CT Construction Digest Wednesday March 13, 2024
Plan to cut CT’s transportation debt could offer more than savings
By using nearly $8 billion in budget surpluses to shrink pension debt, state officials addressed a longstanding problem that had weakened education, health care and other core services for decades.
State Treasurer Erick Russell and Gov. Ned Lamont now hope to do something similar — albeit on a smaller scale — with Connecticut’s transportation program.
Rather than attacking unfunded pension obligations, this plan would erase hundreds of millions of dollars in bonded debt, the principal and interest on highway, bridge, and rail projects. The goal ultimately is to save about $70 million in annual debt service payments and use that savings to accelerate the rebuild of Connecticut’s aging transportation infrastructure.
But for the initiative to be completely successful, the Department of Transportation needs to overcome a second hurdle: pushing Connecticut’s construction program to record highs.
“The goal here is to actually maximize the opportunity for savings,” Russell told The Connecticut Mirror, adding it’s designed to produce benefits for many years to come. “We’re doing so in a way that is about getting long-term benefits.”
The treasurer, who first brought the plan to the Lamont administration for inclusion in the governor’s proposed budget adjustments for 2024-25, is focused on the $2.15 billion Special Transportation Fund that represents 8.5% of the overall $25.1 billion state budget.
The fund, which has been running well in the black in recent years, covers the operating costs for the departments of transportation and motor vehicles. But about 40% of the fund, more than $867 million this fiscal year, will cover principal and interest payments on the hundreds of millions of dollars Connecticut borrows annually — and then matches with federal grants — to fuel its transportation capital program.
Lamont’s budget office projects the STF to close this fiscal year with a surplus of $240 million, or 11%. Last year, it closed 15% or $277 million in the black — and that was despite a 13-month gasoline tax holiday that saved motorists about $330 million. Most of that, $240 million, occurred during the 2022-23 fiscal year.
The Special Transportation Fund reserve, the account that holds these surpluses, is projected to approach $920 million by June 30, equal to almost 43% of this year’s STF.
That enormous reserve already has prompted calls from gasoline station owners, anti-tolling advocates and Republican legislators for reductions in fuel taxes or repeal of the highway mileage tax on commercial trucks.
Russell’s plan would cut that huge reserve by 55% right away, using slightly more than $500 million in unused funds to shave down Connecticut’s outstanding transportation debt, which exceeds $7.4 billion. Most of that debt was borrowed at 5%, though some of the notes are marked at 3% to 4%, the treasurer said.
The plan also would cap that reserve fund balance at 18% of the STF, or about $386 million. Any future surpluses, whenever the reserve is full, also would be used to retire transportation debt early.
Legislators from both parties quickly praised the plan, which is expected to be part of whatever budget adjustments Lamont and legislators make this spring to 2024-25 state finances.
Its popularity may stem from its similarity to how Connecticut dealt with the rising mandatory pension contribution that dominated budgets in the first two decades of the 2000s, leeching resources away from many other programs.
Now that Connecticut has funneled $7.7 billion in surpluses into its pensions since 2020, required contributions will rise about just $50 million next fiscal year.
They otherwise would have grown closer to $700 million.
Similarly, Russell and Lamont’s staffs estimate the early retirement of more than $500 million in transportation funds will slow the growth of the STF debt service line item by about $60 million within two years. And the savings could reach $75 million by 2028, keeping the transportation fund solvent at least through that year as well.
When Connecticut began to chop into its pension debt, Wall Street credit rating agencies responded with improved grades for state bond offerings that led to lower interest rates.
“I think this [transportation bond pay-down] will be very well received from the rating agencies,” Russell added. “This is another example of us implementing sound fiscal policy.”
“For the first time in a generation, the state of Connecticut is not lurching from one financial crisis to the next,” the Lamont administration wrote in its budget introduction. “The state’s financial position is stable, and, unlike other states, we are not facing deficits that would result in deep cuts in spending or substantial increases in taxes.”
But paying down debt and achieving savings in the STF is not the only challenge Connecticut faces.
Cars and trucks struggle daily to navigate an agency system of highways and bridges, much of which was constructed in the 1950s.
