AGC Blueprint

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Building a Stronger FutureA New Blueprint or Economic Growth 2

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The Need ......................................................................................................1n The Recession That Never Ended ..........................................................1

n Construction Matters to the Economy ....................................................2

The Plan: .......................................................................................................3n Boost Private Sector Demand .................................................................3

n Tackle the Inrastructure Debt ..................................................................4

n Ease Regulatory Burdens ........................................................................6

The Cost o Inaction vs. the Benefts o Action ....................8

Contents

The Associated General Contractors of America

2300 Wilson Blvd., Suite 400, Arlington, VA 22201 | (703) 548-3118

March 2011

2011 Building a Stronger FutureA New Blueprint or Economic Growth


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A New Blueprint or Economic Growth 1

The Recession That Never EndedWhile the recession ocially ended in June 2009, the construction industry

has continued to suer rom job losses and ever-tighter margins. At the start o

2011, the industrys unemployment rate was 20.7 percent, roughly twice the

overall unemployment rate. During the past twelve months alone, the industry

has lost over 100,000 jobs. Few regions have been immune as construction

employment continued to decline in two-thirds o the 337 metropolitan areas

or which employment data is available. In short, the construction industry

continues to suer rom depression-like conditions.

The industry continues to shed jobs because demand or construction remains

weak. While $884 billion was invested in construction in 2009, that amount

shrank $100 billion in 2010 to a ten year low. That decline in construction activity

has largely been driven by a collapse in private sector demand. Since 2008, the

percentage o overall construction activity that is nanced by the private sector has

declined rom 76 percent to 60 percent. Developer nanced construction sectors,

like new oce, retail and hotel development, have been particularly decimated,

experiencing between ty and thirty percent declines in activity.

In addition to the private sector declines, the industry also suered rom drops

in local and state construction unding. Indeed, many state and municipal

governments made dramatic reductions to their capitol programs in reaction

to declining tax revenue. These steep drops in private and public sector con-

struction activity were oset somewhat by large, temporary ederal programs,

including the base realignment and stimulus programs.

The stimulus in particular proved helpul. The roughly $135 billion in con-

struction investments kept many construction rms rom shutting down and

saved tens o thousands o construction jobs. Outside o the $49 billion in

transportation related investments, however, much o the stimulus construction

unds have been invested more slowly than many anticipated. As a result, the

impact o the stimulus has been diluted as the investments spread out over what

is likely to be a ve-year period.

Worse, the amount o money the stimulus brought to the construction market

proved much smaller than the overall contractions being driven by diminishing

private, state and local demand or construction. In other words, the broader

downturn in construction activity eliminated ar more jobs than the stimulus

was able to save or create.

Even as the construction market has continued to tumble, robust economic recov-

eries in Asia and South America have begun driving prices up or key construction

commodities. Since 2009, the cost o diesel has risen 28 percent, copper shapes

13 percent and aluminum and brass mill shapes 12 percent. Overall, the cost o

construction materials has risen nearly ve percent between January 2010 and

January 2011.

These price increases are not as extreme as the dou-

ble-digit increases rom earlier in the decade. How-ever, they are occurring at a time when the amount

construction rms can charge or nished projects

has stagnated because o the intense competition or

an ever diminishing amount o work. The most

recent data available rom the U.S. Census Bureau

shows that the price or completed projects re-

mained almost fat during the past twelve months.

As i declining demand, rising costs and stagnant

returns werent enough, ederal investment policies

are causing considerable uncertainty or the growing

numbers o construction rms that have come to

ocus on ederally-unded projects. That is because

Congress has yet to pass long-term inrastructure in-vestment legislation addressing our aging inventory

o water, road, transit or aviation systems.

The Need

Construction Spending is Down 34%


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2 2011 BUILDING A STRONGER FUTURE

Construction Matters to the EconomyThe ongoing construction downturn is not only devastating to people work-

ing directly in construction. It is serving as a drag on U.S. economic growth.

That is because construction spending accounts or more than eight percent

o U.S. gross domestic product and is responsible or one out o every 10

U.S. manuacturing shipments and one out o every 12 machinery shipments.Given that the vast majority o construction rms are small, local businesses,

the strength o the sector has a disproportionate impact on all communities.

