By Scott Stern, CPA and Ryan Culley, CPA
It has been more than two years since Congress passed the bipartisan infrastructure deal (Infrastructure Investment and Jobs Act). As predicted, the $1.2 trillion dollar investment into U.S. infrastructure has been slow to reach actual job sites and construction companies’ wallets.
However, over the past few months we have learned more about the scope, nature and timeline of many approved projects, including $10.9 billion (269 projects) headed to New York and $5.6 billion (120 projects) earmarked for New Jersey.
Most notable for the area’s civil and heavy highway sector are:
Gateway Program – Among the largest projects coming out of the infrastructure deal is the multi-faceted Gateway Program, a $17 billion investment into improving the resilience, reliability and redundancy for NJ Transit and Amtrak train service between New York and New Jersey. This includes the Hudson Tunnel Project, which Amtrak expects will result in 72,000 direct and indirect jobs during construction with union partnerships for job training. Work on the Hudson Tunnel Project has finally begun in both New York and New Jersey. The project has been selected for a grant up to $3.8 billion from the USDOT FSP Grant Program, reducing the financial burden placed on the two states. The project is set to receive a total of $11 billion in federal funding, with a 70-30 funding split between federal and local partners.
This funding includes a $25 million RAISE (Rebuilding American Infrastructure with Sustainability and Equity) grant for the Tonnelle Avenue project in North Bergen, NJ. In October 2023, the Gateway Development Commission (GDC) received a notice to proceed and began mobilization of the Tonnelle Avenue Bridge and Utility Relocation portion of the project. This phase involves moving the roadway, which carries U.S. Routes 1 and 9 through Hudson County. The project includes utility relocation and new construction of a roadway bridge to carry the highway and to make way for the new tunnels.
In September, the GDC awarded contracts worth $47.3 million to Naik Consulting Group for construction management and professional services, and to Conti Civil for construction to build what will be an overpass for the new tunnel. Both companies are based in Edison, New Jersey.
Pursuant of the Project Development Agreement, GDC will enter into a Capital Funding Agreement with Amtrak to facilitate Amtrak’s commitment to fund a portion of the delivery of the Hudson Tunnel Project. GDC is seeking Commissioner’s authorization for the CEO to finalize the terms of the Agreement and make, execute, and deliver it once finalized, and to take all other steps necessary to comply with its terms.
The Gateway Program also includes the rehabilitation of the existing North River Tunnel, which was heavily damaged by Hurricane Sandy in 2012, disabling the tunnel’s use.
- This is part of the first phase of the Gateway Project, which has an estimated completion date of 2035.
The Department of Transportation has also awarded a $292 million mega grant to Amtrak for Hudson Yards Concrete Casing, another Gateway Program project. This funding is part of a $649 million early phase project that will complete the final section of concrete casing intended to preserve future right-of-way for the new passenger rail tunnel under the Hudson River. Official work on the first phase of this project began in November 2023 and is scheduled to be completed by summer 2026.
Five of the nine packages that make up the Hudson Tunnel portion of the Gateway Project will either be under construction or procurement by the end of 2023, according to the GDC. On November 20, 2023, Amtrak and N.J. Transit announced the beginning of procurement for the Sawtooth Bridges Replacement Project.
Roads and Bridges – New York is expected to receive approximately $13.6 billion over five years in federal funding to improve the state’s highways and bridges. To date, $5.4 billion has been announced, including:
- $4.6 billion in highway formula funding and $817.9 million in dedicated formula funding for bridges in 2022 and 2023.
- $59.2 million through the RAISE program, $110 million through the INFRA grant program, and $959.3,000 through the Rural Surface Transportation Grant Program in 2022 and 2023.
Two major projects coming to New York’s roads and bridges include:
- Kensington Expressway: The Department of Transportation awarded $55 million to the New York State Department of Transportation to cap approximately 4,100 feet of the NYS Route 33 (Kensington Expressway) and create a continues greenspace to reestablish community.