And while transportation fund revenues and fund balances have swelled, critics say construction work has not grown as swiftly. If Connecticut saves $60 million to $75 million annually in a transportation fund that’s already achieving big surpluses, they added, the state must leverage those resources to ensure hundreds of millions of additional dollars are invested in projects each year.
The state borrowed an average of $725 million for transportation from 2015 through 2018 under Malloy, according to debt reports from the state treasurer’s office, pairing it with about $700 million in yearly federal construction grants.
But Lamont has enjoyed far more resources than Malloy did, stemming largely from a surge in sales tax revenues that help fund the STF. Yet borrowing for projects hasn’t grown commensurately.
During Lamont’s first four years, annual average borrowing ticked upward just 2.6%, reaching $744 million — even though STF revenues grew 22% over the same period.
Construction industries and trades alike insist the transportation construction program should be double its current size. And they’re not alone.
A 2015 study prepared by the Malloy administration, “Let’s Go CT!,” recommended the annual capital budget, including state borrowing and federal grants, should exceed $2 billion by 2019 and top $3 billion by 2021.
But Malloy’s benchmarks hinged on Connecticut establishing electronic tolls on its highways. And when lawmakers rejected tolling proposals from Lamont in 2019 and in 2020, the administration had to modify its goals.
Still, construction advocates say Connecticut should have been well over the $2 billion per year mark, even without tolls, given its other resources. And with $60 million to $75 million in savings, they add, the state has the flexibility to issue more bonds — and cover more debt service payments — without increasing the sales and fuel taxes that support the transportation fund.
The Lamont administration has ramped up borrowing somewhat in the governor’s second term but still hasn’t hit its own targets.
In a November 2021 report, the administration aimed for $1.2 billion in state transportation borrowing by 2022-23. The state actually borrowed $830 million.
It projected a $1 million investment this year, then adjusted to $875 million.
But Department of Transportation Commission Garrett Eucalitto, who inherited these challenges when Lamont tapped him to run the agency about one year ago, feels the transportation program has turned the corner.
Enhanced federal funding, stemming from the $1.2 trillion infrastructure bill President Joe Biden signed in 2021, should send $1.1 billion to Connecticut this year. Combined with the $875 million in state borrowing, overall funding for the capital program is already at nearly $2 billion. And the agency is well aware of the need to take full advantage of generous federal funding.
“We’re pumping out as much work as we can do,” he told the CT Mirror last week, adding that while some strategic work to reduce congestion may progress more slowly, projects needed to preserve safety haven’t been delayed. “The infrastructure is not degrading as a result of our inability to get more work out the door.”
Still, the administration is projecting $1 billion in state borrowing next fiscal year and $1.1 billion the year after that.
Governors and legislators have puzzled for nearly 15 years about how to ramp up projects. A 2010 legislative investigative panel concluded that staffing and other challenges left the DOT struggling to complete projects on time and under budget.
As recently as 2022, the department had fewer authorized full-time positions than the 3,398 it had in 2010, according to state budget records. And while authorized full-time positions now are 3,567, or 269 higher than 2010 levels, a nearly 11% vacancy rate has left just 3,189 filled.
“I’m not going to pretend that our staffing challenges haven’t held back some of our project development,” Eucalitto said.
Still, the commissioner says expanding the capital program over the next two years is a realistic goal.
The administration already has begun trying to counter a huge surge in state employee retirements that occurred two years ago when pension benefits rules changed. It’s cut a 24% vacancy rate among engineers nearly in half.
“We have made significant progress over the last few years,” he said, adding that many states have struggled to retain transportation engineers in the face of strong competition from private sector wages.
As several major projects wind down over the next year in neighboring New York, including the Tappan Zee Bridge replacement, Connecticut transportation officials are already making plans to accelerate projects here.
“I think the construction industry could absorb more work, and I think we’re going to get there,” Eucalitto said, adding that he remains confident officials will give his department the resources it needs. “Both this administration and the legislature have never said ‘no’ to us yet.”
New Norwalk High School's $239M construction begins after 1 month delay
NORWALK — Construction officially began this week on the new Norwalk High School with the installation of fencing around the site.
