How the $1.2T Infrastructure Bill Impacts Economic Development
Updated: Dec 8, 2021
The Infrastructure Investment and Jobs Act (IIJA) has become law. President Biden has tapped former New Orleans Mayor Mitch Landrieu (D) as a senior White House adviser to coordinate the implementation of the bill, which cuts across several government agencies.
The roughly $1.2 trillion, $550 billion of which is new money, will direct most of its investment, nearly 52%, toward modernizing and making improvements to transportation infrastructure. Urban Land Institute data that indicates that the quality of infrastructure—particularly roads, bridges, and public transit—is a key driver of real estate development decisions.
To access this historic spending the IIJA contains formulaic allocations of funds as well as discretionary and competitive grants. Some categories and sub-categories contain both non-competitive and competitive grants. New programs will require the publication of new guidelines and rules. Funding Mechanisms
Non-competitive funding allocation processes
Formulas dictated by the bill are based on criteria like state population, or, potentially for specific items, users (ex: transit funds potentially determined by ridership).
Once the money is directed to the states, local officials are able to make the important decisions about which projects deserve the funding.
States can also decide to allocate some of the funding to county or city governments within their state.
Discretionary and competitive grant processes
Discretionary grants are made at the direction of the department or agency head and in some cases can override state plans for how infrastructure funds should be spent.
Localities must compete for competitive grants via an application process. The U.S. Department of Transportation’s discretionary grant process is officially outlined on its website.
Next Generation Strategies Public Affairs Group is closely following the recently passed Infrastructure Investment and Jobs Act (IIJA). To discuss your organization’s needs, contact us. A summary of the policy changes and spending plan that could encourage economic development is provided below.
Congestion Mitigation and Air Quality Improvement Program: $13.2 billion: Adds eligibility for Congestion Mitigation and Air Quality Improvement Program (CMAQ) funds to be used on shared micro-mobility, including bike share and shared scooter systems, as well as for the purchase of medium- or heavy-duty zero emission vehicles and related charging equipment
Reducing Carbon Emissions from Transportation: The bill establishes a new Carbon Reduction Program that will distribute approximately $6.4 billion over five years to states by formula to invest in projects that support a reduction in transportation emissions. Eligible projects include transportation electrification and EV charging, public transportation, including Bus Rapid Transit, infrastructure for bicycling and walking, intelligent transportation systems (ITS) improvements, infrastructure to support congestion pricing, diesel engine retrofits, and port electrification. Of that funding, 65 percent would be sub allocated by population to support eligible projects in local communities. Also, states would be required to develop emission carbon reduction strategies.
Electric Vehicle Charging: The bill authorizes $2.5 billion from the Highway Trust Fund over five years for a new competitive grant program to build out alternative fuel corridors along the National Highway System and electric vehicle charging infrastructure and alternative fueling infrastructure in communities across the country. The bill also appropriates $5 billion in Division H for a new Electric Vehicle Formula Program to provide money for States to build electric vehicle charging infrastructure. The highway reauthorization title makes electric vehicle charging eligible for funding through the existing Surface Transportation Block Grant Program (STBGP) and allows for the purchase of zero-emission vehicles in the Congestion Mitigation and Air Quality Improvement Program.
Transportation Infrastructure Finance and Innovation Act of 1998: The bill includes $1.25 billion adds eligibility for public infrastructure located near transportation facilities to promote transit-oriented development (TOD) as well as adds new criteria to the streamlined application process for public agency borrowers to increase the likelihood that the U.S. Department of Transportation (DOT) Secretary will be able to move more projects through the process expeditiously.
Reconnecting Communities Pilot Program: The bill provides $1 billion over five years for a new pilot program that provides competitive grants for planning and projects to remove, retrofit, or mitigate existing highways that were built through neighborhoods and created a barrier to mobility and economic development. As communities across the nation are beginning to reimagine their downtowns to provide more sustainable and equitable access, this new program will support their efforts to reconnect and revitalize those areas. The funding includes $500 million from the Highway Trust Fund and an additional $500 million appropriated for this program in Division H.
Healthy Streets Program: The bill authorizes $500 million for a new Healthy Streets Program for eligible projects, including projects that mitigate urban heat islands, improve air quality, and reduce stormwater runoff. Grants would be prioritized for low-income communities and disadvantaged communities.
Congestion Relief Program: Establishes a $250 million congestion relief program to provide competitive grants to states, local governments and metropolitan planning organizations (MPO) for projects in large urbanized areas (more than 1 million people) to advance innovative, integrated and multimodal solutions to congestion relief in the most congested metropolitan areas of the United States. Grant awards shall be not less than $10 million. When selecting grants, the DOT Secretary shall give priority to eligible projects located in urbanized areas that are experiencing high degrees of recurrent congestion. The federal cost-share shall not exceed 80 percent of the total cost of a
Stopping Threats on Pedestrians: Establishes a $25 million grant program to provide assistance to state departments of transportation and local government entities for bollard installation projects designed to prevent pedestrian injuries and acts of terrorism in areas used by large numbers of pedestrians.
Transportation Alternatives: The bill increases funding for the Transportation Alternatives Program (TAP), which funds bicycle and pedestrian projects among other projects, through a 10 percent set-aside of the STBGP. It also includes various changes that direct more funding to local communities.
Safe Routes to School: The bill codifies the existing Safe Routes to School Program, which encourages children to safely walk or bike to school. It also expands the program to include activities for high school aged students.
Complete Streets: The bill helps address communities’ access to safe bicycling and walking options by providing dedicated funding for the development of Complete Streets standards and planning by states and metropolitan planning organizations.
Electric Vehicle Charging Stations: The highway reauthorization title makes electric vehicle charging eligible for funding through the existing Surface Transportation Block Grant Program (STBGP) and allows for the purchase of zero-emission vehicles in the Congestion Mitigation and Air Quality Improvement Program.