Tuesday, November 12, 2013

Huntley Opens I-90/Ill 47 Interchange

                   At 2 p.m. Friday the full, complete electronic toll interchange between the I-90 Jane Addams Illinois Tollway and Illinois Route 47 at the southern edge of the Village of Huntley formally opened, as the construction equipment pulled away from the cloverleaf and the orange barrels disappeared from view. At a ceremony officially opening the new $61 million interchange paid for in a cooperative effort by the Village of Huntley, the Illinois Tollway Authority, IDOT, McHenry County and Kane County, Huntley Village President Charles Sass thanked all the state, county and local officials involved in completing the project for their efforts, pointing out that the new interchange has “set the stage for attracting more development, creating jobs and expanding the local tax base for decades to come.”

                    The Village has zoned over 300 acres of land within the interchange area for industrial and commercial development, with streets and underground utilities already in place to support new businesses bringing construction jobs and permanent employment to Huntley. Businesses interested in developing new facilities with I-90 frontage and easy access to area highways are encouraged to work with Huntley village officials to arrange industrial revenue bond financing for their new construction within the village.

CTA And METRA Reject RTA’s Joint Bond Issue Proposal

                      CTA President Forrest Claypool promptly expressed opposition to a proposal by RTA Chairman John Gates, Jr. to have RTA take over the power to issue up to $5 billion in government bonds for funding new facility construction by CTA, METRA and Pace, replacing the borrowing now done by those individual agencies. RTA’s current borrowing limit is a mere $800 million. According to CTA spokesman Brian Steele, “This idea is simply the latest in a series of attempted power grabs that would hurt service, make it harder to invest in the system, and make the RTA answerable to no one.”
                    Ongoing METRA scandals and rising interest rates on the CTA’s sales tax backed construction bond issues have prompted Gates repeatedly to recommend legislative initiatives for consolidation of regional public transit authority planning, borrowing and spending power in RTA, as opposed to the four separate public transit agencies now operating in northeastern Illinois. Meanwhile, while Republican and Democratic politicians contend bitterly over control of the planning and funding of public transit in the region, efforts to establish commuter rail service between Huntley and Chicago for the safety and convenience of local residents, and to ease traffic congestion on I-90 between Huntley and the Loop, languish in the earliest planning stages.

Shermer Road Derailment Site Could Reopen Early

                        Union Pacific Railroad Company has completed installation of a wider railroad overpass above Shermer Road at the site of the July 2012 fatal derailment a month ahead of schedule, making it possible that the temporary track bed of crushed stone blocking Shermer near the Northbrook/Glenview boundary could be removed and Shermer Road reopened, at least partially, by year end. The $10 million, 150 foot span will permit widening of Shermer at that location to 3 lanes sometime in the future.

                    According to IDOT, plans for the widening won’t likely come to fruition for another 5 or 10 years, but Glenview and Northbrook residents will be happy to see the roadway restored to its pre-derailment 2 lane configuration as soon as possible. Union Pacific construction workers will begin removing the temporary road bed berm from Shermer in the last half of November.

2014 Construction Starts Should Increase 9%

                         McGraw-Hill’s Vice President of Economic Affairs Robert Murray announced that the Dodge Construction Outlook for 2014 predicts construction starts across the American economy could rise about 9% to a total of $555 billion, led by a solid housing market and rising commercial construction. The Dodge Outlook prediction is based on “more orderly” federal budget deliberations in Congress, and a predicted overall U. S. economy growing at between 2.5% and 3% in 2014.
                    The construction economy has been sluggish in 2013, mostly because of 2013’s contraction in overall U. S. economic growth to 1.6%, compared to 2.8% growth in 2012. Construction starts in 2012 were up 10%, but fell back to only a predicted 5% this year. Apartment construction leads all sectors with 36% growth in 2012, 19% growth in 2013, and a projected 11% growth to a total of $53.1 billion in 2014.
                     Single family home construction is expected to accelerate to $201.1 billion next year. Commercial construction starts increased 14% in 2012, 15% in 2013 and an expected rise of 17% to $72.7 billion in 2014. Nevertheless, it will be a long time before the construction industry sees 2005’s peak levels of activity, according to Murray.

Cash Strapped Owners And Developers Shift More Risk To Contractors And Trades

                   Upward creeping surety loss ratios and skyrocketing trade contractor borrowing for working capital are just two symptoms of increases in onerous contract terms imposed on the construction industry by public and private owners and developers, say speakers at the annual Construction Financial Management Conference sponsored by ACG and CFMA. According to Chubb Surety CEO Rick Ciullo, “Surety rates are down as new players join the fray and dilute prices with added capacity, helping drive profitability down 50% through June 2013.”
                    Consensus Docs Executive Director Brian Perlberg asserts that “We’re seeing larger, more complex projects that require collaboration and communication,” putting additional management responsibilities and computerization costs on building trades. Furthermore, increasing reliance on public private partnerships, design/build delivery processes and computer technology “is clouding how insurers respond to claims,” in the opinion of Marsh, Inc. Senior VP Danette Jones. The speakers agree that bonded contract loss ratios are significantly higher among smaller sureties with a higher number of small general and trade contractor principals.

