California, the perfect example in large investments for the construction sector today and in the years to come

Sacramento, July 6, 2021.- The Administration recognizes the important role that infrastructure investments make in promoting economic stimulus. While many capital projects were paused in 2020 due to fiscal uncertainties related to the COVID-19 Pandemic, the Plan demonstrates renewed commitment to these investments as a key driver in California’s economic recovery.

The Plan proposes significant capital investments statewide over the next five years, including:

$1.6 billion ($18.7 million General Fund, $1.6 billion Public Buildings Construction Fund) for the Department of General Services (DGS) for the renovation of six
state office buildings in Sacramento and two property acquisitions, including $766.1 million for the renovation of the Bateson, the Unruh, and the Resources Buildings in Sacramento.
$2.1 billion ($310.6 million General Fund and $1.8 billion Public Buildings Construction Fund) for the Judicial Council for 14 replacement and/or renovation projects and 2 studies to address building deficiencies in courts across the state.
$715.8 million ($220.3 million General Fund and $495.5 million Public Buildings Construction Fund) for the Department of Forestry and Fire Protection for the replacement of five fire stations, five unit headquarters, and two statewide communications facilities; improvements at two air attack bases to support the new C-130 firefighting aircraft; and for camp conversions statewide.

The Department of General Services (DGS) manages approximately 35 million sf of space that supports a variety of state programs and functions. In addition, approximately 3.6 million sf in new office space is currently under construction or renovation in the Sacramento area. These construction activities are in furtherance of the DGS Ten-Year Sequencing Plan (Sequencing Plan), which provides a strategy for the renovation or replacement of numerous state office buildings in the Sacramento region.

In March 2021, the first of these new office buildings will be completed—the Clifford L. Allenby Building will house the Health and Human Services Agency, the Department of State Hospitals, and the Department of Developmental Services. In August 2021, the new Natural Resources Headquarters Building will be completed. The 21-story facility will house numerous departments within the California Natural Resources Agency. Late 2021 will also see the completion of the new 10th and O Street State Office Building, which will house the Governor and the Legislature during the replacement of the existing Capitol Annex facility. In addition, during 2021 construction will continue on the approximately 1.25 million sf new Richards Boulevard Office Complex in Sacramento.

The COVID-19 Pandemic has increased ongoing telework for state employees. In response to this change, DGS is evaluating the state’s portfolio of leased properties and state-owned buildings to determine potential efficiencies and restacking opportunities. While these efforts will continue, the Administration recognizes the need for modern office space to conduct the state’s core business functions, and remains committed to investing in the construction and renovation of these assets.

The 2021-22 Governor’s Budget includes $766.1 million Public Buildings Construction Fund in continued support of the Sequencing Plan. This includes financing for the continuation of the Bateson Building Renovation ($191.6 million), the Unruh Building Renovation ($122.4 million), and the Resources Building Renovation projects ($452.1 million). The Plan includes $1.6 billion ($18.7 million General Fund and $1.6 billion Public Buildings Construction Fund) over the next five years for the renovation of six office buildings in Sacramento and two property acquisitions. This will include a total of 2.8 million sf of newly renovated, usable building space to meet future needs as outlined in the Sequencing Plan.

Progress has been made over the past decade to increase the percentage of California bridges in good condition and to reduce the number that are classified as structurally deficient (SD). Today, California has fewer SD bridges than the national average, and this number is expected to continue declining thanks to the passage of the Road and Repair Accountability Act (SB 1), which increased funding for badly-needed repairs to the state’s transportation system. However, much more remains to be done, especially as it relates to seismic retrofitting to improve the safety of bridges in the event of an earthquake. Approximately 50% of bridges in the state have exceeded their design life and the backlog of recommended maintenance, repair and replacement work continues to grow. California is home to the second largest percentage of “functionally obsolete” (FO) bridges, or bridges with outdated designs that frequently contribute to congestion chokepoints. Over 7% of California’s bridges are structurally deficient and California has ranks among the top states for bridges in “poor” condition by bridge deck area. In other words, some of our largest bridges, along corridors such as I-5 in San Diego, Highway 101 in Los Angeles, and I-80 in Sacramento need major repair and rehabilitation.

