The Stimulus Act has been both better and worse than you think.
The American Recovery and Reinvestment Act (ARRA) of 2009 — better known as the Stimulus Act — represents an unprecedented response by the US government to the global economic crisis, committing nearly $800 billion in stimulus funding to counter its effects. The ARRA is an amalgam of near-term economic stimulus (job-creation programs, tax credits, and incentives for 3.5 million new jobs) and longer-term investments in public health, education, infrastructure, and cleanenergy initiatives. The AIA estimates that ARRA funding includes approximately $87 billion for the built environment, including school and federal building modernizations, Department of Energy programs, public transportation, housing and urban development, and Small Business Administration assistance.
In the wake of pervasive unemployment in the building sector, many designers and construction workers wonder what happened to their recovery. The answer may be increasingly complex as the ARRA continues to unfold. As a political high-wire act of short-term recovery and calculated long-term payoffs, the government’s message of “investing in the future” has been lost within the context of the stark realities of a tepid recovery: prolonged near-double-digit unemployment, dormant credit markets, and a stagnant gross domestic product.
Bumps Along the Road
The ARRA struggles with its public-relations paradox: On the one hand, it touts transformative public works and infrastructure initiatives (high-speed rail, clean energy) that are comparable in scope and economic impact to the 1930s Works Progress Administration, and on the other, it heralds a mishmash of “shovel-ready” projects. Small wonder, then, that the building industry is generally skeptical of the ARRA’s efficacy, questioning its viability as either a comprehensive national infrastructure renewal program or a legitimate jobs-creation act.
Persistent (mis)representations of infrastructure — merely one-fifth of ARRA funding — as the linchpin of the recovery have unnecessarily elevated expectations for an economic panacea. But dismissing the ARRA as an incoherent hodgepodge of pavement projects fails to acknowledge the far-reaching scope and vision of the administration’s infrastructure agenda. As the building industry grapples with the ARRA and its opportunities (or the lack thereof), some aspects of the legislation should be understood, including:
Broad scope of ARRA funding: Infrastructure aside, 80 percent of ARRA funding permeates myriad sectors of the economy. Many initiatives are taking shape in 2011 and, if approved, will leave lasting legacies. However, the programs remain slow to generate jobs. In numerous situations, local debates rage over the appropriateness of some ARRA investments — such as multimilliondollar TSA baggage-screening devices and subsidies for emerging clean-energy technologies — versus more pragmatic ways of getting Americans working again.
Scale and complexity of projects: As the president readily admits, numerous projects were not as “shovelready” (already designed and permitted) as advertised. The process-intensive nature of planning, designing, and getting the projects permitted belied the hype of “shovel-readiness.” According to the Federal Highway Administration, of the 13,300 committed transportation projects from March 2010, roughly half were completed as of this year. In Massachusetts, the time-intensive process of vetting public work meant that many projects were unable to align with the ARRA funding cycle. Public-works legislation in Massachusetts, such as MGL 149A for Construction Manager-at-Risk projects, mandates a review by the state inspector general for public projects in excess of $5 million. The review alone is a minimum 60-day process. Of the recent round of the Department of Transportation (DOT) “TIGER II” transportation-related development grants, there were no recipients from Massachusetts.
Decentralized administration of projects: There is often a disconnect between plans for nationwide systems that emanate from federal policy and the complicated reality of the local political process. The example par excellence of a failed outcome within the complex calculus of balancing a state’s fiduciary duties with broader regional or national policy is New Jersey governor Chris Christie’s well-publicized recent decision to terminate the trans-Hudson rail project. The project — already one year into construction with $600 million spent in design and planning over the past decade — would have provided new tracks and tunnels to double the capacity of the Manhattan–New Jersey commute at a cost of nearly $9 billion, with about half of that eligible for DOT and ARRA subsidies. The cost-sharing nature of many public projects puts the onus on municipalities to share not merely a vision but also the fiscal accountability. Alternatively, a “National Infrastructure Bank” concept has been proposed as a more objective means to evaluate and fund projects based on merit and relevance. While the ARRA may propose forward-looking programs with global visions, most of the politics in the US remain fairly local, fiscally conservative, and unable to realize large-scale, coordinated outcomes.
