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Friday, August 11, 2017

DOT announces new infrastructure grants

posted by: Kirill Abbakumov

DOT announces new infrastructure grants

On 5 July, 2017, the U.S. Department of Transportation (DOT) published a notice of funding opportunity through the Nationally Significant Freight and Highway Projects (INFRA) program, a new initiative which provides federal financial assistance to highway and freight projects of national or regional significance. The notice solicits applications for awards under the program's FY2017 and FY2018 funding, subject to future appropriations.

The new INFRA program advances a pre-existing grant program established in the FAST Act of 2015 and will make approximately $1.5 billion available to infrastructure projects that are in a neglected condition. In addition to providing direct federal funding, the INFRA program aims to increase the total investment by state, local, and private partners. INFRA will align them with national and regional economic vitality goals to leverage additional non-federal funding. The new program will increase the impact of projects by leveraging capital and allowing innovation in the project delivery and permitting processes, including public-private partnerships. 

DOT will make awards under the INFRA program to both large and small projects. Large project will receive at least $25 million and small project will receive at least $5 million. For each fiscal year of INFRA funds, 10% of available funds will be reserved for small projects. The INFRA grant program preserves the statutory requirement in the FAST Act to award at least 25% of funding for rural projects. For rural communities in need of funding for highway and multimodal freight projects with national or regional economic significance, INFRA is an opportunity to apply directly for financial assistance from the federal government. For these communities, DOT will consider an applicant’s resource constraints when assessing the leverage criterion.

INFRA grants may be used to fund a variety of components of an infrastructure project, however, the Department is specifically focused on projects in which the local sponsor is significantly invested and is positioned to proceed rapidly to construction. Eligible INFRA project costs may include: reconstruction, rehabilitation, acquisition of property (including land related to the project and improvements to the land), environmental mitigation, construction contingencies, equipment acquisition, and operational improvements directly related to system performance. 

Applications must be submitted by or on November 2, 2017. The “Apply” function on www.grants.gov website opened on August 1, 2017.

Wednesday, August 9, 2017

EPA will charge fees for financial assistance to water infrastructure projects

posted by: Kirill Abbakumov

On June 28, 2017, the Environmental Protection Agency (EPA) has published a final rule that establishes fees related to the provision of federal credit assistance under the Water Infrastructure Finance and Innovation Act of 2014 (WIFIA) in order to recover EPA’s cost of providing credit assistance to entities seeking to develop water infrastructure, as well as to cover the costs associated with the program.

WIFIA authorizes EPA to provide direct loans and loan guarantees to water infrastructure projects and to charge fees to recover all or a portion of the agency's cost of providing credit assistance and the costs of retaining expert firms, including financial, engineering, and legal services, in the field of municipal and project finance to assist in the underwriting and servicing of Federal credit instruments. This action applies to entities seeking credit assistance under the WIFIA program for the development and construction of a water infrastructure project.

EPA is establishing an application fee, credit processing fee, servicing fee, optional supplemental fee, and fee for extraordinary expenses to cover these costs to the extent not covered by congressional appropriations. To effectively administer the program, EPA will incur both internal administrative costs (staffing, program support contracts, and other costs) as well as the costs of retaining expert firms, including legal, engineering, and financial services, in the field of municipal and project finance, to assist in the underwriting of the federal credit instrument.

A detailed summary and breakdown of various fees can be found in the Federal Register.

Monday, August 7, 2017

International Entrepreneur rule delayed and under threat of elimination

posted by: Kirill Abbakumov

On July 11, 2017, the Department of Homeland Security (DHS) under U.S. Citizenship and Immigration released a notice that it is temporarily delaying the effective date of the International Entrepreneur Final Rule in order following the Presidential Executive Order on improved border security and immigration enforcement. This delay provides an opportunity to obtain comments from the public regarding a proposal to rescind the rule and review the possible implications.

The International Entrepreneur rule is designed to enhance entrepreneurship, innovation, and job creation in the United States. The rule would add new regulatory provisions on the use of parole in case-by-case basis for entrepreneurs of start-up entities whose entry into the U.S. would provide a significant public benefit through the substantial and demonstrated potential for rapid business growth and job creation. Such potential would be indicated by the receipt of significant capital investment from U.S. investors with established records of successful investments, or obtaining significant awards or grants from certain federal, state or local government entities. Granting parole would provide a temporary stay of up to 2 years (extendable by up to an additional 3 years) to allow the entrepreneur to oversee and grow their start-up entity in the country. A request for re-parole would be considered if the entrepreneur and his or her start-up entity continues to provide a significant public benefit as evidenced by substantial increases in capital investment, revenue, or job creation.

