Uncertainty in the Air for Southeast DOTs

Transportation Departments Challenged to Keep Up With Increased Road Volume

By Debra Wood

Throughout the Southeast, state transportation departments are facing funding challenges as they try to keep up with growing demand for roads.

“It looks like contract awards for highways and bridges are up throughout the [Southeast] region, but the number of contracts are down, which is something we are seeing on the national level as well,” says Alison Premo Black, research economist for the American Road & Transportation Builders Association in Washington. That data reflects the rising cost of materials and overall project costs.

Black reports that through September 2007, in Florida, Georgia and the Carolinas, the value of contracts was up 40% to $5.3 billion compared to $3.8 billion for the same period in 2006. Although the numbers compare contracts let, Black says it’s a good indicator of work to be done in the next year or two.

Florida

The Florida Department of Transportation expects to fund $2.5 billion in new road and bridge contracts for the 2007-2008 fiscal year. That’s a sizable drop from the previous year when it let roughly $3.2 billion in contracts. Although the Legislature met in special session in October to cut the state budget due to falling revenues related to the housing slump, lawmakers did not reduce FDOT’s allotment.

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“That being said, state revenues dedicated for transportation are coming in under forecast compared to the March 2007 forecast,” says FDOT spokesman Dick Kane. “It is expected that future forecast will be lowered by as much as 2%. This may result in some projects being delayed.”

Robert G. Burleson, president of the Florida Transportation Builders Association in Tallahassee, estimates the state will take a $800 million to $1 billion hit to the five-year work program due to declining gas tax revenues. On the positive side, he reports bids in 2007 came in 5-6% under estimates, and there were more bidders.

“We’re hopeful there won’t be a lot of work that has to be cut,” Burleson says.

However, in July, a ruling against the U.S. Army Corps of Engineers in a suit involving their permitting of environmentally sensitive area shut down 35% of Florida’s Lake Belt mining operations in South Florida. As a result, FDOT anticipates a roughly 20% shortage of material and increased aggregate costs.

“Due to the slowdown of residential and commercial construction, we have not seen increases in prices of rock in our bids as of yet,” Kane says. “We are aware of price increases that went into effect in August and future increases that may be forthcoming early [in 2008]. We do anticipate such prices to be passed through in the bids we receive in the future.”

FDOT plans to award a design-build contract with a maximum price of $197 million for the widening and financing of Interstate 95 in Brevard County. It also plans a $112 million widening of the Palmetto Expressway and a $107 million reconstruction of U.S. Highway 1, both in Miami-Dade County.

Beyond the regular lettings, Burleson expects FDOT to enter into a public-private partnership to complete the $1 billion widening of Interstate 595 in Broward County. Farther south in Miami-Dade County, the state picked Miami Access Tunnel, an international consortium headed by Bouygues Travaux Publics of France, for the $1 billion Port of Miami Tunnel project, which still awaits city of Miami funding commitments.

Georgia

State highway contractors continue working on projects in Georgia’s six-year, $15.7 billion Fast Forward Congestion Relief Program, enacted by Gov. Sonny Perdue in 2004 to accelerate projects and utilize Grant Anticipation Revenue Vehicles bonds.

The Georgia Department of Transportation’s 07-08 construction budget is $2.7 billion, up from the previous year’s $2.2 billion. Contractors will stay busy in 2008 with a few major projects funded by Fast Forward.

Archer Western Contractors of Atlanta is targeting a December 2009 completion for its $146 million contract in Crisp County to reconstruct and widen Interstate 75 to six lanes and build nine I-75 bridges.

The contractor also has been working on a $218 million widening and reconstruction of Interstate 85 in Coweta and Meriwether counties since January 2007, with completion scheduled for June 2009.

C.W. Matthews broke ground in December on the $147.4 million reconstruction of the I-85 and State Route 316 interchange. The two large flyover bridges, other bridge work and the addition of HOV lanes throughout the interchange should wrap up by the end of 2008.

Near Brunswick, Skanska USA Civil’s Southeast division (formerly Tidewater Skanska) is continuing work on its $199 million contract to widen 5.7 mi of I-95 to six lanes by November 2009.

North Carolina

The North Carolina Department of Transportation continues spending on roads, but the Legislature has hired a consultant to evaluate the department’s practices and formed a committee to evaluate the state’s transportation system.

Berry Jenkins, North Carolina Highway-Heavy Division director for the Carolinas Associated General Contractors in Charlotte, anticipates NCDOT will let about the same level of work as the last year or two.

NCDOT’s fiscal year 2007-2008 construction budget comes in at about $1.8 billion, says department spokesperson Lisa Crist Crawley.

The state’s recently established 21st Century Transportation Committee was scheduled to meet to discuss short- and long-term ways to improve the transportation system and find additional funding sources.

In addition to the commission, the Legislature hired a consultant to evaluate NCDOT’s business practices and structure. Jenkins says McKinsey & Co. of Charlotte recommended using a formula to prioritize projects, increasing funding for bridges and changing internal processes to better track projects.

Several major NCDOT projects are under way. S.T. Wooten Corp. of Wilson, N.C., is building the $123.5 million U.S. 70 Clayton Bypass in Wake and Johnston counties, scheduled to finish by the end of 2008. And two sections of the Greensboro Urban Loop in Guilford County also will open in early 2008.

APAC Atlantic of Candler, N.C., is working on the $101.6 million section from Interstate 40 to Bryan Boulevard and Archer Western Contractors the $116.5 million stretch from I-85 to Wendover Avenue.

The department plans to use $244 million in GARVEE bonds in calendar year 2007 and $281.6 million in GARVEEs in calendar year 2008. Ten projects will be funded using this mechanism.

South Carolina

After completing its bond-funded, accelerated road building program in 2005, South Carolina DOT’s construction spending dropped to $268 million in regular lettings in 2006-2007. Also last year, the state received less federal money than expected and did not fund projects with bonds.

At the end of the last funding year, however, SCDOT received an additional $77 million in federal dollars as a result of redistributions from states that did not spend their allocations. That money was committed by the end of September.

Michael Covington, director of administration of the SCDOT, expects the department will spend about $432 million in regular lettings for construction projects in 2007-2008, returning to what he describes as a more normal spending pattern.

In addition to these projects, the department may be able to start on design-build projects or others yet to be authorized by the State Infrastructure Bank.

 “All and all, we expect ‘08 to be a bigger year,” Covington says.

Projects for 2008 might include an extension of the Mark Clark Expressway in Charleston County and building more sections of Interstate 73 through a public-private partnership.

Covington says other projects under consideration for 2008 include an upgrade to the U.S. 301 interchange with I-95 to improve access to a new distribution center. And in North Charleston, funding for a $300 million-plus port access road will depend on support from the South Carolina State Ports Authority as well as the Infrastructure Bank and Legislature.

ARTBA’s Black reports a significant increase in South Carolina bridge projects, with the state awarding $140 million through September, compared with $51 million in 2006.

Covington attributes the increase to the state replacing a number of deficient bridges to keep the routes operational.

Useful sources:

FDOT: Plenty of Work Zones Ahead
http://southeast.construction.com/features/archive/0707_cover.asp

Life in the Fast Lane
http://southeast.construction.com/features/archive/0704_Feature5.asp

North Carolina DOT is Facing Up to Its Funding Gap
http://southeast.construction.com/features/archive/0705_cover.asp

Florida Department of Transportation
http://www.dot.state.fl.us/

Georgia Department of Transportation

North Carolina Department of Transportation
http://www.ncdot.org/

South Carolina Department of Transportation
http://www.scdot.org/