Surface Transportation House Markup Falls Far Short

Congress will undoubtedly come up with a short term patch to end the impending crisis when federal highway trust fund spending authority ends October 29. There is still no long term solution in sight, however, and both the Senate’s three year bill passed there July 30 and the House Transportation and Infrastructure version slated for markup today fall far short of the customary six year authorization legislation which would enable state and local governments to plan rationally for infrastructure maintenance, repair, replacement and growth. Gaping revenue shortfalls in the Highway Trust Fund loom just over the horizon, and neither the House nor the Senate version contemplates funding beyond the next three years. Furthermore, both proposed measures are about $30 billion under the projected three year needs.

No Congressman or Senator up for reelection is willing to propose increased motor fuel taxes, and there is no viable source of alternative or supplemental revenue on the table to fill that gap, much less provide any dollars at all for years four, five and six. The House bill being marked up today provides for blocking all funding in 2019 through 2021 unless Ways and Means can come up with an additional $40 billion in those years.

The House committee markup bill allocates $261 billion for highway construction, $55 billion for public transit, and $9 billion for highway safety improvements over the six year authorization period totaling $325 billion. The Senate version passed earlier is $25 billion richer, for a total of $350 billion. Neither bill, however, comes the least bit close to indicating where all that cash will come from. So, next week’s punting of this problem into the 2016 legislative sessions will be followed by a “hail Mary” pass play which could fall halfway short of the goal line for America’s roads, bridges, rails and waterways.

Exelon Drops Nuclear Plant Closure Threat – For Now

In a curtsey toward the truth that threats as lobbying tactics provide little leverage, Exelon has promised to continue operating its nuclear power generating plants, at least for a few more years, in the face of inaction by the Illinois legislature on the company’s proposed $300 million rate hike for generating carbon free electric power. Exelon promises to continue operating the Quad Cities reactor facility through May, 2018, and the Byron facility through May, 2019, though it equivocated on the future of the Clinton reactor.

In making the announcement dropping the threat of imminent reactor closures, Exelon CEO Chris Crane said: “Policy reforms are still needed to level the playing field for all forms of clean energy and best position the state of Illinois to meet EPA’s new carbon reduction rules.” Opponents of the company’s bill say no bailout of reactors is needed, because Exelon profited $1.6 billion in 2014.

The true cause of the legislature’s failure to vote on the proposal this year, though, is the overriding gridlock over the state’s budget crisis, rather than ratepayer opposition to the legislation. Expect to see similar measures introduced next year, once Governor Rauner’s tiff with legislative leaders over his fiscal reforms has finally been resolved.

GOP House Leadership Dustup Drops Highway Funding Bill Into Another Abyss

John Boehner’s announcement of his resignation as Speaker, and Kevin McCarthy’s abrupt withdrawal from the race to succeed him, have plunged into limbo once again all hopes for resolution of the Highway Trust Fund’s long term funding issues before the current patch expires on October 29, 2015. Look for another short term bill to keep funds flowing to road and bridge construction projects around the nation while Congress once more punts the problem into the 2016 legislative session.

House Transportation and Infrastructure Chairman Bill Schuster (R-Pa.) has scheduled his full committee’s markup of the House version of a three year Highway Trust Fund appropriation bill for 10:00 a.m. October 22, in Room 2167 of the Rayburn House Office Building, just one week before the current authorization expires on October 29. That leaves clearly insufficient time for action on the House floor, and a conference committee resolution of differences with the Senate’s three year, $50 billion bill passed 65-34 by the Senate on July 30.

Announcing the markup session, Chairman Schuster said: “Our nation’s economy depends on a safe, efficient surface transportation system … Next week, the Committee will move forward with the policy and authorization provisions of a bill to improve America’s surface transportation infrastructure, reform programs, refocus those programs on national priorities, provide more flexibility and certainty for state and local partners, and welcome innovation.” He neglected to explain how he proposes to fill the cash gap between shrinking motor fuel tax revenues and growing repair and replacement needs for roads, bridges, rails and waterways which move our nation’s citizens and cargo.

Drinking Water Loan Program Locks Up $1.1 Billion Slated For State And Local Systems

Tax dollars appropriated, but unspent, in the Drinking Water State Revolving Fund totaling about $1.1 billion could be deployed to repair and improve the nation’s drinking water supply systems, but poor management, project delays and administrative difficulties have prevented use of the money for its intended purpose. Twenty percent of the cash set aside for repairing and replacing leaking pipes and water mains, century old storage tanks, and decaying treatment plants gets spent for paying the salaries of state water employees, while lack of matching funds and inability to repay loans from the Revolving Fund with inadequate water ratepayer revenue have slowed applications for funding to a crawl.

Systems around our nation suffer 700 water main failures every day. Political inertia blocks water rate increases which could pay for system maintenance and improvements, and more frequent and more disruptive failures will continue if the locked up funds remain unspent, according to American Society of Civil Engineers past president Greg DiLoreto: “Americans have to understand that if they want this system, they are going to have to be willing to finance it.”

