West Virginia’s Road to Prosperity

By Katlin Swisher

Infrastructure and job creation: these are two topics at the top of nearly everyone’s list of priorities when it comes to addressing West Virginia’s current economic struggles. The state needs jobs, which require business start-ups and expansions and out-of-state companies relocating to West Virginia. In order to draw businesses—and people—here, the state’s struggling infrastructure must be addressed.

In light of these needs, West Virginia has taken action to pave the way for economic recovery across the state through three different bonding strategies: general obligation bonds, which were created through Governor Jim Justice’s Roads to Prosperity initiative; turnpike bonds; and Grant Anticipation Revenue Vehicle, or GARVEE, bonds. Through these three types of bonds, the state will invest $2.8 million into more than 600 transportation projects over the next four years. Given the current shape of the state’s roadways, these projects can-not begin soon enough.

“We have not really invested in our roads as we should have over the last decade,” West Virginia Department of Transportation (DOT) Secretary Tom Smith says of the state’s infrastructure challenges. “We’ve gone from 12th worst in the country for bridges to fifth worst, and the surfaces of our roads are continuing to decline. Governor Justice believes we can kick-start the economy again by really focusing on transportation and taking care of all this, which we’ve been letting slide. I think 2018 will be a banner year for us as far as having a lot of actual construction.”

General Obligation Bonds

The Roads to Prosperity general obligation bond, which passed with 72.85 percent of the vote in a statewide special election on October 7, 2017, totals $1.6 billion for major regional transportation projects and improvements. The bonds will be sold in four installments: $800 million in May 2018, $400 million in May 2019, $200 million in May 2020 and $200 million in May 2021. This year’s $800 million bond sale is the largest for transportation purposes in West Virginia’s history, according to Smith.

“That is an eye-popping number,” he says. “We intend to put that $1.6 billion out on the street. It will be very significant for projects all over the state.”

About 40 projects will be funded through the general obligation bonds. The first project will be widening the West Virginia Turnpike on I-77 near Tamarack and Beckley’s Harper Road exit, which is set to begin this summer. The second project will focus on alleviating rush-hour congestion in the Kanawha Valley by constructing a companion bridge adjacent to the Nitro-St. Albans bridge, and I-64 in that area will be widened to six lanes. In addition, 25 bridges on I-70 near Wheeling will also see improvements through a $170-180 million contract, and $200 million will support improvements to smaller, less traveled roadways. Both the Wheeling and Kanawha Valley projects will be under contract by summer. However, because the contractor will manage the design, construction will not begin until later.

Turnpike Bonds

The $500 million turnpike bonds will allow the DOT to use toll revenue from the West Virginia Turnpike to support projects in 10 Southern West Virginia counties: Fayette, Greenbrier, Kanawha, McDowell, Mercer, Monroe, Nicholas, Raleigh, Summers and Wyoming.

“These are the 10 counties most affected by the tolls on the turnpike for the last 50 years,” says Smith. “We think it is a very good gesture on the Legislature’s part, and we are happy to be a part of a project that puts money back into 10 counties that have been so affected over the years.”

The turnpike bonds will support smaller projects, including bridge replacements, roadway improvements and slide corrections. The first project, anticipated to begin this summer, will include route improvements such as adding truck climbing lanes, widening curves and fixing slides on Route 10 from Man to Kegley. The first installment of turnpike bonds will be sold this summer.

GARVEE Bonds

Another $500 million will come from federal GARVEE bonds. The revenue from these bonds will support interstate reconstruction, bridge replacements, slide repairs and freeway drainage. According to Smith, the state has only reconstructed about seven miles of interstate over the last 10 years due to lack of funds.

“With the GARVEE bonds, one of the things you will see is interstate reconstruction on 60 miles around the state in about 13 different projects,” he says. The 60 miles will include sections of I-77, I-64 between Huntington and Charleston, I-79 and I-81.

So far, the state has sold $220 million in GARVEE bonds. Because of the state’s credit rating, the DOT was able to leverage $260 million in revenue. A second installment of GARVEE bonds will be sold in early summer for $100-120 million.

Project Transparency

To select the more than 600 projects, the DOT followed a six-year plan, which was already in place prior to the new bonds, as well as other transportation planning characteristics and recommendations from West Virginia communities.

“We asked, ‘Where are the surfaces of our roadways most in need of repair? Where do we have deficient bridges that need to be repaired? Where do we have projects that will have the biggest bang for their buck from an economic recovery standpoint?’” says Smith. “Those are the types of things that led us to pick the number of projects we have county by county.”

The DOT typically receives about $450 million in federal funds and up to $300 million in state funds annually for routine maintenance and other projects. With those funds still intact, the department is working to repair equipment, buildings and other infrastructure that have been neglected. All of the projects, including construction schedules and contract information, will be documented on the DOT’s website at transportation.wv.gov.

“We are trying to operate with more transparency than we ever have,” says Smith. “As time goes by, we will be putting more and more information out. The public will be able to find out who the contractor is, what the contract amount is and what the project does for the roadway. We realize how important this is and how important it is for us to do it correctly.”

Job Creation

More than 48,000 jobs are expected to be created in West Virginia as a result of these investments. That number was determined by a formula used in a study by Duke University, which indicates 28,000 jobs are created for every $1 billion invested.

The types of jobs include direct jobs, which are jobs working on the actual projects, like construction; indirect jobs, which are related to the project’s implementation such as engineers designing the projects or factory workers in the steel fabrication plants that produce materials for the projects; and induced or trickle-down jobs, which reflect the changes in the economy such as equipment manufacturers and dealers, restaurants, hotels and entertainment.

“The increase in jobs is already occurring,” says Smith. “We have seen engineering firms add employees or offices to West Virginia, and construction companies are moving their crews back from other states because they realize a surge is coming.”

According to Mike Clowser, executive director of the Contractors Association of West Virginia, many Mountain State contractors have been bidding in neighboring states like Kentucky, Maryland, Ohio and Virginia and even as far as North Carolina because those states have seen increases in highway funding in recent years.

“A lot of people were having to go out of state to work because of the lack of opportunities here in West Virginia,” says Clowser. “Our road program was going downhill quickly. We didn’t have as many projects out for bid. The first people who are going back to work are those people who had to go to other states for opportunities. We have contractors who have already brought people back to West Virginia. We are hoping to bring a lot of West Virginians home to work on our roads.”

Several West Virginia companies are already hiring in preparation for these projects and have plans to add more jobs as the projects continue. SMH Construction, a bridge contractor in Bradley, WV, is adding jobs in base-level labor like carpentry, iron working, finishing and surveying and has also expanded its office personnel. “We’ve significantly added to our workforce in the last six months, and we will continue to do so this year,” says Shannon Hapuarachy, a construction engineer with SMH.

Martin Engineering in Hurricane, WV, has already hired eight new field technicians in preparation for the increased needs around the state. These employees will work in materials testing, concrete, blacktop and compaction. According to Paul Martin, the company’s president, the company plans to hire 20-30 more individuals in the next year and open satellite offices in Beckley, Bridgeport and Charleston.

Rodney Holbert, the principal engineer in charge for Burgess and Niple, Inc., has anticipated the positive economic impact the road bonds will have on the state’s economy for some time. Despite usually hiring just one engineer per year, which is generally due to attrition, the Parkersburg-based company has hired four engineers in the last six months and is in the process of hiring a fifth. It will also add two interns to its staff this summer.

“The workload is coming,” says Holbert. “We are getting great projects from the highways department. We are growing. I believe this is going to be our economic stimulus. It’s good for West Virginia. Lasting effects will come out of this.”