ARRA Special Report

Will Stimulus Funds Pave the Road for Economic Recovery in the Southwest?

By Scott Blair, Neal Singer and Tony Illia

The Southwest is receiving billions in ARRA funds, but only a small portion goes to fund infrastructure projects such as highways.

As part of the American Recovery and Reinvestment Act, the Southwest has been allocated more than $1.1 billion in transportation funding. Numerous projects are already under construction or out to bid.

Arizona Highways

Arizona is receiving $522 million in transportation and mass transit funding, of which $350 million will be allocated by ADOT among 41 projects identified as ‘shovel-ready’. The mix of projects needed to meet state distribution requirements, with $130 million for Maricopa County, $46 million for Pima County and $175 million for Arizona’s 13 other counties. The remaining money will be distributed through set formulas and through grant programs.

The second phase of the I-10 widening, Sarival Ave. to Verrado Way has already gone out to bid in the first group of ARRA-funded projects in Arizona. The first phase is currently under construction under a separate contract. Photo courtesy ADOT

“This infusion of ARRA funds is estimated to create or sustain about 13,000 jobs while addressing locally identified transportation needs,” says Timothy Tait, community relations director with ADOT.

On March 13th, the State Transportation Board approved 14 projects worth $85.7 million to be advertised for bids, including a $43.2 million Interstate 10 widening from Sarival Ave. to Verrado Way in Maricopa County and $8.6 million in S.R. 87 safety improvements from Payson to Pine in Gila County.

“There were opportunities for heavy roadway construction as well as faster and equally critical safety and roadway improvement projects,” Tait adds. “As a recent subject of an FHWA-funded ‘best practices in project delivery’ study, ADOT has the people and processes in place to move quickly on ARRA projects.”

Tait says those practices include an internal vetting process to ensure projects are shovel/clearance ready for on-time and on-budget delivery, strong community outreach and pre-construction and construction software to track reporting requirements under ARRA.

“The ARRA should have a very positive impact on many contractors,” says Mark Minter, executive director of the Phoenix-based Arizona Builders’ Alliance. “The sheer volume of the work will create payroll, secondary spending and taxes back to government.”

Trade associations such as the ABA are working with local governments to help implement ARRA. “We are developing standardized reporting forms for contractors to report job creation to project owners,” Minter says. The group will also help train local contractors to better understand issues such at prevailing wage reporting.

Additional funding includes $100.6 million for mass transit and $176.3 million for energy efficiency, weatherization and other state energy funding. Since much of this funding is released through grants, exact project details are not available.

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“The ARRA is a great start in stimulating the construction industry, but the key to sustaining the industry rests in the reauthorization of the federal highway bill by the Congress this fall,” says Jim Andoga, president of Irving, Texas-based Austin Bridge & Road.

New Mexico Gets a GRIP on ARRA

Sometimes it pays to be bold.

Five years ago, the New Mexico Dept. of Transportation’s GRIP 1 program began designing 45 highway and bridge projects with a $950 million price tag, but they were put on hold because of rising materials prices.

Then falling prices for oil and gas crippled the state’s financial outlays, continuing the construction freeze.

But those projects were there, ready to go, when New Mexico was awarded $252.6 million in highway and bridge money from ARRA, says Mike Gibson, executive director of Associated Contractors of New Mexico.

The initiative’s award comes with a number of conditions. One is that 50% of the monies be spent within 120 days of March 3. Another is that the balance be spent within one year.

“In New Mexico, we’re ahead of the curve,” Gibson says. “We’ll spend all our money by the end of May.”

And, he predicts that “a lot of states are going to be severely challenged to spend their portion of stimulus money in the required 120-day time period.”

If they can’t, “The money goes back into the pot for redistribution,” Gibson says. “We’re asking our congressional delegation to get us in line for additional monies.”

The NMDOT began work this month on six highway projects worth $134.6 million, forecast to create up to 500 new construction jobs.

Contractors are leaping at every opportunity. “We will bid on every ARRA project in Arizona and New Mexico that comes out,” says Jed Billings, CEO of Tempe, Ariz.-based FNF Construction. “In fact, we already were successful on New Mexico’s first stimulus job bid on Feb 27th and awarded last month.” The $8.9 million project, a roadway rehabilitation on U.S. 491 from Tohatchi to Shiprock, is scheduled for completion in 12 months.

Several other projects were also awarded. A $16.6 million contract was awarded to Silver City, N.M.-based James Hamilton Construction Co. for new lanes on U.S. 62/180 between Carlsbad and the Texas State Line. The firm also won a $15.6 million contract to realign and rehab N.M. 128. Albuquerque-based Star Paving will reconstruct a $7.9 million, 2-mi portion of U.S. 84/285 near Española.

Because of the years between planning and execution, DOT is reassessing owners’ utilities priorities along the U.S. 491 corridor. That’s good news for Albuquerque-based professional engineer Scott Perkins, vice president for international Wilson & Co., Inc., Engineers & Architects, whose company is providing the reassessment.

Some design projects were also accelerated for the city of Albuquerque, particularly along the east-west Lead-Coal avenues corridor, Perkins says.

$16 million additional stimulus dollars have been allocated by DOT for airport runway improvements in Albuquerque, Las Cruces and Santa Fe, and $36.6 million more for transit projects that may include buses, rail and light rail.

