White House Stakeholder Briefing: Roads, Bridges, and Other Major Projects

March 3, 2022

 

Keith Benjamin, Associate Administrator for Highway Policy and External Affairs DOT

Programs have just passed the 100-day mark, and there is a lot that the administration has accomplished. A significant aspect of this is the formula programs directly to state DOT partners. The primary goal of the formula programs is to improve the condition and performance of highways and bridges in the highway system. Under the federal highway formula program, states can select what projects they want to fund through their planning process. In the first round of funding to states for FY2022, the administration dispersed nearly $28 billion in December 2021; the next set of payments will go out in October 2022. More Guidance is anticipated this spring to address any changes to the formula program eligibility under the new law.

Surface Transportation Block grants to enhance economic empowerment and remove barriers to opportunity. Therefore, the DOT encourages localities to request funding for unique projects that they would not have under the transportation alternatives program and block grants in the past. In the lifetime of the bill, DOT will distribute $72 billion in state block grants, including $7 billion for transportation alternatives.

The legislation has provided several new highway formula programs. First, starting with the carbon reduction program, which will provide formula grants to states to reduce transportation emissions by developing carbon reduction strategies. Over the five years of the bill, distribution to the states and the District of Columbia will total $6.4 billion, and carbon reduction funding and the first round of that, which is $1.2 billion, has yet to go out. The MOPAR protects the formula and protects discretionarily. Another program within the climate category, includes $7.3 billion in formula funding over the next five years distributed to states, plus $1.4 billion in competitive grants to help local agencies improve the resiliency of transportation infrastructure. States may use protect formula program funds to conduct resiliency planning, strengthen, protect, and serve precipitation infrastructure to the impacts of flooding, wildfires, extreme weather events, and other national natural disasters.

Over the next five years, the bridge formula program, which has $27 billion in funding to replace, preserve, protect, and construct bridges on our public roads. Federal Highways sent out the first round of this funding earlier in July, and the next round will be going out this fall. Included in this program is a very important requirement, especially for localities, that at least 50% of the formula funding be reserved for the use of off-system bridges, and federal funding may be used to cover up to 100% of the off-bridge costs. Bridges that are owned and maintained by cities, counties, and tribes that need repair, we highly recommend working with your state DOT to ensure your project is prioritized for that set-aside funding.

In addition to the formula program, there’s also the establishment of a new discretionary bridge program that supports projects to improve bridge and culvert conditions, safety efficiency, and reliability. Funding under that program can be used to replace, rehabilitate, preserve, and protect bridges with $12 billion over the next five years.

Work that we’re doing for tribal communities is continuing federal highways, transportation, tribal transportation program (TTP). The program funds projects for providing safe and adequate multimodal transportation and public road access to and within Indian reservations. Over the next five years, the bill will distribute approximately $3 billion in TTP funding. The bill also reserves from various new grants programs approximately 31 billion in funding for tribal projects. In the coming weeks, federal highway plans to issue some guidance on funding for tribal bridges. Over the coming months, federal highways will release their fiscal year 2022 funding and associated program guidance. In addition, there’s the availability of over $18 million to reestablish the seven Tribal Technical Assistance Program centers to make sure that technical assistance is at the forefront of building out some of these amazing projects. Finally, the bill establishes a new reconnecting communities pilot program, which will fund projects to restore community connectivity by removing retrofitting or mitigating highways or other transportation facilities that create barriers to community connectivity. The bill provides $1 billion over the next five years for the program. The department will award this funding on a competitive basis for both planning activities capital construction projects.

Paul Ballmer, Program Manager, Office of Secretary of Transportation

This program’s raise grant program has been around for several years under different names. The new infrastructure law has greatly expanded and strengthened the program and broadened it to make it more widely available in the coming years. The $8 billion is four or five years of the infrastructure law. But in this first year alone, the department is competing for $1.5 billion in competitive grant awards for the raise project program. The raise program focuses on important regional and local surface transportation projects. The maximum award amount for a raise grant is $25 million. So that one and a half billion dollars will end up touching a lot of different communities. Notice of funding opportunity for the raise grant program has already been published, and it is on the department’s website. That notice is also on grants.gov, which is the federal government’s repository of grant solicitations, and applications for the raise program are due on April 14. You intend to apply for the fiscal year 2022. There will be subsequent rounds of raids in future fiscal years until the full billion dollars is spent.

