illinois Toll Highway Authority board is expected to award a $70 million no bid program management contract for its $12.1 billion, 15 year congestion relief construction plan, dubbed “Move Illinois,” to Kanas City based HNTB, an employee owned engineering and project management business, based on approval of the Missouri firm last night by the Tollway’s Finance Administration Operations Committee. The committee preferred HNTB over New York City based Parsons Brinkerhoff. No one has explained why Chicago based construction management firm Jones Lang LaSalle, also on the ENR “Top 100” list of capable and successful construction managers, was not under consideration.

Despite the size of the budget for the outside and out of state program manager, the Tollway also has budgeted an additional $17 million for salaries of 35 engineers and other permanent staffers to manage Move Illinois over the next five years. Construction projects to be paid for with Move Illinois funds, raised by increasing Tollway tolls a hefty 87.5%, include rebuilding and widening I-90, the state’s first modern toll highway, a new West Bypass between Elgin and O’Hare Field, and a new interchange connecting I-294 with I-57 south of Chicago.

It remains a mystery why no Illinois based heavy civil contracting firms or program management firms were under consideration for this huge no bid deal, especially at a time when local engineers, project managers and skilled tradespeople are still looking for work in the downtrodden construction sector of the state’s economy. Apparently keeping $70 million in tolls paid mostly by Illinois citizens in our own state’s construction economy is a very low priority for the Toll Highway Authority.

Mica’s Congressional Antics Endanger Major Florida Highway Project

One of the prominent members of Florida’s Congressional delegation is House Transportation and Infrastructure Committee Chairman John Mica of Winter Park. Ordinarily, that would mean that Florida’s federally funded highway projects see top priority around Washington. D.C. However, this busy construction season, just the opposite is the case. Mica’s past positions and his inability to rally his own party’s support around any compromise in the conference committee negotiations over the once again stalled federal Highway Trust Fund reauthorization legislation to replace the band aid interim extension which expires next week are putting in peril plans to widen Interstate 4, the Daytona to Tampa expressway which is the closest Interstate to Mica’s house.

The I-4 road construction proposal, to add toll lanes in the median to the highway’s free lanes in each direction, runs afoul of the provisions Mica used the power of his chairmanship to insert in the 2005 Highway Trust Fund reauthorization legislation, which prohibit the addition of toll charging so called “Lexus Lanes” to Interstates which are now freeways. Mica has dropped his Lexus Lane opposition, but changing the law depends on passage of a long term Highway Trust Fund reauthorization bill removing the partial toll prohibition.

Despite Mica’s powerful Congressional leadership position, he can’t rally enough Republican support behind the Senate passed, two year, $109 billion Highway Trust Fund reauthorization bill to get conference committee approval of the measure without including pet Republican add-ons like fast track approval of the Keystone XL tar sands oil pipeline from Canada to Texas, and the tea-party favored extra which would delete all funds for bike path construction and other highway beautification programs.

The I-4 widening proposal depends in large part on the investment of private funds through bonds which could only be repaid out of toll revenues collected on the newly built lanes. Work on the highway, planned to start turning over dirt in 2014, will be delayed well beyond that time frame if the conference committee, on which Mica sits, only manages to kick the can down the road past the upcoming Presidential election in November with another six month band aid interim reauthorization. While Mica is busy beating the Republican Party drum for the XL Pipeline, which is just an election year campaign rhetoric issue, his own neighbors and constituents down in Florida are facing lost construction job opportunities and worsening traffic jams because of his failure of leadership.

Marissa Power Plant Costs And Delays Are Frustrating Municipal Participants

The Prairie State Energy high tech coal fired power plant at 4190 County Highway 12 in Marissa, Illinois was supposed to go on line last January, and provide economically priced electricity to 150 municipal not for profit power utilities across 9 states, annually burning 7 million tons of Illinois coal from the Lively Grove underground mine across the highway, delivered by a continuously operating conveyor elevated above the road. Instead, construction of the plant, designed to power 2.5 million homes with 1,600 megawatts, 95% of which is sold to the participating utilities on a 30 year fixed price, take or pay basis, is six months behind schedule, and 25% over budget. Tri County Electric Coop in southern Illinois is raising customer rates 15% to cover the overruns. Batavia in the Chicago Suburbs has increased electric bills $8.00 to $21.00 a month to pay for its share of the problem.