Reviving demand or construction, particularly private sector construction

activity, is essential to sustaining broader economic growth. That is because:

Construction builds a more globally competitive economy. Inecient

buildings and manuacturing acilities cost American businesses millions o

dollars each year in needless power consumption and lost worker productiv-

ity. Meanwhile congested and unsae transportation networks cost busi-

nesses billions in wasted uel, late shipments and delayed workers. Indeed,

the construction industry alone loses billions each year to congestion and

unreliable roads. Enacting policies designed to encourage businesses to in-

vest in more energy- and work-ecient structures will help them compete

with similar businesses in China, India, Brazil and elsewhere. Meanwhile,

improving aging transportation, water and energy inrastructure will allow

domestic employers to cut delivery times, optimize just-in-time shipping

schedules, reduce costs and increase competitiveness.

There is a direct connection between activity levels and employment in

construction. While the construction sector has made signicant increases

in productivity, especially with the advent o new design and planning tech-

nology, the act remains that it is a labor-intensive industry. Construction

rms cant put the receptionist to work laying bricks or the accountant to

work pouring concrete. The busier rms are, the more jobs they add. Weve

seen the inverse during the downturn construction rms have little capac-

ity to support idle workers which is why the industrys job losses have

been so severe. That means, however, that as

soon as rms experience an increase in activity,they will begin adding jobs. And unlike service-

sector jobs, the average pay or construction

workers is $49,000, eight percent more than

the average or all private-sector employees.

Construction improves our environment.

Improving the eciency o our built envi-

ronment including commercial buildings,

transportation inrastructure and water sys-

tems presents one o the greatest opportu-

nities to reduce power consumption and cut

greenhouse gas emissions. Ater all, the en-

ergy consumed by the nations aging build-

ing inventory accounts or 35 percent o thenations manmade greenhouse gas emissions

and consumes 40 percent o the nations en-

ergy, while trac jams along our aging and

inecient transportation network account or

another 27 percent o energy consumption and

27 percent o greenhouse gas emissions. In other words, we can signicantly

improve our environment in a way that wont stife economic growth or

impose costly new taxes on economic activity.

The health o the construction industry is vital to our economic strength,

employment levels and quality o lie. Yet the industry continues to suerrom a prolonged downturn and as a result is serving as a drag on broader

economic expansion. It is clear that a new approach is needed one that

puts particular emphasis on boosting private sector demand and providing

economic certainty. That is why the association has prepared a new national

plan to revive the construction industry and return the nation to a period

o sustained economic growth. The plan outlines a series o commonsense

regulatory, tax, nance and trade reorms that will boost economic activity

and stimulate private sector demand or construction. Taken together, these

changes will allow sound private-sector construction projects easier access to

credit and nancing, encourage greater eciency upgrades in our buildings

and acilities and keep construction costs competitive.

The plan also calls or pragmatic new long-term investments in inrastructure

that will help businesses while enhancing our economic capacity or decades

to come. Theres simply no doubt that the long term health o our economy

depends on reduced ederal spending and a signicantly smaller ederal debt.

Indeed, the ederal reorms and investments identied in this plan are de-

signed to protect taxpayers rom the ar more signicant costs and economic

hardships that would come with allowing our national inrastructure to dete-

riorate to the point o disrepair. It costs a lot less to maintain roads, bridges

and water systems than it does to repair them, ater all.

The plan also identies regulatory and policy changes that, when made, will

eliminate bureaucratic delays that infate costs, rustrate taxpayers and benet

no one. The plan is ambitious, yet it is calibrated to meet a signicant chal-

lenge. Given the critical role the construction industry plays in our broader

economy, this plan deserves broad, bipartisan support.


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Boost Private Sector DemandAny eort to reinvigorate the construction industry must successully jump-

start new privately-unded construction. The strength o the private sector

market is the single largest determining actor in the health o the construc-

tion industry. Unortunately, private sector demand continues to decline

at alarming rates. O course, the private sector wont begin building again

until employent expands, retail demand grows and manuacturing increases.

That is why the best way to boost private demand or construction is to put

in place pro-growth policies that will boost economic expansion.

Increase Commercial Building Energy Efciency Tax Deductions.

