Infrastructure & Public Works Blog

Interesting article on "accelerated bridge construction"

David Gehrig — Wed, 25 Apr 2012 09:11:42 -0500

This New York Times article describes a relatively new "accelerated bridge construction" technique using a self-propelled modular transport to lift a bridge into place. The article focuses on the River Street Bridge in Boston, but the technique is being used increasingly around the country. When done correctly, the bridge is lowered in place "like a lid fitting onto a box." The primary benefit of this technique is the incredible increase in speed of project completion, shaving months or even yeras off of a project. Click here to read the article.

New law caps retention on public works projects at 5%

David Gehrig — Fri, 14 Oct 2011 18:15:07 -0500

On October 9, 2011, Governor Brown signed SB 293 in to law. SB 293 addressed a variety of issues in public works related statutes, including prompt payment periods between a prime contractor and subcontractor, procedures for filing 20-day preliminary notices, and procedures for making claims on payment bonds. Most noteworthy, however, is the adoption of a new Public Contract Code section 7201 which caps retention of progress payment for all public works projects at 5%.

The newly created section 7201 applies to "public entities," which is defined broadly to include essentially all public agencies, including: "the state, including every state agency, office, department, division, bureau, board, or commission, the California State University, the University of California, a city, county, city and county, including charter cities and charter counties, district, special district, public authority, political subdivision, public corporation, or nonprofit transit corporation wholly owned by a public agency and formed to carry out the purposes of the public agency."

The cap on retention is stated plainly in section 7201(b)(1) as follows: "The retention proceeds withheld from any payment by a public entity from the original contractor, by the original contractor from any subcontractor, and by a subcontractor from any subcontractor shall not exceed 5 percent of the payment. In no event shall the total retention proceedsd withheld exceed 5 percent of the contracto price."

Prior to this law, most agencies had significant flexibility as to the amount of retention withheld. Commonly, agencies withheld 10% of progress payments, sometimes reducing that amount to 5% toward the end of a project. This new law removes any flexibilty in establishing the amount of retention being withheld, and will reduce the leverage agencies have over their contractors to complete projects satisfactorily. Undoubtedly, this will not be a welcome development for public agencies. As three previous governors have argued while vetoing similar bills, this new requirement will hamstring public agencies and limit their ability to protect public resources.

Appellate court clears way for Presidio Parkway Project to move forward as a Public-Private Partnership

Kymberli Aguilar — Tue, 16 Aug 2011 15:35:10 -0500

On August 8, 2011, the 1st District Court of Appeal broke new ground when it published a decision holding that Phase 2 of the Presidio Parkway project can move forward as a public-private partnership (P3). The Presidio Parkway Project is the first project to reach award under California’s new public-private partnership statute, Streets and Highways Code section 143. The project was challenged on three separate grounds by the Professional Engineers in California Government (PECG), an engineers' union. The Court of Appeal affirmed the trial court's ruling approving the California Department of Transportation's (Caltrans) use of the new statute, and should encourage the consideration of P3s as a project delivery method in California.

The case, Professional Engineers in California Government v. Department of Transportation, is among the first brought by a union to stop a P3 project, an area that is growing in the United States as cities and states struggle financially to rebuild their crumbling infrastructure. PECG brought suit challenging Caltrans' use of the new P3 authority for what is also known as the "Doyle Drive Replacement Project." The project will replace 1.6 miles of Doyle Drive, which serves as the southern approach to the Golden Gate Bridge.

The lawsuit alleged that Caltrans and the San Francisco County Transportation Authority (SFCTA) impermissibly used the new P3 authority. PECG argued that permitting third-party engineers to perform the engineering for the project in lieu of Caltrans employees violates the statute. Under the current arrangement, Hochtief Concessions and Meridiam Infrastructure will design, construct, operate and maintain the road for a term of 30 years after construction completion. PECG also claimed that P3 projects in California must be funded solely by tolls or user fees.

