Life Support?

Life Support?

According to White House projections, the American Recovery and Reinvestment Act signed into law by President Obama on Tuesday is expected to add or save 396,000 jobs in California over the next two years. While the Golden State is expected to benefit more than any other from the stimulus effort, the effect the bill will have on California architects and designers remains relatively unclear.

It is not known how much of the $787 billion will eventually make its way to California, nor how the funds will be distributed, although the original House plan had tentatively allocated $37 billion to the state. Some clearer national estimates have emerged.

According to a congressional summary, $48 billion will likely be divided among the states for transportation-related infrastructure projects, including $27.5 billion to build and maintain roads and bridges, with another $8.4 billion going to mass transit projects.

In the housing sector, $4 billion will be allocated for energy efficient improvements and repairs for public housing. In addition, $2 billion is to be set aside to redevelop foreclosed and abandoned homes and $1.5 billion will be directed toward homeless shelters. Another $2 billion will be used to pay off a shortfall in public housing accounts.

In an effort to revitalize the troubled building sector and deliver an immediate jolt to the economy, the bill requires half of the funded projects to be “shovel-ready,” or set to begin work within 90 to 120 days. As a result, the architecture and design sector may not feel the full restorative effects of the stimulus package as early as some have hoped. 

According to the nonprofit tracking site, California has 1,971 shovel-ready projects for which mayors throughout the state have requested federal funding, totaling over $23 billion. Most are infrastructure-related, but millions have been requested for residential, school, and transportation-related (airport, mass transit, etc.) buildings.

The AIA’s Rebuild and Renew Plan, by contrast, suggests funding projects that could commence over 24 months to sustain recovery over a longer period of time. It also suggests funding a wider variety of projects, including livable communities and preservation.

So how will the provisions in the package impact California architects? “The answer is not much,” said Christopher Thornberg, principal of Beacon Economics, a California-based research and consulting firm. “Nothing in the stimulus package is going to bring construction back anytime in the near future,” he added, pointing out that the financial turmoil caused by unsustainable building costs falling back to earth has significantly diminished incentives for new construction.

“It’s not really aimed at rescuing the real estate markets, because there’s not much you can do about the real estate markets,” he said, adding, “that’s not to say that stimulating the economy, or shortening the length of the downturn won’t help the architecture community; of course it will. But it won’t help the architecture community any more or less than any other part of the economy.”

Complicating matters is California’s projected $41 billion deficit. As much as $10 billion from the state’s as yet unknown portion of the stimulus package could be used to offset that gap.

“These are gloomy times and we’ve got to work through this,” Thornberg concluded, “but I think the economy is going to emerge in a healthier place when this thing finally ends.”