Governor Rauner Reintroduces Plan To Sell Thompson Center

Republican state legislative leaders Senator Christine Radogno and Representative Jim Durkin are introducing measures reigniting Rauner’s proposal to sell the Thompson Center in the central loop to a private developer. The idea is to add hundreds of millions of dollars in state budget savings and City of Chicago real property tax revenues by putting the whole city block back on the city’s property tax rolls. Alternative proposals for the private use of the block bounded by Lake, Clark, Randolph and LaSalle streets include the Adrian Smith + Gordon Gill designed 115 story, three million square foot multi-use tower, and Helmut Jahn’s slightly shorter hotel and residential tower preserving the Thompson Center’s dramatic atrium next door. Renderings of these proposals are pictured above.

If it were to actually be built, the 115 story tower covering the entire block would replace the former Sears, now Willis, Tower as Chicago’s tallest building.

Latest Illinois Budget Proposal Includes Huge Tax Increases

Illinois’ budget crisis drags on in Springfield, with the fate of the latest and ever changing leadership proposal including increases in the individual income tax rate from 3.75% to 4.95%, and the corporate rate from 5.25% to 7.0%. Opposition is likely from Governor Rauner, because the proposed measure fails to include all the ethics, pension and workers compensation reforms he wants, and from Democratic legislators and leaders, because the proposed increases still won’t fill the state’s budget shortfalls and unfunded pension liabilities. Looks like the deadlock will continue for several more months.

Trump DOJ May Drop Support For Obama’s New Overtime Rule

Seeking a 30 day extension for filing its brief in the Fifth Circuit Court of Appeals case challenging the Texas federal judge’s nationwide injunction prohibiting enforcement of the Obama administration rule which would extend overtime pay requirements to virtually all salaried workers earning less than $47,426.00 per year, the Trump administration Department of Justice said it needs the extra time to “allow incoming leadership adequate time to consider the issue.” This signals at least the possibility that Trump’s DOJ will drop the appeal and allow the lower court ruling to stand. Should that potential materialize, employers won’t know whether there will be a different new rule coming out of the Labor Department, or whether the old duty based rules will remain in effect.

Is President Trump Putting Construction Trades Back To Work?

Among the early Trump administration executive orders last week were documents reinitiating the approval process for construction of the Keystone XL and Dakota Access pipelines, and a verbal promise to reduce business regulations by 75% to incentivize factory construction in the U.S. Laborers International General President Terry O’Sullivan says pipeline unions have $50 billion of work under contract. North American Building Trades Unions President Sean McGarvey says energy projects currently employ 32% of the U. S. construction industry workforce.

At the same time, it appears the Trump administration is preparing executive orders intended to reduce the influence of organized labor in the construction industry by rescinding Clinton and Obama administration executive orders favoring project labor agreements on major federally funded construction projects. Watch for more news on this front in the coming weeks.

Last week Senate democrats introduced legislation proposing the Trump campaign’s promised $1 trillion infrastructure investment over the next 10 years, including $210 billion for roads and bridges, $200 billion for funding other national transportation projects, $110 billion for water and sewer infrastructure construction, and $100 million for energy infrastructure. Trump administration spokesmen would not comment on the proposal, but Senate Majority Leader Mitch McConnell immediately told reporters he doesn’t want in infrastructure construction stimulus plan.

McConnell said he is waiting for a Trump administration proposal that pays for infrastructure projects “in a credible way.” Assistant Republican Leader Senator John Cornyn echoed McConnell’s sentiment, saying, “It needs to be paid for because we’ve got $20 trillion in debt.” President Trump himself earlier commented that putting people to work building infrastructure is “not a very Republican thing. I didn’t even know that, frankly,” and that infrastructure won’t be a core part of the first few years of his administration.

McHenry County Board Dumps Property Tax Freeze Referendum

At its Monthly meeting January 17, the McHenry County Board voted 17 to 7 to adopt an agenda modification effectively eliminating an advisory property tax freeze referendum from the April 4 ballot. By deleting the item from the meeting agenda, the vote precluded a direct ballot by board members on the question whether the referendum should be on the ballot.

