February 3, 2023
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Financial Briefs: Caltrans gets $171M to widen Hwy 46 in SLO

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The California Transportation Commission approved Caltrans’ allocation request for $171 million to reconfigure the Highway 46 East/State Route 41 “Wye” interchange from west of Davis Road to west of Antelope Road in San Luis Obispo County. The project will convert roughly 4-miles of the 2-lane conventional highway into a 4-lane expressway.                                                                                                                       

“We are pleased to have received this funding allocation to continue these safety improvements in this important east-west corridor,” Caltrans District 5 Director Tim Gubbins said in a statement. 

This upcoming project follows the current widening of a five-mile segment of Highway 46 East from near the Shandon Rest Area to east of the Jack Ranch Café. Four additional phases were completed over the past decade from Paso Robles leading to the Hwy. 46/41 intersection.                                                        

“The San Luis Obispo Council of Governments applauds District Director Tim Gubbins’ leadership to secure the funding needed so the planned grade-separated interchange at the Highway 46 and 41 Junction can proceed on schedule. This improvement will serve so many Californians traveling to and from the coast,” SLOCOG Executive Director Peter Rodgers also said in the statement.                                                            

They said the project is scheduled to begin in March of 2023 and is expected to take about three years to complete. There will be one final segment that will span a roughly 3.5-mile stretch of Hwy. 46 East along the Antelope Grade in San Luis Obispo County to roughly one-half mile within Kern County limits. At the completion of these corridor projects, Highway 46 East will become a 4-lane divided expressway from US 101 in Paso Robles to I-5 in Lost Hills in Kern County.                           

New opioid settlement

California could receive more than $500 million to fight the harms caused by the opioid epidemic as part of a $5.7 billion multistate settlement agreement in principle with the retail pharmacy chain Walgreens to address its role in fueling the opioid epidemic, California Attorney General Rob Bonta’s office announced in a Dec. 12 statement. The settlement will resolve allegations that the company failed to appropriately oversee the dispensing of opioids at its pharmacies, it said. Last month, the AG’s announced California will be eligible to receive up to about $510 million of a proposed $3.1 billion settlement with Walmart to resolve similar claims.

The funds will be divided among participating states, local governments, and tribes, Bonta’s office said. The vast majority of settlement funds must be used to combat the opioid crisis, including by providing treatment and recovery services to people struggling with opioid use disorder, it said. 

AG’s try to block $4B
Albertsons’s payment

California Attorney General Rob Bonta and the attorneys general of the District of Columbia and Illinois have filed a motion for a preliminary injunction to block Albertsons’s planned $4 billion payment of a special dividend to shareholders. This follow their lawsuit in November against Albertsons amid concerns that the payment would hinder the company’s ability to compete with Kroger while regulatory review of the proposed merger between the companies is ongoing. Albertsons and Kroger collectively own nearly 800 stores in California, employing 48,000 workers. Bonta has said he’s concerned that the merger and proposed divide could lead higher prices for consumers, suppressed wages for workers or other anti-competitive effects. 

New CPUC investments review rules 

The California Public Utilities Commission (CPUC) has adopted a new framework to comprehensively review utility natural gas infrastructure investments to help the state transition away from natural gas-fueled technologies and avoid stranded assets in the gas system. 

The decision requires utilities to seek CPUC approval of natural gas infrastructure projects of $75 million or more or those with significant air quality impacts. This will capture natural gas projects likely to have the most substantial community and environmental impacts. Utility applications must demonstrate the need for the project and provide information on projected financial impacts on customers and a summary of engagement with local communities likely to be impacted. The applications would also trigger a California Environmental Quality Act review by the CPUC.

Home builders to slow construction

While many home builders have said they are going to slow down construction, at least until they build up some standing inventory for the spring selling season, a few very large builders have publicly said they are going to keep building and selling homes at a fast rate by dropping price, according to research from John Burns Real Estate Consulting.

The builders who keep building will get the best labor and materials at the best terms, the firm said. At the same time, builders who stop buying land and keep selling homes will generate the most cash. Some who don’t need it to repay debt will use it to buy back their own stock trading below book value, Burns predicted. 

And market pressures will force rents down in some places. Burns expects a 40-year high of multifamily construction to be completed and offered for rent in 2023, encouraging tenants to trade up to nicer apartments for the same rent they are paying today.