Gravel2Gavel Construction & Real Estate Law Blog
On August 2, 2017, the California Governor’s Office of Planning and Research (“OPR”) released its first update to the General Plan Guidelines (the “Guidelines”) since 2003. The Guidelines provide guidance to cities and counties throughout California on the preparation and content of their General Plans, which govern land uses and zoning within their jurisdictions. The updated Guidelines contain new recommended policies, information resources, and reflect recent legislation regarding General Plans.
Articles Posted in Infrastructure
Data Center Trends in Construction and Real Estate
Posted
Data centers trigger visions of windowless, concrete boxes located at the periphery of suburban office parks. That perception may fade in the coming years. With new technologies, such as cloud computing, blockchain platforms, the Internet of Things, artificial intelligence, big data and mobile apps demanding instant access to data, the industry is seeing global growth and innovation, including “micro” centers closer to end users, underwater and floating data centers, “mega” centers and green data centers.
U.S., China Infrastructure Investment Visions Differ
Posted
Infrastructure investment is a global phenomenon with long-term implications for the regions and countries involved. As illustrated by two announcements last week, the United States and China have very different visions.
President’s Infrastructure Plan Will Present Opportunities, Face Challenges
Posted
Rebuilding America’s aging infrastructure is one task that most economists and civil engineers, and most Americans, agree should be at or near the top of President Donald Trump’s agenda. President Trump touted his background as a real estate developer to convince voters that he was best positioned to identify priorities and bring various interest groups together to structure concrete solutions. If he can harness bipartisan support for fixing or upgrading roads, bridges, tunnels, railways, airports, dams and other critical infrastructure, while satisfying Congressional budget hawks, he will fulfill one of his most consequential campaign promises. However, the just announced Trump Tax-Cut Plan, while light on technical detail, would almost certainly enlarge the budget deficit and will complicate any legislative push for infrastructure funding.
Contingencies in Construction Budgets: Lenders’ and Borrowers’ Perspectives
Posted
As any builder will tell you, it is impossible to know with certainty the exact amount a project is going to cost. Variables affecting the cost run the gamut from labor and material costs to delays for unforeseen conditions, weather or other causes. The longer a project is expected to take, the more uncertain the project’s costs become. For this reason, contingencies are included in budgets by all parties involved: owners, contractors, subcontractors and, occasionally, lenders. Ideally, these contingencies will allow the project to absorb delays and other unexpected events without the owner being forced to contribute additional equity (and “balance the loan”) at the time. The owner will desire maximum flexibility over the re-allocation of the contingency(ies) to line items that will then be funded by the lender—while the lender will want to “control” the use of contingency line items to the extent possible.
With this in mind, let’s look at some of the competing motivations at play and “typical” loan agreement provisions regarding the use (or re-allocation) of contingency(ies) to other line items in the Project Budget.
Eminent Domain in California – What You Should Know and What You Can Do BEFORE the Government Comes to Take Your Property
Posted
Public development and infrastructure projects are on the rise in California. This is a good thing for the economy. 
But it also means that private property will often be needed to complete these projects. Public agencies may acquire private property upon payment of just compensation, without the owner’s consent, through an eminent domain action. Property near highways, railroads, public utilities, government buildings and other public facilities are frequent acquisition targets for expansion of these facilities, as are those properties in the path of development of growing cities. But virtually any property may be subject to public acquisition, either through condemnation of the entire property or of easements in the property.
Water Bill to Boost Public-Private Partnerships
Posted
We have previously written regarding critical repairs and updates needed for the Nation’s aging infrastructure. We have also noted the need for private investment to get these capital-intensive infrastructure projects off the ground. An Act recently passed with strong bipartisan support by Congress and expected to be signed into law as early as this week by President Obama seeks to promote private investment in water infrastructure projects through innovative financing programs and the use of public-private partnerships (“P3s”).