Affordable Housing Lawsuit Challenges Chicago’s Ordinance

The Home Builders Association of Greater Chicago and Hoyne Development have jointly filed a lawsuit against the City of Chicago, challenging the city’s affordable housing ordinance, which requires residential developments of 10 or more units needing zoning changes, or the city’s financial assistance, to include 10% of the units built as affordable housing, or pay a fee of $100,000.00 per required affordable unit not included in the development. Next month an amendment will increase the in lieu fees up to a maximum of $225,000.00 per affordable unit not built, depending on which of three city zones includes the proposed development.

Plaintiffs assert the ordinance takes their private property for a public use without just compensation, but the city will vigorously defend the ordinance as an exercise of its proprietary authority to impose fees for requested regulatory revisions.

High Profile Architects Compete For Obama’s Presidential Library

Architecture firms from Chicago, New York, California, North Carolina, Italy and the United Kingdom are rumored to be under consideration for designing President Obama’s presidential library, to be built in Chicago’s south side Washington Park or Jackson Park, after Obama’s term of office ends in January, 2017. Chicago based architects in the running include Helmut Jahn, designer of O’Hare Field’s United Airlines terminal, and the University of Chicago’s Mansuelo Library, who sat at Obama’s head table at the president’s state dinner for German Chancellor Angela Merkel in 2011; Mark Sexton, who designed Chicago’s Spertus Institute; Carol Ross Barney, designer of new CTA stations and Chicago’s Riverwalk; Tigerman McCurry, designer of the innovative children’s scale Chicago Center for Children’s Advocacy; and Ralph Johnson of the Chicago office of Perkins + Will, designer of the Notebaert Nature Museum in Chicago’s Lincoln Park.

Former presidential library design firms from New York – Ennead Architects and Robert A. M. Stern – are in the running, along with New York’s Diller, Scofidio + Renfro; the San Francisco office of Skidmore, Owings & Merrill, designers of the U. S. Consulate building in Guangzhou, China; and Philip Freelon of North Carolina’s office of Perkins + Will. Overseas competitors include Italian architect Renzo Piano, designer of the modern wing of the Art Institute of Chicago and of New York’s new Whitney Museum; and London based David Adjaye, designer of the under construction National Museum of African American History and Culture in Washington, D.C., who sat at the President’s head table during the 2012 state dinner for British Prime Minister David Cameron. Announcement of the winning architect is expected early next year.

Quincy Veterans Home Legionella Outbreak Kills Eight

Fifty two people have been sickened, and eight have died, in an outbreak of Legionnaire’s Disease at the Illinois Department of Veterans Affairs 129 year old facility in the last 6 weeks. This news, coupled with recent outbreaks in California and New York, also likely connected to HVAC systems, has contractors in the business of installing ductwork or plumbing checking their insurance policies to see if they have coverage for losses of this nature.

According to brokers who sell pollution coverage for construction businesses, the product is “high severity, low frequency” coverage, reasonably priced for the risk involved. However, different insurers treat legionella differently. Some deem the bacteria included within the definition of “pollutant,” others require a special legionella endorsement to get coverage, and a few will not cover legionella under any circumstances.

The Center for Disease Control reports that there are between 8,000 and 18,000 cases of Legionnaire’s Disease annually in the U. S., with most originating from HVAC and non-potable water systems, but some also come from water faucets and showerheads. Average cost for a Legionnaire’s Disease endorsement runs between $1,250.00 and $1,500.00 for a million dollars of coverage.

Huntley Dropping “Copper Only” From Plumbing Code

For many years the Village of Huntley has been a community with the highest quality requirements for new construction, by means of a strict village building code. One of the provisions requiring developers within the village to live up to the highest standards of construction is Huntley’s plumbing code section 303.5.3:

“Absolutely no plastic materials shall be utilized within the confines of any building for water distribution. Exception: The use of CPVC pipe shall be permitted for residential fire suppression systems only.”

The State of Illinois Department of Public Health has prohibited Huntley from enforcing this limitation since August 2014, in the interest of “consistency” among local government plumbing codes within the state. However, the Department of Public Health does allow local government units to petition for the right to amend the state plumbing code within their jurisdictions. On September 10 Huntley’s Village Board will vote on a resolution adopting the state plumbing code verbatim as the Village plumbing code, removing forever the “copper only” water piping requirement.

Allowing future large scale residential construction with plastic water pipe will devalue every house in Huntley with copper water pipe, by putting lower cost plastic pipe homes on the market to compete with sales of existing copper pipe homes. Besides harming existing village residents, such a change could also reduce the village’s real property tax base over time.

While the health department currently prohibits Huntley from enforcing the “copper only” plumbing requirement, the Village Board should instruct the village staff to petition the state for the right to keep the plastic water pipe prohibition in Huntley’s plumbing code.

Stalled Progress On Representative Tryon’s Low Carbon Electricity Bill Threatens Shutdown Of Exelon’s Quad Cities Reactors

Huntley’s 66^th District Representative Mike Tryon, Chief Co-Sponsor of HB 3293, Low Carbon Energy Portfolio, and Co-Sponsor of the companion legislation HB 2607, Renewable Resource Procurement, has been blocked by the state’s ongoing budget stalemate from wrestling either measure out of the House Rules Committee and onto the House Floor. As a consequence, Commonwealth Edison’s parent company Exelon must decide by October 1 whether or not to shutter its two reactor nuclear generating facility along the Mississippi River at Cordova, Illinois, known as the “Quad Cities” plant. Exelon must either agree to shut down the reactors after May 2017, or continue operating the facility through at least 2019.