The delay and subsequent review of the rule provides the public, economic developers, and related entities and organizations to provide their feedback on the potential positive impact of the program on communities, cities, counties, and state where international entrepreneurs are responsible for significant improvement and creation of opportunities. In addition, potential negative implications from rescinding of the rule are also welcome for review by the DHS. The International Entrepreneur is similar to the EB0-5 visa program that incentivizes investment and employment creation in the U.S., and was also placed under review.

The implementation of the rule is delayed from July 17, 2017, to March 14, 2018                . Written comments from the public must be received on or before August 10, 2017 through the Federal Register.

Thursday, August 3, 2017

DOT announces $226.5 million funding opportunity for public transportation

posted by: Kirill Abbakumov

On July 18, the Federal Transit Administration (FTA), under the Department of Transportation (DOT) announced the opportunity to apply for approximately $226.5 million in FY 2017 funds under Grants for Buses and Bus Facilities Infrastructure Investment Program. Funds will be awarded competitively to assist in the financing of capital projects for acquisition of buses and/or construction of bus-related facilities. Incidental costs such as the costs of related workforce development and training activities, and project administration expenses, are also included.

The purpose of the Bus and Bus Infrastructure Program is to assist in the financing of buses and bus facilities capital projects, including replacing, rehabilitating, purchasing or leasing buses or related equipment, and rehabilitating, purchasing, constructing or leasing bus-related facilities. According to DOT’s latest Conditions & Performance Report, transit providers nationwide face a maintenance backlog of nearly $90 billion, including 10,000 buses estimated to be in poor or marginal condition.

The Bus and Bus Infrastructure Program provides funds to designated recipients that allocate funds to fixed route bus operators, and to states, and local governmental authorities that operate fixed route bus service. FTA also may award grants to eligible recipients for projects to be undertaken by economic development organizations engaged in public transportation. FTA may prioritize projects that demonstrate how they will address significant repair and maintenance needs, improve the safety of transit systems, and deploy connective projects that include advanced technologies to connect bus systems with other networks.

Complete proposals must be submitted electronically through www.grants.gov before or on August 25, 2017. More information can be found at transit.dot.gov

Monday, July 31, 2017

Congress continues work on spending bills without budget resolution

posted by: Kirill Abbakumov

As Congressional August recess approaches, the House Appropriations Committee continues its work on the 12 annual appropriations bills for FY 2017. To date, the Committee has passed 7 bills and anticipates approving the final 5 bills before the recess. Combined, these 12 bills will direct government funding for the next fiscal year. Currently, neither the House nor Senate have passed a FY 2018 budget resolution which sets funding amounts for all federal agencies and programs, allowing the appropriations committee to move ahead of the normal budget process.

In the House, budget committee leadership continues working on their FY 2018 resolution with negotiations ongoing between moderate and conservative members. House Republicans hope to use the FY 2018 budget to lay the groundwork for tax reform and some cuts to mandatory spending levels.

Reports indicate the House budget resolution, which has yet to be released, will also include reduced levels of non-defense discretionary spending while increasing the amount of defense discretionary spending. This increase in defense spending would be above the funding caps set by the Budget Control Act of 2011 (P.L. 112-25), requiring a new bipartisan budget agreement to fund these programs. Such an agreement could be difficult to reach, as Democrats would be unlikely to accept significant reductions in nondefense spending in exchange for higher defense caps. Despite this, House appropriators are pushing forward with their bills, even though if a new spending agreement is reached, it could require them to rewrite certain bills to meet the new spending levels.

The Senate Appropriations Committee is moving at a slower pace, and will likely mark up many of the spending bills after the August recess. Similar to the House, any bills passed by the Senate committee may need to be rewritten if a new budget agreement is reached.

Monday, July 24, 2017

New Senate bill to support infrastructure workforce

posted by: Kirill Abbakumov

On July 20, the Senate introduced the bipartisan Building U.S. Infrastructure by Leveraging Demands for Skills (BUILDS) Act, which would support grants to industry partnerships in transportation, construction, energy, and other infrastructure sectors. Administered by the U.S. Department of Labor and the Departments of Transportation, Energy, and other federal agencies, the grants would allow local partnerships to develop work-based learning programming and apprenticeships and help workers and businesses get the necessary skills for rebuilding American infrastructure.

