Investing in California's Future Through the American Recovery

Investing in California’s Future Through the American Recovery and Reinvestment Act October 2017 www.hsr.ca.gov Foreword In 2009, the United States was at the height of the worst economic recession – now known as the Great Recession – seen since the Great Depression of the 1930s. Millions of jobs were lost, home prices plummeted and the U.S. stock market declined by almost 50 percent, with devastating effects on the overall American economy. California citizens were profoundly affected with an unemployment rate of 12.4 percent in 2010. The Central Valley fared far worse with an unemployment rate of almost 17 percent. To address this economic crisis, the president and Congress passed the American Recovery and Reinvestment Act of 2009 (ARRA) to provide economic stimulus to save and create jobs through infrastructure investment. ARRA funds were established to support near-term investments – repairing roads, bridges and airport facilities – and longer-term investments, such as high-speed rail, to spur technological development and build new infrastructure that would support longer-term economic development goals. To achieve that, ARRA required that all ARRA funds be fully expended by September 30, 2017. California received $2.55 billion in ARRA funds and combined it with other state and federal funds to develop and begin construction of the high-speed rail system that California voters approved in 2008. California has met the goal of investing these funds on schedule, but more importantly, California has fully achieved ARRA’s important policy goals. ` Hundreds of private sector firms have worked on the program – including small and disadvantaged businesses. ` Thousands of good-paying jobs have helped put people back to work – with the Central Valley showing an almost 400 percent growth in jobs supported from 2014 to 2016. ` Billions of dollars have infused the state’s economy – creating $3.5 to $4.1 billion in economic activity. This report describes the dividends that this critically needed public investment in California’s transportation infrastructure has yielded for the state and for its citizens. It shows that this investment has yielded a range of economic benefits, including job creation, small business contracting opportunities, and economic impacts. It also shines a light on the apprenticeships and job opportunities created for unemployed or disadvantaged workers. In the longer-term, California will reap even greater dividends from developing a new high-speed rail system connecting the state’s economic and population centers, positioning it to stay economically competitive into the 21st Century. Fernando Madrigal, Jr.: From Security Guard to Electrician In the more than two years since the official groundbreaking, the high-speed rail project has created hundreds of well-paying jobs for workers throughout the Central Valley. Fernando Madrigal, Jr. personifies the opportunities associated with high-speed rail. Madrigal left the Marine Corps after 12 years of service. After working a few security guard jobs, he signed up for a 10-week training program sponsored by PG&E to introduce workers to the various constructions trades. Madrigal settled on a career path as an electrician and worked his way up to a third-year apprentice union electrician with Local 100 of the International Brotherhood of Electrical Workers (IBEW). He is employed by AC Electric Company and has worked on the project for nine months. He helped build a new administration building and a school-bus refueling station for the Kings Canyon Unified School District, and he’s currently part of a crew that’s working near the site of the new Clinton Avenue Bridge, which is being rebuilt as part of the realignment of State Route 99. Madrigal’s crew is identifying underground utility locations and setting up power connections for new traffic signals. 1 CALIFORNIA HIGH-SPEED RAIL AUTHORITY • WWW.HSR.CA.GOV High-Speed Rail in California is Happening… Major construction is progressing in the Central Valley with more than a dozen active construction sites over 119 miles. “High-speed rail along with statewide rail Workers are building bridges, viaducts and grade separations at multiple locations, and modernization will move the first complete structures are expected to be finished this year. the greatest number of people while minimizing Hundreds of businesses – large and small – and thousands of individuals – including impacts to the natural and disadvantaged workers and disabled veterans – are hard at work. built environments and More than 1,400 craft laborers have been dispatched to work on the three major encourage pedestrian- design-build construction projects. friendly land development around high-speed rail 100 percent of the steel and concrete used is domestic, consistent with federal Buy stations. High-speed rail American provisions, stimulating California and the nation’s economy. is integral to helping manage major pressing Environmental, engineering and community outreach is advancing on every mile issues such as climate of the Phase 1 system from San Francisco/Merced to Los Angeles/Anaheim. change, traffic and airport congestion, and energy 407 small businesses have worked on the program to date with more to come, independence.” including 116 Disadvantaged Business Enterprises (DBE) and 45 Disabled Veteran Business Enterprises (DVBE). - Dan Richard As of June 2016, more than 630 different private sector firms have worked on the Board Chair program, and companies from 35 different states have contributed to everything from planning and engineering to construction services. Want Jobs for the …And Showing That Public Investment ’Forgotten Man’? in Infrastructure Yields Many Benefits Finish High-Speed Some are tangible and quantifiable, such as the number of construction sites, new Rail or expanded job opportunities, or the number of small or disadvantaged businesses working on the project. Sacramento Bee Editorial Board Some are less easy to quantify but are no less tangible, such as the transformative http://www.sacbee. effect of putting people back to work or laying the foundation for a new “made in com/opinion/editorials/ America” high-speed rail manufacturing sector. This report chronicles the positive article153955174.html impact of the federal and state dollars invested – and the dividends accrued thus far. INVESTING IN CALIFORNIA’S FUTURE THROUGH ARRA • OCTOBER 2017 2 Achieving American Recovery and Reinvestment Act Objectives The key policy objectives established in ARRA were to: ` Create jobs ` Stimulate the economy ` Spur technological development ` Build new transportation infrastructure that provides long-term economic benefits In awarding ARRA funds to California, the federal government also sought to provide the opportunity to demonstrate America’s capacity to design, build, and operate the first world-class high-speed rail system in the United States. For more information, see: https://www.congress.gov/bill/111th-congress/house-bill/1/text. The ARRA funds, matched with state dollars, were used for initial construction in the Central Valley and advancing engineering and environmental reviews along the entire 520-mile Phase 1 system connecting San Francisco/Merced to Los Angeles/ Anaheim. Starting in California’s Central Valley The Authority and the Federal Railroad Administration (FRA) jointly agreed to start construction in the Central Valley for several reasons: ` The Central Valley suffered from one of the highest unemployment rates in the nation, reaching nearly 17 percent in 2010. ` The region’s population is projected to more than double by 2050 – from 6.1 to 13.2 million people. ` The Central Valley has long experienced the negative effects of some of the worst air quality in the nation. ` The land-use patterns and flat terrain allows for less complex designs and construction. ` The Central Valley provides long stretches of contiguous open space for testing high-speed trains before they are put into passenger service. Delivering Through Partnerships From its inception, California high-speed rail was envisioned to be planned, designed, constructed and funded through a series of partnerships between the state, federal, regional and local governments, with key private sector participation. State – In 2008, California’s voters approved $9 billion through Proposition 1A to connect the state with high-speed rail. In 2014, the California Legislature increased its support by approving a continuous appropriation from the state’s Cap-and-Trade program to help build high-speed rail. Federal – In 2009, Congress provided $3.48 billion through multiple appropriations, including $2.55 billion in ARRA funding for environmental planning, design and construction. Regional and Local – Planning and environmental reviews have involved significant collaboration with regional and local partners. In 2012, the Authority entered into agreements to fund early investments and connectivity projects in regional rail systems to provide early benefits and lay the foundation for high-speed rail. Private Sector – Since 2011, the Authority has interacted extensively with private sector developers, contractors, operators and equipment providers – both formally and informally. These firms possess global experience designing, building, operating, maintaining and financing high-speed rail systems. Their input has shaped the approach to delivering and operating the system. In late 2017, a private sector Early Train Operator will be brought on board to assist in preparing for

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