Passage of the legislation would result in electric rate increases throughout the northern Illinois areas served by Commonwealth Edison, increasing costs for construction businesses using electric power to perform their work. On the other hand, shuttering the Quad Cities plant would significantly reduce generating capacity in the state, which could mean future difficulties for contractors and developers needing more power as their businesses grow and development in northern Illinois continues to expand. This is just one example of the barriers to businesses planning for their futures which our embattled politicians in Springfield seem unable to avoid as they struggle to please their base constituencies rather than solve our state’s difficult problems.

IDOT’s New Secretary Warns Against “Planning For Yesterday”

Governor Rauner’s newly appointed Secretary of Transportation Randy Blankenhorn warned in a speech September 3 at the City Club of Chicago that his agency is far behind the times: “I’m afraid that we’re planning for yesterday’s transportation system,” he told his audience of transportation professionals. Describing a bus load of four year olds driven for an hour each way to and from preschool, Blankenhorn complained: “That’s a transportation system that is not working.”

Reporting on the results of his listening tour around the state following his appointment, Blankenhorn said one logistics executive told him the business the state’s highways and intermodal rail facilities as its warehouses, because of the slow pace of freight movement across the state. “IDOT is not going to come up with the solution,” he warned, “It is going to be you. … Do we continue to build overhead message signs that tell me how late I am, or do we do a better job?”

In response to one question about designating high occupancy vehicle lanes on existing superhighways, Blankenhorn said he would prefer adding express toll lanes as roads are widened, so drivers needing to speed along to their destinations could pay for the privilege. He said tolls for such express lane usage would vary depending on the time of day and the traffic congestion conditions.

In concluding his address, Blankenhorn pointed out that nothing is likely to change regarding plans for future transportation needs until Governor Rauner and Speaker Madigan work out their budget differences, and get the legislature back to work on the stacks and stacks of other legislation remaining to be processed.

Unions Win A Round For Day Labor Worker Organization

NLRB’s August 27, 2015 decision in Case 32-RC-109684, Browning-Ferris and Sanitary Truck Drivers Local 350, puts every employer hiring workers from temporary labor agencies on notice that even day labor has broad rights to organize and bargain collectively with the business owners who “lease” them from temp providers. Reversing more than 30 years of labor law precedent limiting the opportunities for collective bargaining by workers employed in day labor agencies, a majority of the Board ruled that those older opinions are “increasingly out of step with changing economic circumstances, particularly the recent dramatic growth in contingent employment relationships.” The majority opinion seeks to “put the Board’s joint-employer standard on a clearer and stronger analytical foundation … to best serve the Federal policy of ‘encouraging the practice and procedure of collective bargaining.’”

In other words, businesses in the construction industry and other segments of the economy who may have union contracts with a skilled labor force, but use temporary labor agencies to supply less skilled workers on a day to day basis as workloads fluctuate, will face renewed union efforts to organize the day laborers who report to work at their plants and project sites. The last 30 plus years of NLRB precedents have made it difficult for union organizers to establish that plant operators and construction contractors were joint employers of the day labor workers, forcing unions to organize and bargain only with the temp agencies. Under this new ruling, the companies putting agency employees to work from time to time can be the “employers” compelled to bargain collectively with the unions representing their temporary workers.

The case arose at a BFI recyclable sorting facility, where BFI directly employed operating engineers, spotters and other union workers outside the sorting facility to move materials as they arrived and prepare them for sorting, but used temporary workers supplied by temp agency Leadpoint Business Services to man the sorting lines within the plant as the workload might require. Local 350 sought to organize 240 full time, part time and on call sorters, screen cleaners and housekeepers to bargain collectively with BFI over wage rates, work hours and plant operating conditions. BFI Argued that, under the last 30 plus years of NLRB decisions, Leadpoint was the sole employer of the temporary workers, and BFI could not be compelled to bargain collectively with them.

The temporary labor contracts between BFI and Leadpoint were worded to take maximum advantage of earlier NLRB rulings. But, citing work factors controlled by BFI, including sorting line operating speeds, productivity standards, break times, safety, and mandatory overtime, the Board determined that, under its new, broader interpretation of “joint employer” status, the union could compel BFI, rather than only Leadpoint, to sit at the negotiating table with Local 350.

Whether or not your construction business currently has any union labor agreements in place, if you use workers from temp agencies on your project sites, or in your plant or office, you can expect to see union organizing efforts and bargaining initiatives for the temporary work force aimed at your business in the near future.

Overtime Pay Lawsuit Hits Walsh Construction

Chicago based Walsh Construction is facing a federal class action overtime pay lawsuit in Connecticut, brought by non-craft project bookkeepers claiming Walsh improperly classified them as professional accountants, exempt from time and a half for hours worked past 40 per week. Most construction tradespeople belonging to unions have labor agreements requiring them to be paid time and a half –or more on Sundays and holidays – for overtime work, but non-union clerical and administrative staffers lack the overtime pay requirements of union contracts.