Kirkwood, Missouri, in suburban St. Louis, has been sending checks to Prairie State Energy for $296,000.00 per month, each of the last six months, and getting no electric power at all in return to sell to Kirkwood families. Mark Twain’s Hannibal, Missouri is in the same bad position. “We’re in almost a million and a half bucks, and we don’t have a dime of revenue. All I can say is, I had other plans for that money,” says Hannibal Board of Public Works Director Bob Stevenson. The cash hemorrhage of these two towns, along with the other municipal participants in Prairie State, will double in August, when the second unit, also six months behind in construction, was originally scheduled to go on line.

Even with the Lively Grove underground coal mine across the road spilling out 7 million tons of coal annually from its 6 foot 8 inch high seams onto three storage piles feeding the conveyor belt above the highway, municipal aggregators which are part owners of Prairie State will continue losing piles of cash once both units are fully operational. That picturesque riverfront town of Hannibal is committed to paying $54 per megawatt hour for electricity from Prairie State, while in today’s market it can sell the electricity for only $40 per megawatt hour or a little less. Hannibal ratepayers’ wallets will continue getting thinner every day for a long time, while the ghosts of Tom Sawyer and Becky Thatcher stand by watching Hannibal’s citizens painting that white picket fence around Tom’s house.

Wednesday, June 20, 2012

Both Sides Seem To Expect A Court Battle Over Detroit Bridge Construction

Michigan Governor Rick Snyder wants a new international bridge between Detroit and Windsor, despite failure of the Michigan legislature to pass a bill funding the project. Grosse Pointe billionaire Manuel Moroun wants any new span across the Detroit River to be part of his current monopoly on bridge traffic and toll collections, and has spent $1.6 million just this year lobbying against Governor Snyder’s plans for the New International Trade Crossing. Governor Snyder has enlisted the Canadian national government as an ally in contracting for construction of his planned new bridge, while Moroun mounts a petition drive to add to November’s ballot an amendment to the Michigan Constitution prohibiting Governor Snyder’s project without voter approval in a referendum. Both sides have carefully worded their initiatives with an eye on a future court battle involving Article 1 Section 10 of the United States Constitution.

Moroun’s ballot initiative would require referendum approval of any international bridge “which is not open to the public and serving traffic as of January 1, 2012.” The intergovernmental agreement signed last Friday between Michigan and Canada for construction of the New International Trade Crossing says, on the other hand, “Any reference to any Michigan Law … shall be deemed to be reference to such Law … in effect as of the date the Michigan Party became a Party…” Since the international agreement is now signed, that language is intended to foreclose a November ballot initiative seeking to render the agreement unenforceable.

Now to the United States Constitution. Article 1 Section 10 of that document provides that “No state shall … pass … any law impairing the obligation of contracts.” Whoa, why is that even in there? Well after the revolutionary war, during the time the United States operated under the Articles of Confederation before ratification of the current Constitution, several states were in the habit of adopting legislation freeing powerful citizens of their debt obligations to people and governments who were on the “wrong” side of that war. Recognizing that such behavior would inhibit the new nation's full participation in international trade, the founding fathers inserted the “contract clause” into Article 1 Section 10 of their new Constitution, and there it remains to this day.

Mr. Moroun and his private bridge monopoly are quite likely to lose this battle, even if his ballot initiative should pass. The government of Canada now has a contract with State of Michigan, executed under Governor Snyder’s existing authority to make agreements for international cooperation, for construction and operation of the bridge. Article 1 Section 10 of the U. S. Constitution now prohibits Michigan from enacting any law – including an amendment to the Michigan Constitution – impairing the obligation of that contract.

In an effort to counter the U. S. Constitutional argument, Moroun has already hired Wayne State University law professor Robert Sedler as a consultant to plant a law review article arguing his side of the issue. Gubernatorial spokesperson Sara Wurfel has already announced the State of Michigan position that an amendment to the Michigan Constitution passed in November could not undo a contract signed in June.

