Equity emerging as key to unlock infrastructure grants

Municipalities looking to tap into federal infrastructure funding need existing matching funds while also reckoning with the administration's emphasis on equity, and this latter point emerged as a clear priority from the Department of Transportation officials during presentations at the National League of Cities' Congressional City Conference Monday in Washington, D.C. 

"Something that's near and dear to the Biden administration is looking at how transportation projects can enhance equity," said Polly Tottenberg, deputy secretary, DOT. "We're particularly going to talk about Reconnecting Communities, and Safe Streets and Roads for All." 

Safe Streets is looking to disburse $5 billion over the next five years with $800 million already sent out to 510 communities. Its goal is to eliminate deaths and serious injuries on the roadways.  Reconnecting Communities is a pilot program that has disbursed $185 million to 45 communities. Its goal is to reconnect communities cut off from badly routed train tracks and highways. 

The federal government is also putting a fine point of emphasis on the Justice40 Initiative, a plan aimed at achieving equity while inspiring clarifications. "Justice40 Is the Biden-Harris administration's commitment to ensure that at least 40% of the benefits of our infrastructure and climate projects are supporting disadvantaged communities," said Mariia Zimmerman, strategic advisor for technical assistance and community solutions, DOT. 

DOT admits the definition of a "disadvantaged community" is a bit fuzzy. They are currently using a mapping system based on Census data while acknowledging the system has limitations in sparsely populated rural areas and tribal communities. Issuers are also struggling to come up with ways to measure levels of equity in their offerings. 

"There's public authorities at the state revolving funds category like water and sewer who see disadvantaged communities that could pull down a lot of funds," said Lourdes German, executive director, The Public Finance Initiative. "But they need support in thinking about the way they would respond to federal directives on equity." 

German said that some social bond savvy city-based issuers don't have a standard measurement framework for equity. "We've also heard from communities who know that they want to center equity very early in the capital investment plan," said German. "If they're able to do that with an extension to bonds, there's a foundation." 

German's organization, in partnership with PFM Group Consulting LLC's Center for Budget Equity & Innovation and PFM Financial Advisors LLC,  launched a grant and technical assistance program during the conference in an attempt to clarify the role of racial equity in the bond market. 

Several state level transportation officials are also hard at work on boosting equity by participating in the Equity in Infrastructure Project. Earlier this month at the American Association of State Highway and Transportation Officials' Washington Briefing 13 states joined the effort. The project's main goal is to improve public contracting practices by creating more opportunities for historically underutilized businesses.   

To help municipalities find their way through the federal policy-influenced funding maze, the DOT points to its central navigation system. Zimmerman also counseled attendees about the possibility of a do-over. "If you have applied for a DOT grant and you are unsuccessful you always have the opportunity to ask for a debrief," she said. "Those who review the application can give you feedback on what would have made it a stronger application. If you're in a situation where it's maybe your fourth or fifth time it might also be an opportunity to talk about if the grant program is the right fit. Hopefully you'd be asking that question a little bit sooner."