Tips for Maximizing Project Fundability & Financial Sustainability

Wednesday, January 26, 2022
11 min
Federal Funding
Federal Grant Programs
Government Finance
Operations and Maintenance
Ellory Monks

Lover of infrastructure, cities, environment. Also: women engineers, Rice University. Co-Founder of @TheAtlas4Cities & 2x mom.

Many state and local government leaders are starting preparatory work now to best position their communities to receive funding. They aren’t waiting for clarification from federal agencies to get started. That’s because they understand that there’s no such thing as a shovel-ready project and waiting to get started could mean missing out on securing project capital. This was a critical lesson learned during the 2008 stimulus, when state and local governments struggled to spend stimulus money on prescribed timelines.

What does that preparatory work look like in state and local governments? In higher capacity (e.g. bigger, richer) states and local governments, leaders are already identifying the projects they’d want to fund with federal infrastructure money. They’re combing through strategic and capital improvement plans, consulting reports sitting on shelves and The Atlas case study database. They’re mapping those proposed projects to IIJA, and then doing preparatory work to submit those projects for funding.

Lower capacity state and local governments are going through a similar mapping process, but with less staff time and dedicated resources. For them, it’s risky to spend time and money preparing applications for grant money they might not receive.

Tips for Maximizing Project Fundability + Financial Sustainability

Throughout the process outlined below, it is essential that state and local governments keep people at the center of their decision-making. Considering what can be done to better serve residents and their communities should not be a single step in this type of decision making process. To achieve transformative outcomes for residents and communities, it must be the guiding principle that is revisited continuously. Specific guidance for identifying impactful infrastructure projects is outside the scope of this handbook, as local leaders tend to know their communities exceptionally well.

Keeping people at the center of decision making is key for state and local governments to maximize project impact.

Assessing the Types of Available Funding for State and Local Governments

The amount of federal funding currently and soon to be available to state and local governments is unprecedented. A crucial first step in the state and local government mapping process is to consider all the funding sources available to state and local governments right now, and for what types of projects.

Recent infrastructure funding passed in 2021.

Different colors of money can be sequenced to pursue larger project scopes and achieve bigger community impacts. Below are some examples of how local governments can get more bang for the same buck:

Find New Entry Points to Bigger Projects
  • Use eligible remaining American Rescue Plan Act funds for water, wastewater and stormwater upgrades to complete early-stage feasibility studies.
  • Use studies to identify where new projects could align with future DOT funded traffic calming and safety improvement projects or new EPA WIFIA and SRF system improvements.
  • Then use DOT formula funds and apply for DOT competitive grants to design and implement projects with dual-benefits – e.g. greening medians and traffic circles, aligning separated bike lanes with street trees or low-maintenance bioswales, and installing green curb bump-outs and pedestrian improvements around schools to reduce urban heat island effects.
  • Where projects provide hazard mitigation benefits, like reducing flood risk, consider how early stage project design and feasibility studies can also include relevant data collection and cost-benefit information.
  • Use this information to support FEMA pre-planning or project implementation applications through programs such as FMA and BRIC, and enable future applications for competitive funds earmarked to create resilience benefits.
Target Rising O&M Costs
  • Look for areas where existing maintenance costs are rising and explore project options for reducing long-term maintenance costs.
  • For example, channel improvements that reduce the need for dredging or the impacts of erosion that can be funded by both ARPA and IIJA funds from EPA and result in a lower long-term cost-burden.
  • Think about how broadband capacity expansions can also enable better data collection, monitoring and targeting to reduce the cost of direct service delivery or specific local risks, like fire or flood risk.
Look for Cross-Sector Bottlenecks
  • Zoom out and consider where one type of project might be slowing down or blocking another type of high-priority investment.
  • For example, housing infill projects that substantially increase density depend on water and sewer capacity upgrades. Often these types of projects are a point of friction between developers and municipalities. ARPA funds can directly alleviate some bottlenecks and local governments can get creative to think about how to use these funds to create new incentive programs to accelerate and better align (dig-once) water, streets and housing investments.