While an ordinary court dispute of this nature could take years to wind its way to the U. S. Supreme Court, this one involves the government of Canada, and could have the U. S. Supreme Court as its very first stop, should the State of Michigan or the Canadians elect to send it directly there in the event Moroun’s ballot initiative succeeds. The U. S. Supreme Court has original jurisdiction over cases “between a State, … and foreign States…”

There are even more defenses against Moroun and his allies in the Michigan/Canada agreement. Canada is paying for the customs plaza on the Canadian side of the river, and the U. S. federal government is paying for construction of the customs plaza on the American side. Canada is fronting the full cost of construction of the bridge, and collecting the Michigan share of that cost from Michigan’s share of auto and truck tolls, all of which will be collected on the Canadian side of the bridge. If Moroun loses his ballot initiative, or loses in the U. S. Supreme Court, there aren’t any other points of attack for him and his allies, and the U. S. Constitution doesn’t bode very well for the Moroun monopoly. In fact, the more design and construction contracts for the project which get signed before initiation of any court battle, the worse it looks for the billionaire.

Meanwhile, going forward with the bridge construction project will put a lot of Canadian and American skilled tradespeople back to work. The Ann Arbor Center for Automotive Research released a study concurrently with the signing of the international agreement which projects that the $2 billion project could put 6,000 American tradespeople to work in each of the first two years, and 5,100 in the third and fourth years. Another 6,600 jobs would be leveraged in the United States each of the four years due to freeing up of $2.2 billion in federal road funds for other Michigan located projects since the Canadians are fronting Michigan’s $550 million share of bridge construction additional 1,400 permanent American jobs would be created for operation of the bridge. Finally, the study projects, 6,800 permanent American private sector jobs will be created by new economic activity in the area of the new bridge and as a result of enhancement of the $70 billion annual cross-border trade flowing between Detroit and Windsor. At the very top of this employment totem pole should be about 125 Wayne County ironworkers earning $58/per hour. Canada expects its side of the river to supply rebar and steel plate for the bridge construction, while American steel mills will provide structural members.

Though Moroun and his political allies will undoubtedly continue their fierce opposition to the project in court and at the ballot box, Michigan House Speaker Jase Bolger seems to be throwing in the towel. “It appears Governor Snyder’s plan does not involve any action by the Legislature, so it seems he has found a way to accomplish his goal of a new bridge while addressing our chief concern of protecting taxpayers,” the Marshall, Michigan Republican said in a prepared statement.

Monday, June 18, 2012

Detroit Bid Rigging Trial Implicates Mayoral Associate

Last week’s federal court testimony in in the Bobby Ferguson bid rigging trial implicated former Mayor Kwame Kilpatrick’s friend Al White to Ferguson’s allegedly corrupt construction business. According to Detroit Building Authority Capital Projects Superintendent Robert J. Hill, White signed in to one January construction meeting on the $12 million Garden View Estates construction project as a project manager for Xcel Construction Services, the winning bidder, and then signed an April subcontract on the same project as an employee of Ferguson Enterprises. Ferguson has denied any connection between Xcel and the company bearing his name.

Xcel was paid $557,000 to act as construction manager for the Garden View project, and then directed $9 million in demolition and other work to Ferguson Enterprises. In his testimony Hill acknowledged that Xcel and Ferguson Enterprises have the address on Wyoming Street. If convicted, Ferguson faces up to 20 years in prison.

Sunday, June 17, 2012

Political Rhetoric Builds No Roads

With a mere two weeks left before the current band aid Highway Trust Fund extension legislation expires, Senators and Congressmen seem more focused on political game playing than they are on the closed door conference committee negotiations which give the only hope for any legislative initiative beyond another episode of kicking the can down the road. Last week Senate Environment and Public Works Chairman Barbara Boxer pulled five concrete mixers onto the pavement at the foot of Capitol Hill as a backdrop for her speech to a “get the bill done” rally where she intoned, “There is only one group standing in the way of the bill … That group of people that’s standing in the way of jobs and business – those are the House Republicans. That’s the facts, and that’s the truth.” New York Senator Charles Schumer was even less circumspect in his remarks in front of the concrete trucks, referring to “a hundred House Republicans – militants, radicals, extremists – who actually believe the federal government should not be involved in highway building.”