Current law allows owners to deduct the cost o installing energy ecient

systems, like new heating and cooling units, in commercial buildings. The

amount o the deduction is up to $1.80 per square oot that will see at

least a 50 percent eciency improvement. Given the limited impact this

deduction has had on boosting energy-ecient installations, Congress

should raise the deduction amount to $3.00 per square oot, saving en-

ergy and energy costs.

Convert Commercial Building Energy Efciency Tax Deductions into

Tax Credits. In addition to boosting the deduction amount or eciency

upgrades to commercial buildings, Congress should convert the tax benet

into a tax credit. In an environment where many commercial building

owners are likely to experience losses in 2010 and 2011, tax deductions

will have limited to no impact. Converting deductions into credits will

provide a signicant nancial incentive or property owners to improve the

eciency o commercial buildings.

Reject Efforts to Increase Tax on Carried Interest. Some members o

Congress are trying to increase the tax on carried interest rom 15 percent

to 38 percent. Such an increase would undercut the economic incentive to

build projects or redevelop underutilized properties and drive away invest-

ments rom the commercial real estate sector.

Approve Pending Trade Agreements and Restore Fast Track Trade

Promotion Authority. Passage o pending trade agreements with Korea,

Colombia and Panama will boost demand or construction o domestic

shipping and manuacturing acilities while providing a needed boost to

the overall private sector. Restoring Fast Track authority, meanwhile,

will allow the President the reedom and fexibility to negotiate bilateral

ree trade agreements that can be presented to Congress or an up-or-down amendment-ree vote, restoring condence on the part o potential

new trade partners and accelerating completion o new pro-growth trade

agreements. Streamlining trade negotiating authority will make it easier

to open new markets or U.S. exports, while boosting demand or the

construction o manuacturing and shipping acilities nationwide.

Provide Tax Credits for Contractors that Invest in New, Cleaner Con-

struction Equipment. Instituting a 30 percent investment tax credit or

cleaner construction equipment will boost demand or new, domestically-

manuactured equipment while allowing construction rms to improve

their overall eciency. The new tax credit would apply both to manuac-

turers o new, cleaner diesel-powered construction equipment and con-

struction rms that purchase the new equipment or improve the eciency

o existing equipment.

Extend Payroll Tax Exemption into 2011. As part o the Hiring Incen-

tives to Restore Employment (HIRE) Act, employers that hire unemployed

workers in 2010 may qualiy or a 6.2 percent payroll tax incentive. This

incentive has proven particularly popular with the construction industry,

given the seasonal nature o many construction jobs, especially in northern-

tier states. Congress and the Administration should act now to extend this

exemption into 2011 so construction rms will have an additional incentive

to expand their workorce in time or the spring construction season.

Incentivize New Equity for Existing Real Estate Projects. As property

values all and lenders adopt more restrictive standards, new sources o

equity capital will be needed. Congress should provide temporary tax in-

centives to attract new equity or existing projects. The incentives would

provide bonus depreciation on the new investment equity and deduction

o losses that are not subject to passive loss limits. At least 80 percent o

the invested capital must be directed to reducing the outstanding balance

o the commercial mortgage debt with the remainder going to capital im-

provement to qualiy or the incentive. This will ease debt market con-cerns and boost the broader economy.

Make Permanent Shortened Cost Recovery Period for Retail & Restau-

rant Improvements. Tax provisions shortening the cost recovery period o

certain leasehold, retail and restaurant improvements rom 39 to 15 years

expired at the end o 2009. Making those provisions permanent will provide

an important incentive or retail and restaurant operations to make capital

improvements to their leasehold space.

Make Permanent Depreciation Bonus & Capital Expenditure Write-

Off Levels. As part o the Tax Relie, Unemployment Insurance Reau-

thorization, and Job Creation Act, businesses are able to immediately

write-o 100 percent o the cost o new tangible depreciable property

(like construction equipment) placed in service starting September 9, 2010through 2011. The law also allows or 50 percent bonus depreciation or

business investments placed in service in 2012. In addition, the current

law allows small business taxpayers to write-o capital expenditures o up

to $500,000 made in 2010 and 2011 and up to $250,000 made in 2012.

