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CT Construction Digest Thursday May 30, 2024

At halfway mark, majority of infrastructure law funds yet to be spent

Julie Strupp

Halfway through the five-year Infrastructure Investment and Jobs Act, less than half — 38% — of the funding has been announced, according to the White House. That’s a 13.5% increase in the past 6 months, an indication that the process is ramping up but still lags. 

To date, $454 billion of the IIJA’s $1.2 trillion has been announced for a range of projects like the Brent Spence Bridge between Cincinnati and Covington, Kentucky. Announced funding, captured from agency press releases, is preliminary and non-binding, whereas awarded funding represents actual obligations, per the White House. Half of the IIJA’s funding, or $550 billion, goes to new initiatives. 

The White House also released an updated map of the more than 56,000 projects and awards that are identified or now underway at 4,500-plus localities around the country. That’s up 40% from 40,000 projects six months ago.

Dive Insight:

The IIJA and other federal funding has buoyed the infrastructure sector amid slowdowns elsewhere in the building industry in recent years. Infrastructure spending continues to build in 2024 as $1.8 trillion in federal grants, loans, tax credits and other financial incentives seep into the economy, according to analysis from S&P Global, a financial information provider. 

The largest portion of IIJA money is designated for road and bridge construction, according to White House data analyzed by CNBC, followed by rail, broadband, power and water projects. So far, improvements have launched on 165,000 miles of roads and more than 9,400 bridge repair projects are underway thanks to the IIJA, according to the White House.

However, inflation has sapped the buying power of the law, according to S&P. Elevated prices for materials, wage increases and continued skilled trades worker shortages have resulted in the funding carrying less bang-for-the-infrastructure buck than what policymakers envisioned.

Many of the country’s infrastructure systems suffer from long standing underinvestment, according to the American Society of Civil Engineers. ASCE gave U.S. infrastructure a “C minus” on its most recent report card, with roads, bridges, airports and water systems rated in “poor” to “mediocre” condition. Many need updates to withstand the impact of more frequent and intense extreme weather due to climate change.

The goal of the IIJA is to start to address these repair and resilience gaps, and recent Biden administration investments have kept the state of infrastructure from getting worse, an ASCE study released in May found. 

Yet beyond inflation, changes in the infrastructure landscape — including supply chain problems, stricter emission standards in the energy sector and extreme weather — have raised baseline spending needs, ASCE found. The organization warns that progress realized from the IIJA will end along with the funding in 2026.

“In recent years, though funding levels have improved, the infrastructure needs for various sectors have grown and evolved,” ASCE wrote in its Bridging the Gap report. “These changes have effects on the anticipated investment needs and, therefore, the size of the funding gaps for each sector.”


Fitch gives A+ rating to pending $669M Yale New Haven Health bond issuance; $333M will be used for capital spending

David Krechevsky

Fitch Ratings said Tuesday it has assigned A+ ratings to $669 million in bonds that will be issued on behalf of Yale New Haven Health (YNHH).

Proceeds from the bond issuance are expected to be used to refund the health system’s existing debt, as well as to provide approximately $333 million to support Yale New Haven’s capital spending program.

Fitch outlined several major capital projects Yale New Haven Health has underway or planned, including an $840 million neurosciences center on the St. Raphael campus.
Its other major capital project under evaluation is a comprehensive outpatient center in Meriden. Most other capital spending will be directed at infrastructure improvements, technology and equipment needs, and additional ambulatory access centers, according to Fitch.

The ratings, issued with a stable outlook, are for approximately $159 million series 2024A put bonds, $333 million series 2024B variable rate demand bonds and $177 million 2024C fixed rate revenue bonds to be issued by the Connecticut Health and Educational Facilities Authority on behalf of YNHH.

Fitch also said it affirmed the health system’s outstanding debt and Issuer default rating at A+, and affirmed the short-term rating on its bond series supported by self-liquidity at F1+.

The bonds are expected to price the week of June 10, Fitch said.

Fitch said the A+ rating reflects its view that YNHH is implementing steps “that are expected to improve operating results over time supported by recent volume growth,” as well as institutional characteristics that include its local and regional market presence and “brand recognition for tertiary and quaternary care,” and a closer alignment with the Yale School of Medicine.

The A+ rating is further supported by Fitch’s view that the system has sufficient funds available to support completing its large tower expansion project that includes a neurosciences center. Management is also expanding the system’s primary care access, “which will further drive the already highly utilized YNHH's high end services at its flagship Yale New Haven Hospital,” Fitch said.

The stable outlook reflects Fitch's expectation that the health system will ultimately return to stronger operating results, “but at a level lower than had been recorded historically,” the ratings firm said. Fitch added that it anticipates system operating results in fiscal year 2024 will be “break-even,” with further financial recovery in 2025 and beyond.

Fitch added that the current rating does not factor in the potential acquisition of three Connecticut hospitals and a medical group from the for-profit Prospect Medical Holdings, for which YNHHS signed a $435 million asset purchase agreement in October 2022. YNHHS has filed a lawsuit seeking to void the deal, claiming Prospect violated terms of the agreement.


Gov. Lamont vetoes first bill of year, rejecting proposal doubling cap on bidding

John Moritz

Gov. Ned Lamont vetoed his first bill from this year’s legislative session on Wednesday, sending back to lawmakers a proposal that would have doubled the cap on municipal contracts exempt from competitive bidding practices. 

The legislation, Senate Bill 226, proposed raising the minimum threshold for competitive bidding on all municipal contracts from $25,000 to $50,000 as part of what supporters described as an effort to increase efficiency and keep up with inflation.