Within minutes, a press release from the other side of the aisle blamed Senate Democrats for inaction on this most important economic legislation which has been languishing for over three years in Capitol back rooms. House Transportation and Infrastructure Chairman John Mica shot back with a reference to the pet provisions House leadership wants included in any long term highway legislation. Referring to House initiatives to cut back on environmental protection and review for road construction projects, and specific fast tracking of the Keystone XL Canadian tar sands oil pipeline, Mica’s release says “I am disappointed in the fact that Senate negotiators have yet to move on key House reform proposals …. In addition, the Senate appears unwilling to compromise at all on the Keystone XL pipeline.”

Speaker Boehner has already indicated he expects to see nothing more than another temporary extension - six months this time – pushing back any opportunity for leadership and a real solution to this major economic issue until after the presidential election. Despite a letter from 17 transportation and construction industry groups sent to all 47 conferees pointing out that the Highway Trust Fund will run out of cash in early 2013 unless a long term reauthorization measure with increased revenue sources is passed, Senators and Congressmen are still putting their pet projects and reelection rhetoric ahead of the nation’s economic and infrastructure needs. The industry groups made clear that the Congressional tourniquet on infrastructure funding is causing gangrene in this major sector of our economy: “A six month extension is not the way to go,” their letter says. “This approach could further exacerbate the Highway Trust Fund’s financial crisis and cause states to cut back on transportation investments during what should be the peak construction season.”

Actually, this is the fourth year during which state and local governments have been forced to defer or cancel much needed infrastructure construction and repair projects because of the uncertainty surrounding availability of federal motor fuel tax revenues to pay for projects which are already approved. Several state highway officials are already dealing with what the industry calls “hard stops and starts” on jobs already underway – a very expensive and wasteful manner of conducting any sort of construction effort. This monumental lack of Congressional leadership on what should be a non-controversial issue is already responsible for hundreds of millions in wasted taxpayer dollars at a time when needs are growing while revenues are shrinking. There is no excuse for such behavior in Washington.

Saturday, June 16, 2012

State Fiscal Problems Threaten Illinois Wind Power Development

Cash strapped Illinois government has borrowed nearly all of the state’s alternative energy supply investment fund, crippling future development of wind power in the state. Established in 2010, the fund was opened in September 2010 with initial cash of $7.1 million, and within a month $6.7 million was borrowed by various state agencies to pay past due bills. Although the Illinois Power Agency says the debt is being repaid, and it plans to use the repaid cash for its intended purpose, renewable power developers are doubtful the fund’s balance will become available to them with any certainty in the future.

By current law, there is a 2025 deadline for Illinois to get 25% of its electric power from renewable sources. However, changing conditions in the state’s electric market are driving wind power developers away from the state. Houston based EDP Renewables has closed its Bloomington office and, although that company has invested $1.5 billion  Illinois wind farms, future wind power developments are now on hold. “We need to be able to lock in long term contracts in order to sell our power,” says EDP Senior Manager of Government and Regulatory Affairs Jeff Bishop. “Currently, the way the renewable portfolio standard is structured, it makes it very difficult for us to procure long term contracts.”

When Commonwealth Edison signed its first long term wind power contracts in 2010, Com Ed had 99 percent of residential customers in the Chicago region, but that market share is rapidly diminishing under recent legislation permitting municipal aggregation. Already 100 cities, villages and towns have moved their residents to other power companies, and another 160 have passed measures which will further erode the Com Ed market share. Com Ed predicts that by 2017 it will have only 65% or so of the Chicago region market for residential power.

The Illinois Power Agency, which procures energy on behalf of Illinois utility companies, says this sort of market volatility makes it impossible to grant long term contracts at stable prices for new wind power development. Chicago based Invenergy’s Director of Origination Craig Gordon believes that the municipal aggregation legislation jeopardized even those long term renewable power contracts already in place. “We’ve seen a lot of these municipalities are switching their suppliers … and what that does for folks who have long term contracts, is put those contracts in jeopardy,” Gordon says.

