November/December 2021 Issue

Also in this issue: New Law Governs Police Officer Hiring and Record Retention     |     Anita Gallucci Wins Distinguished "Friend of Public Power Award"     |     Milwaukee Wins Tax Exemption Challenge When Plaintiff Files Claim Too Soon

Financing Opportunities for Local Governments under the Infrastructure Investment and Jobs Act

Eric B. Hagen | 12.08.21

On November 15, 2021, the Infrastructure Investment and Jobs Act (IIJA) became law. This is the single largest hard infrastructure investment in American history at roughly $1.2 trillion, which includes $550 billion in new investments for transportation, natural resources, power and energy, environmental remediation, broadband, cybersecurity and resilience. 

With the IIJA’s enactment, the focus now shifts to its implementation. Federal agencies like the Department of Transportation, Department of Energy, and the Environmental Protection Agency will be responsible for implementing the law and will need to administer the billions of dollars in grants provided by the IIJA. Local governments should begin planning now for the financing opportunities afforded by the IIJA. 

Local governments can access IIJA funds in three general ways: (1) meeting certain eligibility criteria for formula funds; (2) receiving suballocations from state governments; and/​or (3) applying for competitive grant opportunities. 

Below is a summary of notable financing opportunities for local governments under the IIJA:

Transportation:

• New $5.0 billion Safe Streets and Roads for All program to directly support local initiatives to prevent death and serious injury on roads and streets (commonly referred to as ​“Vision Zero” or ​“Toward Zero Deaths”). 
• New $7.3 billion PROTECT program to be administered by U.S. DOT. Competitive planning grants will be available for communities to assess vulnerabilities to current and future weather events, natural disasters, and changing conditions; and to plan transportation improvements and emergency response strategies to address those vulnerabilities. Competitive resilience improvement grants will also be available for communities to carry out resilience improvements and strategies. 
• New $15.8 billion Bridge Investment Program to improve the safety, efficiency, and reliability of both large bridges in poor condition as well as bridges that are in rural and tribal areas. 
• New $500 million Strengthening Mobility and Revolutionizing Transportation (SMART) Grant Program for projects demonstrating transportation technology integrations, building on the success of smart cities and prior challenges. 
• New $2.5 billion Charging and Fueling Infrastructure Grant to strategically deploy publicly accessible infrastructure for electric vehicle charging, hydrogen fueling, propane fueling, and natural gas fueling infrastructure along designated alternative fuel corridors or in certain other locations. Priority will be given to rural areas in low and moderate income neighborhoods and communities with a low ratio of private parking spaces to households or a high ratio of multiunit dwellings to single family homes. Local governments are authorized to provide a portion of these funds to a private entity for operating assistance. 
• New $500 million Reconnecting Communities pilot program to support planning and construction to remove barriers to community connectivity and rectify harms caused by past transportation investments. 
• $2.0 billion Rural Surface Transportation Grant Program available to local governments to improve and expand the surface transportation infrastructure in rural areas.
• New $3 billion Railroad Crossing Elimination Program to fix rail and road crossing congestion in communities. 
• Appropriates $21.25 billion for Federal Transit Funding, including the reauthorization of $15 billion for the Fixed Guideway Capital Investment Grant program, a new $1.75 billion All Stations Accessibility Program, and $250 million for the Enhanced Mobility for Seniors and Individuals with Disabilities program. 
• $25 billion for Airport Infrastructure Grants, the Airport Terminal Program, and the Federal Aviation Administration (FAA) Facilities and Equipment program. 
• New $10.0 billion National Infrastructure Project Assistance program for projects generating national or regional economic, mobility, or safety benefits for large and smaller scale projects. 
• Additional $7.5 billion for the Local and Regional Project Assistance program (the RAISE/BUILD program) for surface transportation projects that will have significant local or regional impacts. 