Representative Allen Skillicorn circulated petitions to get the referendum on the April ballot, but was unable to get nearly enough signatures to put the question to voters. The county board proposal to put the measure on the ballot needed to pass January 17 to meet the ballot proposition deadline.

The county board has refused to raise county property tax levies for the last five years, and board members voting to remove the issue from the agenda pointed this fact out, together with the fact that the proposed referendum was advisory only, and would not have effectively precluded levy increases in any event, even if adopted by the voters in April.

USEPA Opens Water Infrastructure Loan Applications

January 10, 2017 the USEPA began accepting applications for loans under the Water Infrastructure Finance and Innovation Act, and the agency will consider the first round of applications submitted through April 10, 2017. The Act appropriated $17 million to EPA for credit assistance up to 49% of the cost of water system projects, with the remaining 51% of the cost required to come from other matching funds. According to the agency, the appropriation should support up to $2 billion in water infrastructure construction financing.

Passed during the Obama administration, it will be interesting whether President Trump will claim this expected $2 billion in public/private partnership spending as part of his promised $1 trillion infrastructure job creation program.

Transportation Secretary Designee Chao Fails To Clarify Trump Infrastructure Plans

Senators, Representatives and construction industry trade association officials all hoped to hear details of the $1 trillion ten year infrastructure investment plan promised by President Trump during the campaign, but in spite of her nearly certain confirmation, Elaine Chao’s testimony at her confirmation hearing before the Senate Commerce, Science and Technology Committee was singularly unenlightening, devoid of details, and embarrassingly disappointing. Combined with President Trump’s statements in interviews after the election that putting people to work building infrastructure is “not a very Republican thing. I didn’t even know that, frankly,” and that infrastructure won’t be a core part of the first few years of his administration, and Senate Majority Leader Mitch McConnell’s statement to reporters that he wants to avoid a $1 trillion stimulus, Chao’s testimony puzzled Association of General Contractors spokesman Brian Turmail: “Are we hearing signs that people just don’t know what the plan is, or signs that people don’t want any kind of plan? We don’t know the answer.”

While acknowledging in her remarks that Highway Trust Fund revenues fall $10 billion short of spending every year, and that attracting the promised private investment in infrastructure projects is a “major challenge,” Chao offered no specific proposals for solving either difficulty. All she would say is that “the pay-fors for any infrastructure proposals are all challenging and all have their particular champions and also detractors.” Guess everybody except President Trump knew that already.

Chicago Federal Judge Strikes Down Lincolnshire’s “Right To Work” Ordinance

Enacted with the encouragement of Governor Rauner, the village of Lincolnshire’s December 2015 anti-union “Guarantee of Employee Rights” ordinance came to an abrupt end with the filing January 7, 2017 of U. S. District Judge Matthew F. Kennelly’s order invalidating the ordinance as preempted by the National Labor Relations Act. The Lincolnshire ordinance, passed under that village’s home rule powers, purported to make unenforceable labor union contract provisions requiring workers not belonging to a union to pay union dues and be hired through union halls.

In a federal lawsuit filed against the village by the Carpenters union, Laborers union, and two Operating Engineers locals, Judge Kennelly held that the U. S. Constitution’s supremacy clause prohibited local governments from overriding provisions of the National Labor Relations Act. While the Act permits state legislatures to enact statewide laws eliminating the Act’s grant to unions of the right to contractually require employers to deduct dues equivalents from non-union employees’ wages, allowing local units of government to do so on a piecemeal basis would create an unmanageable patchwork of labor laws across the nation, and effectively negate the collective bargaining rights granted to labor unions by the NLRA.

Lack Of Congressional Funding Delays Major Infrastructure Projects

President Trump’s campaign promise of a 10 year, $1 trillion infrastructure construction program could face major hurdles in the halls of Congress, given the U. S. Treasury Department’s December 30, 2016 report listing the seven most ambitions infrastructure projects already on federal drawing boards, but delayed due to lack of funding from our Republican controlled national legislative body.