The class action lawsuit is part of a drive to use the existing Fair Labor Standards Act, and the Obama administration’s proposed new rules, to require construction contractors to pay overtime past 40 hours to everyone on a project site who earls less than $52,000.00 per year. Companies in the construction business should watch the outcome of this case closely, to determine what impact the result may have on their own payroll expenditures, and bottom lines.

Mayor Emanuel Reorganizes Chicago Infrastructure Trust

Frustrated with the sluggish pace of progress by his showpiece Chicago Infrastructure Trust in pushing forward funding and completion of public private partnership investment projects in the city, Mayor Rahm Emanuel has shaken up the board and staff of the entity he touted on its creation as “the breakout strategy for the city” during the present era of declining federal funding and disappearing state resources. Executive Director Stephen Beitler, venture capitalist, is being replaced by Chicago Law Department attorney Leslie Darling. Former Boeing executive James Bell and former Sara Lee executive Diana

Ferguson have resigned from the Trust’s board, and former 10^th Ward Alderman John Pope lost his seat after being defeated in April’s election. Their departures are joined by former Chicago Inspector General David Hoffman, whose term expired at the end of 2014.

Thus far, the Trust has initiated work on only two projects – improving city owned building energy efficiency, and adding cell phone service in CTA subway tunnels. The energy efficiency upgrade project was slated to involve 104 city buildings at an investment of $115 million, but lack of investor participation cut back the scope to $13 million worth of work on only 62 buildings. The subway cell phone initiative for 4G wireless installation is expected to produce investment of $32 million.

Mayor Emanuel has expanded the Trust’s Board from five to seven members. New appointees include City Treasurer Kurt Summers, Ventas CEO Debra Cafaro, Northern Trust hedge fund officer Carl Lingenfeller, Ernst & Young Global investment head Kym Hubbard, Marquette & Associate Managing Partner Miguel Zarate, and 19^th Ward Alderman Matt O’Shea. The sole holdover from the earlier board is Chicago Federation of Labor President Jorge Ramirez.

The new, expanded board will be looking at potential private investments in proposed projects such as express L service from the loop to O’Hare Field, upgrading 400,000 Chicago street lamps to energy efficient LED lighting, and improving energy efficiency of 114 swimming pools in Chicago’s parks and schools, a proposal approved by the outgoing board, but which tanked as the CPS bond rating has plummeted.

OSHA Proposes $1.7 Million Fine For Worker Asbestos Exposure

St. Louis area contractors Kehrer Brothers Construction and its affiliate D7 Roofing were investigated by OSHA for exposing Mexican H-2B visa temporary workers to asbestos hazards during renovation of a former school building in Okawville, Illinois. Kehrer was cited for 16 egregious violations, 9 willful violations, and 6 serious violations for failing to warn the workers of asbestos hazards, failing to provide proper training in asbestos remediation, and failing to provide proper protective equipment, and for threatening to fire workers who spoke with OSHA investigators.

According to Assistant Secretary of Labor for Occupational Safety and Health David Michaels, the workers were at the mercy of their employer, who helped them obtain temporary work visas, arranged their housing, and drove them back and forth to the project site: “They spoke no English … They were completely at his mercy,” Michaels said. Kehrer affiliate D7 was also cited for 1 serious and 2 willful violations in the investigation.

Overtime Pay Rules Changes

The Obama administration has proposed dramatic rules changes under the Fair Labor Standards Act for determining which employees must be paid time and a half for working more than 40 hours per week. Current rules exempt white collar salaried workers earning more than $35,000.00 per year from overtime requirements. The proposed new rule would require time and a half pay past 40 hours per week to white collar workers earning between $35,000.00 and $50,440.00 per year.

Businesses responding to the proposal say it will not result in higher earnings for current employees, rather it would cause hiring of part time workers without benefits to perform the extra hours of work, eliminating overtime for current staff. It remains to be seen what the final rule will look like after the comment period expires.

East Algonquin Road Corridor Development Study

The Village of Algonquin recently released the study report it commissioned from development consultants Gruen Gruen + Associates with recommendations for enhancing development in the area of the village along Algonquin Road east of the Fox river. The study report notes that business properties in the study area consist of 59% retail stores, 26% construction, industrial and automotive uses, and 15% medical and health related service businesses. According to the consultants, residential development in the study area has been hindered by perceived quality differences between Jacobs High School west of the Fox and Dundee-Crown High School east of the river, as well as village requirements that homes built in the area have brick on all four sides, increasing construction costs. Lower traffic and worker counts east of the Fox also contribute to restaurant vacancies and lack of grocery and food service businesses in the study area.

In order to arrest the declining business environment along Algonquin Road east of the Fox, the consultants recommend that Algonquin’s village government adopt a policy of discouraging dense residential and mixed use developments, as well as stand alone retail locations, and encourage housing development within the study area by eliminating costly façade requirements. As for business development, the study recommends reducing regulatory costs and uncertainties by making medical clinics, physical therapy facilities and MRI centers as permitted uses, rather than requiring special use permit applications for every clinical use project.