The Water Resources Reform and Development Act of 2014 (“WRRDA”) (H.R. 3080) establishes a five-year pilot program – the Water Infrastructure Finance and Innovation Act (“WIFIA”) – which provides low-interest federal loans and loan guarantees for major water infrastructure projects. WIFIA authorizes the Army Corps of Engineers and the Environmental Protection Agency to provide up to $175 million in direct loans and loan guarantees for the construction of critical water infrastructure projects, including those delivered through P3s. WIFIA is modeled after the Department of Transportation’s Transportation Infrastructure Finance and Innovation Act, a successful federal program which has supported major P3 transportation projects.
In addition, WRRDA creates a separate 15-project pilot program – the Water Infrastructure Public-Private Partnership Program – to assess the use of P3s to accelerate projects in such areas as hurricane, storm, and flood damage reduction; coastal harbor improvement; and aquatic ecosystem restoration. These pilot projects authorize the Army Corps of Engineers to enter into agreements with private entities and state and local governments to help address a significant project backlog.
It is estimated that the U.S. water and sewer infrastructure will need an investment of between $600 billion and $1 trillion in the coming decades. Given the magnitude of capital needed and the critical nature of these projects, P3s seem to be an ideal structure for accomplishing the work, particularly given the current financial pressures faced by the government and its agencies. If WRRDA and its programs prove successful, it makes sense to expand such financing programs and encourage the use of P3s to fund projects addressing other sectors of the Nation’s infrastructure.
Hallmarks of Infrastructure Success
Posted
Enhancing the quality of life and economic opportunity in any region will require investments in social infrastructure–facilities for civic life, health care, education, and social services–as well as transportation infrastructure–transit, highways, surface streets, and parking. These projects entail considerable risks in design, approval, and execution, and must compete with investments elsewhere in the public and private sectors. Attracting economic and political support of all types for infrastructure will be critical to achieving the region’s potential.
In this article, reprinted with permission from the Bay Area Council Economic Institute, Pillsbury Partner Rob James identifies the hallmarks of projects that tend to realize the greatest success in navigating the risks and meeting the competition.
Building Around Nature – Literally
Posted
Construction is set to begin in April on a highway bypass south of College Station, Texas. But a group of ancient oak trees sits near the site where the road will run. The Texas Department of Transportation (“TxDOT”) intended to remove four of the trees, each 200 to 300 years old, which stood in the way of the planned bypass. And the safety of the nearby trees, including a massive 500 year-old oak tree thought to be one of the oldest trees in Texas, could not be guaranteed.
But community outcry has forced the TxDOT to reassess. For nearly 150 years, Regina McCurdy and her family have owned the land on which the ancient oak trees sit. The last 7 of those years, she and her family have been fighting with the TxDOT to save the trees.
It appears their pleas in favor of nature were finally heard. Last week, the TxDOT decided to redesign the road. The new design will use a narrower median to allow the road to be built around the oak trees. According to John Barton, TxDOT Deputy Director, it is an “urban design in a rural setting.” Additionally, an arborist will monitor the trees during the construction process to ensure their survival.
Now THAT is sustainable design.
California’s High Speed Rail Inches Toward Construction
Posted
Since we last checked in on California’s planned high speed rail system nearly a year ago, it has continued to take baby steps toward construction.
Mike Rosenberg of the San Jose Mercury News notes here that on June 6 the California High Speed Rail Authority’s (CHSRA) board authorized its CEO to negotiate final terms of a contract for the first phase of construction with a Tutor Perini-led group after its $985 million bid beat its nearest competitor by about $100 million and the initial estimate by over $200 million.
The project also avoided a potential roadblock with the June 13, 2013 decision of the federal Surface Transportation Board (STB) to grant the CHSRA an exemption allowing it to proceed with construction without subjecting itself to the STB’s approval requirements in addition to the hurdles already cleared. The STB’s decision, effective June 28 according to its text, is available here.