Once again, political meddling with long term power market forces in attempts to fix short term problems has created a nightmare for the long term plans of alternative energy developers, and the uncertainty is driving them out of our state.

Congressional Inaction Kills Pennsylvania Wind Power Project

Spanish wind power developer Gamesa, Inc., citing uncertain federal wind power subsidies, has announced cancellation of a proposed 22,000 acre, 60 megawatt 30 turbine wind farm on Shaffer Mountain near Central City, Pennsylvania. Gamesa had been pushing forward with development of the proposed wind farm, even in the face of environmental opposition from a threatened lawsuit challenging U. S. Fish and Wildlife Service approval of the project, based on the alleged impact of the turbines on populations of an endangered species of Indiana bats which migrate through the area.

Congressional inaction on reauthorization of tax credits for wind power development is costing jobs in both the manufacturing and construction sectors of our economy, and the job losses in the renewable power sector will continue until Congress acts. The failure of our political leaders to even take up legislative measures on this important issue reflects poorly on both political parties.

Friday, June 15, 2012

Michigan’s Bridge Monopoly Battle Rages On

With monumental assistance from allies in Michigan’s legislature, Grosse Pointe billionaire Manuel Moroun continues his fight to maintain his private bridge monopoly on truck traffic and truck toll revenue between Windsor and Detroit. Wednesday, June 13, the Michigan House Appropriations Committee approved a bill to prohibit Governor Rick Snyder from using money from Michigan’s Strategy Fund to pay for any part of construction of a competing freeway to freeway bridge project two miles downstream from Moroun’s Ambassador Bridge. The Ambassador Bridge is the only existing highway bridge crossing the Detroit River between Detroit and Windsor, and Moroun collects all those truck and auto tolls.

In the last two legislative sessions, bills passed which prohibit Michigan’s Department of Transportation from spending any money on new Detroit River bridge construction, but Moroun wanted to make sure the Strategy Fund’s economic development money was also cut off as a source of funding for any competing bridge. He is also circulating petitions to put a state constitutional amendment on the ballot requiring a public vote before any competing bridge could be built. Over the last few years, the Moroun family has also donated about half a million dollars in campaign funds to federal candidates who have consistently opposed federal funding of new Detroit River bridge construction.

Despite this unprecedented example of self-interested lobbying, Governor Snyder will announce today a proposal, backed by Canada’s government and U.S. officials, for construction of the downriver New International Trade Crossing which would sidestep Michigan’s legislative funding restrictions Moroun has lobbied so diligently for. The proposed new $1 billion bridge and $2 billion attached bridge end customs plazas, would be paid for by privately collected toll revenues from bridge traffic, and by Canadian and U.S. federal contributions to customs facility construction. No funds would come from Michigan’s state coffers, Snyder promises.

Snyder is already authorized under Michigan’s Urban Cooperation Act to participate with Canada and the U.S. federal government in an international bridge authority which could fund the bridge, contract for its construction and operation, and arrange a private contract for toll collection. Canada has offered to advance Michigan’s $550 million share of construction costs against Michigan’s portion of toll revenue from truck and auto traffic over the new bridge. Besides the construction jobs and permanent operating jobs created by the new span, Michigan’s gross domestic product should increase by $2.2 billion annually from traffic across the new bridge, with new state and local tax revenues rising by $400 million each year, and Michigan personal incomes going up by $4 billion.

Given these prodigious improvements in Michigan’s economic quality of life from construction of the proposed new span, it becomes clear that Moroun’s political campaign fund donations are the only real reason for state and federal elected officials’ opposition to the project.

Wyoming Legislators Want The Road Repair Purse Strings Back

Recognizing that dramatically reduced federal funding of highway construction will mean there isn’t enough cash to pay for all of the state’s planned road repair and construction projects, Wyoming legislators are moving ahead with drafting of legislative proposals to take away the authority of the state’s appointed Transportation Commission for setting prioroties among the highway projects competing for scarce resources. Legislators expect to be asked to increase Wyoming motor fuel taxes, and if they do, they want more specific control of where in their state the money gets spent.