The DOT report lists the top 7 projects facing lack of appropriations as:

1.    Technology to accommodate driverless motor vehicles, at a cost of $1.3 trillion.

2.    Recapitalization and expansion of the Interstate Highway system, at a cost of $790 billion.

3.    Improvements in Amtrak’s Northeast Corridor, at a cost of $101 billion.

4.    California’s high speed rail program, at a cost of $59 billion.

5.    Interstate 10 upgrades, at a cost of $29 billion.

6.    Next Generation Air Traffic Control system at a cost of $25 billion.

7.    Interstate 35 Minnesota to Texas Trade Corridor, at a cost of $16 billion.

Facing a Congress reluctant to fund these $2.3 trillion in major projects already planned by DOT, FAA and other federal agencies, it seems most unlikely President Trump can coax Congress to raise revenue an additional $1 trillion to fund his promised infrastructure program.

Despite Financial Woes, CPS Considers $75 Million New South Side High School

After shuttering 50 school buildings in 2013, Chicago Public Schools is under a moratorium on further closings until 2018. Commenting on the dichotomy of closing existing schools while spending tens of millions to build new ones, former CPS Vice President Jesse Ruiz says: “I’ve always said that instead of cornerstones with the year the school was built, we should put expiration dates and not have folks believe that a given facility or building is what is always going to be there for that community.”

Rapid growth of school choice alternatives, including charter schools and selective enrollment programs, without a comprehensive city wide plan for school building locations has created substantial under-enrollment at traditional neighborhood school buildings. Twenty two attendance boundary high schools in the city draw less than 13% of their students from within their attendance areas.

Ironworkers Union Pension Benefit Cuts Approved

Cleveland based Iron Workers Local 17 has received approval from the U. S. Treasury Department to cut pension benefits to retirees under the union’s multi-employer pension plan. The plan has 2,067 members, and is projected to become insolvent within 20 years. Union members and retires iron workers are voting whether or not to approve the benefit cuts.

The 2014 Kline-Miller Multiemployer Pension Reform Act authorized the Treasury Department to approve requests for benefit reductions by multi employer pension funds .to extend their solvency. Treasury has denied three applications, and is still considering the application of Oklahoma City based Bricklayers Local 5.

IRS Issues New Guidance On “Beginning Of Construction”

Real estate developers and property owners seeking to take advantage of Section 45 production tax credits and Section 48 investment tax credits under the U. S. Internal Revenue Code need to be mindful of the date fixed under the IRS rules as the “beginning of construction.” IRS Notice 2017-4, issued December 16, 2016, clarifies the calculation of the date when construction begins. Two tests may be used to define “beginning of construction:” 1) starting physical work of a significant nature, and 2) paying or incurring 5% or more of the total cost of the facility under construction.

However, “beginning of construction” under either test depends on construction work proceeding “continuously” from the start date. Earlier IRS guidance defined “continuous” as putting the facility in service during a calendar year no more than four calendar years after the calendar year of beginning construction. Notice 2017-4 extends the continuity deadline to December 31, 2018 for all construction begun before June 6, 2016, whether or not the project would otherwise meet the four calendar year test.

Notice 2017-4 also refines the determination of the 5% of construction cost start date when the project involves retrofitting of an existing facility. If the fair market value of used property in the retrofitted facility does not exceed 20% of the total market value of the retrofitted facility when complete, the “cost of construction” will include all costs properly included in the depreciable basis of the retrofitted facility.

Developers and owners with projects currently under construction who expect to take advantage of Section 45 or Section 48 credits, or both, should review their project schedules and expenditures to make certain they are in compliance with the new guidance.

McHenry County Board To Cut Committees, Meeting Schedule

McHenry County Board’s Temporary Rules Committee, organized by the Board’s first popularly elected Chairman, Jack Franks, has voted to recommend reducing the number of Board committees from 11 to 7, and to cut the meeting schedule from two voting meetings per month to one. In ongoing efforts to improve Board efficiency, the TRC also recommends permitting substitution of board members for absent committee members, making it easier to assure attendance of a quorum at committee meetings. Lack of quorum has created delays in Board action on agenda items on multiple occasions in the recent past.

