Transformative funding and partnerships through the Infrastructure Investment and Jobs Act and Inflation Reduction Act
Authors: Diana Mendez & Lucas Pizzutti
Earlier this month, Miami-Dade County Mayor Daniella Levine Cava announced that the County received “$296,417,177 in infrastructure grants since her last report in July. An additional $483, 226,645 in applications have been submitted and are still pending. The grants come from the Infrastructure Investment and Jobs Act [(“IIJA”)] and the Inflation Reduction Act [(“IRA”)]”. These funds are being used on a variety of projects countywide such as the Miami International Airport terminal expansion, the cargo mobility optimization at the Seaport, and to support the Net Zero Resiliency Program. The IIJA and IRA were enacted in 2021 and 2022, respectively, to upgrade US infrastructure and develop solutions to the challenges created by climate change through the development of clean energy technologies. As the funding mechanisms in both bills are being rolled out, local governments, such as Miami-Dade County, are starting to benefit from the funding opportunities created by bills.
In addition to funding, the bills view the private sector as a key participant in providing financing to upgrade the nation’s private infrastructure and encourage the use of public-private partnerships (“P3s”) for federal projects, as well as federally assisted projects at the state and local level. For example:
- Division A, Title I, Section 11305, of the IIJA enables the Secretary of Transportation to utilize alternative contracting methodology on behalf of any Federal land management agency that receives funding under Title 23, Sections 203, 204 or 308.
- Division G, Title X, Section 71001, of the IIJA created a new program to be administered by the US Department of Transportation that will distribute $100 million over 5 years for making technical assistance grants for communities engaging in P3s. Under these provisions, the Build America Bureau of the U.S. Department of Transportation will issue technical assistance and expert service grants to build organizational capacity to explore innovative finance opportunities in a portfolio of assets and projects and or to hire technical experts to provide analysis for the project.
- DOT has provided a $5 Million Grant to the University of Maryland to establish the Build America Center which will offer educational programs, information, and resources for transportation agencies in all areas of alternative and innovative project financing and delivery.
- Division H, Title VI, Section 80403, doubles the cap on private activity bonds (PABs) for surface transportation projects from $15 billion to $30 billion. PABs allow the issuance of tax-free municipal bonds to private entities financing qualified projects. The objective is to provide private developers and operators with access to tax-exempt interest rates to lower cost of capital and achieve P3 project feasibility. Currently, $16.9 billion have been issued in PABs, and $21 billion have been allocated to additional projects. Sections 80401 and 80402, also expand the scope of projects that may use PABs to include qualified broadband projects and carbon dioxide capture facilities.
- As part of the Biden Administration’s plan to deliver what the Administration described in its White House October 30, 2023, briefing as “the largest electric grid infrastructure investment in history - more than $30 billion from the Bipartisan Infrastructure Law and Inflation Reduction Act,” the Department of Energy has announced a nearly $3.5 billion investment to strengthen grid reliability and resilience across 44 states by leveraging private investment through the use of P3s.
While the IIJA and IRA bills view the private sector as a critical participant in upgrading the nation’s infrastructure, many states and local governments have yet to implement enabling legislation that allows for P3s in a wide array of infrastructure projects. Ten years into enacting 255.065, Florida Statutes, Florida’s P3 enabling legislation, the Sunshine State has pioneered in this area. Therefore, local governments such as Miami-Dade are uniquely positioned to upgrade local infrastructure projects by leveraging the funds available under the bills and obtaining financing from the private sector through P3s.