This marks the first step in the five-year project that is scheduled for completion in 2029, though students will start classes in fall 2027.
Emily Morgan, media relations specialist for Norwalk Public Schools, said in a text message Tuesday morning that the district will “schedule an actual groundbreaking ceremony probably in the next month or so.”
The construction comes a month later than the district’s anticipated February start. Last month, Deputy Superintendent Sandra Faioes, who oversees facilities and operations, said that groundbreaking on the new NHS was delayed by winter weather conditions.
The fencing installation comes with some day-to-day impacts, according to an update posted on the Norwalk High School website Monday morning.
“This will not have an immediate impact on campus traffic, but it will close the football field and track,” the update said.
Starting Friday, only some students’ parking availability will be limited. Affected students will be notified and their parking location moved to Andrew’s Field, the update said.
All student parking will move to Andrew’s Field by March 29.
The new 332,628-square-foot school building, which will house NHS as well as P-TECH on its campus, will accommodate over 2,000 students, according to the NPS construction website.
Contractor Gilbane Building Company will construct the school where the Testa Field Complex is currently located. A new athletic facility will be built in place of the existing school, which will be demolished, according to the project website.
“As a result, many athletic programs will be displaced during construction from 2024 through 2027,” the project website states.
Between fall 2027 and the fall 2028, the district will bus student athletes to spaces at Nathan Hale Middle School, West Rocks Middle School, Cranbury Elementary School, Brien McMahon High School and Oak Hills Park to continue sports participation when Testa Field is unavailable.
“By distributing NHS athletics to alternate facilities within the community, some recreational sports will also be displaced,” the website said. “City of Norwalk Recreation and Parks has reviewed these impacts and is confident that they can coordinate a suitable alternate location or time to accommodate these sports."
The $239 million project will cost the city about $47.8 million with an 80 percent state reimbursement rate.
To fully capitalize on the reimbursement, the city moved the property line between NHS and Naramake Elementary School westward, cutting out some Naramake property, according to Alan Lo, the city’s building and facilities manager.
The school’s new parking lot should open in fall 2028, with a new field replacing the old Testa Field. New tennis courts are slated to open in spring 2029.
East Hartford approves $6.5M for demolition in Founders Plaza, fewer apartments likely to be built
EAST HARTFORD — A newly executed agreement between the town and the developers of the Founders Plaza property near the bank of the Connecticut River transfers $6.5 million in state funding for demolition of the former Bank of America building.
The new agreement, approved by the Town Council at a special meeting Monday, also reduced the minimum number of apartments expected to be built and the timeframe for construction of the first phase.
The agreement now calls for permits to be pulled within four years for 150 units in the first phase instead of the 300 that had been discussed in recent weeks. The original plan, unveiled last summer after Lexington Partners, the lead developer, bought the property for $4 million, called for 1,000 units to be built along with 300,000 square feet of commercial space, a pedestrian bridge over the river to Hartford, and a transportation center.
East Hartford Mayor Connor Martin said Tuesday that "150 units is actually the minimum, which is still significant, but ultimately the project's goal is to have 300 units in the first phase. Later phases will also include additional units of housing, to be discussed in the future."
The developers have since set aside the bridge and transportation center to focus on the housing for the $840 million project, which originally included $125 million to $150 million in public improvements.
Christopher Reilly, president of Lexington Partners, said last week that even though interest rates have started to stabilize, they are still high and lenders have taken a step back, prompting the company to rethink the rollout of the project.
"We're phasing out the project in more manageable increments," he said.
Reilly said the financial factors will also have an impact on how quickly the first phase, which he estimated will cost $110 million to $120 million, will begin construction.
The new agreement also calls for the $6.5 million demolition grant to be converted to a loan if the building permits are not issued within four years. The new provision would call for the loan to accrue interest at the rate of a 15-year treasury bond, plus 4 percent.
Martin said the measure was simply put into place in order to protect the state's and the town's investment, while also setting expectations and milestones, encouraging the developer to meet these benchmarks.
"I have full confidence in this project," Martin said.