                    Trade subcontractors furthest from the cash flow are being hit hardest, as both labor and material costs increase and owner payments get strung out over longer time frames. The financial stress on the trades will ultimately, of course, come back to plague owners and developers in the form of higher overhead and fee lines in trade contractor bids on future projects.

Inland Waterway Construction Moves Slowly Back Toward “Regular Order”

                       The Water Resources Reform and Development Act of 2013, passed with changes by the Senate Oct. 31, will go soon to a conference committee co-chaired by California Senator Barbara Boxer and Pennsylvania Congressman Bill Shuster. If the conference committee can reach agreement on the final details of this legislation, it will be the first time since 2007 that legislation providing for two year funding of water resources development and construction in the nation’s inland waterways has come to a vote in Congress. Because of the failure of comprehensive budget and appropriation legislation in the past three congressional sessions, projects to keep afloat the $185 billion in bulk cargoes moving on the nation’s rivers and lakes annually has ground to a virtual halt.

                    If appropriations for harbor, river and lake construction and development could once again become an agenda item of “regular order” in Congress every two years, the average of 52 service disruptions per day along the navigable waters of the United States might be brought down to more manageable proportions, not to mention the additional employment that will be generated in the construction sector of our economy.

Congressman Mica Predicts Dramatic Drop In Federal Highway, Transit Funding

                    Florida Congressman John Mica, former chairman of the House Transportation and Infrastructure Committee, told a meeting of state and local officials gathered in Orlando that they are going to have to find sources of money outside Washington, D. C. to pay for transit and highway construction in their future plans. While touting the $8.4 billion in federal taxpayer dollars funneled to Florida in the recent past to fund major highway, airport and rail transportation projects, Mica told the “Florida Forward” transportation conference that the federal motor fuel tax of 18.4 cents per gallon, last increased in 1993, no longer brings in enough money for road and transit construction.
                    “There is pressure when you’re borrowing 43 cents on every dollar you are spending,” Mica said. “Long term, we’re going to have to do something, since the gas tax is broken.” What he really means is that Congress is politically unable to raise the motor fuel tax rate so long as gasoline and diesel prices remain at current levels. Alternative proposals to force auto and truck owners to automatically report and pay an additional tax on vehicle miles driven have been dead on arrival in Washington.
                    A quick look around the Chicago suburban areas where huge paving contractors are busily at work reveals that Mica may be telling the truth. Most of the billions in road construction work in Illinois which is planned for future years will be done on toll roads paid for by the cars and trucks driving on them, rather than supported by cash from the Federal Highway Trust Fund. What this will mean for the tradespeople and laborers whose livelihood has depended on full employment during the Illinois road building season remains to be seen, but there is no easy solution in view.

With Steel Construction At Near Record Highs American Bridge Company Shuts Down Fabrication

                  Explaining the company’s decision to shutter its steel fabrication facilities in Coraopolis, Pennsylvania and Reeds Port, Oregon, American Bridge Company CEO Mike Flowers says the firm’s backlog of steel erection orders and revenues from new steel construction projects are at near record highs, but unfortunately both the projects being completed and those on the drawing boards use steel members whose gigantic dimensions are too expensive to fabricate in the United States. “The products the plants make no longer matches the products needed by the construction company,” Flowers said.
                    Instead, American Bridge, in a joint venture with international construction giant Fluor Corporation, is completing the $1.9 billion reconstruction of the San Francisco Bay Bridge using steel beams and columns fabricated in China where labor costs are dramatically lower. Construction companies unable to find low cost fabrication here in the US work around Congressional “Buy American Steel” legislation by purchasing U. S. made plate, shipping it by ocean to China, where it is fabricated into the required bridge elements and then put on freighters returning to American ports. So much for Congressional attempts to keep steel forming jobs in this country.
                    Because highway bridge construction in the U. S. turned primarily away from all steel bridges to less expensive reinforced concrete bridge members, the majority of bridges currently needing repair or replacement are not within the all steel bridge specialty of American Bridge. As a result, Flowers said, the fabricating arm of American Bridge has been financially unhealthy for years. If Congressman Mica’s prediction of rapidly declining federal highway construction funding is correct, neither the steelworking trade nor the ironworking trade can take much comfort in the highly touted “Buy American Steel” clauses Congress has inserted into many of its recent infrastructure funding bills.