Barriers to entry: Firms with limited public-work experience may find ARRA opportunities elusive as they face tough competition from firms with established public-project portfolios. Some firms have neither expertise nor capacity to take on the specialty tasks or tight schedules required of some ARRA assignments. Generally, to win ARRA-funded work, firms must not only demonstrate competence but also invest in performing well in the various “designer selection” processes established by municipal and state agencies. In Massachusetts, designer selection boards have been established for major construction-funding agencies including Division of Capital Asset Management and Maintenance (DCAM) and the Massachusetts School Building Authority (MSBA), to name a few. At the federal level, the General Services Administration’s Design Excellence Program has been lauded as a qualifications-based (rather than cost-based) designer selection process that reinforces the value of design in the public realm.
The Road Ahead
Half of Massachusetts’ $7.1 billion ARRA funds has been spent, some of which has enabled a diverse range of new buildings, including community-health centers, fire stations, regional transit hubs, IRS buildings, commuter-rail stations, and building rehabilitation and weatherization projects. According to a report in the Boston Business Journal based on data from the Associated General Contractors, the cumulative effects of these public and transportation-focused projects yielded an increase of 1,300 construction jobs in the state in 2010. As the Obama administration redoubles its focus this year on the private sector’s role in the recovery, opportunities for the building industry to rebound with ARRA opportunities are not out of reach.
The $2.1 billion Transportation Investment Generating Economic Recovery (TIGER) grant program continues to invest in a range of transit-oriented development projects, including public transit, passenger and freight rail, and port improvements. The second round, TIGER II, has already received proposals worth more than $19 billion for $600 million in funds. The Dilworth Plaza and Concourse Improvement Project at Philadelphia’s City Hall, the recipient of a $15 million TIGER grant in 2010, is an excellent illustration of opportunities for the design profession in transportation projects: a dynamic, multiuse urban plaza sitting atop a renovated multimodal commuter train station.
Private-sector projects have also benefited from stimulus funding. Although the state government is the largest ARRA beneficiary in Massachusetts, institutional and private-sector entities here have been particularly successful in leveraging stimulus funds: UMass, Harvard University, and the Broad Institute are among the top five ARRA recipients in the state, with nearly $700 million in funding. On the local level, state government also serves a critical role in the private-sector rebound. In Massachusetts, several major building projects — most notably, the once-moribund Fenway Center “Parcel 7” mixed-use development — broke ground in 2010 thanks in part to contributions from the Commonwealth’s MassWorks construction and infrastructure renewal program, a Massachusetts funding source that is independent of the ARRA. MassWorks’ financial commitment to the $13.5 Yawkey Commuter Rail Station — one of the country’s first net-zero-energy rail stations — is the cornerstone of the $450 million project.
On the legislative front, the AIA’s Rebuild and Renew program continues to work with Congress to reinvigorate the private-sector construction market by loosening the credit market and easing regulatory burdens on small businesses. In early February of this year, the administration announced the five-point Better Buildings Initiative featuring AIA-recommended subsidies and credits for private-sector and institutional retrofits, and a national Race to Green grant competition for states to propose innovative retrofit and energyconservation programs similar to last year’s Race to the Top for education funding.
Perhaps the healthiest and most productive response to the ARRA would be an expanded understanding of what constitutes opportunity for the design and construction industry. Blair Kamin, the Chicago Tribune’s architecture critic, recently wrote about the design and construction industry’s opportunity to transcend its complaints about stimulus projects and to make meaningful contributions in a transformative opportunity to green, rebuild, and renew American buildings. Noting that building-system retrofits may not always inspire, he asked, “But what if the fan-coil heating and cooling unit happens to be in the Ludwig Mies van der Rohe–designed Chicago Federal Center, which is getting $155 million in stimulus money for energy retrofits and other upgrades? That wouldn’t be a bore.”