Taxpayers also are allowed to expense up to $250,000 o the cost o quali-

The Plan


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ed leasehold improvement prop-

erty, qualied restaurant property

and qualied retail improvement

property. While these temporary

measures will provide some relie,

the limited duration o these benetsundermines their ability to stimu-

late growth. Congress should make

permanent the current depreciation

bonus & capital expenditure write-

o levels. Congress also should

make permanent the special rule or

long-term contract accounting that

decouples bonus depreciation rom

allocation o contract costs.

Extend and Expand the Five-

Year Carryback of Net Operating

Losses for Small Businesses. Busi-

nesses that experienced net operating

losses in 2008 and 2009 are able to

carry those losses back over the pre-

ceding ve years. The provision allows businesses with deductions exceed-

ing their income to get a reund or taxes paid in previous years. This

provision had little impact on construction companies because ewer rms

experienced losses in 2008 or 2009 than are expected to in 2010 and 2011.

Expanding the provision to cover net operating losses incurred in 2010

and 2011 or all businesses will allow cash-strapped construction rms

to convert uture tax benets into cash today that can be used to expand

payrolls, retain workers and invest in equipment.

Make Permanent Certain Tax Cuts from 2001 & 2003. While the broad

range o tax cuts enacted in 2001 and 2003 were extended through 2012,

uncertainty about uture tax rates ater 2012 will limit the ull benets o

the rate extension. As a result, Congress should make permanent thereductions in individual income, dividend and capital gains tax rates rom

the past decade. Congress also should make permanent the estate tax at or

below levels enacted in December 2010. Taken together, making these cuts

permanent will strengthen capital markets and make it easier or businesses

(construction and other) to grow, expand and build new acilities.

End Double Taxation of U.S.-based Businesses Succeeding in In-

ternational Markets. Unlike most o our global competitors, the U.S.

punishes domestic businesses that succeed in international markets by

orcing them to pay taxes on their overseas prots twice in the host

country and then again here. Given the increasing globalization o mar-

kets, this puts U.S. businesses at a distinct competitive disadvantage and

discourages many rms rom using overseas prots to invest in domes-

tic operations. Congress and the Administration should work to tran-sition rom our current worldwide tax system to the territorial tax

system our competitors use. Under this system, overseas prots would

not be taxed a second time, making it easier or domestic rms to in-

vest in manuacturing, oce and distribution acilities here in the U.S.

Repeal the Alternative Minimum

Tax. Since the vast majority o

Americas businesses are taxed as

individuals instead o as corpora-

tions, the alternative minimum tax

undercuts potential earnings thatotherwise will be reinvested as re-

tained earnings each year. These

retained earnings provide the capi-

tal needed or businesses to invest

in real estate, renovations and new

manuacturing equipment, all o

which is essential to the private con-

struction market. Congress should

repeal the alternative minimum

tax beore it saps more capital out o

the economy and undermines uture

construction projects.

Tackle theInfrastructure DebtThe nations transportation, water

and energy inrastructure serves as the oundation or private sector growth.

Access to reliable and aordable power, clean water systems and a trans-

portation network that or much o the 20th century was the envy o the

world has given American businesses a signicant competitive advantage.

However, that competitive edge is being undermined by ederal misalloca-

tion o inrastructure resources and the resultant mistrust taxpayers have

in the ederal governments ability to use any increases in inrastructure

unding wisely. As a result, our national inrastructure has been allowed

to age and deteriorate to the point where the American Society o Civil

Engineers now estimates that our country is dealing with a trillion dollar

inrastructure debt.

As our inrastructure deteriorates, American businesses suer. Trac conges-tion alone costs businesses nearly $100 billion a year in lost productivity and

costly delays. Worse, aging inrastructure is undermining our quality o lie,

causing an enormous waste o uel, water and other natural resources and is

threatening to undermine decades o environmental improvements. Fixing

our inrastructure debt, however, isnt just about increasing investment levels.

Just as important is making serious reorms to ederal inrastructure programs

to reocus them on core missions, eliminate wasteul and/or questionable

spending and restore taxpayers trust in the ederal governments ability to

wisely invest their money.