Reilly said Tuesday that they still intend to build 300 units in the first phase, but added that due to capital market uncertainty, finding a lender now for 150 units should be less of a problem.
As for the grant possibly being converted to a loan, Reilly acknowledged that it was an incentive to build.
"That's expensive," he said.
The new agreement with Port Eastside LLC also has a future provision for tax abatements, tax fixing agreements, caps on fees, or other incentives in order to complete the project.
Norwalk advances traffic signal modernization project with $3.4 M federal grant, 'two new signals'
NORWALK — The city is beginning phase five of a grant-funded project aimed at modernizing the city’s traffic signals, which involves the addition of two new signals and the conversion of 19 existing signals to an adaptive timing system.
“This grant is for two complete, new traffic signals,” explained Jim Travers, director of Norwalk’s Transportation, Mobility, and Parking Department during the Economic and Community Development meeting last Thursday. “One at North Avenue, Main (Street) at Cross (Street), and the other one… is actually going to be Strawberry Hill (Avenue) and County (Street).”Top of Form
“In addition to those two signals, we are also extending the city’s synchro green, adaptive technology,” said Travers, referring to technology that allows the traffic signals to adapt to the volume of traffic over time.
Norwalk has received a $3.4 million federal grant that will cover the design and construction of the new signals, among other traffic improvements.
Received through the Congestion Mitigation and Air Quality Improvement Program, a federal grant program with the U.S. Department of Transportation, Federal Highway Administration, Fred Eshraghi, Norwalk’s traffic signal engineer, took the lead in this application, Travers said.
TMP requested $380,461 of the grant to be allocated to the engineering consultant VHB to design the new intersections and design a new transit signal priority system for 56 intersections. The Economic and Community Development approved the agreement with VHB for $380,461. The Common Council will vote to authorize the agreement as well.
The intersection at Strawberry Hill Avenue and County Avenue will be designed in anticipation of the new Norwalk High School campus.
Switching signals to an adaptive timing system will improve traffic congestion in the city much better than having a set time for intersections, Travers said.
“We would time the signals one time and then that would stay, but adaptive actually just learns the behavior of traffic and can make fluctuations in signal time itself to better move traffic,” Travers said. “So we’re seeing this technology really advancing.”
Overall, the $3.4 million will cover the replacement of two traffic signals, the implementation of adaptive traffic signal technology at 19 intersections, improve pedestrian enchantment at 56 intersections and introduce transit signal priority at 56 intersections.
“We have been slowly, over the years going through — for grants to modernize is the city’s traffic signal,” Traver said. “These are city-owned traffic signals… we would otherwise need to make the investment through our city capital dollars.”
Barbara Smyth, Common Council member, thanked the TMP department for yet “another grant-funded project.”
“It’s just wonderful the amount of money you’ve been able to bring in to improve things here in Norwalk,” Smyth said. “The adaptive signals really have made a difference, so thank you.”
Norwalk’s first adaptive signals were installed on West Avenue in partnership with the Sono Collection and the city has used grants to extend the technology down the corridor. The city is also working with Wegmans to install adaptive signals on Connecticut Avenue to help improve the traffic flow with the popular grocery chain coming to the city.
“The city of Norwalk was the first city in the state to engage in adaptive signal technology,” Travers said.
State board offers $8M to help clean-up proposed Bridgeport soccer site
BRIDGEPORT — A special state board has recommended spending $8 million to help clean up lower East Side properties where a developer wants to build minor and major league soccer stadiums, plus adjacent housing, retail and a hotel.
Though that amount is, according to key legislators from Bridgeport, only about a quarter of the $30 million that was sought, it is being welcomed as a first sign of support for and faith in the overall project by state government.
"We're trying to piece together other monies," said state Rep. Antonio Felipe, a Democrat who represents the area along the Pequonnock River off of Stratford Avenue and Kossuth Street where the stadiums would be constructed. “(We are) trying to come to a place where we can use different pots of money to get to the full sum."
Felipe and state Sen. Marilyn Moore, D-Bridgeport, sit on a board of fellow legislators and other state officials that review applications to the Community Investment Fund. The legislature set up the fund in 2021 to target aid to projects and initiatives that would benefit underserved and marginalized communities.