Illinois Tollway Budgets For Western Access To O’Hare

Illinois Toll Highway Authority’s $1.7 billion 2017 budget, passed December 15, provides $374.5 million for continued construction of the I490 tollway and Illinois 390 O’Hare access roadway flyover above the Canadian Pacific freight yards on the west side of the airport property – a project opposed by the railroad and the subject of ongoing litigation between CP and the Tollway. The Tollway filed the lawsuit because CP officials refused even to discuss a western access route that would include five ramps above CP’s rail right of way. Total cost of building the proposed toll beltway completely around O’Hare is predicted to be $3.4 billion, and is in support of the City of Chicago’s $13.3 billion O’Hare Modernization Program.

Chicago, IDOT Seeking Federal Rail Construction Grants

In separate but related moves, Chicago’s City Council and IDOT are seeking federal funding for rail construction projects intended to speed up CTA light rail commuting and untangle south side rail conflicts among Amtrak freight traffic and METRA commuter lines. The City Council has rushed through a TIF district between North Avenue and Devon Avenue straddling the CTA’s red and purple line tracks. The TIF district is intended to generate $851 million in revenue dedicated to improving CTA tracks, to be used to match a federal $1.1 billion grand the City has applied for during the Obama administration’s waning days.

IDOT is seeking a federal grant of $160 million to eliminate passenger/freight rail conflicts in the 75^th Street corridor near the Dan Ryan Expressway. Among other improvements, IDOT’s proposed construction would allow Metra SouthWest Service commuter trains to use the LaSalle Street station as the downtown terminal, reducing conflict and overcrowding with Amtrak and BN passengers at Union Station. IDOT thinks it can get its project approved even if consideration is delayed until after the Trump inauguration, but Chicago aldermen rushed their TIF designation through because they believe Obama’s DOT may approve their grant application, while anticipating Trump administration resistance to funding inner city transit construction.

        

Will Labor Secretary Designee Pudzer Push Equal Pay Rights?

President elect Trump’s daughter Ivanka repeatedly promised during the Trump campaign to fight for equal pay rights for women in the labor force. The Obama administration’s EEOC has promulgated a new reporting requirement for all businesses with over 100 employees, expanding earnings and hours worked reporting requirements from a 200 cell report to a 4,000 cell report due on the third quarter EEOC snapshot date. Trump’s Labor Secretary Designee, fast food executive Andrew Pudzer, on the other hand, is pledged to “save small businesses from the crushing burdens of unnecessary regulations that are stunting job growth and suppressing wages.”

According to Senate Minority Leader Charles Schumer, Pudzer is “someone who opposes an increase in the minimum wage, opposes the overtime rule that would raise middle class wages, and whose businesses have repeatedly violated labor laws,” and that Trump’s naming Pudzer to the Labor Department post is “the surest sign yet that the next cabi9net will be looking out for the billionaires and special interests, instead of America’s working class.” It will be interesting to see whether the Obama administrations third quarter 2017 wage and hour reporting requirement will survive, because of Ivanka’s influence, or die in the Pudzer DOL regulatory environment.

Infrastructure Needs To Challenge Secretary Designee Chao

Shepherding President Elect Trump’s promised ten year $1 trillion infrastructure construction program through a deficit shy and spending averse Congress will be the biggest challenge faces by Trump’s Transportation Secretary Designee Elaine Chao, wife of Senate Majority Leader Mitch McConnell. While Chao’s past experiences as Secretary of Labor and Deputy Secretary of Transportation, as well as her service on the boards of directors of construction giants Parsons and Vulcan Materials give her a depth of understanding of infrastructure and politics not often combined in the cabinet job she is designated to hold, bridging the gap between anticipated federal transportation revenue streams and the projected cost of the nation’s infrastructure construction and repair needs will likely be her greatest obstacle.

According to a recent joint study by the American Association of State Transportation Officials and the American Association of Port Authorities, American freight infrastructure alone needs investment of nearly $258 billion. Getting Congressional approval of the motor fuel tax increases, proposed $137 billion in tax credits to spur private-public partnership investment in toll roads and other revenue generating projects, in addition to the $10.3 billion Congress just approved for water resources infrastructure, and the continuing resolution freezing Highway Trust fund spending at 2016 levels could be an insurmountable hurdle, even for Chao.