Reform and Enact Multi-Year Federal Highway, Transit and Aviation

Legislation. Transportation projects are oten complex, multi-year projects

that take time to plan, und and complete. Many multi-year surace and

aviation projects are now months late because long-term surace and avia-tion transportation bills have languished. Congress and the Administration

need to reorm both programs to eliminate spending programs that arent

in the direct ederal interest. For example, even though bicycle programs

and transportation museums may be important, they represent the kind o


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spending that have prompted taxpay-

ers to lose aith in the ederal program

and resist needed increases in highway

user ees. Likewise, both the aviation

and surace transportation bills need to

include revisions to the ederal reviewprocess to signicantly reduce the time

it takes to approve projects. Mean-

while, additional unding sources must

be identied to nance new transpor-

tation programs like High Speed Rail

i these programs are to move rom

dream to reality.

Transition to Vehicle Miles Tax.

Congress and the Administration

must establish a clear timeline or transitioning rom the current gas tax

to a vehicle miles tax (VMT). The VMT will serve as a more accurate

user ee by requiring drivers to pay or their road use regardless o whether

they operate a hybrid, electric vehicle or traditionally-powered automo-

bile. The VMT could also be signicantly less-regressive than the gas tax,

as dierent rates could be set based on income levels and/or type o vehicle

used. Given the challenges associated with this transition and the average

lie-cycle o the automobile feet, this switchover will take years, which

is why the process must start now. In the meantime, Congress and the

Administration should adjust the gas tax to $.334 per gallon to ensure the

highway trust und remains viable until the transition is completed.

Address Maintenance and Modernization Backlog for Federal Build-

ings. Congress and the Administration can provide immediate new oppor-

tunities or unemployed construction workers and signicant long-term

savings or taxpayers by addressing unmet maintenance and moderniza-

tion needs in its building inventory. The Government Accountability O-

ce has identied $4 billion worth o needs in over 900 ederal buildings.

Aging ederal acilities undermine government productivity and waste sig-nicant amounts o energy. For approximately hal o one percent o its

stimulus program, the ederal government can boost construction employ-

ment, increase ederal productivity and reduce energy consumption.

Reform Water Resources Development Act to Invest in Navigation

and Flood Control Projects. Congress and the Administration should

begin to address unmet navigation and food control needs by increasing

unding or the U.S. Army Corps o Engineers Civil Works program to

a minimum o $7 billion in 2010. In addition, Congress should agree to

allow only projects that have been vetted and identied by the Corps to

be unded. Today there are simply too many Congressionally-selected

projects that are undermining investments in the projects that the Corps

has identied as true national priorities. The Harbor Maintenance Trust

Fund also must be used or its intended purpose.

Establish a Clean Water Trust Fund. Congress should increase unding or

the Clean Water State Revolving Loan und and Sae Drinking Water State

Loan Fund to a combined $6 billion annually. In addition, the Adminis-

tration and Congress should work to-

gether to establish a Water Trust Fund

that will allow or uture investments

to come rom dedicated and sustain-

able long-term unding sources, in-

stead o depending on unreliable andunpredictable annual appropriations

out o the General Fund.

Establish a National Infrastructure

Bank. Consolidate existing ederal

inrastructure lending programs,

such as the Railroad Rehabilita-

tion and Improvement Financing

(RRIF), Transportation Inrastruc-

ture Finance and Innovation Act

loans (TIFIA), Federal Ship Financing (Title XI) and other similar pro-

grams into a single national inrastructure bank. (The Ship Financing

Program also should be expanded so needed port inrastructure invest-

ments can qualiy.) This independent institution would have a mandate

to evaluate and make loans available to support up to 33 percent o the

cost o inrastructure projects. The bank would have sections dedicated to

specic types o inrastructure and would guarantee that those percentages

o loans go to specic types o inrastructure. Assuming current interest

rates and perormance comparable to TIFIA, i the bank were capital-

ized at $1 billion annually, it could leverage those resources into as much

as $51 billion worth o inrastructure projects. This would allow certain

projects an opportunity to attract and repay nancing and could comple-

ment, but not substitute, more traditional unding streams.

Encourage States to Enact Permissive Public Private Partnership Laws.

All earmarked transportation unds that have been unused or at least 10

years, worth over $620 million, should be consolidated into a single Public

Private Partnership Innovation Fund. The Department o Transportation

would use this und to encourage states to enact new, or revise existing,public private partnership legislation to encourage greater private-sector

unding or transportation inrastructure projects. States will be able to

win competitive grants rom this und based on their success in enacting

permissive legislation and entering into viable public private partnerships.