The study praises completion of the Algonquin Road congestion relief project just west of the Fox, but remarks that more work is needed in order to further reduce traffic congestion in the downtown area at the river, so as to encourage folks living west of the bridge to travel across to the east side for shopping and entertainment.

New USEPA Clean Water Rules In Force In Illinois

Despite a ruling by North Dakota Federal Judge Ralph Erickson in Fargo barring enforcement of EPA’s new clean water rules in 13 states, the agency announced that it will enforce the new regulations in all 37 states which were not joined in that particular litigation, including in Illinois. Judge Erickson’s ruling bars enforcement of the new rules on permits required for activities affecting small tributary streams and other waters on private property within Alaska, Arizona, Arkansas, Colorado, Idaho, Missouri, Montana, Nebraska, Nevada, New Mexico, North Dakota, South Dakota and Wyoming. Different states have similar litigation proceeding elsewhere, with a court hearing scheduled in another case against the rules in New York on October 1.

The agency seems confident the new rules will ultimately be held enforceable everywhere, despite legislation pending in both houses of Congress to block the new rules. Meanwhile, construction contractors and property owners in Illinois who are proposing work on property with wetlands or small streams need to contact USEPA and apply for permits required under these new regulations, or face potential fines and penalties should EPA ultimately prevail in this protracted legal battle. Better safe than sorry.

Federal Surface Transportation Update

Congress may be creeping toward a long term solution to the Federal Highway Trust Fund revenue problem, at least for the next six years, according to my conversation with Sixth District Congressmn Peter Roskam (R. Ill.) a member of the House Ways and Means Committee, which is charged with responsibility for appropriating money to fill the gap between the nation's needs for road, bridge, waterway and transit construction and repair, and the declining revenues generated by the federal motor fuel taxes dedicated to keeping America moving. Congressman Roskam agrees that the 34 consecutive short term appropriation patches for the Trust Fund are a poor substitute for the traditional funding Congress used to provide six years at a time. Without the ability to predict federal shares of highway, bridge, waterway and transit funding over the long term, state and local governments are crippled in their planning for needed repair and construction projects which usually last more than a year from initial planning through completion.

Primarily because of the Congressionially enacted CAFE fuel economy standards, and also because folks tend to drive less when the economy is sluggish, taxes generated on gasoline and diesel fuel have declined dramatically in recent years, although the costs of highway, transit and waterway construction projects continue to increase. As a result, the gap between motor fuel tax revenue and the funds needed for surface transportation infrastructure construction and repair projects continues to grow each year. According to Representative Roskam, the majority of the Ways and Means Committee is looking toward legislation which would reduce the income tax rate on repatriated foreign earnings of U. S. corporations, and would dedicate the expected resulting tax revenues to the Highway Trust Fund.

However, it remains to be seen whether such an appropriation bill from the House would pass in the Senate, since such a six year funding measure would not address the need for additional Highway Trust Fund revenues in future six year appropriation periods. 

House Proposes 5 Month Surface Transportation Fix

            Unable to come forward with any acceptable compromise on long term funding to keep the Federal Highway Trust Fund solvent over the long term, in the face of the July 31 expiration of the band aid measure passed at the end of May, the Chairmen of the House Transportation and Infrastructure Committee and the House Ways and Means Committee are jointly proposing to extend general revenue infusions totaling $8.1 billion into the highway till, to keep summertime road construction projects going through December 18. Bill Schuster (R-Pa.) and Paul Ryan (R- Wis.) issued a joint statement yesterday, proposing a bill which should come to a vote in the House today. They said, in part, “ This country needs a long-term plan to fix our roads, bridges and other infrastructure, and this bill gives us our best shot at completing one this year. … By providing resources through the end of the year, we can ensure construction continues while we work toward a package that could close the trust fund’s shortfall for as many as six years.”

            This House measure would transfer cash from general revenues to the highway trust fund account, to be offset by $8.3 billion in anticipated Transportation Security Administration fees. House Republican have ruled out any increase in motor fuel taxes, and the current proposal includes a $90 million tax cut for natural gas and LPG producers, to bring their rates in line with motor fuel taxes. While the House proposal does not include an unrelated renewal of Export-Import Bank authority, the Senate is expected to add that into its version of this must pass legislation, adding to the potential for last second histrionics in debate over the ultimate conference committee legislation.

            The Senate has before it a six year highway trust fund extension bill providing $300 billion in cash to the fund, but has failed to reach agreement on revenue to support the measure. The Senate’s thinking that a one time tax on $2 trillion in foreign profits of U. S. firms could fill the gap is clearly a non-starter in the House, despite Senate Minority Leader Harry Reid’s opposition to any more surface transportation band aids.

Summer Sizzles – Congressional Highway Funding Fizzles

            Facing a July 31 deadline for the expiration of Federal Highway Trust Fund appropriations, only one of the five key Congressional committees charged with legislating U. S. surface transportation policy seems capable of any action during this session. Senate Environment and Public Works Chair James Inhofe (R-Ok) and Ranking Member Barbra Boxer (D-Cal) have agreed on and passed out of their committee the DRIVE [Developing a Reliable and Innovative Vision for the Economy] Act, which proposes a six year, $350 billion surface transportation appropriation, and the Senate Banking Committee, in charge of transit construction appropriations, and the Senate Commerce Committee, in charge of rail and bus appropriations, are expected to add on as much $90 billion more to the dream pot of gold.