The Court of Appeal affirmed the February 2011 decision by Judge Wynne Carvill of the Alameda County Superior Court, rejecting all of PECG's arguments. First, the Court held that under section 143, Caltrans employees or direct consultants are not mandated to perform all of the preliminary planning and design services associated with the project. Second, the project is "supplemental to existing facilities" and fits squarely within the definition of a transportation project pursuant to section 143(a)(6). Third, the Court explained that funding for P3 projects awarded under section 143 need not be confined to tolls or user fees, and that the legislation authorized a much broader use of innovative methods of financing. Although unlikely to be granted, PECG will have until September 16, 2011 to seek review from the California Supreme Court.

While the Court of Appeal's ruling is obviously pivotal for the Presidio Parkway Project, it should also encourage the use of P3s as a project delivery method for other public projects in California. P3s create unique opportunities to bring the financial and management resources of the private sector to public infrastructure projects, while sharing risks and rewards. Increasingly, P3s are being considered by agencies throughout the state in an effort to rebuild our infrastructure in spite of budgetary challenges. The result in this case should pave the way for more innovative approaches to public infrastructure projects while also reducing the financial risk to California's public entities.

A complete copy of the Court of Appeal Decision can be found here.

Interesting BIM video from Disney

David Gehrig — Tue, 16 Aug 2011 14:56:18 -0500

I just came across this short video regarding Disney's use of Building Information Modeling on the construction of their new Fantasyland. It demonstrates the benefits of BIM in a little over 3 minutes. Watch it here.

Ninth Circuit decision makes it harder to bring a Federal False Claims Act case

Shawn T. O'Leary — Fri, 25 Mar 2011 17:27:15 -0500

On March 24, 2011 the Ninth Circuit Court of Appeals made it more difficult to bring a complaint claiming a violation of the Federal False Claims Act (FCA). The Court held that FCA complaints must not only “state with particularity the circumstances constituting fraud or mistake” (under Federal Rule of Civil Procedure 9(b)), but must “also plead plausible allegations” (under Federal Rule of Civil Procedure 8(a). In Mary Angela Cafasso v. General Dynamics C4 Systems, Inc. (March 24, 2011) 11 C.D.O.S. 3557 the Court upheld the dismissal of the plaintiffs’ False Claims Act complaint before trial because, although the “complaint alleges unsavory conduct ... unsavory conduct is not, without more, actionable under the [False Claims Act].”

The Federal False Claims Act was enacted during the Civil War to protect against fraud by government contractors who were submitting inflated invoices and shipping faulty goods to the government. United States Code §§ 3729-3731 sets for specific circumstances that are violations of the FCA, including: 1. knowingly presenting, or causing to be presented, a false or fraudulent claim for payment or approval; 2. knowingly making, using, or causing to be made or used, a false record or statement material to a false or fraudulent claim; or 3. conspiring to commit a violation …(31 U.S.C. § 3729(a)(A)-(C) (2010).) Each violation is punishable by civil penalties of $5,000 - $10,000 per violation, plus up to three times the amount of damage sustained by the government, and the cost of action. A violation can also cause a contractor to be suspended or debarred from further work for the federal government. Separate criminal statutes may also impose prison sentences for FCA violations. (See, i.e.,18 U.S.C. § 286.)

Before the Cafasso case, the Ninth Circuit Court of Appeals had made it easier to state a claim under the FCA. In Ebeib ex rel United States of America v. Lungwitz (Aug. 9, 2010) 616 F.3d 541, the Ninth Circuit joined other federal circuits “in recognizing a theory of implied certification under the FCA” based on the theory “that the act of submitting a claim for reimbursement itself implies compliance with governing federal rules that are a precondition to payment.” Even where the contract with the federal government did not require an express “certification of compliance” with every payment application (as some do), and even where the actual charges on the invoice were true and correct, “the act of submitting a claim for reimbursement itself implies compliance with governing federal rules that are a precondition to payment” such that the failure to actually be in compliance with those federal rules is a violation of the FCA.