Re-establish and Make Permanent Build America Bonds Program. The

Recovery Act created the Build America Bonds program as a new nancing

tool to allow state and local governments to obtain much-needed unding, at

lower borrowing costs, or projects such as construction o schools, hospitals,

transportation inrastructure and water & sewer upgrades. Unortunately,

this progam expired in 2010. Congress should reestablish it, make it perma-

nent, and expand eligibility to cover certain private activities with national

benets, such as energy inrastructure and eciency upgrades at commer-

cial, manuacturing and health care buildings.

Exempt Construction from Private Activity Bond Cap. Private Activity

Bonds are a orm o nancing that allows private entities to partner with state

or municipal governments to receive tax-exempt nancing or private- or pub-


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licly-owned projects in the publics interest. However, the rules governing

these bonds limit the total dollar amount that can be issued based on a states

population. Eliminating these caps would qualiy signicantly more water,

sewer and mass transit projects, among others, or this kind o nancing.

Ease Regulatory BurdensAny serious eort to improve the economy and boost private sector demand

or construction must include a comprehensive eort to reduce costly, time

consuming and needless regulatory burdens. Unortunately, those burdens

have only increased over the past two years as the government has taken an

increasingly anti-business approach to crating regulations and interacting

with regulated businesses. Nobody questions the governments essential

role in protecting the environment, ensuring workplace saety and promot-

ing ethical business behavior. But the expansion o reporting requirements,

growth in oversight audits and widespread reports that ederal inspectors

are striving to meet minimum ne quotas are orcing businesses to spend an

increasing amount o their time and capital on regulatory compliance.

In the construction industry alone, projects oten languish or years awaiting

environmental and permitting reviews. These reviews are crated in a way

that even a minimum o resistance can delay decision making, yet virtually no

amount o eort can accelerate the process. Nobody questions the need to ask

tough questions and demand good answers about constructions impact on

the environment, the quality o work and whether the government is getting

a good value or its investment. But it shouldnt take years o eort, dozens o

sta and miles o red tape to answer those questions. That is why the associa-

tion recommends the ollowing regulatory and policy revisions.

Pass Legislation Limiting Major New Regulations. Congress should

pass, and the Administration should sign, proposed legislation that would

require Congressional approval beore any regulations costing the econ-

omy over $100 million can be established. This would allow or more

robust debate and consideration beore costly new regulations are put in

place than the current rulemaking process provides.

Develop a Comprehensive National Energy Plan. Congress and the Ad-

ministration should crat a comprehensive national energy plan. This plan

would eliminate the uncertainty and conusion that have come with an ad

hoc energy policy that encourages boom and bust cycles with temporary

and varying energy incentives and tax breaks. It also would streamline

the permitting process or alternative power generation acilities and e-

ciency upgrades to existing plants. Such a plan also should allow or a

greater private-sector involvement in planning, developing and expanding

alternative energy sources.

Streamline Environmental Reviews for Infrastructure Projects. The

current ederal environmental review process or ederally-unded inra-

structure projects is unnecessarily slow and expensive. For example, it

takes an average o 13 years or highway and 12 years or transit projects

to receive ederal approval. As a result, every eort should be made to

streamline the environmental review process while protecting the envi-

ronment by designating lead ederal agencies, establishing and meeting

clear timelines, simpliying analysis requirements and placing a statute olimitations on claims.

Repeal Three Percent Withholding for Government Contracts. Be-

ginning in 2012, ederal, state and local governments with total annual

expenditures o $100 million or more will be required to withhold 3 per-

cent rom all payments or goods and services they purchase. Given the

extremely narrow margins on which most construction rms are now op-

erating on average 3.4 percent this new measure will orce contrac-

tors to either break even or operate at a loss. Worse, rms wont be eligible

to receive interest earned on the withheld unds when they are returned

ater as long as 2-3 years.