            The problems, however, are in the Senate Finance Committee, which will refuse to increase motor fuel taxes to bring sufficient Highway Trust Fund revenue to fund this ambitious package, and in the House Ways and Means Committee, where Chair Paul Ryan (R-Wi) refuses to consider a motor fuel tax increase, and offers no alternative sources of revenue.

            Congress has already pumped $62 billion in general revenue into the Highway Trust Fund to make up for money lost to CAFÉ’s increasing fuel mileage requirements for cars and trucks, to hybrid and electric vehicles, and to the fact that general economic woes have cut into everyone’s miles driven per year. The Congressional Budget Office estimates another $11 billion in general revenues will be needed next year just to keep federal surface transportation funds flowing to the states at current levels. Look for the 35^th successive band aid, short term legislative fix to push this issue out beyond the next federal electioin cycle.

Midwestern States Struggle Over Highway Appropriations

            Illinois, Wisconsin, Missouri and Michigan legislators are all faced with voters who want first class roads, but don’t want to pay for building or maintaining them. Illinois’ Department of Transportation projects that current revenue sources will provide less than 20% of projected highway funding needs for the next fiscal year. Wisconsin Governor Scott Walker opposes bonds to fund that state’s road and bridge budget, but also he opposes increasing motor fuel taxes or vehicle registration fees to bolster revenue for surface transportation needs. Last August Missouri voters soundly defeated a proposed $0.0034 retail sales tax  for roads and bridges, and this spring the Missouri legislature killed a 2 cents per gallon motor fuel tax hike. As a result Missouri lacks the cash to meet federal highway grant matching requirements, and MDOT says its entire budget will be consumed by maintenance requirements.

Michigan’s Proposal 15-1 would have increased that state’s retail sales tax to fund education and surface transportation programs, but it went down to voter defeat by a margin of 4 to 1 against. Republicans in the Michigan House responded with a bill to raise diesel fuel taxes and vehicle registration fees, and end the state’s low income earned income tax credit, but the Michigan Senate seems poised to kill that measure.

            Even if these hard hit states could come up with the cash required to meet federal grant matching requirements, there I no certainty that federal funds will continue to be available at current levels over the long term. Midwestern drivers will be steering around potholes and keeping an extra spare tire in the trunk for years to come, it seems.

Blackstone Group To Renovate Willis [formerly Sears] Tower

            Following the June 5 closing on its purchase of the former Sears Tower in Chicago, Blackstone Group announced its affiliate Equity Office will work together with CBRE and Telos Group LLC to expand the 700,000 square feet of retail and entertainment offerings in the building, and lease up the 3.8 million square of office space in the tower. No one has announced whether or not the name of the iconic building will be changed again.

Stalled Illinois Electric Utility Legislation Portends Summer Woes

            Political wrangling over the issue whether nuclear plants should get the same “clean energy” preferences now provided for wind and solar power in the state, and the prospect of a $2.00 per month increase in electric bills to consumers have delayed efforts to provide rate relief that could keep Commonwealth Edison’s six aging nuclear generation plants on line for many more years, save the jobs of thousands of nuclear plant employees, and help Illinois meet carbon emission reduction goals.

            Opponents of the various solutions now on the legislative agenda say that proposed peak demand billing to residential customers is a corporate bailout for Com Ed, rather than an incentive to increasing energy efficiency in the state. Meanwhile, the issue is complicated by super majority voting requirements resulting from the Illinois Legislature’s failure to resolve balanced budget issues during the regular session which closed at the end of May.

American Subcontractors Association Pushes Federal Contracting Revisions

            ASA is soliciting its members to push Illinois Senators Durbin and Kirk to vote in favor of Senate Amendment 1731 to HR 1735, which, if passed, would prohibit use of reverse auctions in solicitations for federal design and construction work, restrict use of individual surety bonds on federal construction projects covered by the Miller Act, increase limits on SBA’s surety bond guaranty program, and institute a two step process for awarding design/build contracts, with the first step focusing solely on qualifications of proposers, followed by a second step based on price.

Michigan Road Legislation Presages Midwest Legislative Battles

            Michigan’s state legislature is embroiled in road repair funding battles which could easily spill over into the capitals of other Midwestern states struggling to find ways to fund road and bridge projects in this era of increasing gas mileage and the consequent decrease in motor fuel tax revenues. One outrageous bill in the proposed package would even take away the state’s earned income tax credit for poor families and toss that cash into the road and bridge budget.

            Other proposals include increasing the diesel fuel tax to match the rate on gasoline – opposed by truckers – and increasing the license plate fees on electric and hybrid vehicles by $100 per car to offset the fact they obviously contribute less, or nothing at all, in motor fuel tax revenue though they do use the roads and bridges. Everyone acknowledges there’s a problem, but there is absolutely no agreement on a solution.