The BUILDS Act would help businesses in targeted industries grow and maintain the workforce necessary to keep up with demand, while also ensuring that a diverse range of workers could access the training and credentials needed to find sustainable jobs in these fields. The Act would support implementation grants of up to $2.5 million over three years – and renewal grants of up to $1.5 million - to partnerships comprised of multiple employers in a target industry, education or training providers, labor organizations, local workforce boards, and other stakeholders where appropriate. Partnerships would be required to carry out activities that support:

  • Assistance in navigating the registration process for registered apprenticeship;
  • Connecting businesses and education providers for development of classroom curriculum to complement on-the-job learning;
  • Serving as employers of record for participants in work-based learning programs for a transitional period;
  • Training managers and front-line workers to serve as mentors to work-based learning participants;
  • Helping businesses recruit individuals for work-based learning, particularly individuals being served in the workforce system or by other human service agencies.

Partnerships would focus on apprenticeship and other work-based learning programming during which workers earn wages while obtaining specific occupational skills and credentials along a career pathways in key industries that help advance workers into higher-paying jobs.

The BUILDS Act coincides with strong political interest in infrastructure investment, as President Trump has released a plan to incentivize up to $1 trillion in new funding for construction and related projects that could lead to as many as 11 million new jobs. Businesses in infrastructure currently face intense labor shortages given impending retirements, a lack of diversity in the workforce, and overall skill shortages in growth industries. According to a report by the Departments of Education and Labor, there are 68% more projected job openings in infrastructure jobs over the next five years than there are students training for these jobs, with an approximate potential loss of $200 million in revenues in 2017 due to unfilled technical jobs.

Friday, July 21, 2017

Hollings MEP program receives increased funding

posted by: Kirill Abbakumov

On June 27, 2017, National Institute of Standards and Technology (NIST) issued a final rule to amend the regulations governing the Hollings Manufacturing Extension Partnership (MEP) program to allow NIST to provide up to 50% of the capital and annual operating and maintenance funds required to establish and support an MEP Center. The regulations are also being amended to remove other cost sharing rules that are not required by the MEP authorizing statute or current program policies.

The Hollings MEP Program consists of technical centers in each state that connects small and medium-sized manufacturers to public and private training, tools, and other resources essential for increasing innovation capabilities, expanding domestic and foreign markets, and improving productivity and overall competitiveness.  MEP focuses on small and mid-sized enterprises that puts manufacturers. MEP leverages more than $100 million of federal investment into a nearly $300 million program by partnering with state a local governments and the private sector to provide a wealth of expertise and resources to manufacturers

Prior to being amended the program required that NIST provide less than 50% of the capital and annual operating and maintenance funds of an MEP Center beginning in the fourth year of a cooperative agreement. The revised statute allows NIST to provide up to 50% of the capital and annual operating and maintenance funds required to establish and support an MEP Center. This is a welcome change for economic development, as an increase in funding translates to greater support for a program that aid small American manufacturers in developing new products, expanding into global markets, adopting new technology, reshoring production, and upgrading their technological capabilities.

Thursday, July 20, 2017

House passes TANF subsidised jobs bill

posted by: Kirill Abbakumov

On June 23, 2017, the House passed the Accelerating Individuals into the Workforce Act (H.R. 2842) which would allocate $100 million under the current Temporary Assistance for Needy Families (TANF) contingency fund for demonstration grants to support subsidized jobs programs. At least one of the demonstration projects supported by the grants would need to fund registered apprenticeship programs, and the bill requires that 15% of the overall funding be reserved for career pathways programs as defined by the Workforce Innovation and Opportunity Act (WIOA).

More than 80% of today’s jobs require postsecondary education and training, but less than 10% of adult TANF recipients have education beyond high school. Despite these barriers, less than 7% of combined federal and state TANF spending goes to work, education and training programs. 

Under current law, TANF funds can be used by states to subsidize TANF recipient’s wages, however less than 1% of total TANF spending is used on subsidized jobs programs. The American Reinvestment and Recovery Act (ARRA) also provided an additional $5 billion in funding to supplement states’ TANF spending on subsidized jobs, though that funding expired after FY2010. These programs can be successful if they connect participants to training and upskilling opportunities, like those available in apprenticeship programs and when built into career pathways programs.

The bill recognizes the importance of investing in training opportunities for TANF recipients, a population and an activity drastically underfunded in the current TANF system. However, the Act currently lacks language that would see the program receive increased annual funding to keep pace with historic levels of investment and dedicate new resources for proven strategies like industry partnerships and career pathways.