Preserve the U.S. Department of Transportations Oversight of Trans-

portation Planning. Past eorts to enact climate and energy legislation

have included eorts to give the Environmental Protection Agency in-

creased review and permitting authority when it comes to transportation

issues. Should these ideas become law, they would only add new and

needlessly redundant layers o oversight that would prolong the already

lengthy review process or vital transportation projects. Congress and the

Administration should resist any eort to expand the EPAs regulatory

reach into the transportation arena.

Reform the Approval Process for the New Starts Transit Program.

While the New Starts program has led to greater accuracy in planning

transit projects and projecting trac volumes, its review process is lengthy

and costly. The program should be reormed to allow or reviews that

ask and answer the same tough questions about a projects viability in a

signicantly shorter amount o time.

Allow Broader Participation in the Green Jobs Act. The Green Jobs Act

o 2007 limits training grant unding to entities that coordinate with labor

organizations, needlessly limiting the range o organizations that can help

out-o-work construction workers take advantage o growing demand or

green construction. Congress should enact the Green Jobs Improvement

Act and allow any accredited training program, regardless o its relation-

ships with unions, to compete or taxpayer grants.

Establish a Federal Multiyear Capital Budget for Public Works Infra-

structure. Establishing a ederal multiyear capital budget or public works

will make it easier or ocials to plan or, and nance, major, multiyear

inrastructure projects. Most states already successully use multiyear capital

budgets. Such an approach is preerable to the current ederal budgeting


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process or key inrastructure like

water and wastewater acilities

that discourages good long-term

asset management by ocusing on

unding short-term needs only.

Oppose So-Called High

Road Contracting Reforms.

The Administration is report-

edly considering implement-

ing High Road contracting

reorms that would allow con-

struction rms to be blacklisted

rom ederal work based on

anonymous accusations. The

premise o the proposed reorms

ignores current ederal contract-

ing law as well as the rigorous

legal obligations and nancial risk that ederal contractors are currently

required to meet.

Reject the Clean Water Restoration Act. Congress may again consider

legislation that would signicantly expand ederal jurisdiction over waters

and wetlands under the Clean Water Act. Were this legislation to become

law, all construction activity impacting any water or wet area in the United

States would be required to obtain a Clean Water Act permit. Where

these permits are currently required, they have proven both costly and

time-consuming. On average, it already costs an applicant $30,000 and

takes up to 313 days or the ederal government to grant a general permit,

and over $270,000 and 788 days or the ederal government to grant an

individual permit. To avoid needlessly delaying billions o dollars worth

o construction projects, Congress should preserve state and local author-

ity over local land and water use.

Accelerate Licensing of New Nuclear Power Plants. With demand orelectricity projected to grow substantially within the next two decades,

Congress and the Administration need to act on the 30 pending nuclear

power plant applications that have been submitted to the Nuclear Regula-

tory Commission. As one o the ew sources that can generate electricity

reliably, eciently and without greenhouse gas emissions, nuclear power

must remain an essential component o our power grid. Unortunately,

todays 104 U.S. nuclear reactors operate at more than 90 percent ca-

pacity. Constructing a nuclear plant takes years, however. Further need-

less permitting delays will only increase our national reliance on oreign

sources o energy.

Revise Environmental Legisla-

tion to Encourage Green Con-

struction Activity. Environmental

legislation should encourage de-

mand or energy-ecient buildings

and inrastructure. Those op-portunities should not be limited

by proposals that would increase

the cost o construction or reduce

demand or new commercial,

manuacturing and industrial acil-

ities. In that light, environmental

legislation must not add new per-

mitting requirements that block

or delay the development o com-

mercial and residential build-

ings. Congress should encourage

cost-eective improvements to

our environment and air quality by unding energy ecient inrastructure

along the lines o AGCs Building a Green Future plan. Congress also

should pass legislation to pre-empt use o the Clean Air Act to regulate

greenhouse gas emissions, an approach economists agree stifes economic

growth and construction activity.

Avoid Government-Mandated Project Labor Agreements. Gov-

ernment-mandated project labor agreements have been proven to

limit competition or construction work, needlessly denying work-

ers the opportunity to benet rom publicly-unded projects. Worse,

government mandated project labor agreements put public ocials with

little to no experience in construction in charge o setting work rules and

schedules, creating ineciencies and undermining workplace saety. The

Administration should avoid using government-mandated project labor

agreements at all costs and instead let workers and construction rms

negotiate terms o employment and work.