Indiana Project Manager Who Embezzled Gets 4 Year 7 Month Federal Sentence

            An Indiana man who falsified City of Bloomington construction contract records of concrete quantities to steal $440,000.00 from taxpayers over nearly four years was immediately taken into custody June 9 in federal court to begin serving his 55 month sentence, rather than being given the usual four to six weeks to prepare for imprisonment extended to non-violent offenders. The sentencing judge, in her instructions to federal marshals to haul away the offender in cuffs right away said she wanted to let taxpayers know public corruption will not be tolerated. “He did violate a huge trust and it would be very symbolic for people in Bloomington to know he will be serving his sentence starting today,” she intoned.

Republican State Officials Push Prevailing Wage Repeal

            Republican governors and state and local legislators in Illinois, Indiana, Michigan, Nevada, New York, Ohio and Wisconsin continue to push forward legislative measures to repeal various requirements that public construction contracts require the companies receiving the awards to pay workers prevailing wages for their respective trades, whether or not the employer is party to any union labor agreement. The politicians favoring prevailing wage repeal justify their union busting measures on the basis that taxpayers funding public projects will save money, yet these measures do not require the employers to pass savings from wage reductions along to the government. In all likelihood, much if not all of the savings in labor cost will fall down to the employing contractor’s profit line on the construction draw, rather than reducing the taxpayer investment in the project.

            Although couched in terms of helping to balance government budgets, what these legislative initiatives are aimed at is reducing the power and influence of labor unions in government work and politics in general. Whether or not any of these new state and local measures is enacted into law, prevailing wages will still be required by federal law on any project assisted with so much as a single dollar of federal funding. Since most infrastructure and educational construction at the state and local levels receives federal funding assistance in some proportion, any cost savings will be minimal at best. What the Republican politicians are looking for, then, is really a chance to trumpet to their business constituents and donors that they have achieved legislative victories over construction labor unions

Surface Transportation Infrastructure’s Bad News Will Only Get Worse

            Widely circulated doom and gloom reporting about the sorry state of this nation’s surface transportation infrastructure will only get worse as the Federal Highway Administration begins to collect “element level” bridge condition data from state highway departments. The Moving Ahead for Progress in the 21^st Century highway legislation mandates state reporting to FHWA of separate ratings for each and every square foot of roadway bridge built with federal funding. Bridge components, including decking, joint seals, girders, beams, bearings and columns, will each get a square foot by square foot rating as good, fair, poor or severe.

            This sort of detailed reporting, while it could lead to more precise budgeting for needed repairs and maintenance, will undoubtedly not lead to higher funding levels to meet the needs reflected. What it will do is give the public a more accurate, and hence gloomier, picture of the sorry state of our bridges, which carry ever increasing loads of freight and passenger traffic, while receiving less and less maintenance and repair attention. Maybe this kind of reporting will lead to highway funding authority more appropriately based on the need to bring the worst bridges up to safe condition, rather than relying on political influence of Representatives and Senators to determine where our finite resources are allocated.

Congress Sends Highway Trust Fund Patch To Obama

            As we predicted earlier, early Saturday morning the Senate passed the House approved extension of Federal Highway Trust Fund expenditures through July 31. The fund authorization was set to expire May 31, and President Obama is expected to sign the bill on his desk, to avoid stopping work on innumerable federally funded road construction projects this summer.

            However, the Highway Trust Fund will run out of money in late July or early August. Congressional leaders do not expect any long term extension legislation until year end action by the House Ways and Means Committee on a comprehensive tax reform bill, according to House Transportation and Infrastructure Chair Bill Schuster. Congress will have to appropriate about $5 billion to keep highway projects going through September, and $10 billion to keep them funded through year end.

            American Automobile Association Vice President for Public Affairs Kathleen Bower blasted the inefficiency and high cost of the now 33 temporary surface transportation funding extensions: “It’s almost like a payday loan,” she said in a May 19 press briefing. 

Highway Trust Fund “Patch” Isn’t Even A Band-Aid

            Tuesday’s House vote of 387-35 to pass HR 2353, which is expected to pass the Senate by tomorrow and be signed by President Obama before the current, and very temporary, surface transportation funding measure expires May 31, will be the 33^rd stopgap measure enacted in the last six years. HR 2353 will extend Highway Trust Fund appropriations at current levels only until July 31. Ironically, six years has been the customary duration of Highway Trust Fund appropriations. However, because Congress lacks the guts to increase the motor fuel tax rate to bolster revenues declining due to better gas mileage mandated by CAFÉ legislation, legislators and the administration continue to disagree on new methods of replenishing the Highway Trust Fund, and prospects for agreement on another six year appropriation bill remain in limbo.

            House leaders and construction trade groups back a $401 billion six year funding measure, supported by a motor fuel tax hike from the current 18.4 cents per gallon to 33.4 cents per gallon, while Senate leaders and the Obama administration favor a six year, $478 billion appropriation, with as yet unspecified funding sources. Meanwhile, California, Indiana, Oregon and Washington are in various phases of experimentation with alternate taxes on miles driven rather than gallons burned as a way of replacing declining motor fuel tax revenues for maintaining transportation infrastructure. The Oregon experiment is farthest along. Beginning July 1, as many as 5,000 volunteers in that state will begin participation in a pilot program collecting 1.5 cents per mile driven, as measured by odometer devices or GPS software on their vehicles, and receiving reimbursement for fuel taxes collected at the pump, as well as credit for miles driven on private property and out of state.