State and local government leaders should consider all the different colors of money available to their organizations because it will ultimately lead to better, more sustainable financial decisions, not just because it maximizes the amount of funding their organizations will receive. State and local governments haven’t spent all of their ARPA relief money, for example, and some of it is eligible to spend on certain types of infrastructure upgrades, such as water, wastewater and broadband projects like those highlighted above.

Furthermore, much of the funding state and local governments are eligible to receive through IIJA include matching requirements. Considering all of the colors of money available upfront is critical for state and local governments in preparing to demonstrate cost-share requirements to relevant federal agencies.

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Identifying Projects to Pursue with Federal Funding

Next, state and local government leaders should map projects included in their capital improvement and strategic plans against the broad funding categories included in the legislation (see graphic below.) Capital improvement and strategic plans are the right place to start, as projects that are of highest value to communities are frequently included in them. Impactful projects that align more closely to the categories below are more likely to get funded. For more inspiration during this step, browse The Atlas case study database.

It is extremely common for department staff to have a running wish list of projects they’d like their state or local government to pursue. These are the projects that they advocate to their superiors, sometimes for years, without getting management support. If this resonates with you, we strongly encourage you to consider how your most important wish list projects can be incorporated into a more strategic project that is aligned with your organization’s strategic plan. You should ask: Can I modify or increase the scope of this project to meet a strategic goal outlined in IIJA? Think big! After years of downsizing projects to match available funding, capital planners and program managers will need to do the opposite. Revisit concepts that seemed too costly or ambitious and combine projects for bigger impact. Scale up where possible.

For example, a transportation engineer may desperately want a new traffic calming project in her city. Such a project may be unlikely to garner enough management support to be submitted for federal funding, and if it does, it may be slow to attract funding. Could this project scope be modified or expanded to include green stormwater management interventions alongside new curb cuts and traffic circles? Such a project is more closely aligned with elected officials’ priorities and more likely to receive funding quickly.

What's in it for state and local governments?
Sector breakdown of the $1.2 trillion included in IIJA.

Keep the Legislation’s Vision in Mind

With that project list in hand, state and local government leaders should next reconsider the overarching vision and stated goals of the infrastructure bill.

These are the goals and the vision that elected leaders – President Biden and the members of Congress who voted for the bill – must deliver on, sooner rather than later- if they want to increase their chances at reelection. That means that there will be (and already is) enormous pressure on all of the executive branch agencies and review committees to prioritize projects that deliver on the overarching vision and goals.

According to the The White House, IIJA will:

Rebuild America’s roads, bridges and rails, expand access to clean drinking water, ensure every American has access to high-speed internet, tackle the climate crisis, advance environmental justice, and invest in communities that have too often been left behind.

The legislation will help ease inflationary pressures and strengthen supply chains by making long overdue improvements for our nation’s ports, airports, rail and roads. It will drive the creation of good-paying union jobs and grow the economy sustainably and equitably so that everyone gets ahead for decades to come.

The White House has also publicly stated its goals for IIJA. They include:

  1. Deliver clean water to all American families and eliminate the nation’s lead service lines.
  2. Ensure every American has access to reliable high-speed internet.
  3. Repair and rebuild roads and bridges with a focus on climate change mitigation, resilience, equity and safety.
  4. Improve transportation options and reduce greenhouse emissions. This is the largest investment in public transit in U.S. history.
  5. Upgrade airports and ports to strengthen supply chains and prevent disruptions causing inflation. Improve U.S. competitiveness, create more and better jobs, and reduce emissions.
  6. Make the largest investment in passenger rail since the creation of Amtrak.
  7. Build a national network of electric vehicle (EV) chargers.
  8. Upgrade power infrastructure to deliver clean, reliable energy across the country and deploy  energy technology to achieve a zero-emissions future.
  9. Resilient infrastructure against the impacts of climate change, cyberattacks and extreme weather events.
  10.  Tackle legacy pollution by cleaning up Superfund and brownfield sites, reclaiming abandoned mines and capping orphaned oil and gas wells.

The projects most likely to receive funding quickly will fall into one of the funding categories and clearly deliver on one of the big-picture goals.

