$60B Released for Infrastructure Law Funding
On Tuesday (Oct. 11), the Federal Highway Administration announced that it has released nearly $60 billion in funding for 12 formula programs under the bipartisan infrastructure law.
The funding for fiscal year 2023 will go directly towards all 50 states, the District of Columbia and Puerto Rico to support investment in critical infrastructure, including roads, bridges and tunnels, carbon emission reduction and safety improvements.
“America’s roads and bridges are the vital arteries of our transportation system, connecting people and goods across the country,” said U.S. Transportation Secretary Pete Buttigieg. “Because of President Biden’s Bipartisan Infrastructure Law, today we are sending historic levels of funding to every state to help modernize the roads and bridges Americans rely on every day.”
According to the release from the FHWA, the $59.9 billion in funding is the second year of funding under the bipartisan infrastructure law, representing an increase of $15.4 billion in formula programs compared to fiscal year 2021.
“These historic investments in American infrastructure give States the flexibility they need to determine how to allocate funds in order to replace deficient bridges, improve safety for all road users, and reduce carbon emissions by improving transportation infrastructure for communities throughout each state,” said Acting Federal Highway Administrator Stephanie Pollack.
“This funding we are announcing today will allow States to continue the important work of President Biden’s Bipartisan Infrastructure Law that will make our infrastructure safer and more efficient for the tens of millions of American families that count on it to get to school, work, and critical medical care every day.”
While several programs receiving funding are new, including the Carbon Reduction Program and PROTECT program, other programs have received a significant increase in funding under the bipartisan infrastructure law. The Bridge Formula Program, for example, has seen a 391% increase for this year over fiscal year 2021.
The FHWA reports that in the last year alone, thanks to the bipartisan infrastructure law, funding has been used through various programs to support repairs on over 2,400 bridges and over $200 million in projects in 21 states.
Additionally, funding has supported improvements on over 5,300 projects through the Highway Safety Improvement Program, as well as more than 6,000 projects through the National Highway Performance Program.
The allocation of funding by state and program can be viewed here.
Infrastructure Law Programs
At the beginning of the year, President Joe Biden announced a new program launched by the U.S. Department of Transportation targeting the replacement and repair of the nation’s bridges as part of the bipartisan infrastructure law.
The Bridge Replacement, Rehabilitation, Preservation, Protection, and Construction Program (Bridge Formula Program) will be administered by the Federal Highway Administration and represents the largest bridge investment since the construction of the interstate highway system.
USDOT expects for the Bridge Formula Program to help repair approximately 15,000 highway bridges, as well as dedicate funding for Tribal transportation facility bridges and “off-system” bridges, or locally-owned facilities not on the federal-aid highway system.
As an incentive for off-system bridges owned by a county, city, town or other local agency, the new guidance notes that federal funds can be used for 100% of the cost of repairing or rehabilitating the structures. Typically, states must match federal funding with up to 20% state or local funding.
Funds are being allocated to states based on need, with states responsible for deciding what bridge projects get funded. According to reports, the administration is encouraging states to use funds to repair existing bridges when possible, but if choose to build new bridges should prioritize equity and address barriers to opportunity and challenges experienced by underserved communities.
A full map of bridges in poor condition and funding provided by state can be found here.
Then, in April, the FHWA announced the $6.4 billion Carbon Reduction Program, created under the bipartisan infrastructure law. The formula funding will help states develop carbon reduction strategies and address the climate crisis, as well as expand transportation options to save money on gas.
The CRP will reportedly apply to a wide range of projects designed to reduce carbon dioxide emissions from on-road highway sources, including installing infrastructure to support the electrification of freight vehicles or personal cars, to construction bus corridors or facilitating micro-mobility and biking.
According to the FHWA’s press release, under the CRP, states must also develop carbon reduction strategies in consultation with Metropolitan Planning Organizations to identify projects and strategies tailored to reduce carbon dioxide emissions in their states. However, localities can begin using these funds even before plans are developed and reviewed.
Funding was announced by state in the Fiscal Year 2022 Federal-aid Highway Program apportionments, determined by a formula set by Congress. $52.5 billion will go to states for this fiscal year, with $6.4 billion in total being distributed over five years.
More recently, in August, the FHWA announced a first-of-its-kind infrastructure program to help states prepare for and respond to extreme weather events. The new $7.3 billion Promoting Resilient Operations for Transformative, Efficient, and Cost-Saving Transportation (PROTECT) Formula Program funding is available through Biden’s bipartisan infrastructure law.
The PROTECT program offers the funding to states over five years to make transportation infrastructure more resilient to future weather events and other natural disasters, such as wildfires, flooding and extreme heat. The focus will be on resilience planning, making resilience improvements to existing transportation assets and evacuation routes, and addressing at-risk highway infrastructure.
According to the FHWA, in general, eligible projects include highway and transit projects, bicycle and pedestrian facilities, and port facilities including those that help improve evacuations or disaster relief. States are encouraged to work with regional and local partner organizations to prioritize transportation, emergency response improvements and address vulnerabilities.
Eligible improvements can involve adapting existing transportation infrastructure or new construction to keep communities safe by bolstering infrastructure’s ability to withstand extreme weather events and other physical hazards. Additionally, projects may include the use of natural or green infrastructure to buffer future storm surges and provide flood protection, as well as aquatic ecosystem restoration.
The FHWA reports that PROTECT builds on other USDOT actions to support the Biden Administration’s approach to reducing greenhouse gas pollution by 2030. These actions include a proposed rule for states and municipalities to track and reduce greenhouse gas emissions; the Carbon Reduction Program, which will provide $6.4 billion in formula funding to states and local governments to develop carbon reduction strategies; and the National Electric Vehicle Infrastructure (NEVI) Formula Program, which will provide $5 billion to states to build out a national electric vehicle charging network.
A breakdown of estimated funding for the program over five years by state can be found here.
Recent Finance Program
Earlier this month, Secretary Buttigieg announced that the USDOT will now offer low-cost, flexible financing for nearly half of transit project costs.
The expanded financing program will be offered as part of the Transportation Infrastructure Finance and Innovation Act (TIFIA) program through the Build America Bureau. TIFIA 49 authorizes borrowing up to 49% of eligible project costs for projects that meet certain eligibility requirements.
According to the USDOT release, the Department hopes that this initiative will help get more projects off the ground. Previously, TIFIA loans have been historically capped at 33% of eligible project costs.
Sponsors of projects may be deemed eligible to applied for the TIFIA 49 initiative in the transit category If they include the following activities:
In the Transit Oriented Development (TOD) category, projects must fall under:
Until now, the DOT reports, the only eligible projects eligible for up to 49% financing included rural projects, as well as INFRA, Mega and Rural Grant “Extra” projects. The Bureau also plans to provide technical assistance for project sponsors, as well as expand outreach and technical assistance capabilities to assist project sponsors to take full advantage of this initiative.
According to the project’s fact sheet, projects must be at least $10 million in size and must comply with applicable federal regulations and policies associated with federal funding programs. TIFIA reportedly has favorable terms such as low interest rates, interest does not accrue until proceeds are draw and flexible amortization.
Additionally, borrowers have up to a 35-year repayment period, with the bipartisan infrastructure law allowing up to 75 years for some projects. This is deferrable for five years after substantial project completion and no pre-payment penalty.