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.