California Transportation Commission voted Tuesday to approve a plan by the San Diego Association of Governments to restructure funding for three local Department of Transportation infrastructure projects.
The CTC voted unanimously to replace funds allocated by the state under Proposition 1B with federal and local funds to avoid an abrupt shut down of construction on Interstates 15 and 905 and state Route 52. Commissioners also voted to pursue cash management strategies for ongoing Proposition 1B projects statewide.
Under the plan, several ongoing projects on I-15 would be consolidated into one, said Commissioner John Chaulker. The projects are currently funded with a combination of state, federal and local TransNet funds. Due to the state budget crisis, the Treasurer froze the sale of Proposition 1B funds. The plan approved by the CTC would keep the ongoing projects moving by drawing entirely on federal and local money until state money becomes available.
SANDAG anticipates the funding solution will keep construction moving for the next six to eight months, after which the state will hopefully be able to re-enter the bond market, Chaulker said.
“This allows the state to forestall economic Armageddon,” said Will Kempton, Caltrans director.
During Tuesday’s telephone conference several commissioners expressed concern that the decision will set a precedent giving local agencies greater authority over the way state bond money is spent. Commissioners agreed the measures are made acceptable by the “extraordinary times” the state is facing.
Upon the request of several commissioners, the specifics of the current decision will be entered into the record so that the decision cannot be used as a precedent in the future, said Mitch Weiss, CTC deputy director.
Commissioners who originally opposed the funding measure, voted in favor after Kempton testified the plan will save state taxpayers an estimated $300 million in shutdown costs and preserve nearly 1,000 jobs.
Construction sites cannot simply be abandoned, Kempton said. Barricades must be erected, trenches covered and sites maintained to avoid erosion and other damage. There is considerable cost involved with upkeep.
While the plan buys the state some time, certain challenges arise when switching a project from state to federal funding. Federal regulations requiring that only American steel be used in federal infrastructure projects will increase costs of Caltrans projects, said Pedro Orso Delgado, Caltrans district director.
American steel is more expensive than foreign steel and thus federalizing state construction jobs, would increase the cost of such projects by approximately 0.15 percent, Delgado said. While the figure may seem miniscule, it will increase the cost of projects in San Diego County alone by $500,000.
Although San Diego contractors can breathe easy for the next six months, it remains to be seen whether a state budget will be enough to prevent the shutdown of construction projects in the near future. Even if the legislature were to pass state budget in the near future, the state Treasurer may not be able to sell the bonds necessary to fund the projects, Chaulker said.
With the approved funding arrangement, federal and local money for transportation projects will be exhausted within six months. At that point the projects will be entirely reliant on state bond money, which may not be readily available due to the state of the bond market.
Max Frazier of Errecas Inc. urged state transportation commissioners to continue taking measures to avoid the shutdown of projects and resulting loss of construction jobs. Due to the economy, the company has reduced its staff to 150 down from 250. If the state Route 52 project on which Errecas is the contractor were shut down, the company would be forced to reduce its staff again by 50 percent, Frazier said.
Aside from the financial hardship placed on jobless construction workers, the company would be burdened with trying to find a new staff when funding becomes available to resume the project.
“Please help the economy out,” Frazier said. “Help the workers out.”