In the Cafasso case, however, the Court reminded would be FCA claimants that not every wrong is a false claim. The FCA allows private plaintiffs under certain conditions, referred to as “relators,” to prosecute FCA claims, referred to as “qui tam actions,” and retain certain amounts recovered in those actions (as further defined by statute). This case involved an employee who claimed that she discovered a FCA violation at her former company. She alleged that her former employer (the government contractor) wrongfully failed to notify the government of inventions developed by the company while under contract, which the government had a right to use for free and had a right for other companies working for the government to license the invention at a reasonable rate. She claimed that the impact was that the government may have to pay twice to use the same invention.

The Court looked at the facts alleged in the complaint, though, and failed to find a FCA violation. “[T]o commit conduct actionable under the FCA, one must, in some way, falsely assert entitlement to obtain or retain government money or property. … Cafasso’s complaint alleges no false claim.” Despite Cafasso’s position within the company and access to company records, she failed to identify a single false or fraudulent claim for payment, false record or statement, document certifying receipt of property, or any other qualifying false claim. The Court held even if the facts alleged in the complaint were true that the company “withheld disclosure of new inventions so it could continue to use them as trade secrets,” that the conduct “might be a breach of contract but not a fraudulent claim.” This “allegation, which identifies a general sort of fraudulent conduct but specifies no particular circumstances of any discrete fraudulent statement, is precisely what Rule 9(b) aims to preclude.”

The import of the Cafasso case to all litigants is that, for the first time, the Ninth Circuit has confirmed that for complaints that claim fraud or mistake, including FCA claims, must “state with particularity the circumstances constituting fraud or mistake” under Rule 9(b) and must “plead plausible allegations” under Rule 8(a). “Plausible allegations” raise a “reasonable expectation that discovery will reveal evidence” of the misconduct alleged. The import of the Cafasso case for FCA claimants is that although the Ninth Circuit has expanded FCA claims to include things such as “implied false certification,” claimants must nonetheless plead specific facts that fall within one of the statutory FCA categories, and that general allegations of fraud or wrongdoing will not suffice.

Design-build gaining traction in the public sector

David Gehrig — Tue, 15 Mar 2011 15:10:39 -0500

The use of design-build in the public sector appears to be growing. As more public agencies achieve positive results with this project delivery method, the legislature appears to be more comfortable with expanding the statutory authority. My colleague, Lisa Dal Gallo, and I recently co-authored an article about this trend as well as the many benefits of design-build. Click here for a copy of the article.

Doyle Drive project sued for impermissible use of P3 authority

Steven Miller — Thu, 02 Dec 2010 13:30:14 -0500

The Professional Engineers in California Government, the union representing state engineers, has filed suit to stop the project to replace Doyle Drive, the 1.6 mile highway that connects the Golden Gate Bridge with the City of San Francisco. The lawsuit alleges that the project impermissibly uses a Private Public Partnership (P3) contrary to the State law authorizing the project. Instead, the engineers union asserts that the project should be awarded to the lowest bidder pursuant to a traditional design-bid-build process, with the design component being performed by State engineers. Under the current arrangement, Hochtief Concessions and Meridiam Infrastructure will design, construct, operate and maintain the road.

Central to the lawsuit is the assertion that Streets and Highways Code Section 143, which authorizes P3 projects on the state highway system under certain circumstances, requires that revenues to pay for the project be generated by tolls. As the Doyle Drive Project does not include a tolling component, the lawsuit contends that proceeding with the project as a P3 violates the statute.

The lawsuit was filed with the Alameda County Superior Court and is case number RG10544672. Articles summarizing the lawsuit can be found here and here.

By many measures, the state of American infrastructure is concerning

David Gehrig — Thu, 11 Nov 2010 18:05:35 -0500

I recently received a link to a very informative blog post on the Blogineering blog which includes a compilation of 50 separate articles and videos addressing the current state of infrastructure in the United States. It paints a disconcerting portrait of our considerable infrastructure needs over the near term, while also linking to articles which offer potential solutions. Needless to say, it is an informative resource. You can find the blog post here.

