Hawaii construction industry to see most of $2.8 billion federal infrastructure funds

At least $2.8 billion in federal money is now available to improve Hawaii roads, bridges, airports, water systems, broadband internet and more under a congressional bill signed into law Monday.

However, it likely will be a few years before a lot of this money gets spent and trickles through the local economy, mainly via the construction industry.

Two local economists anticipate that major results from anticipated spending in Hawaii under the new law, which is part of a $1 trillion bipartisan federal infrastructure spending measure signed by President Joe Biden, are a couple of years out and will be spread over several years.

“This isn’t stimulus to get the economy out of a recession,” said Carl Bonham, executive director of the University of Hawaii Economic Research Organization. “This is let’s do the infrastructure spending that we should have been doing over the last two decades.”

Bonham expects the amount of money going to construction, as opposed to equipment or materials purchases, will total around $2.1 billion or $2.2 billion and average between $400 million and $500 million a year over five years.

Capital improvement projects by the state government by comparison have been around $1.3 billion a year. Construction statewide is a $10 billion annual industry. Hawaii’s entire economy is about $93 billion.

“This is not huge,” Bonham said of the extra federal spending. “It will matter. The stuff is important, and it’s a great investment.”

Eugene Tian, chief economist for the state Department of Business, Economic Development and Tourism, said his expectation is for most spending to happen over three to five years.

“We’re not going to spend the $2.8 billion in a year,” he said. “The impact will be in the next few years.”

More than half the money reserved for Hawaii — about $1.5 billion — will go to improving roads and bridges.

At least $1.2 billion is specified for repairing or rebuilding roads, with a focus on climate change mitigation, resilience and safety.

Another $339 million will go to repair and replace bridges that are deficient or outdated.

Ed Sniffen, deputy director of the state Department of Transportation’s Highways Division, said it’s too early to know which projects will receive funding under the new law and when.

That’s because federal guidance needs to be provided, and input from counties will be a factor as well.

It’s possible that some projects can be built sooner than previously planned because of the extra federal funding, while other projects remain a few years off because of timetables for needed environmental review, design and permitting work.

For instance, the top highway improvement project for HDOT is realigning a roughly 7-mile nearshore section of Honoapiilani Highway on Maui. But the $90 million project needs environmental and design work that puts it three years out, though federal money would make funding it and other projects easier.

Under the new law, HDOT will receive a 20% federal funding bonus for highway projects — about $224 million this year, up from $185 million last year — that continues over five years, Sniffen said.

On top of that, bridge improvement funds will grow by $67 million a year, giving the state agency roughly $500 million more to spend on roads and bridges over five years.

“It is going to allow us to move ahead on projects that we wouldn’t be able to afford,” he said.

Planned road projects that could benefit include changes to Kamehameha Highway on Oahu from Hauula to Kaaawa and fronting Laniakea Beach.

Kyle Chock, interim executive director of the local construction industry organization Pacific Resource Partnership, expressed gratitude to Hawaii’s congressional delegation for working hard on the bill over the past several months.

“Hawaii’s infrastructure was rated a D+ by the American Society of Engineers,” Chock said in a statement. “And these important investments will help us improve that, particularly in communities that need it the most. It will also help to support Hawaii’s ambitious clean energy goals of 100% renewable by 2045.”

One potential constraint on making expeditious use of all the money directed toward construction could be the availability of labor, according to Bonham.

UHERO projects that construction jobs should roughly equal their 2015 peak of about 39,000 jobs in 2023, which could be a challenge given the existing tight labor market.

Other pieces of the $2.8 billion in committed Hawaii spending include $637 million for repairing and expanding public transit systems that include county bus services, $246 million for airport improvements, $200 million for water and wastewater systems and $18 million for electric vehicle charging infrastructure.

Also, $100 million is being provided to expand broadband access in Hawaii, including undersea cables, while the state Department of Hawaiian Home Lands will receive at least $60 million to provide high-speed internet access to more Native Hawaiian beneficiaries.

At least 280,000 Hawaii residents will be eligible for a new broadband benefit for low-income families under the law.

The $2.8 billion is allocated to Hawaii based on the state’s population. The law also is making tens of billions of additional dollars available through competitive grant applications, and this could add to spending on infrastructure in Hawaii involving harbors, the energy grid, flood mitigation, pollution, coastal habitat restoration and other things.

U.S. Sen. Brian Schatz (D-Hawaii), said Hawaii’s minimum guaranteed sum represents the biggest federal investment in infrastructure benefiting local residents in 40 to 50 years and should result in projects that last 30 to 50 years.

“It’s going to be enormously beneficial for Hawaii,” he said. “This is something to be real excited about.”

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Breakdown of Hawaii’s share

Key provisions in the infrastructure bill for the state include:

>> $1.2 billion to repair and rebuild roads, with a focus on climate change mitigation, resilience and safety.

>> $339 million to repair and replace deficient or outdated bridges.

>> $637.4 million to repair and expand Hawaii’s public transit system, with a focus on cleaner and safer buses.

>> $246 million to improve airport runways, gates, taxiways and terminals, and investments to reduce airport congestion and emissions by using low-carbon technologies.

>> $100 million to help the state deploy and expand the reach of broadband access in Hawaii.

>> $200.4 million for water infrastructure for water treatment, pipes, storage tanks and a revolving fund for municipal wastewater facilities and treatment systems.

>> $21 million for electric-vehicle charging infrastructure and state-led initiatives to accelerate the clean energy transition ($18 million for EV charging and $3 mil­lion for the clean energy transition).