Plan for Future Operations and Maintenance

Finally, state and local government leaders should remove any projects on their remaining lists that are not financially viable over the asset or program’s lifetime. A crucial consideration here is to consider if the project or program can attract private financing. According to Drexel/Finance Lab:

Private financing is essential to maximizing the impact of new IIJA-funded projects. Private funds can support projects that cannot be completed with public dollars alone. Similarly, private actors will often take the lead on designing and building the follow-on developments made possible by new transit options, expanded broadband reach and port modernizations, among others. This new economic activity, which will follow in the wake of infrastructure upgrades, is the big return on investment for federal spending.

Many projects will only be successful if they draw on private financing. Even with the influx of new federal dollars, local leaders should secure private funding, find a capable project sponsor and creatively deploy tax incentives to improve the scope of projects. Each of these are established best practices in real estate and infrastructure development and all occur outside of federal legislation.

While IIJA funding will cover new construction costs, it may not extend to the associated operating and maintenance costs. In an essay critical of IIJA, the authors of Strong Towns argue, “Federal infrastructure spending might prop up the national economy today, but cities take on the long-term liabilities…Federal infrastructure spending induces local governments to take on unproductive debt.” The authors also argue that federal infrastructure money can negatively bias local government leaders to the types of projects they choose to pursue: “Federal infrastructure spending prioritizes new construction. What cities need most is maintenance.” They continue, “Federal infrastructure spending blinds local governments to better projects they could do themselves right now.”

It is also worth noting that IIJA funding also may not extend to the demolition of an existing infrastructure asset, which is often crucial to projects that aim to reconnect Black and brown communities that have been destroyed by highways and other infrastructure assets. This is the primary aim of the $1 billion included in the legislation for the Reconnecting Communities Pilot Program.

To get to their final submission list, state and local leaders will still need to do the crucial work of socializing the list with key stakeholders, as well as evaluating technical feasibility. This crucial stakeholder and technical engagement is the everyday work of most state and local governments and is not the focus of this handbook.

The following sections dive into the funding categories – transportation, water, broadband, resilience, energy, legacy pollution – included in IIJA that are most relevant to state and local governments. We include all of the reauthorized and newly established programs and the relative speed at which local governments can expect to see the money. Each section also includes case studies of successful local government projects relevant to that funding category.

Next up: Transportation Infrastructure & IIJA: Funding, Timelines, Model Projects

Author’s Note: Rachel Angulo (Content Marketing Manager at The Atlas) provided writing and research support to this section. Mark Funkhouser (Former Mayor of Kansas City, MO), Shalini Vajjhala (Executive Director of the San Diego Regional Policy & Innovation Center) and Erik Caldwell (Director of Data Strategy at The Atlas and former Deputy Chief Operating Officer at the City of San Diego) generously reviewed this section.

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Introduction to the IIJA Handbook for State and Local Government Leaders
Jan 26th, 2022
5 min
State and Local Government
Federal Funding
Federal Grant Programs
On November 15, 2021, President Biden signed the $1.2 trillion Infrastructure Investment and Jobs Act (IIJA) into law. Now, much...
Section 1
Tips for Maximizing Project Fundability & Financial Sustainability
Jan 26th, 2022
11 min
Federal Funding
Federal Grant Programs
Government Finance
Operations and Maintenance
Many state and local government leaders are starting preparatory work now to best position their communities to receive funding. They...
Section 2
Transportation Infrastructure & IIJA: Funding, Timelines, Model Projects
Jan 26th, 2022
6 min
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safe streets
electric vehicles
zero emission vehicles
The $108 billion in funding for transportation infrastructure is a tremendous opportunity to upgrade our rapidly deteriorating transportation infrastructure. The...
Section 3
Water Infrastructure & IIJA: Funding, Timelines, Model Projects
Jan 26th, 2022
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lead service lines
aging infrastructure
Water infrastructure in the United States is failing, aging and outdated. According to the Pacific Institute, “The nation’s water infrastructure...
Section 4
Broadband Infrastructure & IIJA: Funding, Timelines, Model Projects
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