Governor signs SB 972, clarifying design professionals' duty to defend

Michael Conneran — Wed, 06 Oct 2010 15:12:15 -0500

Governor Schwarzenegger has now signed SB 972, a new law that clarifies when design professionals will owe a "duty to defend" to public agencies when lawsuits are filed that implicate the services provided by such professionals. The new statute, which will be effective on January 1, 2011, was adopted in response to two court decisions (Crawford v. Weather Shield Mfg., Inc. (2007) 44 Cal.4th 541 and UDC v. CH2M Hill (2010) 181 Cal.App.4th 10), which held that parties could be required to bear the costs of defense under common contractual indemnity provisions, even if they are not ultimately found to have been negligent.

This new law complements AB 573, adopted in 2006 and codified in Civil Code Section 2782.8, which limited the permissible scope of indemnity obligations that public agencies could obtain from design professionals to instances of negligence or intentional misconduct. Under the new law, which modifies Section 2782.8, the duty to defend will likewise only be implicated in instances of negligence or intentional misconduct.

New case delineates boundaries between bidder responsiveness and responsibility

David Gehrig — Fri, 01 Oct 2010 18:11:54 -0500

A court of appeal case published on August 31, Great West Contractors, Inc. v. Irvine Unified School District, refined the rules for public agencies evaluating bids submitted for a low-bid contract by clarifying the distinction between bidder responsiveness and bidder responsibility. In short, bidder responsiveness can only be determined on the face of the bid, and the rejection of a bid based on information obtained from an investigation external to the bid must be evaluated as an issue of bidder responsibility. The court also made several observations about the apparent favoritism of the School District in attempting to award the contract to the third low bidder. Please read on for a discussion of the case.

In Great West Contractors, the Irvine Unified School District advertised contracts for the modernization of two elementary schools. Great West Contractors was the low bidder on both projects by a combined total of approximately $800,000. In response to a question included in the bid package asking bidders whether they had ever been licensed under a different name or license number, Great West answered "no." This was the same answer Great West had given during the pre-qualification process, which the School District had found acceptable. However, after investigating the licenses previously held by Great West, the School District discovered that it had previously operated under several other licenses which were not directly relevant to the work to be performed on the modernization projects. Nonetheless, the School District decided to reject Great West's bid as non-responsive.

Great West protested the rejection of their bid, lost at the trial level and appealed the case. The appellate court, citing the recent D.H. Williams v. Clovis Unified Unified School District (2007) 146 146 Cal.App.4th 757 case, held that:

a public agency cannot reject the bid of the lowest bidder on a public works project on the theory that the bid is "nonresponsive" to the agency's request for bids when, in substance, the real reason for the rejection is that the agency thinks the lowest bidder is "not responsible"--at least not without giving the lowest bidder the chance for a hearing on whether the lowest bidder really is "nonresponsible."

More specifically, the court held that bidder responsiveness can only be determined from the face of the bid. Once an agency investigates information outside of the bid, as the School District did by investigating Great West's prior licenses, it becomes an issue of bidder responsibility and the rejection of the bid requires providing the bidder a due process hearing. The court also restated the 5 factors considered by the D.H. Williams case for determining when an issue is really one of bidder responsibility, not responsiveness (which I won't detail here). Ultimately, the court reversed the judgment of the trial court and remanded the matter to allow Great West to amend its complaint to pursue its bid preparation costs and presumably for a due process "responsibility" hearing.

The lesson for public agencies is clear: don't reject a bidder as nonresponsive based on information which does not appear on the face of the bid. While it is obviously beneficial for public agencies to couch a bid rejection as an issue of non-responsive as opposed to nonresponsibility, after the Great West case a court can apply its own judgment to convert the issue to one of bidder responsibility which entitles the bidder to a hearing and a more difficult standard for rejection. If the issue facing the agency is truly one of bidder responsibility, a public agency should treat it as such or risk facing a successful protest.

Also of note, the court used disdainful language in observing the apparent favoritism displayed by the School District in trying to award the contract to Great West as evidenced by: 1) rejecting Great West's bid for holding ancillary licenses while ignoring the same issue with the third low bidder awarded the contract; and 2) the failure of the School District to respond to Great West's Public Records Act request until almost a month after the request was submitted, while responding within a day of a request submitted by another bidder.