The second program on this list is the infrastructure grant program, previously known as the fast loan program several years ago. This program will also compete for around one and a half billion dollars this year. For the fiscal year 2022, the infrastructure grant program primarily focuses on highway and freight projects and mostly on larger scale projects. Projects that have more than $100 million in costs compete for most infrastructure grant project funding. Additionally, this year’s infrastructure can include wildlife crossing projects, and the amount of funding that can be used on ports and freight rail projects has been increased from previous years. This is a program that we have not yet published the Notice of Funding Opportunity.

The megaprojects program is new in the bipartisan infrastructure law. 50% of the funds are reserved for more than $500 million in costs. The other 50% of the funds are for projects between $100 and $500 million. The full $5 billion is the total for the full five years of the law. The megaprojects program also has a unique authority and allows the department to consider making multi-year awards, awarding anywhere from one to $5 billion depending on the projects.

The rural sophistication grant program is restricted to projects in rural areas; $ 300 million for the fiscal year 2022 will be awarded to projects located in rural areas. The eligibility for this program is focused primarily on the Federal Highway. Importantly, projects like rural transit are also eligible for on-demand transit systems, integrated mobility management systems, things of that nature only want this program.

Roger Bonner, Head Project Development Team, Build America Bureau

The Build America Bureau within the Office of the Secretary of Transportation provides long-term, low-interest loans for transportation projects across the entire sector. In addition to providing loans, the bureau actively assists prospective borrowers through the planning and loan application processes. Also, it provides technical assistance for borrowers to help educate them on innovative financing techniques, including public-private partnerships, as well as sharing best practices in project finance and project delivery.

There likely isn’t enough to fund every single project that’s needed in the infrastructure bill, and loans can help fill that gap. Many grant programs do not offer the fun 100% of the project’s costs. Most of them require a non-federal match. And because all loans are repaid with non-federal money, it can represent all or part of that non-federal match, requiring less upfront money on the part of the prospective project sponsor. Loans can really be used effectively to complement the grant programs in all transportation. In the build America bureau, about $100 billion is available to projects, and if you were to close the loan, the interest rate would have been a little bit under two and a quarter percent.

There are two primary lending programs: Tiffany a credit program, which provides loans across the surface transportation spectrum. The second program is RIF which focuses on freight and passenger rail. You can certainly support large projects, and it’s also available for some highway bridge projects, as well as freight rail projects, transit-oriented development, and other intermodal projects under the new Bipartisan Infrastructure Law, on the risk side. The bipartisan infrastructure law also extends eligibility for some transit-oriented development projects. It relaxes application requirements for certain borrowers, and both for RIF and Tiffany, allows DOT to lend to certain projects for up to 75 years for repayment schedules, as opposed to the original 35 years. I’ll also mention the authority to allocate tax-free or tax-exempt private activity bonds and the bipartisan infrastructure law giving an additional $15 billion in capacity for those allocations.

The law also provides for two new grant programs within the Build America Bureau. The first one is $12 million over the five years of the bill for rural and tribal project sponsors, which will help them with some of the early development planning activities such as revenue forecasting, early engineering, and environmental review. The second grant program is $100 million over the five years of the bill. Again, providing technical assistance for asset concessions and other p3 public, private partnership efforts and consultants to help project sponsors identify the best way to deliver a project to look at different p3 options, risk analysis, and so forth.

Q&A:

A question was asked about what requirements there for U.S. manufacturers are seeking funds. Benjamin responded that the Build America by America provisions expand domestic preferences’ coverage and federal financing system programs. That provision requires agencies to identify any federal financing system programs for infrastructure considered efficient under the law within 60 days of enactment, and as the Secretary reported to the Senate DPW committee yesterday, he sent a report to Congress into the Office of Management and Budget in January of this year. Build America by America also establishes the Made in America office at the Office of Management and Budget as required. Under that provision, VOC is working with that office to ensure that its financial assistance programs are properly aligned, and we do need to work expeditiously on that there are some statutory deadlines there, but I’ll pass it to Roger to fill. Bonner added that in the Build America Bureau, we oversee the project then adopt the regulatory requirements and the operating administration within DOT. That has responsibility in that area. For a highway or bridge or tunnel project, we would adopt the rules the Federal Highway Administration has in place for all relevant projects, and so on. So, as you described for highway projects, any of those loads that we did for that, that mode of transportation, would be the requirements apply.