            Oregon officials have worked with the ACLU on measures to protect driver privacy while Oregon government gathers records of miles driven via GPS mapping, but the complexity of tracking miles driven on private property or out of state suggests the “pay by the mile” tax will not be readily transferrable to federal revenue generation. Meanwhile, opposition to state wide adoption of the Oregon experiment is growing among those who see it as a strong disincentive to the purchase of environmentally friendly hybrid and electric vehicles.

            Time alone will tell whether there is any politically acceptable solution to the problem of paying for maintenance and expansion of America’s aging and crumbling transportation infrastructure, but once again, the passage of HR 2353 means time is very, very short.

June 3 Hearing To Air Opposition to CTA Brown Line Flyover Construction

            Opponents to the Chicago Transit Authority’s $570 million project to build a 45 foot high overpass carrying the Brown Line’s northbound light rail tracks over the northbound and southbound Red Line tracks and the southbound Purple Line tracks just north of Clark and Belmont will get the opportunity to voice their concerns about the four year long construction project at a hearing scheduled for 6:30 p.m. June 3 at the Center on Halsted, 3656 North Halsted Street, Chicago. To complete the congestion relieving and transit capacity enhancing project, CTA will need to acquire 21 real properties, including 16 existing commercial and residential buildings in the neighborhood, as well as moving the historic Vautravers Building 29 feet west of its current location at 947-949 West Newport Avenue.

            CTA’s brand new President Dorval Carter Jr., who just arrived in town from the U.S. Department of Transportation’s Federal Transit Administration, numbers the Brown Line Flyover as among CTA’s top construction priorities. Though the FTA has said it supports the flyover concept, this far it has only funded environmental studies required to launch the effort. CTA has not secured any funding source for the costs of actually building the overpass. Opposition to the project is led by neighborhood resident Ellen Hughes, whose home is slated for condemnation to make way for the overpass construction.

Passenger Rail Construction – Speed or Safety?

            The Federal Railroad Administration boasts on its website that it makes available $10.1 billion in funding, together with its 33 partners in state governments and the District of Columbia, for construction of high speed intercity passenger railway projects, yet more than seven years after Congress mandated installation of Positive Train Control technology on existing rail passenger and hazardous freight rail routes, the federal government has not appropriated a single dime of funding to provide for safety of rail passengers in the Boston/Washington corridor, or for those citizens living in the vicinity of railbeds which daily carry tons of flammable and otherwise hazardous cargo around our nation. Following the May 12 fatal derailment in Philadelphia, FRA Acting Administrator Sarah Feinberg ordered Amtrak to implement the simple expedient of installing more speed limit signs along the northbound tracks where the train traveling over 100 m.p.h. flew off a curve. In her statement announcing this initiative, Feinberg described the speed limit signs as “just initial steps” toward preventing similar disasters in the future.

            If there is no money for installation of PTC technology along existing railroad rights of way where millions of citizens already ride the rails at speeds up to 100 m.p.h, how can we expect new intercity railroad routes built to handle even greater train speeds to be safe when they are in service?

April 23 Vote Ends Illinois Tollway Guarantee of Union Labor for Construction

By a vote of 6 to 3 the Illinois Toll Highway Authority’s board on April 23 decided against continuing its project labor agreement which has required construction contractors working on Tollway projects to use union labor exclusively, introducing the potential for strikes and other job actions which could delay progress on the Tollway’s completion of its 15 year, $12 billion reconstruction and widening program.

Tollway construction contracts awarded after May 1, 2015 will no longer be under the project labor agreement, in which construction trade unions have promised since 1994 not to strike or engage in slow-downs on Tollway projects. Besides the blow to the wallets of workers on Tollway projects, this policy change will most likely seriously inconvenience millions of Chicago area commuters who face a growing threat of ongoing traffic jams at locations where job actions could leave construction barricades and lane closures in place far longer than they could have remained if the project labor agreement had been renewed.

Federal Surface Transportation Appropriations Still Stalled

With the current expiration date on short term federal surface transportation funding of May 31, 2015 rapidly approaching, state and local governments are once again facing the prospect of stalled road, bridge, waterway and rail construction projects while Congress attempts to find a new source of funding for long term infrastructure upkeep. Lagging revenues from the motor fuel tax need to be augmented with higher rates or new sources of money, and meanwhile the Obama administration’s $478 billion, six year “Grow America” appropriation bill remains stalled in Congressional committees on Capitol Hill.

Vice President Biden’s speech Monday to kick off Infrastructure Week notwithstanding, it seems highly unlikely there will be any Congressional action on long term federal funding for surface transportation projects at any time soon. Short term extensions of the National Highway Trust Fund appropriations will most likely continue until after our next presidential election.

Construction Employment Still Lagging

According to data released last week by the Federal Bureau of Labor Statistics, unemployment in the nation’s construction industry continues to lag behind the U. S. economy in general, with national unemployment at 5.4%, while unemployment in the nationwide construction industry still stands at 7.5%. With skilled jobs in the construction trades representing one of the mainstays of middle class American prosperity, lagging unemployment in the construction industry is one of the significant economic factors holding back growth and progress for the American middle class.