California Supreme Court opinion regarding applicability of prevailing wages to charter cities still pending

David Gehrig — Thu, 22 Jul 2010 20:05:30 -0500

An appellate court case decided in April of 2009 held that public works projects awarded by charter cities, and financed solely from city revenues, were not subject to California prevailing wage requirements under the Prevailing Wage Law. (See State Building and Construction Trades Council of California v. City of Vista (2009) 173 Cal.App.4th 567.) On August 19, 2009, the California Supreme Court granted a petition to review the case, and de-published the opinion of the appellate court. According to the Supreme Court website the case has been “fully briefed,” although oral argument has not yet occurred. Presumably, the Supreme Court will issue its opinion by the end of the year.

The appellate court held that the Prevailing Wage Law is not a matter of “statewide concern,” and that charter cities are “free to determine whether the statute’s provisions will govern their public works contracts.” The appellate court found support for this conclusion in a number of prior opinions. The applicability of the Public Works Law to charter cities is now obviously in doubt, which surely has those involved in public works projects for charter cities interested in the outcome of this case. We will post a summary of the case once it is published.

Sunset date for transit operator design-build statute extended to 2015

Julie Sherman — Wed, 21 Jul 2010 20:09:47 -0500

On October 11, 2009, Governor Schwarzenegger signed into law AB 729 (Evans) extending the sunset date on the design-build statute applicable to public transit operators to January 1, 2015. The full text of the bill can be reviewed here. This marks the second extension of the sunset date. The transit operator design-build statute was adopted in 2000 pursuant to AB 958 (Scott), and included a sunset date of January 1, 2005. In 2006, pursuant to AB 372 (Nation), the sunset date was extended to January 1, 2011. It appears that the California Legislature is gaining comfort with design-build in the public sector.

New California appellate case expands applicability of False Claims Act

Shawn T. O'Leary — Tue, 16 Mar 2010 15:14:30 -0500

A California appellate case published in late February expands the applicability of the California False Claims Act to contractors which submit applications for payment while failing to comply with material contract terms. (SF Unified School District ex rel. Contreras v. Laidlaw Transit, Inc. (February 26, 2010) Cal. App. 2010 LEXIS 249.) The Laidlaw case provides powerful support to public entities in their efforts to avoid fraud on public works projects, as described in more detail below.

After most of the qui tam plaintiff's case was dismissed by the lower court, plaintiff school district pursued an appeal on a lone issue: that Laidlaw Transit made an implied certification with each of its payment applications that they were in compliance with its contractual requirements when it knew that it was not. The appellate court sustained a cause of action on this basis: "Plaintiffs allege Laidlaw violated the CFCA by submitting claims for payment to the District at times when Laidlaw knew it was in breach of various terms of its contract to provide student bus transportation services. The trial court sustained Laidlaw's demurrer and ultimately dismissed the action, but we reverse. Under the CFCA, a vendor impliedly certifies compliance with its express contractual requirements when it bills a public agency for providing goods or services. Allegations that the implied certification was false and had a natural tendency to influence the public agency's decision to pay for the goods or services are sufficient to survive a demurrer."

The Court's reasoning would appear to apply to a broad category of contract compliance issues in government contracts: "It is reasonable for governmental entities to assume that contractors seeking payment are in compliance with the material terms of their contracts. If a contractual provision turns out to be unduly onerous or a contractor needs more time to comply, the contractor does not expose itself to liability under the CFCA if it informs the governmental entity of the problem and seeks an accommodation. But if that same contractor is aware of the noncompliance and chooses to seek payment without informing the government, then it is a fraud appropriately within the scope of the CFCA. To exclude such fraud would be contrary to this court's obligation to construe the CFCA 'broadly so as to give the widest possible coverage and effect to the prohibitions and remedies it provides.' " (Citation omitted.) The act is " 'intended to reach all types of fraud, without qualification, that might result in financial loss to the Government.' [Citation.]"

Note that this court specifically recognized that some contracts require a separate certification of compliance with each payment application, but that this contract did not do so. Nonetheless, the court found it appropriate to still recognize an implied certification inherent in the making of the payment application, at least as to express material contractual terms.

