Capital Makeover: Stimulus Fuels D.C. Construction
Policy + Politics

Capital Makeover: Stimulus Fuels D.C. Construction

While most American cities have cut spending to close budget gaps and in some cases are selling or leasing  everything from airports to zoos, the nation’s capital is in the midst of an extreme makeover, supported largely by stimulus funding. Stroll down the streets of the federal city — assuming you can, with all the cranes, bright orange cones, dump trucks and trailers strewn about — and witness a major construction boom and brick-and-mortar spruce-up.

That’s because nearly $14 billion of the $787 billion stimulus package  has been earmarked for the construction and renovation of federal buildings. Some $5.5 billion has been allocated to properties owned by the General Services Administration (GSA), with $1.2 billion of that dedicated to the Washington region.

The hard-hit construction industry, which has a more than 17 percent unemployment rate,  has benefitted most. Those who design, build, upgrade and maintain government buildings have had little or no shortage of work, and this is likely to continue in the months ahead. Washington, D.C. is one of the best places in the country to land a job, which some think colors politicians’ views of the rest of the country. The D.C. unemployment rate is 6.4 percent, well below the national average and almost half California’s.

“Job growth in D.C. is nowhere near the pitiful numbers in other parts of the country,” said David Kessler, Office Managing Principal with the Reznick Group,. “There is a lot of job movement, whereas people are barely hanging on in other parts of the country.” Kessler attributes the activity to companies that have contracts with the federal government.

“We are thankful and lucky to be here in D.C.,” said Karen Chaney, security officer with Grunley Construction, which specializes in renovating federal facilities and is one of the largest recipients of stimulus funds. The Rockville, Md., company received stimulus funds of more than $124 million in fiscal year 2010, according to government documents. Two of the area’s other big companies — Clark Construction and the Whiting-Turner Contracting Company — reported revenue increases in calendar 2009.

Grunley has a $150-million contract for the last phase of renovation for the Eisenhower Executive Office Building. The four-year project will be completed in 2011 at a cost of over $427 million. The company is also completing the Supreme Court’s seven-year, $122 million modernization project, upgrading and replacing mechanical and electrical systems as well as adding “life safety” systems, such as sprinklers and smoke detectors. In addition, Grunley and a handful of other D.C.-area contractors have been remodeling several buildings on Capitol Hill.

For contractors and construction companies outside the Beltway, the picture isn’t so rosy. Economists are predicting the industry may not begin to dig out until next year. Total construction spending in the U.S. inched up a mere 0.1 percent in June, according to the latest government data. “It will be many more months, if not years, before privately financed activities begin to recover in earnest,” said Anirban Basu, chief economist with the Associated Builders and Contractors (ABC).

 A CLOSER LOOK: Stimulus-funded construction projects in Washington, D.C

• Department of Homeland Security at St. Elizabeth’s Hospital—$450 million

• Herbert C. Hoover building(home of the Dept. of Commerce)—$185 million

• Government Services Administration headquarters—$161 million

• Lafayette Building (houses the Dept. of Veteran Affairs and the Export-Import Bank)—$129 million

• Mary Switzer Building (houses the Social Security Administration, Health and Human Services, and U.S. Information Services departments)—$66 million

• Department of Interior headquarters—$62 million

• Department of State headquarters—$15 million


More than Slapping on a Coat of Paint…

Last year a piece of ceiling in the U.S. Capitol fell on a police officer. The Architect of the Capitol is responsible for maintenance of congressional buildings, including the Capitol, and some of them are in dire need of repair. The AOC estimates the cost of all identified deferred maintenance at $1.5 billion over the next 10 years, or approximately $150 million per year, and has requested $755 million for fiscal 2011, with $82.8 million allocated for deferred maintenance.

Rep. Debbie Wasserman Schultz, D-Fla., created a $60 million Historic Buildings Revitalization Trust Fund this year to “address the deferred maintenance issues across the U.S. Capitol complex." Schultz, chairwoman of the House Appropriations legislative branch subcommittee, told The Fiscal Times, "These are not only buildings of historic significance to our country, but everyday workspaces for thousands of workers who help to run the greatest legislative body in the world. We must insure that these buildings are not only preserved for future generations, but also that they are safe for everyone who works in them."

Scott Amey, general counsel for the Project on Government Oversight, an independent D.C.-based think tank, says, “There is a bright spot in the fact that they are performing work to make government buildings more [energy] efficient to save money in the long run.” Amey says this is the type of long-term savings taxpayers want to see with stimulus dollars.

“Publicly financed activities continue to expand, particularly those most closely aligned with the stimulus package,” economist Basu said. “For many contractors, the stimulus has ushered in a reasonably busy period. However, even these operators have reason to be nervous since the stimulus money will eventually run out.”

Related Links:

Recovery Act Offers $1.2 B Boost for D.C. –Area Construction (Federal Times)

Costs Rise as Capitol Crumbles (Politico)

Stimulus Projects Are A Bright Spot for Construction Industry (The Federal Times)