Another question was asked if there will there be a specific program that targets local roadway needs for the local municipality can apply to aside from competitive grants. Bonner said that’s the most amazing part of legislation and the fact that there’s this expansion of eligible entities. But we also understand the challenge to myself having run a city agency, that all the support we could get we welcome, but there are several opportunities that we mentioned on today, but I think it will state in some additional ones. There’s a lot of discretionary dollars to take advantage of. You want to make sure that we do so but also that there are certain provisions within the formula dollars that allow localities to work with their state DOTs to make sure that they’re getting their infrastructure done as well. And I highlighted that earlier in my remarks, both the off system or just portion, eco-village as a stipulation that at least 50% of the bridge formula dollars have to go to off-system bridges again, off-system bridges are defined as a local city, county, on bridges and then the transportation alternatives program as well which is really can be used for all sorts of different like pedestrian projects like facilities, Asian trails, school community improvement, historic preservation, vegetation management, etc. Benjamin added that the bill authorizes the Disadvantaged Business Enterprise Program for federal aid highway in transit from funding consistent with previous Surface Transportation authorization laws. In fact, though, we’ve continued to meet the nationally expected aspiring number of spending at least 10% of eligible DOT funding on goods and services provided by DBS. For FY2020 alone, DOT operating administrations awarded more than $65 billion in federally assisted contracts, of which close to 12% went to DBAs. There are two related DVE directives in Bill, one that specifically is about establishing minimum uniform criteria for use by states in certifying firms and then the second directing us to take steps to ensure that recipients and their contractors comply with prompt payment requirements are even further than that. One of the big things in the name of technical assistance, especially with expanded abilities, is making sure that our localities are aware of the resources that exist both here in Washington but also with the state DOTs and our federal highway division offices to make sure that they’re well aware of the expectations around dB funding. So it’s something we take extremely seriously. And we know it is going to be something that these newly eligible entities will have to do so as well.

The last question was about what systems are in place to ensure that small group communities can access these programs. Ballmer said the discretionary grant opportunities are available to really communities, local governments, tribal governments of all shapes and sizes. With certain statutory requirements to follow in awarding these funds, we try to provide a lot of technical assistance on our website, and we put the notice out. We post webinars like this one, where we put our experts make them available to answer any questions that you might have about the criteria about the various requirements of the application, how to address them, how to frame your project, and then even after your application comes in, you know a lot of people labor under the misconception that you need a very expensive, shiny application to be competitive, and we really don’t think about it that way. The last thing I’ll add is that we also have a team in the Office of the Secretary. That’s called the routes team, which is focused on rural communities specifically, and making sure that, you know, for all of our grant programs, they can act as a one-stop-shop to help direct those communities to the right program and give them technical assistance and provide the answers to their questions they might have. The administration has  program set up to ensure rural programs can compete fairly, but also have that technical assistance shop with the routes office, focusing on ensuring that rural community interests are addressed in our progress. Bonner stated that for the Build America Bureau, they work very closely with the routes program folks. All of the available resources of the department, including the Build America Bureau, are made available to rural and tribal sponsors, certainly those in rural areas. A couple of years ago, we put in place what we call the rural project’s initiative, which allows us under a credit program, certificate program to provide every resource available by law. So, instead of lending to 1/3 of a project’s eligible costs for rural borrowers. We lend to roughly half of the project’s cost for rural projects initiative, which is as much as allowed by law. Still, we are also able to cover the fees associated with getting a loan, so the applicant doesn’t have to come out with or come up with those out-of-pocket costs. Because the most attractive part of it is that we can charge half of the interest rate that we do for the loans, if you close a loan with us this week, it would have been roughly just a little bit over 1% interest. The world consciousness initiative is by far our most popular within the euro. We also have what we call the regional infrastructure accelerator grant program. We just announced the first slide recipients a couple of months ago, and we’ve got a Notice of Funding Opportunity out for the second round of that.