Rescind Buy American Requirements. Well-meaning eorts to stimulate

purchases o American-made products too oten cause needless delays to

construction projects while infating construction costs. Invariably, sig-

nicantly more construction workers are impacted by these delays than the

limited number o workers that benet rom these requirements. Con-

gress and the Administration should rescind Buy American requirements

included in the stimulus and avoid urther temptations to expand these

requirements beyond their traditional and limited use in ederal procure-

ment and highway programs.


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No doubt some will argue that new measures and regulatory reorms arent

needed and that the construction industry will recover on its own. But just

looking at the construction industrys perormance in the year and a hal

since the ocial end o the reccession, it should be pretty clear that the sec-

tors revival is anything but guaranteed. Allowing this industry to continue

to stagnate will have signicant long-term impacts both on the strength

o the domestic labor market and on the quality o Americas public and

private inrastructure and buildings.

The construction industry has accounted or twenty percent o the jobs lost

during the economic downturn, even though it accounts or just ve percent

o the workorce. That means a signicant portion o the jobs lost over the

past two years wont return until the construction industry revives. Given

the construction industrys heavy consumption o manuactured goods and

shipped equipment and supplies, any prolonged downturn or the sector

will drag on the hard-hit manuacturing and shipping industries.

A prolonged construction downturn also means that the private sector will

not be making needed upgrades to oce, shipping, power generation, re-

search or manuacturing acilities. This will put private rms at a distinct

competitive disadvantage as they work to expand exports and increase do-

mestic market share against oreign, oten state-unded, rivals.

U.S. businesses will also be hamstrung by our ailure to reorm, streamline

and invest public and private resources in our critical inrastructure. I we

continue to allow roads to congest, bridges to age, water systems to deterio-

rate and the power grid to remain inecient, we will undermine domestic

employers. How can we expect our businesses to succeed i their shipments

are stuck in trac, their utilities are unreliable and their cost o operating

continues to increase?

The U.S. Chamber o Commerce, or example, has ound a direct cor-

relation between the quality o our inrastructure and the viability o our

business community. Meanwhile, the U.S. Department o Treasury has

noted that America invests a smaller amount in maintaining and expand-

ing its inrastructure than Europe or Asia, as measured by percent o GDP.

Should this be allowed to continue, the costs to our economic viability will

be proound and protracted.

On the other hand, the benets o acting on this plan will be signicant.

Enacting measures to boost the economy and expand private sector demand

or construction will immediately improve employment levels. It will lead to

an increase in domestic demand or manuactured goods, shipping services

and construction supplies and materials. And it will bring new vitality to

many o our hardest hit communities.

A resurgence in private and public sector construction will also boost our

global economic competitiveness. It will allow our businesses to operate

more eciently and improve their productivity. It will lower shipping costs,

helping armers earn more or what they grow and shoppers to spend less

o what they earn. It will improve quality o lie or all Americans, better

saeguard our environment and reduce the amount o water, energy and uel

we consume each year.

In other words, the benets o this plan are greater than the costs associated

with it and ar greater than the costs associated with doing nothing. That

is why it is our hope that each o its recommendations will be acted on

with urgency and speed. Not only are millions o unemployed construc-

tion workers looking or relie, but our broader economic health needs the

competitive advantage that comes with much-needed improvements to our

built environment.

The Cost O Inaction Vs.The Benefts O Action

Photo credits:

Page 4, D.H. Grifn Company, Greensboro, N.C.

Page 5, Cianbro Corporation, Thames River Bridge Rehabilitation, New London and Groton, Conn.

Page 7, Kiewit Western Company and Sundt Construction, Inc., Interstate 10, Tucson, Ariz.


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The Associated General Contractors of America2300 Wilson Blvd., Suite 400, Arlington, VA 22201 | (703) 548-3118

The Associated General Contractors o America (AGC) is the leading association or the

construction industry. AGC represents more than 33,000 frms, including 7,500 o Americas

leading general contractors, and over 12,500 specialty-contracting frms. More than 13,000

service providers and suppliers are associated with AGC through a nationwide network o chapters.

Visit the AGC Web site at www.agc.org.

Documents

AGC Blueprint