Last October, Andre Swanston unveiled a multi-phase proposal to bring professional soccer, along with housing and retail, to the former greyhound racing track site on the lower East Side. Then in January Swanston's Connecticut Sports Group announced a minor league soccer team was ready to call Bridgeport home as soon as next year if a venue was built that would be a precursor to a larger major league stadium.
Felipe and Moore both said the initial ask was for $30 million.
A summary of the application provided by the state's economic development office makes no mention of soccer. It only specifies the funds will be used "towards remediation of 20-acres of brownfield sites ... and establishment of (a) sustainable waterfront location through coastal resiliency and flood mitigation infrastructure."
That point was emphasized by Democratic Gov. Ned Lamont's office. Lamont has previously expressed skepticism about using taxpayer dollars to build the stadium. And his senior press secretary, David Bednarz, in a statement Tuesday said, "Our understanding is that the city’s application to the Community Investment Fund board is solely for funding to remediate the land at this property with the goal of attracting a developer to build something at this site that will foster economic development in this historically disadvantaged neighborhood, and this land has to be remediated regardless of what type of project ends up getting built there."
Bednarz also noted that ultimately all CIF dollars require final approval from the Lamont-chaired Connecticut Bond Commission.
The actual CIF application was submitted by the Bridgeport Economic Development Corporation, a quasi-public non-profit which can partner with the city or with private developers like Swanston and Connecticut Sports Group. Hearst Connecticut Media Group submitted a Freedom of Information Act request for that document. It was denied until the contract for the $8 million is finalized and executed.
Swanston in a statement Tuesday welcomed the $8 million and said it "complements significant private capital already committed." He thanked Lamont's economic development department and Bridgeport's state legislators and added, "We look forward to deepening our collaboration with state and local leaders as this development progresses."
A big supporter of Swanston's plan, Felipe noted it would have been difficult for the CIF board to grant the full $30 million sought for the environmental cleanup given last fall the same group authorized $22.5 million to demolish PSEG's former coal-fired power plant in the South End
Felipe said the $30 million "would have been the biggest single award we've ever given, and Bridgeport already has the largest single project with PSEG."
"Two rounds in a row getting the biggest one didn't feel right to members who maybe wanted something in their communities," Felipe said. "We got what we could."
Moore called the $8 million "a start" for Swanston. She said the housing component in particular appeals to her. Swanston is pledging to build 1,000 units.
As of early January Swanston had said having the minor league stadium built and open for the 2025 season was "ambitious but possible." On Tuesday Connecticut Sports Group stuck with that timeline, stating that the site work should begin in the spring "to complete stadium construction by summer 2025."
Moore is doubtful the minor league team will be playing next year.
"There's no way," she said. "This is a huge project, financially. They're only getting $8 million from the state. They've got to get the rest of the funding they need to build (and) you've got to do remediation."
Felipe said it is crucial to establish the minor league team as soon as possible and prove there is a market for it in Bridgeport in order for Swanston to move forward with the next phases.
“Having that team play and be successful is the path to getting a major league team," he said. "They need to show that expansion is worth it."
It is unclear if any other state dollars will be forthcoming for the stadiums in 2024. The current legislative session adjourns for the year May 8. It is always possible lawmakers and the governor could agree before then to set aside some funds in the biennial state budget. And there are various land-use monies for Connecticut Sports Group to also pursue.
Another of Swanston's boosters in the legislature is state Sen. Herron Gaston, D-Bridgeport. Gaston Tuesday welcomed the CIF's $8 million investment.
"It's a step in the right direction," he said. "Certainly I think this is a great signal that we are definitely committed to seeing the soccer project take off in a very meaningful way."
He continued, "And I think during a subsequent legislative session there may be greater opportunities for more funding for this very vital project I think is going to help to be a gamechanger with respect to revitalizing and resuscitating the heartbeat of Bridgeport."
A group created by state lawmakers to invest in distressed municipalities approved $3 million to help transform a long-shuttered Hartford diner into a community center Tuesday.