It is likely that this decision will be appealed. Given that it appears to create new law in California, there is a better than average chance that the California Supreme Court would take some action. For the time being, however, it provides powerful support to public agencies where contractor did not comply with material contract terms and did not notify the government of that fact when it made payment applications.

Design-build authority for transit operators extended to 2015

Julie Sherman — Tue, 19 Jan 2010 18:30:45 -0500

On October 11, 2009, Governor Schwarzenegger signed into law AB 729 (Evans), revising the design-build statute applicable to transit operators. AB 729 extends the authority of public transit operators to use design-build contracting from January 1, 2011 to January 1, 2015. We interpret this to mean that transit operators must award, but not complete, a design-build contract prior to this date.

AB 729 also retained the requirement that public agencies submit a report to the Legislative Analyst evaluating the design-build process in various categories within 120 days of putting the project in to operation or by December 1, 2015 (whichever occurs first). The continued reporting requirement will allow further analysis to be conducted regarding the effectiveness of the design-build contracting process. The full text of the bill may be viewed here.

The design-build statute for transit operators was initially adopted in 2000 pursuant to AB 958 (Scott), and established a sunset date of January 1, 2005. In 2006, AB 372 (Nation) extended the sunset provision to January 1, 2011.

Santa Clara Gets Help from State Legislature for New 49ers Stadium

Laila Louridas — Mon, 21 Dec 2009 19:09:01 -0500

A controversial new state law introduced by Sen. Elaine Alquist and approved by the Governor in October 2009 will make it easier for the City of Santa Clara to facilitate construction of a new football stadium for the 49ers. Senate Bill 43 creates a new joint powers authority, the Santa Clara Stadium Authority, which will be exempt from the City's competitive bidding rules and is authorized to award a design-build contract for the new stadium.

According to an October 28, 2009 article in the San Francisco Chronicle, the stadium is estimated to cost $937 million. $114 million of this amount will come from public redevelopment funds and a new tax on hotel guests near the site. The remaining $823 million would come from private funds. While the new law allows the City to award a design-build contract for this work, it also requires that all subcontracts be competitively bid pursuant to the City's requirements. The 49ers have said that the project would be in jeopardy if the team's desired contractor did not get the job. Effectively, it appears that this new law will allow the City to treat this contract award as a "sole source" directly to the 49ers desired contractor on a design-build basis.

The bill is controversial in that it seems that it was designed specifically to create a special exemption to avoid competitive bidding for this particular stadium project. As discussed in a November 30, 2009 article in the San Francisco Chronicle, SB 43 is not the only bill recently passed specifically to help developers constructing new NFL team stadiums while avoiding applicable laws. ABX3 81 exempts developers of an NFL stadium in Los Angeles County from complying with applicable EIR requirements.

Harvard Graduate School of Business and Graduate School of Design hosts symposium on Integrated Project Delivery

David Gehrig — Wed, 02 Dec 2009 18:34:20 -0500

On October 22 and 23, 2009, the Harvard Graduate School of Business and Graduate School of Design jointly sponsored a symposium on Integrated Project Delivery (IPD). IPD is a project delivery method where all of the key participants (owner, contractor, designer and key subcontractors) are engaged at project commencement to collaboratively design, develop and execute the project. Participants’ compensation is based on overall project outcome, measured against an agreed target cost, and liability within the IPD group is waived or greatly reduced. IPD has produced exceptional results in healthcare, and more recently, in a range of commercial and institutional projects.

The symposium used the Harvard Graduate School of Business Case Study format, focusing on the Autodesk AEC headquarter project in Waltham, MA. (Case Study N2-610-017) The symposium attendees, who were senior members of the design, construction and facility industries, were lead by Professors Robert Eccles and Amy Edmondson in a Socratic investigation of strengths and weaknesses of the current IPD project format. There were also 4 panel discussions, concluding with a panel of major institutional owners who commented on their experience and how what they had learned during the symposium would be applied to their infrastructure programs. Hanson Bridgett’s Howard Ashcraft, who prepared the contracts for the studied project, was also a panelist discussing IPD project structure.

