The CARES Act and Other New Opportunities for Public-Infrastructure Improvements

P3 Focus Blog
April 3, 2020

To be sure, the Coronavirus Aid, Relief, and Economic Security (CARES) Act is not focused on funding infrastructure. Although infrastructure spending has been part of the stimulus discussion since its inception, the CARES Act primarily focuses on other forms of economic resuscitation, and a separate, infrastructure-heavy bill is now winding its way through the legislative process. Whether Congress will pass such a bill, and what it will include, is still very much up in the air. We will provide our analysis of the proposed infrastructure bill once it starts to gel, but in the meantime, it is worth highlighting the new infrastructure opportunities that exist today, as a result of both the CARES Act and the effects of the pandemic.

First, the CARES Act does include funding for new and existing public infrastructure. Although some of the Act’s infrastructure-related funding, such as $25 billion in new transit infrastructure grants, appears to be limited to covering operating expenses related to the response to the pandemic (transit revenues have plummeted as a result of social distancing measures—the New York City subway’s ridership, for example, was down more than 60% even two weeks ago.) However, some of the act’s infrastructure funding can be applied to new infrastructure. The Act includes $10 billion in new Airport Improvement Program grants, which have traditionally been used for new infrastructure. And the Act confirms that the grants can be used "for any purpose for which airport revenues may lawfully be used." The Act also includes $5 billion in new community development block grants, which can be applied to new infrastructure projects, and $1.5 billion for economic development grants to states and localities, for which new infrastructure projects also appear eligible.

Second, and independent of new funding opportunities, the situation itself yields new infrastructure opportunities. The need for new public healthcare facilities is well documented. But the reduction or cessation of operations of existing infrastructure (such as airports, subways, and seaports) also provides an opportunity for new, expedited construction. One of the greatest challenges related to the improvement of existing public infrastructure is the need to work around existing operations, resulting in dramatically longer delivery times and greater expense than if the infrastructure were simply shut down. Public agencies are already beginning to take advantage of the lull in activity to expedite infrastructure projects, particularly in facilities that are typically very high-use, such as airports, and more attention should be given to what projects should be prioritized at this time in order to take advantage of decreased demand. Miami International Airport, for example, has a recently approved $5-billion capital improvement program, and there are likely opportunities to fast-track some of the included projects, and similar projects throughout the country. 

 

This information is intended to inform our clients and other friends about legal developments, including recent decisions of various municipalities, legislative, and administrative bodies. Because of the rapidly changing landscape related to COVID-19, we intend to send out regular updates. The information we provide is not intended as legal advice and viewers/readers should not rely on information contained in these materials to make business or legal decisions. Before making any legal decisions, consult your lawyer. Please do not hesitate to contact us should you need assistance responding to the many issues which have arisen, and will continue to arise, out of this situation.

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