- North Genesee Street Gateway Bridge and Multi-Modal Connector Project: The Department of Transportation awarded $18.2 million for the revitalization of the North Genesee Street Gateway Bridge and Multi-Modal Connector Project. The New York Department of Transportation will now be able to make improvements such as replace two bridges, add paths for bicyclists and pedestrians as well as improve bus and infrastructure.
New Jersey is expected to receive approximately $8.1 billion over five years in federal funding for highways and bridges. Announced funding to date totals $3.2 billion, which includes:
- $2.7 billion in highway formula funding and $492.2 million in dedicated formula funding for bridges in 2022 and 2023.
- $25 million through the RAISE program and $26 million through the INFRA program in 2022 and 2023.
Part of this investment is $26 million that the Department of Transportation allocated to Hudson County to make drainage improvements on approximately two miles on Route 7, including raising the roadway, adding pump stations, raising and improving a bridge approach, and installing new pipes, inlet structures, outfalls, and flood walls.
Airports – To date, New York has received approximately $319 million in 2022 and 2023 to replace and modernize airport infrastructure. The Federal Aviation Administration awarded $14 million as part of the Airport Terminal Program to the Long Island MacArthur Airport for upgrades to the Main Terminal Building’s utilities and fire and life safety systems to bring them into compliance and increase energy efficiency.
New Jersey has received approximately $58.9 million in 2022 and 2023 for airport infrastructure. The Federal Aviation Administration has awarded $4.8 million to the Atlantic City International Airport as part of the Airport Transit Program. The funds will go toward the replacement of two passenger boarding bridges. The project will reduce travel time and increase passenger safety.
Water – So far, $1 billion has been announced to help New York provide clean and safe water across the state and improve water infrastructure. Of this funding, $229.4 million is dedicated to lead pipe and service line replacement, with another $171.8 million allocated to safe drinking water investments that can also support lead pipe replacement in fiscal year 2022 and 2023.
To date, $329 million has been announced to New Jersey to provide clean and safe water across the state and improve water infrastructure. This includes $329 million available in fiscal years 2022 and 2023 to provide clean and safe water across the state through the Environmental Protection Agency. Of this funding, $48.4 million is dedicated to lead pipe and service line replacement, with another $30.7 million for safe drinking water investments that can also support lead pipe replacement in fiscal year 2022 and 2023.
Ports and Waterways – New York has received roughly $128.6 million in 2022 and 2023 for ports and waterways. New York was awarded $48 million for one port project through the Port Infrastructure Development Program. To date, New Jersey has received roughly $118.4 million in 2022 and 2023 for ports and waterways and was awarded $25 million for a port project through the Port Infrastructure Development Program.
Resilience – In response to the exorbitant amount of funding spent on weather-related damages over the last decade, both states will receive infrastructure dollars dedicated to resilience. To date, approximately $239.3 million has been allocated to New York for infrastructure resilience in 2022 and 2023, including $36.8 million through the Army Corps of Engineers for flood mitigation. New Jersey has been allocated $369.3 million and $12.7 million, respectively.
Get Ready to Be Part of the Action
While there will be plenty of infrastructure projects to choose from, getting your bid selected among steep competition will require a strategic and thoughtful approach. Now is the time to start planning for your wins by taking proactive steps, such as:
- Speak with your lenders about your bonding capacity.
- Revisit your prequalification process.
- Work with your CPA to generate the highest quality balance sheet.
- Get updated financials from your subcontractors to identify any new areas of risk.
- Identify any skill deficiencies or talent gaps you will need to correct in your labor force.
- Benchmark your business against your peers to determine areas for improvement.
Of course, an important part of this planning process will be sustaining your business’s financial health while you wait for these jobs to materialize. Grassi’s Construction team offers a wide range of resources, including benchmarking reports, cash flow projections, operational reviews and other tools to help position your company for optimal results.
For more information on the infrastructure bill and planning to seize the right opportunities for your construction business, please contact your Grassi advisor or Scott Stern, Construction Partner.