A Renaissance for Rail? President Obama Releases a New Plan for High-Speed Rail

Meghan Mead — Thu, 21 May 2009 16:58:48 -0500

On April 16, 2009, President Obama unveiled his new High-Speed Rail Strategic Plan. Until this year, rail transportation has received less than three percent of all federal investment in intercity transportation infrastructure and the Northeast has the nation’s only high-speed rail corridor. In contrast, throughout the 20th century the United States has invested $1.8 trillion in our highway and aviation infrastructure. Now however, with oil prices climbing and mounting concern over climate change, investing in public infrastructure solely to support cars and planes in no longer sustainable. As President Obama’s Plan states, “a new approach is needed--one that responds to today’s economic, energy, and environmental challenges.” Railroads offer a solution as they can reduce pollution and congestion and efficiently transport people and goods between cities.

The chart below shows the relative advantages of air, rail, and highway transportation based on population density and distance between cities.

		Intercity Distance in Miles
		0-100	100-600	600-3000
Population Density	Light	1) Auto	1) Auto 2) Conventional Rail	1) Auto 2) Air
	Moderate	1) Auto 2) Commuter Rail	1) High-speed Rail 2) Auto	1) Auto 2) Air
	High	1) Commuter Rail 2) Auto	1) High-speed Rail 2) Air	1) Air

The Strategic Plan identifies ten potential high-speed rail corridors.

California (Bay Area, Sacramento, Los Angeles, San Diego)
Pacific Northwest (Eugene, Portland, Seattle, Vancouver, Tacoma)
South Central Corridor (Tulsa, Oklahoma City, Dallas/Fort Worth, San Antonio, Austin, Little Rock)
Gulf Coast Corridor (Houston, New Orleans, Mobile, Birmingham, Atlanta)
Chicago Hub Corridor (Chicago, Milwaukee, Cleveland, Toledo, Twin Cities, Kansas City, Detroit, St. Louis, Colombus, Louisville, Indianapolis, Cincinnati)
Florida Corridor (Orlando, Tampa, Miami)
Keystone Corridor (Philadelphia, Harrisburg, Pittsburg)
Southeast Corridor (Washington, Richmond, Raleigh, Charlotte, Atlanta, Macon, Savannah, Columbia, Jacksonville)
Empire Corridor (New York City, Albany, Buffalo)
Northern New England Corridor (Boston, Montreal, Portland, Springfield, New Haven, Albany)

The American Recovery and Reinvestment Act of 2009 (ARRA) appropriates $8 billion in funding for passenger railroads. Additionally, President Obama has promised a $5 billion commitment to high-speed rail over the next five years.

The Department of Transportation (DOT) has established three tracks for projects to receive ARRA funds. The first is for projects that are “shovel ready”, primarily intercity passenger rail projects and congestion reduction projects. The second track is for corridor development programs, a preliminary step for high-speed rail and intercity passenger rail projects. The third track is for planning activities, including the development of corridor plans. The DOT will issue guidance on the application process on June 17, 2009 and expects to begin awarding its first grants at the end of the summer.

Are public works bidding requirements in California really that restrictive?

David Gehrig — Tue, 14 Apr 2009 14:10:37 -0500

In a word, yes. Most public agencies are required to award their public works construction projects to the lowest responsive, responsible bidder. Failure to comply with public bidding requirements can result in a legal ruling which can void the contract. However, there are also a variety of alternative project delivery methods (design-build, construction manager at-risk, job order contracting, public-private partnerships, lease lease-back etc.) that are available for select public agencies to use for qualifying projects. The difficulty is that the statutes which authorize these alternative project delivery methods are not organized in any logical fashion. I recently prepared a paper summarizing the main alternative project delivery methods available to public agencies in California, with a chart at the end that provides statutory references. The paper was included with the materials at the Integrated Project Delivery Seminar Series. In addition, the paper was included with the materials at the Lean in Public Sector Construction Projects Workshop and served as the basis for a presentation I gave on the topic. You can view a copy of the paper by clicking here.

