The Infrastructure Investment & Jobs Act: A Guide for Local Leaders
Below is the Nowak Metro Finance Lab Newsletter shared biweekly by Bruce Katz.
Sign up to receive these updates.
We were recently at a gathering where someone triumphantly pronounced that “Infrastructure Week has finally ended!” With President Biden’s signature on the bipartisan Infrastructure Investment and Jobs Act that indeed may be the case, but we are left wondering: what happens in the weeks that follow?
On November 15, 2021, President Biden signed the historic $1 trillion Infrastructure Investment and Jobs Act (IIJA) into law. The IIJA supports $1.2 trillion in programming, including $550 billion in new spending. The topline figures are bold, and the investments made by the act are potentially transformational — jump starting an overdue modernization of the roads, wires, pipes and transmission lines undergirding the American economy. However, the degree to which the IIJA’s potential is achieved will rest upon the actions of local leaders, and how effectively cities and communities capitalize on the funds.
Passage of this bill is just the first, and in many ways the easiest, part of delivering this infrastructure agenda. Starting today, local leaders must prioritize projects, marshal public and private funds, and make clear the principles that guide their efforts.
The distribution of the American Rescue Plan (ARPA) required local governments to organize and prepare for federal dollars. Many cities did this by establishing command centers to coordinate local action in response to pandemic aid. Implementing the IIJA must build on these partnerships across sectors and jurisdictions to move from COVID-19 relief to an economy-wide recovery and modernization.
In April, the Nowak Metro Finance Lab released a local guide to ARPA. Today, in partnership with Accelerator for America and the U.S. Conference of Mayors, the Nowak Lab is releasing a guide to the Infrastructure Investment and Jobs Act to support local action that is ambitious enough to meet the scale of the IIJA. Infrastructure Investment & Jobs Act: A Federal Investment Guide for Local Leaders | Nowak Metro Finance Lab | Drexel University
It is our hope that this guide can bolster the efforts of local leaders to organize the public, private and civic actors in their jurisdiction to focus on big picture investments. We identify over 30 of the most transformative and highest impact federal programs and funding streams in the IIJA, totaling $352 billion. We focus on what cities and local leaders should know, including what the programs do, when cities can apply for or access the funds, and the agencies, authorities, and offices responsible for administering them. We also identify whether programs are new or existing, and how they are distributed, delivered by formula or through competitive grants. The speed of funding availability will differ depending on those distinctions, with existing formula funds flowing most quickly and new competitive programs moving more slowly. Overall, cities can plan strategically knowing most programs are funded in five increments over five years.
Emblematic projects like New York’s Penn Station or California’s high speed rail line underscore why the capital stack and governance of projects matters as much as the aspirations of the project itself. Cost overruns and delays can quash public enthusiasm for much-needed investments.
In many cases, the most important role that mayors can play is being a convener — putting the right people (the local parties responsible for receiving funds or applying for them) in a room together to accomplish bigger, bolder, things.
In our view, IIJA funds will be most transformative when used as a supplement to strategic local and regional projects that seek to advance economic competitiveness and improve equity — and not when treated as many individual pots of money to be separately competed over and managed in silos. To situate local leaders, we identify six strategies to ensure transformative outcomes.
Strategy 1: Think About IIJA Funds in Terms of Recipients and Applicants
The IIJA’s programs are distributed across federal agencies, recipients are dispersed across sectors and levels of government, and its programs will achieve the most impact when combined. Local leaders must quickly separate the signal from the noise and organize fund recipients and applicants around local strategic priorities. To this end, leaders must understand who applies for and receives federal funding, when funding will flow, and work to streamline interaction with the many federal agencies and offices administering the funds. The IIJA will be distributed through at-least six cabinet-level agencies and specific offices within these agencies. A transformative project may interact with many of these differing agencies and their funding sources.
Strategy 2: Approach IIJA Funds as One (of Many) Sources to Finance Projects
Major projects will be successful if they creatively use different streams of public funding to draw private financing into projects. The influx of public money the IIJA provides makes it possible to achieve more ambitious projects than before, but many projects will fall short of their potential if they rely on public money alone. Private funding, a capable project sponsor, and the creative use of innovative finance mechanisms will be key to make transformative projects work. The IIJA created and expanded three mechanisms for federal low-interest debt financing, including Transportation Infrastructure Finance and Innovation Act (TIFIA), Carbon Dioxide Transportation Infrastructure Finance and Innovation Act (CIFIA), and Water Infrastructure Finance and Innovation Act (WIFIA). Mayors would be wise to direct project sponsors to these financing sources.
Strategy 3: Build Economic Opportunity Through Deployment
The full impact of infrastructure projects can be more than the project itself if project leaders focus intentionally on hiring a diverse workforce and selecting Black and brown prime- and sub-contractors to do the design, build, and maintenance of projects. Most of the IIJA spending will manifest itself in communities through local or state issued construction contracts. The IIJA specifically calls for 10% of all DOT spending on surface transportation and transit programs to be spent on disadvantaged business enterprises (DBEs). Mayors and local leaders must champion and encourage local transit agencies, airports, ports, state DOTs and other key issuers of transportation contracts to pursue reforms that encourage supplier diversity. They must also coordinate workforce training programs and encourage local hire provisions that ensure the affordable training necessary to access new, quality jobs are available to local residents, both as a mechanism to create opportunity and prevent labor shortages.
Strategy 4: Geographically Align Spending to Support Place-Making
The projects that will receive the most funding — and those most worthy of building — will be those which use the additive effects of place. The IIJA makes a set of investments that are explicitly focused on types of places (ports, waterfronts, post-industrial brownfields, and energy demonstration sites, among others). and many that are focused on the issues these places face (e.g., smart cities, safe streets, broadband and energy transmission). A skillful and transformative local implementation of IIJA will require blending the place- and non-place focused investments to create transformations within a specific geography.
Strategy 5: Use the IIJA to Address the Climate Crisis & Build Resiliency
The IIJA represents the largest amount ever spent by the federal government to prepare the country for the economic and environmental impact of climate change. The funds are intended to help communities prepare for and mitigate damage from extreme fires, flooding, storms, heat, and droughts that are projected to become more common as the planet warms and sea levels rise. The bill also invests in low-or-no emission transportation, including bike and pedestrian mobility, and electric and alternative fuel cars, buses, trucks and ferries and the charging and power infrastructure to support them.
Strategy 6: Position Your City as a Clean Energy & Tech Innovation Hub
The IIJA presents opportunities for states, utilities, local governments, universities, labs, and public sector actors to benefit from over $21.5 billion dedicated to research and development and new energy demonstration projects through the Department of Energy. The bill includes funds for carbon management, clean hydrogen, renewable energy, critical minerals, energy storage, energy efficiency, and electric grid reliability projects. Many of these programs involve the competitive selection of demonstration projects and the establishment of new research hubs and centers of excellence, which local and regional actors must position themselves to host. The bill also supports investments in new transportation technology and dedicates nearly $2 billion for cybersecurity initiatives, nearly half of which will be awarded to states and cities.
The enactment of the Infrastructure Investment and Jobs Act is a milestone of legislative achievement. Now comes the hard part. Communities across the country will meet the aspirations of the bill (i.e., to use infrastructure spending as the vehicle towards building an economy that is innovative, inclusive and resilient) only if they organize in new and different ways. The days of legislative design are over; the days of delivery have just begun.