Tuesday, July 18, 2017

House passes 2017 Perkins reauthorization act

posted by: Kirill Abbakumov

On June 23, 2017, the House passed the Strengthening Career and Technical Education for the 21st Century Act of 2017, which would reauthorize the Carl D. Perkins Career and Technical Education Act. The bill was passed out of committee on May 17, by a unanimous vote.

The bill is similar to the reauthorization bill passed by the House in September 2017 and includes requirements for closer alignment of postsecondary performance indicators with the core performance indicators under the Workforce Innovation and Opportunity Act (WIOA). It also contains requirements that state Perkins plans describe how CTE programs fit within the state’s broader vision and strategy for preparing an educated and skilled workforce. The bill would additionally adopt several key WIOA definitions, including recognized postsecondary credentials, industry or sector partnerships, and career pathways.

Despite strong support for the House bill, the prospects for Senate action are uncertain. The Senate did not take up the House bill last year and was unable to reach agreement on their own proposal, in large part because of partisan disagreements about the Secretary of Education’s oversight role in CTE programs.

In addition, President Trump’s FY2018 budget request includes a proposed reduction of $168 million for Perkins state grant, or a cut of 15% against current funding levels. This makes the reauthorization effort come against a backdrop of larger political discussion around the future of federal investments in education and workforce initiatives.

Friday, July 14, 2017

FAA reauthorization bill increases funding for airports in local communities

posted by: Kirill Abbakumov

On June 21, 2017, the House Transportation and Infrastructure Committee Chairman Bill Shuster (R-Pa.) introduced the new FAA reauthorization bill which extends the current one-year extension expiring on September 30 to a new six-year period, providing more long-term certainty regarding aviation policy. The main objective of the new 21st Century Aviation Innovation, Reform and Reauthorization Act (21st Century AIRR Act) remains the intention to privatize air-traffic control, there are several provisions that provide positive developments for county governments.

The bill contains several key features for local governments. The Essential Air Service (EAS) program, which supports commercial flights for the nation’s most rural communities, would see increased funding each year throughout the bill’s lifetime. In fact, the final year of the authorization would fund EAS at $350 million, almost double the current funding level. This vital program to connect the nation’s most rural communities with larger transportation hubs will ensure continued travel options for county residents as well as key opportunities for economic development.  In his FY 2018 budget blueprint, President Trump had advocated for the program’s elimination.

Also included in the bill is the Airport Improvement Program (AIP), a key grant mechanism to assist airports in starting new projects, would see an increase in the 21st Century AIRR Act. Funding levels under the bill would increase each year through 2023, in total raising AIP funding from the current level of $3.35 billion to slightly more than $3.8 billion, which amounts to a $467 million increase.

On June 27, 2017, the Transportation and Infrastructure Committee approved the bipartisan 21st Century AIRR Act (H.R. 2997). However, Congress remains divided on the issue of air-traffic control privatization, with only the House advocating for privatization, while the Senate leaves air-traffic with the FAA. Despite contention, the new reforms are expected to cut red tape to ensure manufacturers can get products to market on time, stay competitive, and continue to employ millions of Americans, as well as encourage American innovation in aviation technologies to promote a stronger workforce.

Wednesday, July 12, 2017

EPA to redefine contentious WOTUS rule

posted by: Kirill Abbakumov

In late June 2017, the Trump administration announced that they will repeal the Waters of the United States (WOTUS) rule. The Environmental Protection Agency (EPA), Department of the Army and U.S. Army Corps of Engineers are proposing a new rule that would rescind the Obama administration’s WOTUS rule and re-codify the regulatory text that existed before its adoption in 2015. The agencies claim that these actions would provide certainty in the interim while a new rule-making process is undertaken.

Property developers, chemical manufacturers and oil-and-gas producers have voiced opposition to the rule, which they argue is an intrusion on property owners’ rights and an impediment to economic growth. The rule expanded the definition of federally-regulated waters so broadly that ditches, canals, collection ponds, and isolated wetlands far from “navigable waters” were covered. In order to build or make modifications on their land, farmers, ranchers, and businesses would need to hire consultants and lawyers to get costly federal permits. In late February, President Trump signed an executive order directing the EPA to review WOTUS and to do so based on a much narrower interpretation of “navigable waters” as outlined in a 2006 Supreme Court opinion.