House Democratic leaders, including House Transportation Committee ranking member Peter DeFazio (D-Ore.), have been quick to point out the schizophrenic nature of the Congressional Republican response to President Elect Trump’s promises of substantially larger, and construction job cresting, infrastructure investments by the federal government: “Looks like House Republicans missed the memo from President Elect Trump on boosting transportation infrastructure investment. Instead of carrying out the promise of rebuilding our crumbling roads, bridges and transit systems,” DeFazio said, “the Continuing Resolution ignores the FAST Act transportation funding levels that were approved a year ago, resulting in a $2.4 billion reduction in transportation investment, which will impact next Spring’s construction season. … House Republicans like to talk about this ‘big league’ trillion dollar transportation plan they supposedly want to pass. Cuts like these make you question whether they are serious about it.”

The negative impact of federal appropriations significantly below the levels promised in last year’s FAST Act is already being felt in state capitals like Topeka, where Kansas DOT put 10 more highway construction projects on hold, in addition to the 24 projects dropped from its bidding schedule last month due to increasing budget shortfalls.

It looks like deferred maintenance could be a continuing headache for Chao once her expected quick Senate confirmation becomes a reality.

Trump Names Elaine Chao As Transportation Secretary Appointee

President Elect Trump has named Elaine Chao, former Deputy Secretary of Transportation and Secretary of Labor under earlier Republican administrations, and wife of Senate Majority Leader Mitch McConnell, as his choice to head the Trump administration USDOT. Senator McConnell’s immediate reaction to the appointment and forthcoming Senate confirmation vote was “No, I’m not going to recuse myself.”

Associated General Contractors of America and American Road and Transportation Builders Association both applauded the selection. House Transportation Chairman Bill Schuster and USDOT Secretary Anthony Foxx also joined the chorus of praise for Trump’s choice. Trump’s announcement charged Chao with carrying out “our mission to rebuild our infrastructure in a fiscally responsible manner.” No explanation was forthcoming regarding the discrepancy between Trump’s campaign promise of $1 trillion for infrastructure investment over the next ten years, and his current transition website posting slashing that figure to a mere $550 billion.

Pence, Trump and United Technologies Keep Carrier Jobs In Indiana

Without releasing the details of the arrangement, the Trump transition team has announced, and Carrier has confirmed, an agreement that would preserve in Indiana 1,000 of the jobs Carrier earlier proposed moving to Mexico. Reports indicate that the State of Indiana has offered new incentives to Carrier to keep 1,000 jobs in the state, and that Trump pressured Carrier’s parent United Technologies with threats of losing a significant portion of its $5.6 billion in annual defense contracting revenue if Carrier’s proposed move to Mexico was put into effect.

Missouri Infrastructure Budget Faces Deep Pothole In Motor Fuel Tax Shortfall

Illinois is not the only state where increasing vehicle fuel economy and tax averse state legislators are combining to leave secondary roads and bridges in deplorable condition. Missouri road fund revenue has plummeted from $1.3 billion in 2009 to only $800 million anticipated in 2017, leaving 30% of the state’s less traveled roads in poor condition, and 22% of the state’s bridges in poor repair or weight restricted.

A particular sore spot is the need to rebuild 200 miles of interstate between St. Louis and Kansas City, at an estimated cost of $2 billion to $4 billion. Missouri’s motor fuel tax rate of $0.17/gallon has not gone up in 20 years, and voters are opposed to any increase at present. Combined with more miles per gallon from modern cars and trucks, the revenue decline for road and bridge maintenance has been dramatic. Last year the Missouri House failed to even take up a bill to increase the motor fuel tax rate.

Declining revenues have already forced MDOT to cut the highway maintenance workforce by 20%, close repair shops and sell off highway maintenance equipment, shifting $100 million to bandage the highway repair budget. Legislators have even suggested transferring many miles of back roads from state to county responsibility, but such a move would undoubtedly increase maintenance costs per mile of road by denying county and local governments the advantages of statewide quantity purchases of paving materials.

No one has yet figured out how to build and repair more miles of road with fewer dollars.