But on the whole, New Mexico’s share of the national stimulus package (estimated to eventually total $1.8 billion, according to the state’s ARRA website) has yet to make its way to most engineering design companies, says Diane Snyder, executive director of the New Mexico branch of the American Council of Engineering Companies.

“We’re not seeing anything from the stimulus package yet,” she says. “Projects have to be shovel-ready, way past coming up for design. But we’re supportive of the initiative and hope better things for round two.”

Vicky Mora, CEO of the AGC New Mexico Building Branch (a trade association for commercial builders), says, “There’s an effect, but we don’t yet know the effect or how it’s impacting projects for our members.”

She says the group has started a hotline to receive member reports on impacted companies, changes in availability in credit and demand for construction.

The stimulus is good, but not a continuing initiative, Gibson says. “We have $16 billion in unfunded work across New Mexico,” he adds. “The initiative is a badly needed Christmas present, but it’ll be short-lived. It’ll help create jobs -12,000 to 14,000 of them if you count indirect as well as direct, many more in our opinion than DOT’s estimate - but it’s not going to solve our problems.”

Unless the state comes up with a continuing initiative to produce a sustained funding mechanism, the future isn’t bright, Gibson says.

For next year, the New Mexico Legislature has its own budget problems with a $600 million deficit, and it has failed to vote on a number of proposals that would have created new tax monies for highway projects, Gibson says.

Furthermore, the six-year reauthorization bill for federal highway monies expires in September.

“New Mexico construction companies may have to be seriously looking to move their business to other states,” Gibson says.

Nevada Looks to Rapid Implementation

“The economic recovery package was designed to put people back to work, and that’s exactly what this money does in Nevada,” U.S. Sen. Harry Reid, D-Nev., says in a statement. “We’ll accomplish this while improving our public facilities and moving closer toward our clean energy future.”

Nevada will receive $1.5 billion in federal stimulus money that will create an estimated 34,000 new jobs.

Construction-related spending focuses on transportation, energy and environmental projects. Nevada gets $201 million for roads and highways, of which $109 million, 52%, will be used in Clark County. About $27.6 million or 13% will be spent in Washoe County. The remaining $72.8 million will go to rural counties, including Pershing, Elko, Humboldt, Lander, Lincoln and Nye.

The money, while useful, barely dents the Nevada Dept. of Transportation’s $8 billion funding shortfall. The allocation, once divided, is too small for high-priority projects such as the U.S. Highway 95 widening from Ann Road to the Rainbow Curve in Las Vegas, a $155-million job that is designed and awaiting funds.

“As one of the nation’s fastest-growing states, Nevada has a multibillion-dollar transportation funding deficit,” NDOT director Susan Martinovich says. “NDOT and our transportation partners have aggressively designed projects to utilize any funding that may come our way.”

Southern Nevada will use $39.7 million for projects approved by the Regional Transportation Commission that consist almost entirely of small road paving and resurfacing work. The agency divided the money between the different area municipalities based on population and property values. The breakdown gives $16.3 million to Clark County; $10.1 million to Las Vegas; $4.8 million to North Las Vegas; $6.3 million to Henderson; and $1 million each to Boulder City and Mesquite.

Four nonpaving projects are included in the transportation stimulus allotment: a $9 million landscape project on U.S. Highway 95, from Martin Luther King Boulevard to the Rainbow Curve, in Las Vegas; $3.6 million for a safety crossing over U.S. Highway 93 in Elko County; $3 million to add a mile of rail line to the V&T tourist railroad in Carson City; and $27.6 million to help fund construction of the Meadowood interchange off of U.S. Highway 395 in Reno.

Airports, meanwhile, will receive $20 million for facility upgrades. The North Las Vegas Airport gets $7.8 million to relocate power lines near the 920-acre facility, while the Carson City Airport will use $9 million for rehabilitating, lengthening and realigning its 5,900-ft-long, 75-ft-wide asphalt runway in order to accommodate larger aircraft.

Reno-Tahoe International Airport gets $2.2 million to improve its 20-year-old apron and ramp areas, and $1.3 million will enhance Boulder City’s sole 4800-ft-long, 75-ft-wide asphalt runway.

The state additionally secured $3 million for environmental work, with $1.73 million going toward clean diesel programs and $1.26 million for assessing and fixing underground petroleum tank leaks. There is $44 million for energy projects, including $32 million for inspecting public building energy efficiency and performing retrofits, as well as installing onsite renewable energy components at existing government buildings.

Other energy projects will synchronize traffic signals and create bike lanes and pedestrian pathways. The package also has $9.1 million for geothermal energy development at the Fallon Naval Air Station and $3.1 million for geothermal test wells at the Hawthorne Army Depot.

The Nevada Housing Division will receive $3.7 million for weatherization work that improves energy efficiency of homes and businesses.

Nevada will additionally receive $20 million for building improvements to Nellis Air Force Base in Las Vegas, Reno’s Veterans Administration Hospital and the Hawthorne Army Depot. More than $13 million will be dedicated to constructing a new child-development center at Nellis. In Reno, more than $5.5 million is slated to make vital repairs and enhancements to the VA hospital, while Hawthorne Army Depot’s family housing area will benefit from a new water main, a project of nearly $1 million.

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