Forged Chubb Performance Bonds Costing Contractors Millions

                  Chubb Group has been notifying obliges in nine states that performance and payment bonds supporting contracts of 22 construction companies and bearing the Chubb surety seal and purported signatures are forgeries. The 22 contractors presenting these bonds were bilked out of over $3 million in bond premiums over the last year and a half by the forgers, who, among other things, misspelled the name of one of the Chubb executives whose forged signature appears on the bonds. The contractors purchasing the forged bonds have been required to pay another premium and purchase a valid replacement bond in order to continue with work on the projects affected.
                    At least two forgers acting as individual sureties have been identified as the source of the forged Chubb bonds, and Chubb has successfully obtained summary judgment for fraud and racketeering against the two forgers in the U. S. District Court for the Northern District of Florida, in Pensacola. It remains to be seen, however, whether Chubb and its lawyers can ever track down and actually collect from the forgers.
                    It seems several of the victims of this bond forgery scheme are minority owned or woman owned contractors. Earlier performance bond forgery schemes resulting in criminal conviction of the forgers have bilked construction companies out of as much as $22.5 million in fraudulent bond premiums over a three year crime spree. That particular forger was eventually caught and sentenced to ten years in federal prison.

                    If your construction business works even occasionally on bonded projects, make sure you do your due diligence and follow the advice of Surety and Fidelity Association of America Corporate Counsel Robert Duke: “The thing that can be done, and we preach, is to create awareness among obligees that it’s a five minute phone call to verify the authorization of a bond and avoid any of this.”

Construction Unemployment Down Worker Hours Up

             The U. S. Labor Department announced that unemployment in the construction sector of the economy hit a six year low of 8.5% in September, though construction unemployment is still higher than the 7.3% unemployment in the overall economy.                   

In the last 12 months employment in construction jobs increased 3.4%. Hours worked weekly by construction company employees rose 4.2% over the same one year period, showing that tradespeople are putting in longer work weeks, in addition to the time worked by new hires.

                    Since 2010, unemployment in construction has declined from a high of 17.2% to the current 8.5%, demonstrating that construction industry unemployment has dropped by more than half from its peak.

New OSHA Rule Moves Toward Public Real-Time Company By Company Injury Statistics

                   OSHA’s Assistant Secretary of Labor for Occupational Safety & Health Dr. David Michaels announced a new OSHA rule entitled “Improve Tracking of Workplace Injuries and Illnesses” which will require 478,000 U. S. employers of 20 or more employees to electronically report illness and injury rates to the agency once annually, or quarterly for employers with over 250 workers. OSHA plans to eventually post the data on line, creating a public, facility specific database of workplace injury information for regulators, workers, competitors and prospective employees.
                    According to Michaels, such a database would have several advantages:
·                                   It will allow employers to benchmark their injury rates against others in the same industry and against worldwide industrial injury data generally.
·                                     It will allow government agencies, owners and developers hiring contractors to compare and contrast safety statistics among bidders for their work.
·                                       It will allow contractors with exemplary safety records to have bragging rights over their competitors.
·                                It will allow companies with good safety records to become “employers of choice” among people looking for work within their industries.
·                                       It will push employers to find and remedy safety and health hazards before illness or injury occurs.

     Michaels admits that OSHA and its various state government counterparts taken together have only enough staff to inspect each of the nation’s workplaces subject to OSHA jurisdiction only once every 100 years. Creation of the database should enable regulators to focus enforcement efforts on high risk industries and facilities.
                    The National Association of Manufacturers has already announced its opposition to the proposed rule. NAM Director of Labor and Employment Policy Amanda Wood denies that publishing company specific and facility specific injury statistics would “further the end game to achieve safer workplaces.”
                    “Discussing specific injury and illness data could lead to unfair characterizations of businesses by people who just see a statistic and don’t know the circumstances behind it,” Wood said. “We need best practices, not additional regulations, at this time.”

                    OSHA has scheduled a public hearing on the proposed rule in Washington, D. C. January 9, 2014, and public comment on the rule closes February 6.

Construction Injuries Down, But Fatalities Up

                   The Bureau of Labor Statistics just released data on injuries and deaths in construction industry mishaps shows a decline from an injury rate of 3.9 injuries per 100 full time workers in 2011 to 3.7 per 100 full time workers in 2012. However, the number of construction workplace fatalities increased 5% over the same one year period, to a total of 775.

Changes Proposed to Illinois Renewable Energy Law

                    Illinois electric rate payers have deposited $53 million into a fund to finance solar power panel construction in the state, but problems with the renewable energy legislation have left the cash sitting in the bank. Oak Park Senator Don Harmon will introduce a bill in the next session to remove the restriction against disbursement of the money to property owners putting up solar panels unless Ameren or Com Ed is actually purchasing power from the panel owners.

                    Because so many customers have switched away from Com Ed and Ameren to lower cost power providers, the two major utilities are not buying solar power, and solar power development in the state lags far behind other Midwestern low sunshine states with low electric rates.