Natural Resources:

• $11.713 billion each for the Clean Water and Drinking Water State Revolving Funds (SRFs) over five years (49% as principal forgiveness/​grants, 51% as loans).
• $15 billion over five years for lead pipe replacement through the Drinking Water SRF (49% as principal forgiveness/​grants, 51% as loans). 
• $10 billion in grants over five years to address emerging contaminants and PFAS drinking water contamination ($1 billion through the Clean Water SRF; $4 billion through the Drinking Water SRF; $5 billion for underserved communities). 
• $500 million for the STORM Act to provide support through loans and grants to local communities facing rising water levels, coastal erosion and flooding. 
• $3.5 billion for the FEMA Flood Mitigation Assistance program, which helps provide financial and technical assistance to states and communities to reduce the risk of flood damage to homes and businesses through buyouts, elevation, and other activities. 
• $1 billion for the FEMA Building Resilient Infrastructure and Communities (BRIC) Program, a pre-disaster mitigation program supporting states, local communities, tribes and territories undertaking hazard mitigation projects to reduce the risks they face from disasters and natural hazards. 
• Energy, Energy Efficiency, and Building Infrastructure:
• $550 million for the Energy Efficiency and Conservation Block Grant to fund activities to reduce fossil fuel emissions in a manner that is environmentally sustainable and to maximize benefits for local and regional communities. 
• $225 million for grants to implement updated building energy codes. 
• $50 million for Battery and Critical Mineral Recycling grants to establish or enhance programs for battery collection, recycling, and preprocessing. 

Environmental:

• $1.5 billion over five years for the EPA Brownfields program to help communities, States, Tribes and others to assess, safely clean up and sustainably reuse contaminated properties. 
• $3.5 billion available for 5 years for the Hazardous Substance Superfund program to allow EPA to invest in clean-ups and continue moving forward on remedial actions for Superfund sites. 
• $75 million for grants to states and local governments focused on improving material recycling, recovery, management, and reduction. The new EPA program would help educate households and consumers about residential and community recycling to decrease contamination in the recycling stream. 

Broadband:

• $42.45 billion for the Broadband Equity, Access and Deployment Program. This program will provide formula grants to state governments to award subgrants for broadband planning, mapping, deployment, and adoption programs, prioritizing unserved areas, underserved areas, and anchor institutions. 
• $1 billion for Broadband Middle-Mile Grants for construction, improvement, or acquisition of middle mile broadband infrastructure. 
• $1.25 billion for the Digital Equity Competitive Grant Program to support promotion of digital equity and inclusion, generally to address affordable broadband access and connecting devices, digital literacy, privacy, online availability of public resources and public services, and digital participation in economic, social, healthcare, and civic opportunities. 

Private Activity Bonds:

• Local governments can now issue tax-exempt bonds to finance rural broadband projects. This will drive down the cost of deploying the technology in rural areas, as it allows for cheaper financing of new broadband to be installed in rural areas. 
• Local governments can now issue private activity bonds to finance the purchase and installation of carbon capture, utilization, and storage equipment, as well as direct air capture (DAC) projects. Carbon capture removes carbon dioxide from an emissions stream at a power plant or industrial facility reducing emissions from energy-intensive industries. DAC is an innovative emerging technology that removes carbon dioxide directly from the atmosphere. These technologies allow us to reduce emissions and protect the environment while continuing to use our natural resources, but first-generation facilities can cost upwards of $1 billion. 

Cybersecurity:

• $1 billion over 4 years for the State and Local Cybersecurity Grant Program that provides for states and localities to develop and implement cybersecurity plans and address imminent cybersecurity threats. This program will provide formula grants to state governments, of which states are required to subgrant 80% to local governments and 25% of funding must be provided to rural areas.

• $250 million Rural and Municipal Utility Advanced Cybersecurity Grant and Technical Assistance Program for municipal utilities and other entities to deploy advanced cybersecurity technologies to improve their security practices. Grants will be awarded on a competitive basis, with priority given to entities that have limited cybersecurity resource, have assets critical to the reliability of an interconnected transmission network for electricity, or own facilities critical to national defense. 

The deployment of IIJA funds and execution of new programs will be a massive effort that plays out over the coming months and even years. Local governments as the owners and operators of a substantial amount of infrastructure will have the job of designing, approving, and executing the projects funded by the IIJA. Local governments should start planning for these projects now to take advantage of all the opportunities afforded by the IIJA.