Federal Assistance Programs
Federal assistance comes in many forms. The most common are:
Discretionary Grant Programs – can be accessed through an application process. It is important to note most Federal grants can only be awarded to public entities. However, public-private partnerships are often encouraged to apply.
Federal Loan Programs – low-cost/low-interest Federal loans that can be obtained for a percentage of the cost of the project.
Private Activity Bonds – can be issued to private or public entities for specific projects.
Formula Funds – State Departments of Transportation can award Federal funds for certain infrastructure projects using funds the State receives annually from the Federal government.
Discretionary Grant Programs
Federal grant funds are awarded through programs established by a legislative process. Each program is administered by a Department and/or Agency and have declared priorities for use of the funds. Through a combination of legislation, rulemaking and processes declared through a Notice of Funding Opportunity (NOFO), eligibility criteria for applicants and project types are defined. While a program may be authorized, until funding is appropriated by Congress, no grants may be authorized. Many grant programs require non-Federal matching funds to be offered in the application to be considered for award. Many grant programs are over-subscribed (more requests for funding than there is funding available), resulting in there being no guarantee of receiving an award. It is important to know that free Federal money is never truly free: grants come with many strings including compliance with the National Environmental Protection Act (NEPA), Buy America rules or the Buy American Act, Title VI, the Davis Bacon Act (re: wages) and require years of reporting once the project has been completed. While applying for grants can be part of a strategy, they should not become part of a financial plan. Think of this as fishing for funding.
The Bipartisan Infrastructure Investment and Jobs Act (IIJA), passed November 15, 2021, authorized $1.2T for infrastructure improvements. Port and terminal infrastructure improvements, intermodal connectors and cargo handling equipment are eligible for several grant programs that are funded through FY2026.
Strong Port Strategies can help you determine whether applying for a grant is worth your time and expense.
Federal Loan Programs
While Federal loans often come with strings (Buy American Act compliance, NEPA requirements, etc.), a possible delayed payment plan and low interest rate make it worth considering as part of a financial plan. Some loan programs work directly with private firms, while others prefer public entities as applicants. The loan process can take up to one year or more. Some loan programs will accelerate the available percentage of loan to project cost ratio if you applied for certain Federal grant programs and were not selected for an award.
Strong Port Strategies will include discussions of Federal loans as part of a multi-year infrastructure funding strategy for your projects.
Private Activity Bonds
Private Activity Bonds (PABs) may be obtained by private entities when dedicated for highway and freight exchange projects. PABs provide special financial benefits such as tax-exempt status. PAB financed projects may not be required to complete NEPA as they are considered private vs public dollars. The Infrastructure Investment and Jobs Act signed into law on November 15, 2021, increased the available PAB authority at the U.S. Department of Transportation (USDOT) to $30 billion.
The intent behind Congress providing private entities with access to tax-exempt interest rates is to lower the cost of capital for private developers. It is hoped that the result will be an increased investment in public infrastructure by the private sector. PABs may be secured through a State or a Federal assistance program.
Strong Port Strategies can help you analyze how to incorporate PABs into your financial strategies.
A high volume of Federal funds flow to all 50 U.S. states and its territories via formulas established by Congress. These formula funds can be awarded as grants through certain State programs for transportation infrastructure improvement projects. For the most part, these projects must be approved for inclusion in a State’s Transportation Improvement Plan (STIP).