The Asylum Hill Neighborhood Association’s $3 million request for the 1,767-square-foot former Aetna Diner at 267 Farmington Ave. was among 27 proposals that were tentatively approved for $74.28 million in funding by the Community Investment Fund 2030 board Tuesday morning.
Chaired by State House Speaker Matthew Ritter and Senate President Pro Tempore Martin R. Looney, the board was created by state lawmakers in 2020 with the mandate to approve up to $875 million for community-building projects in distressed municipalities over five years.
“CIF funds can be a game changer and help restore vibrant and healthy communities," Ritter said in a released statement. "Here in Hartford we are seeing projects be earmarked with the resources they need to spark additional development and growth — projects like the Aetna/Comet Diner property, the Charter Oak Cultural Center, the Hartford Workforce Hub and the transformation of the blighted former Chester Bowles Park Housing into Willow Creek."
House Matt Ritter said,
Requests by municipalities and nonprofits that were approved
by the Community Investment Fund 2030 Board still must pass the state Bond
Commission.
Other items passed Tuesday include:
$5.75 million – for the “Rubber Avenue Corridor Revitalization” in Naugatuck. Funds will be used for stormwater drainage infrastructure to promote private investment.
$250,000 – for renovations to Camp Schade by the Boys and Girls Club of New Britain.
$8 million – for remediation of 20 acres of brownfields along Kossuth Street, Howe Street and Stratford Avenue and establishment of a sustainable waterfront with flood mitigation infrastructure under the Bridgeport Economic Development Corp. CIF funds will support public park aspects of the project.
$6.5 million – for renovation of Connecticut’s first synagogue on Charter Oak Avenue in Hartford. This project will allow the Charter Oak Cultural Center City School for the Arts to add eight classrooms and upgrade handicap accessibility.
$1.32 million – for sidewalk improvements and renovations of Elmwood Park in Danbury, as well as a neighborhood drainage study.
$250,000 – for planning to transform 20 acres in the distressed “Mount Pleasant – Myrtle Street Corridor” of New Britain into a sustainable community.
$2 million – for improvements to Howard T. Brown Park in Norwich.
$2.79 million – to help Click Inc. of Windham to renovate its kitchen, food processing and storage facilities, add office and community training space.
$2.13 million – to build a greenhouse on the Community Health Center Inc. greenhouse in Middletown.
$5.15 million – to help Connecticut Trust for Historic Preservation Inc. perform studies and renovations at seven locally and nationally significant places in Bridgeport.
$2.75 million – for the Continuum of Care in New Haven to purchase its two facilities at 977 Ella grasso Boulevard and 163 Blake St., preserving 58 units of affordable housing.
$250,000 – to the Friends Center for Children in New Haven for a planning grant for community engagement and design of the Flint Street Family campus.
$250,000 – for Haven’s Harvest, in New Haven, to conduct a community engagement and feasibility study of its work in the Fair Haven neighborhood.
$1.62 million – for the completion of the 12-acre urban Lyman Allyn Park in New London.
$350,000 – for community engagement, a master plan and designs for renovations to the two sites of the New Haven Museum.
$900,000 – to support Northeast Neighborhood Partners Inc.’s development of a workforce hub in the Swift Factory in Hartford.
$3 million – for the streetscape improvements in Norwalk.
$5.52 million – for pre-development, site improvements and infrastructure for Willow Creek in Hartford under the Overlook Development Corp.
$3.44 million – to Sound Communities Inc. to replace 54 units of obsolete affordable housing with 55 modern units.
$2 million – for a new childcare building for the Thames Valley Council for Community Action in Groton.
$4 million – for improvements to Rockwell Park in Bloomfield.
$8.68 million – to support the development of 64 affordable housing units, a community facility and streetscape improvements around 2980 State St. in Hamden.
$3.5 million – to build a downtown library with surrounding street safety improvements in Manchester.
$250,000 – for community engagement toward creation of a master plan for Mansfield’s municipal facilities.
$250,000 -- to fund community engagement and a planning study for Plainfield’s Parks and Recreation Department.
$250,000 – to help the University of New Haven identify a West Haven site for its dental and healthcare clinic.