Capitol Update 3/27/2023
In today’s business environment, high interest rates are not always the prime culprit of suppressed construction activity, as surprisingly few projects, even in vulnerable markets such as office and retail, are completely dissolving due to rate increases, says Ken Simonson, chief economist at the Associated General Contractors of America. Homebuilding has fallen off, but Simonson says that’s more directly tied to expensive construction and mortgage interest costs than federal interest-rate hikes. Full Story: Daily Commercial News (Ontario)
Strong demand for manufacturing facilities and the first gain in single-family starts in 13 months drove a 6% increase in construction starts in February, according to Dodge Construction Network. On the nonbuilding side, utility and gas plant starts increased 68%, but a 30% drop in environmental public works starts and a 5% decrease in highway and bridge starts pulled down the overall gain.
Full Story: Dodge Data & Analytics
The American Institute of Architects’ Architecture Billings Index registered another decrease in February with a reading of 48, down from January’s 49.3. However, inquiries for new projects were up, as was the value of new design contracts, suggesting a brighter outlook in months ahead, the AIA says. Full Story: The Architect’s Newspaper
The commercial real estate industry is bound to be affected by uncertainty in the banking industry stemming from recent bank failures, writes David Bitton, chief marketing officer at DoorLoop. However, Bitton sees reasons for optimism, including low CRE delinquency and balanced loan-to-value ratios, as well as moderating inflation expectations. Full Story: Construction Dive
Hotel construction perked up in December, despite rising interest rates and materials costs that had led to 25 months of year-over-year decreases, according to STR. Development executives are optimistic that cost factors will ease and that more construction will resume. Full Story: Lodging
In February, unemployment rates were lower in 9 states, higher in 3 states and the District of Columbia, and stable in 38 states. Nonfarm payroll employment increased in 6 states and was essentially unchanged in 44 states and the District.
The Federal Reserve’s case for pausing its interest-rate hike has gained traction among analysts after a coordinated move by six central banks to boost liquidity in US dollar swap arrangements. The shift follows UBS’ acquisition of Credit Suisse and the collapse of three US banks, which led to increased concerns over financial contagion. Full Story: Bloomberg The Wall Street Journal
Tutor Perini had the most OSHA violations among contractors during the past decade
Tutor Perini Corp., one of the largest contractors in the country, was cited 244 times for health and safety violations on its jobsites over the past decade — far more than any commercial or residential builder — and that doesn’t count two high-profile investigations last year, according to a Construction Dive investigation. Inspectors from OSHA cited the company between five and 55 times a year from 2012 through 2021, the most recent data available. Initial fines totalled $1.2 million. Key findings were shared with the agency and the company for review. OSHA was four times more likely to find a violation when inspecting a Tutor Perini jobsite than one of its large rivals, according to an analysis of OSHA data for the 30 largest commercial contractors by revenue. Each OSHA inspection of a Tutor Perini site resulted in about 1.5 violations, on average, compared to the median of 0.33 for its peers.
The board of the California High-Speed Rail Authority has agreed to raise spending authorization for a project by more than $2 billion. The increase, which brings the authority’s spending authorization to $20 billion, comes amid added scope and a need for additional contingency funds for the project, construction of which is focused on 119 miles of line in the Central Valley. Full Story: Engineering News-Record (tiered subscription model)
Both parties expressed commitment during an appropriations subcommittee hearing to preserving Transportation Department funding in the Biden administration’s proposed budget for fiscal 2024, but the hearing also had plenty of bipartisan sparring. Sen. Brian Schatz, D-Hawaii, chair of the subcommittee, was concerned Republicans would try to dampen discretionary spending, but Republicans said Biden’s budget would “zero out” Federal Highway Administration bridge funding and Rebuilding American Infrastructure with Sustainability and Equity grants, undermining the bipartisan infrastructure law. Full Story: Engineering News-Record (tiered subscription model)
President Joe Biden has vetoed a measure that would have overturned a Labor Department rule allowing for retirement plan money managers to weigh environmental, social and governance factors in their decisions. The House is planning a vote to override the veto, but gaining the legislative supermajorities that would be necessary to do so would likely be difficult. Full Story: Financial AdvisorThe Associated Press Axios
Crews are upgrading bridges and building access roads as they prepare to tear down four dams on the Klamath River. The project, considered the largest in the world aimed at restoring salmon runs, is funded by $200 million from PacifiCorp and $250 million from a California water bond. Full Story: Times-Standard (Eureka, Calif.)
Flatiron Construction will carry construction and upgrades at two water treatment plants in Oakland, Calif., under a $237 million contract with the East Bay Municipal Utility District. The work includes replacing a raw water control valve, adding a fifth stage of flocculation, replacing flocculation baffles and adding a sedimentation basin cable-vac system. Full Story: The Construction Broadsheet