Remember the main infrastructures in California

California ports play a vital role in maintaining waterborne trade essential to the nation’s economy. In 2017, California’s ports handled 40% of all containerized cargo entering the U.S. and 30% of the nation’s exports. Since 2012, maritime traffic volumes have increased by over 16%, while other factors have also begun impacting port operations: the need to protect against potentially catastrophic natural disasters such as earthquakes and sea-level rise, increased demands for security and emergency management, tighter regulatory requirements including air quality regulations, and modernization to incorporate new technologies to maintain competitiveness. California ports are in satisfactory condition for the time being, but require significant improvements to maintain existing conditions and meet new demands. The funding gap is estimated at $ 10.7 billion over the next 10 years, and available revenue has been insufficient to fill the gap as needs continue to outpace available funds.

Dams are a critical element of California’s infrastructure. The public depends on them for 70% of state’s water supply, 15% of the power, as well as for flood control, recreation, fisheries and wildlife habitat. Changes in climate and population growth require new operational strategies. Over half of California’s 1,476 state, federal and locally owned dams are considered high hazard dams, meaning their failure would result in probable loss of human life and economic damage. Approximately 70% of the dams are greater than 50 years old. Aging dam infrastructure challenges must be met with increased resources to ensure their reliability and safety. Fortunately, funding for dam inspection has increased in recent years. In 2015, the California Division of Safety of Dams (DSOD) budget was approximately $13 million, up from $11 million in 2010. This increase kept funding on par with inflation. However, while DSOD’s budget is significantly higher per regulated dam than the national average, it does not fully fund the necessary programs to ensure adequate dam safety.

Driving on deficient roads costs Californians $61 billion annually due to congestion-related delays, traffic collisions, and increased vehicle operating costs caused by poor road conditions. The condition of California roads is among the worst in the nation, ranking 49th according to the latest US News & World Report Ranking. Meanwhile, Southern California and the Bay Area are the second and third most congested urban areas in the nation, respectively. Repair and improvement to these roads is vital to California’s economic health and public safety. The Road and Repair Accountability Act (SB 1) passed in April 2017, provides $52 billion in additional funds for local and state roads over the next 10 years. However, a total of more than $130 billion over that same time is needed to bring the system back to a state of good repair. A good transportation system enables efficient movement of goods and people and is critical to California’s economic well-being.

California’s passenger rail system operates on right-of-way owned by Class I freight railroads, which are also the major carrier of freight in the state. Passenger rail systems and smaller freight carriers (Class II and III), to a lesser degree, rely on public funding for operations and maintenance. Class I freight railroads are able to fund maintenance and capital investment from their revenues, and generally operate on infrastructure that is in good condition. Progress is being made on safety related Positive Train Control (PTC) systems and most of the state’s railroads implemented the service by the December 31, 2018 statutory deadline. However, some of the challenges that remain include lack of adequate funding for grade crossing safety programs, and commuter rail and state-supported intercity passenger rail that lack a dedicated revenue source for operations, maintenance, and capital investment programs. California, and the public agencies managing passenger rail systems, are working to remedy the issues regarding funding, interconnectivity, and capital investment, which have been outlined in the 2018 California State Rail Plan.

California needs robust, flexible, and reliable transit systems to reduce peak congestion on our highways, provide options for citizens who do not drive, and improve air quality. Public transit in California provides nearly 1.5 billion trips annually on 139 transit systems throughout the state. The California Transportation Commission estimated in 2011 the state needed approximately $174 billion for expansion and state of good repair transit projects over the next 10 years, but at the time only 45% of funding had been identified, leaving a shortfall of $96 billion. Fortunately, recent legislative initiatives and ballot measures are attempting to close the funding gap, including an additional $750 million annually for transit agencies across the state provided through the Road and Repair Accountability Act of 2017 (SB 1). Adequate resources must be provided to our transit systems or we risk retreat on sustainability gains as well as the current state of good repair.