While the bill passed both chambers without much opposition earlier this month, Lamont said that the suggested increase went well beyond inflation — which he argued would put the threshold at around $35,000 — and risked eroding safeguards put in place to ensure transparency in the awarding of public contracts. 

“Competitive bidding processes are essential to ensure fairness, quality, and cost-effectiveness in public procurement,” Lamont said in a letter explaining his decision. “By increasing the threshold for sealed bidding, we run the risk of limiting competition, potentially leading to inflated costs, reduced quality of services or goods, and even unethical practices such as favoritism or collusion.” 

Under current law, local leaders have the option to enact ordinances exempting contracts valued under the $25,000 threshold from competitive, or sealed, bidding rules.

The legislation had drawn support from the leaders of the Connecticut Conference of Municipalities and the Council of Small Towns, who noted that the threshold has remained stagnant for more than a decade.

The executive director of COST, Betsy Gara, said the organization was given a heads up from the governor’s office that he planned to veto the bill following its advocacy.

“We thought it would be a useful change for municipalities,” Gara said. “With today’s construction costs, $25,000 is an extraordinarily low number to require sealed bidding.” 

Lamont’s veto sends the bill back to the legislature, where only three members — two Republicans and one Democrat — voted against it.

The decision also comes less than two weeks after the arrest of a former Lamont administration official, Konstantinos Diamantis, who was charged with soliciting bribes from contractors in exchange for work on lucrative school contracts that he oversaw. Diamantis, who pleaded not guilty, was suspended by Lamont in 2021, prompting him to resign from state government

“In light of what’s happened in school construction, I think it’s the right thing to do,” said state Rep. Gale Mastrofrancesco, R-Wolcott, who was one of the three ‘no’ votes in the bill.

Despite the strong, bipartisan majorities that voted in favor of the bill during the session, both the leaders of the House and Senate said Wednesday that they had no plans to attempt to override the veto with a two-thirds vote of each chamber. 

“My guess is next year we can just come back to it and meet in the middle,” said House Speaker Matt Ritter, D-Hartford. 

Legislative leaders are currently planning to hold a special session in mid-to-late June to pass a complex bill dealing with local car tax assessments, as well as a limited number of other issues that went unaddressed during the three-month-long session earlier this year, Ritter said.

After that point, if the governor has vetoed other bills that lawmakers want to reconsider, Ritter said that they can do so in a veto-override session.

The only other legislation that Lamont has threatened to veto this year is a bill creating a $3 million fund to provide unemployment aid for striking workers, which the Senate passed in the final minutes before its midnight deadline on May 8.

Lamont spokeswoman Julia Bergman said Wednesday that the governor’s office had yet to formally receive the striking workers bill, House Bill 5431, preventing the governor from taking any action on it. 

As of Wednesday, Lamont had signed 69 other bills into law from the legislative session, including measures to expand paid sick leave, increase state oversight of youth summer campsbanning dog racing and ending the practice of reporting of medical debt to credit rating agencies. 


Torrington receives $1.6 million grant to rebuild sewer pumping station: To 'protect environment'

Emily M. Olson

TORRINGTON — The sewer plant's hardest-working pumping station on Harris Drive, which was built in 1979, draws from seven smaller stations in the northern area of Torrington, feeding to the main plant off South Main Street. 

But the station's capabilities are hampered by flooding — and at times, floodwaters rise inside and outside the small building, which holds drive shafts that push sewer water through the system, a generator and other equipment. Before it fails, it must be rebuilt. 

"We've had up to 18 inches of water outside, and more than that in here," sewer plant administrator Ed Tousey said. "We've done everything to contain it; sandbags, berms ... and it's never stopped pumping."

Tousey spoke outside the station on Wednesday, May 29, with U.S. Sen. Richard Blumenthal, D-Conn., who arrived in the early afternoon to announce that Torrington will receive a $1.6 million federal grant to rebuild the station. Tousey was also joined by Mayor Elinor Carbone, facilities manager Jamie Sekora, Economic Development Administrator Richard Lopez and Public Works Director Ray Drew at the announcement. 

"The $1.6 million is a congressionally directed grant, meaning that we were given the chance to apply for it through the federal government," Drew said. "It's going to help with our infrastructure. This station is our largest, it serves seven smaller ones, and it's one of 14 stations around the city."

"The project is still in the design phase, but we expect construction to start within a year," Tousey said. The rest of the funding for the project, estimated to cost $3.2 million, will come from the sewer plant's budget. 

"One of the many things this grant means is that this station will be brought into the 21st century," Blumenthal said. "Its location is below the floodplain, and when Torrington applied for this funding, U.S. Sen. (Chris) Murphy and I asked that this money go to them. The need is obvious."

Blumenthal pointed out that well-maintained sewer facilities prevent pollution in local rivers such as the Naugatuck River, and thereby protect Long Island Sound. 

"Ultimately, this will prevent costly spills and equipment malfunctions," he said. "It stops raw sewage from going into the river. It's worth so much, for the environment, to provide this kind of funding."

The $1.6 million federal grant is the city's second, Carbone said. The first, in 2021, was used to build a $2.7 million regional animal control authority on Bogue Road, replacing the aging facility that was built in 1947. The city received a federal Community Project Funding Grant for $1.5 million toward the project; that new facility opened in 2023

"We appreciate your advocacy," Carbone told Blumenthatl. "Our aging infrastructure is in need."