DIR opinion solidifies "de minimis" exception to prevailing wages for private developers

David Gehrig — Wed, 08 Apr 2009 09:55:50 -0500

The California Department of Industrial Relations recently published an opinion which solidifies the “de minimis” exception to prevailing wage laws for private developers which receive small amounts of public financial support for their projects. In Public Works Case No. 2008-37, the DIR responded to a request for a prevailing wage coverage determination initiated by the developer of a senior care facility in Elk Grove. As an incentive to build the facility, the city offered financial incentives in the form of reduced sewer impact fees (sewer credits) which totaled over $200,000. The DIR concluded that pursuant to Labor Code section 1720(c)(3), this amount was “de minimis” in relation to the overall project cost.

Ordinarily, construction projects in California which are paid for "in whole or in part out of public funds" are subject to prevailing wages. (See Labor Code section 1720(a)(1).) However, Labor Code section 1720(c)(3) creates an exception for “de minimis” public contributions as follows:

If the state or a political subdivision reimburses a private developer for costs that would normally be borne by the public, or provides directly or indirectly a public subsidy to a private development project that is de minimis in the context of the project, an otherwise private development project shall not thereby become subject to the requirements of this chapter.

In this opinion, the DIR concluded that the “total project costs” came to $18,207,335, meaning that the sewer credits represented only 1.1% of this total. Consistent with three prior opinions, the DIR concluded that a contribution of public funds in the amount of 1.1% fell within the de minimis exception. In fact, an earlier opinion concluded that the exception applied where the public contribution was 1.64% of the total project cost.

This opinion is welcome news for developers which might receive financial incentives from a public agency for a construction project. While public contributions of 1.64% or less are small in terms of the total project cost, they are nonetheless useful, particularly in this economic climate.

Federal Stimulus Bill Means Increased Infrastructure Spending Coming to the Bay Area

Meghan Mead — Fri, 03 Apr 2009 11:30:24 -0500

While the recession has led to a drastic slowdown in the construction industry, the horizon looks brighter as the Bay Area preps for a welcome infusion of cash from the federal government. The money comes from the federal stimulus bill, the American Recovery and Reinvestment Act of 2009. During his campaign President Obama emphasized the need for increased infrastructure spending as a means to end the recession, increase public transportation, and improve America’s aging infrastructure. The stimulus bill makes good on his campaign promises, with approximately $50 billion dedicated to core infrastructure spending on bridges, roads, rail, and other transportation projects.

The Bay Area could receive up to $1.5 billion in funding from the federal stimulus bill. Major projects that could receive federal funds include the reconstruction of Doyle Drive, costing an estimated $1 billion, and the construction of the subterranean train station at San Francisco’s Transbay Terminal, with a price tag of about $490 million. The Bay Area Council Economic Institute is leading the effort in drafting a plan to maximize the federal money flowing to the Bay Area and ensure funding is allocated to high priority projects. For now, the federal money has or will come from three different sources:

The Metropolitan Transportation Commission (MTC) has already received and distributed $495 million from the federal stimulus package. MTC is the agency responsible for allocating funding to the numerous transportation agencies and authorities in the Bay Area, as well as lobbying the federal government on behalf of Bay Area transportation agencies. The money will be used for projects such as rehabilitating roads and rails and procuring new equipment for transportation agencies.

The Bay Area is likely to receive an additional $462 million from the State for projects that were originally supposed to be funded through a bond sale. However, the credit crisis, California’s reduced bond rating ( the lowest among all fifty states), and the massive budget deficit have all conspired to reduce the likelihood of receiving funding from the state for infrastructure projects. Currently, the state is looking at an $8 billion budget shortfall although some think that number could increase if the recession continues.

The Bay Area may also receive up to $450 million in discretionary funds from the California Department of Transportation (“DOT”) for Doyle Drive, San Francisco’s Transbay Terminal and/or other projects. The DOT has yet to issue the guidelines to receive discretionary funding; those are expected on May 18, 2009.

In a separate lobbying effort, California’s High Speed Rail Authority, whose high speed train will link San Diego, Los Angeles, Sacramento, and San Francisco, is optimistic that it will also receive some federal funding. California is the only state with a high speed rail that has been voter approved.

It is an exciting time for infrastructure development in the Bay Area. We will continue posting information on new developments, including DOT’s guidelines for its discretionary spending.