Despite warnings from some Senators about unintended consequences of legislative intervention in scarce resource allocation, the Joint Transportation, Highways and Military Affairs Interim Committee voted Wednesday to proceed with revision of the priority setting authority of the non-partisan Transportation Commission. In blatant recognition that a major pillar of political power in their districts is the ability to allocate funds to local projects, legislators’ votes overlooked warnings stemming from legislative interference earlier this year with project priorities set by the state’s School Facilities Commission.

Describing school construction priority setting this spring as a “fiasco,” Sheridan Senator Jonathan Botten said, “We had to compromise and we ended up spending a whole lot more money than what was originally intended.” The other side of the intra-government power struggle is reflected by Thermopolis Representative Lorraine Quarterberg’s remark that if the fuel tax is increased, residents and elected officials have a right to be more involved in deciding where the money is going.

Apparently Wyoming legislators have forgotten that politicization of spending decisions was the reason the Transportation Commission and School Facilities Commission were set up in the first place.

Jamie Dimon’s Apology Disappoints Both Sides Of the Aisle

In testimony Wednesday before the Senate Banking Committee, J P Morgan Chase CEO Jamie Dimon apologized for that bank’s $2 billion loss of its shareholder’s cash in a unit that was created to monitor and reduce the company’s investment risk, but his mildly toned testimony did little to soothe the ongoing political wrangling over forthcoming rules enforcing Dodd-Frank bank regulation legislation. “We made a mistake. I am absolutely responsible. The buck stops with me,” Dimon said.

However, when questions from Rebuplican Senators attempted to provoke repetition of Dimon’s often fiery critique of regulatory intervention in the banking industry, Dimon failed to oblige. He refused to characterize Dodd-Frank as a “marginal” improvement in banking safety, and to deny that the legislation has had a lauditory effect on banking practices. Likewise, when New Jersey Democrat Robert Mendez asked provocatively, “Wouldn’t J P Morgan have gone down without the massive federal intervention, both directly and indirectly, in 2008 or 2009?” Dimon’s response didn’t satisfy Democrats. “I think you were misinformed,” he replied. “and I think that misinformation is leading to a lot of problems we’re having today.”

While Dimon still opposes the Volcker Rule banning bank speculation with paid in capital, he did acknowledge that the supposedly conservative investment strategy in J P Morgan’s $350 billion Chief Investment Officewas “not carefullt analyzed” and “should have gotten more scrutiny from both senior management and the firmwide risk control function,” he continued his attempts to spin $2 billion in losses as a minor problem. “We have let a lot of people down, and we are sorry for it,” his prepared remarks concluded. “We will not make light ofthese losses, but they should be put into perspective. We will lose some of our shareholders’ money – and for that, we feel terrible – but no client, customer or taxpayer money was impacted by this incident.”

Damon’s remarks reinforce his steadfast refusal to recognize that a bank’s paid in capital is the only bulwark standing between customer deposits and the sort of losses which brought about the Great Depression, and which today threaten the health of FDIC and FSLIC depositor protections. Despite Dimon’s trumpetinf about no depositor having lost a penny, J P Morgan customers did lose $2 billion worth of that protective bulwark, and that is a very, very real loss to them.

Tuesday, June 12, 2012

Atlanta Charter Schools Default On $18.9 Million Of Construction Bonds

Three Fulton County charter schools – Fulton Science Academy Middle School, Fulton Science Academy High School, and Fulton Sunshine Academy elementary school – have received notice from their construction bond trustee Wells Fargo Bank that they are in default on an $18.9 million construction loan secured by Alpharetta Development Authority bonds. According to the default notice, officials of the middle school had been notified by the Fulton County School System that there were “significant reservations” about renewal of the schools charter before the bonds were issued, but that information was not disclosed to the bank in connection with issuance and sale of the bonds. Wells Fargo contends that failure is a breach of the bond indenture.

