Octa's transportation blog

Market Conditions Report Will Help Shape Measure M Plan

To ensure that OCTA can continue delivering the improvement projects promised in the Measure M  transportation sales tax program, OCTA commissioned a Market Conditions Forecast and Risk Analysis. The information will help shape the Measure M Next 10 Plan Delivery Plan, which is accelerating freeway, road, transit and environmental projects through 2026.

The Market Conditions Forecast and Risk Analysis is needed to gain additional insight due to lower than expected sales tax revenues and increased competition for available resources due to capital work in the Southern California Region. The report was developed by the Orange County Business Council and delivered to OCTA in September.

The analysis identified seven risk factors. Four are expected to be influential: neighboring county transportation construction programs, such as those in Los Angeles, Riverside, and San Bernardino, construction wage pressures, sustained low statewide unemployment, and increases in residential construction.

Construction wage growth in Los Angeles, Orange, Riverside, and San Bernardino counties has accelerated since 2014, which reflects labor demand pressures and indicates stronger wage growth. The analysis notes that if the private sector economy continues to grow, pressure on construction wages and public sector construction costs will likely increase.

Sustained low unemployment suggests slack in the economy, which may exert more cost pressure for OCTA's capital projects.

Increases in residential construction, despite the state's economy and building activity at low levels, may increase demand for construction labor and materials.

The analysis suggests that OCTA further accelerate the Next 10 Plan due to the potential increases in project costs. An updated Next 10 plan that incorporates this information will be prepared and delivered to the Board. To learn more about the Next 10 Plan, visit here.