The middle school has 507 students, and has received over $30 million in taxpayer funds over the last ten years. Up to $3.7 million per year in public funds could have been available to cover $1.5 million in annual payments due on the bonds over the next ten years, but that funding will end June 30 when the charter contract with Fulton County School System expires. Both Fulton County Schools and the State of Georgia have refused to renew the middle school charter, citing concerns with fiscal and management practices at the facility, including no bid construction contracts entered with companies having ties to school officials. Last week some of the bonds were sold at 69% of face value by worried investors, and the bond rating has been reduced to junk status. The notice of default is the first step in foreclosure on the three schools’ under construction 44 acre campus, including a planned 90,000 square foot instructional building, and seizure of school operating revenues by the bond trustee.

Construction work on the new campus, designed to house all three charter schools, has stopped. When the  10 year charter renewal was rejected, the schools were offered a compromise 3 year charter, but rejected the compromise and determined instead to become a private school on July 1.

Monday, June 11, 2012

Will Presidential Politics Bankrupt The Highway Trust Fund?

While Senate Democrats are still hoping for passage of some sort of conference compromise long term reauthorization measure for the federal Highway Trust Fund, it now appears House Republicans just want to kick the can down the road past the presidential election. Trouble is, that maneuver would likely put the Highway Trust Fund in insolvency.

Last week, in response to an end of press conference question on surface transportation appropriations, House Speaker John Boehner said, “We’re going to go with a six month extension” when the current band aid measure expires at the end of this month. The reply from Senate Majority Leader Barbara Boxer, who is still conducting behind closed doors leadership meetings aimed at pushing through some sort of conference committee long term reauthorization measure, was steely and pointed: “I am very disappointed that Speaker Boehner is even talking about a long term transportation extension, which would lead to the Highway Trust Fund going bankrupt. Three million jobs and thousands of businesses are at stake.”

Boxer is right. If Congress refuses to deal now with the long term problems facing funding for infrastructure construction in the United States, declining motor fuel tax revenues resulting from higher mileage cars and trucks and folks driving fewer miles, future and even current projects for road and bridge repairs, drinking and waste water treatment systems, rail and waterway transportation, airport expansion, and other infrastructure construction paid for from the Trust Fund and managed mostly by fiscally struggling state and local government agencies, will grind to a halt, leaving skilled construction tradespeople and construction contracting businesses across the country high and dry.

For example, Mark Foster, North Carolina’s Department of Transportation chief financial officer, has to check his cash balance every morning at 7 a.m., to be certain the state has not committed more spending that it can reasonably expect to receive reimbursement from Washington for the federal 25% of the state’s transportation funding total. “We … watch our IOU’s from the feds very closely, in terms of what we have extended in the state dollar in anticipation of recovering the federal dollar,” he says. “You make sure at the end of the day, when you make a commitment, you can pay for it.” The Congressional enactment of nine sequential temporary extensions of Highway Trust Fund appropriations since 2009, with no effort whatsoever toward rectifying the long term problems with federal funding for surface transportation, makes state and local officials more and more nervous with each passing day. Foster, for one, says he is daily attempting to avoid “hard stops and starts just based on what is happening in Washington. That’s not fair to our industry and certainly that causes lots of consternation locally as we make priority commitment to certain projects.”

Nevada DOT spokesman Scott Magruder is equally cautious. “We are monitoring our cash flow. There is a potential, yes, where new construction projects would get delayed down the road.” Washington Governor Chris Gregorie echoes that sentiment, remarking that the state’s major projects “are all at risk.”

The lack of effective leadership on this issue in Congress is appalling. The construction industry is a significant factor in our nation’s economic recovery, and already lags well behind manufacturing and other sectors in terms of bouncing back. Construction lost 28,000 jobs in May, and general contractors don’t see significant revenue increases for 18 months to two years. Construction’s share of gross domestic product has declined from the characteristic 4% to 5% down to a historic low of a mere 3%. Construction industry recovery is still a long way off, and political leaders in Congress shoulder a major share of responsibility for that fact due to their refusal to face the tough issues involved in long term Highway Trust Fund reauthorization.

Shame on them all.

Friday, June 8, 2012

Public Employee Unions Under Attack

Failing to unseat Wisconsin Governor Scott Walker is just the latest flub in the battle by public sector union labor to preserve its power in politics and the recovering economy. Outspent and out-organized by capitalist PACs and other campaign contributors, labor unions failed miserably in their counterattack against Walker’s rabid anti-uinion legislative record in the state. Freedom Works spokesman Brendan Steinhauser characterizes Walker’s recall victory as a signal for anti-union forces to redouble their efforts across the nation: “We absolutely intend to use this going forward,” he said. According to Steinhauser, the message is “Be bold, be a leader, be a conservative and you’ll be rewarded.”

Across the country, attacks on organized labor abound. In California, a November ballott initiative would prohibit unions from using member dues withheld from paychecks for any political purpose. And, San Diego and San Jose citizens overwhelmingly voted this week to cut pension benefits for city workers. Indiana Governor Mitch Daniels signed legislation earlier this year to make that state the 23d “right to work” state in this country, by prohibiting labor unions from withholding dues from non-member paychecks. Louisiana Governor Bobby Jindal signed legislation reducing teacher tenure and collective bargaining rights. Michigan unions face tough opposition to their efforts to enact a state constitutional provision protecting collective bargaining rights for public employees.

Clark University Labor Relations Professor Gary Chaison says public sector unions are losing the public relations battle. “I think that it’s the fault of the unions themselves for failing to recognize they are out of step with the public sympathies. There is a perception that, through their political influence, they are getting a special deal. They’re doing well while others are not.” Even Staunch Democrats like Chicago Mayor Rahm Emanuel and Illinois Governor Pat quinn are going after public employee union perks. Emanuel is calling for suspension of automatic cost of living pension benefit increases for retired public employees, and Quinn is looking for ways to reduce pension benefits due to current state employees.

So, while Wisconsin citizens may dislike their governor’s barnstorming anti-union tactics, apparently they dislike long favored public employee union perks even less.

Wednesday, June 6, 2012

Detroit Light Rail Project Short On Cash and Needed Legislation

Detroit and Michigan Politicians and business leaders who expected Transportation Secretary Ray LaHood to deliver a gift wrapped $40 million federal grant for construction of the three and a half mile M-1 light rail commuter line from downtown Detroit to Grand Boulevard in New Center were disappointed Monday when all the Secretary brought to their meeting Monday was a 60 day deadline for answering federal concerns about long term operational funding for the project, and the accuracy of lowball construction cost estimates and highball ridership estimates.  While Detroit Mayor David Bing characterized LaHood’s presentation to the supporters of the $137 million project as enthusiastic, saying LaHood “made it very clear that there’s nowhere else in the country that he’s seen this kind of commitment from the business community,” both LaHood and Federal Transit Administrator Peter Rogoff skipped the press conference after the 90 minute meeting with project supporters.

The proposed 3.5 mile line promises 16 minute trips from Congress in downtown Detroit through 10 intermediate stops to Grand Boulevard in New Center, with trains running every seven and a half minutes during rush periods to every twelve minutes the rest of the day. Funding commitments for M-1, led by Kresge Foundation’s $35 million pledge, include promises of $3 million or more each from Penske, Quicken Loans, Compuware, Detroit Medical Center, Ilitch Companies, Wayne State University and Henry Ford Health System, and less generous grants from Chevrolet, Chrysler, Kellogg Foundation, and Blue Cross/ Blue Shield of Michigan, among others. So far supporters have raised pledges totaling $84 million, but LaHood doubts that adding $40 million in federal funds would make up the actual construction costs of the line.

Besides underestimating the cost of building the line, LaHood also suspects the projected initial fare paying ridership of 3 million trips per year is overstated. The feds want better backup of current projections or revised estimates more in line with reality. And, after 2025 M-1 proposes to turn the system and its operating costs to a regional transportation authority, but legislation creating such a local entity is stalled in Lansing, where Michigan Governor Rick Snyder wants the rail line to hook up with a proposed 110 mile rapid transit bus system serving Detroit’s suburbs, Metro Airport, and Ann Arbor. Unless that RTA bill passes soon, Detroit’s light rail future looks bleak.