EPA Administrator Scott Pruitt stated that "EPA is taking significant action to return power to the states and provide regulatory certainty to our nation's farmers and businesses.” According to him, the re-codification "is the first step in the two-step process to redefine 'waters of the U.S.' and we are committed to moving through this re-evaluation to quickly provide regulatory certainty, in a way that is thoughtful, transparent and collaborative with other agencies and the public."

The proposed rule would recodify the identical regulatory text that was in place prior to the 2015 Clean Water Rule and that is currently in place as a result of the U.S. Court of Appeals for the Sixth Circuit's stay of the 2015 rule. Therefore, this action, when final, will not change current practice with respect to how the definition applies. The agencies have also begun deliberations and outreach on the second step rulemaking involving a re-evaluation and revision of the definition of "waters of the United States" in accordance with the Executive Order.

Monday, July 10, 2017

House approves EPA’s brownfields reauthorization program

posted by: Kirill Abbakumov

On June 15, 2017, the U.S. House Energy and Commerce Committee’s Subcommittee on the Environment approved the reauthorization of the Environmental Protection Agency (EPA)’s Brownfields Enhancement Redevelopment and Reauthorization Act of 2017 (H.R. 3017) which would reauthorize EPA’s brownfields program and extend liability protections for local governments that did not cause or contribute to the contamination.

EPA’s brownfields program provides technical assistance and grants for communities to undertake brownfields projects. The program was originally authorized in 2002 through the Small Business Liability Relief and Brownfields Revitalization Act. While the program’s authorization expired in 2006, Congress has continued to fund the program on an annual basis.

Brownfields are abandoned or underutilized properties whose redevelopment is hindered by real or perceived environmental contamination.  There are an estimated 400-600,000 sites like these throughout the United States, and redeveloping these locations has been a priority for the Conference of Mayors since the 1990s.

Redeveloping brownfields cleans up properties, creates jobs, and recycles land back into productive use while preserving farms and greenfields. According to EPA, since the inception of the program, over 26,000 brownfield sites have been assessed and over 5,700 properties and 66,000 acres have been made ready for reuse. The program has leveraged over 123,000 jobs and over $23.6 billion dollars. It is estimated that every dollar spent leverages approximately $16 in other investments.

Friday, July 7, 2017

HUD Secretary Ben Carson expresses concern FY2018 budget

posted by: Kirill Abbakumov

On June 8, 2017, U.S. Department of Housing and Urban Development (HUD) Secretary Ben Carson expressed his concern before the House and Senate Transportation, Housing and Urban Development Appropriations Subcommittee over the Trump administration’s FY2018 budget request for HUD. The President’s budget proposes a $7.4 billion reduction to HUD’s budget relative to FY2017 enacted levels. The budget would eliminate the Community Development Block Grant (CDBG) program, currently funded at $3 billion, and the HOME Investment Partnerships program, currently funded at $950 million.

The CDBG program provides annual grants on a formula basis to nearly 1,200 metropolitan city, county, and state governments. There are 185 counties that receive these grants directly, while local entitlement cities and counties receive 70% of CDBG funds and states receive 30%. Counties utilize the flexibility of CDBG funds to support projects that address their local community and economic development, housing, water and infrastructure and human service priorities. HOME funds are used for the acquisition, reconstruction and rehabilitation of housing for low-income families.

Senate subcommittee members from both parties expressed concerns about the drastic cuts proposed in the president’s budget. Senate Subcommittee Chair Susan Collins (R-Maine) stated that the funding levels proposed in the FY2018 budget will place vulnerable families at risk of losing their assistance and of becoming homeless, while Ranking Member Jack Reed (D-R.I.) shared similar concerns that the drastic cuts will be devastating to communities across the nation. Several House T-HUD Appropriations Subcommittee members similarly expressed concerns about the proposed cuts during their hearing.

Secretary Carson noted in his testimony that HUD looks forward to working with state, local, and private partners to support them in playing a greater role in local community and economic development.  He also reiterated during the hearings that he expected improved efficiency, public-private partnerships, and greater flexibility would help HUD meet its mission even with reduced funding.

The outcome of the testimony resulted in an advice to cities, counties, and states to collect information on CDBG and HOME-funded housing, community, and infrastructure projects. This will be needed to calculate the impact of these programs on local entities, if the programs are to be eliminated in FY 2018.

On June 23, 2017, the Supreme Court ruled 5-3, affirming that the Court of Appeals of Wisconsin was correct in the case Murr v. Wisconsin. The Court ruled that “Treating the lot in question as a single parcel is legitimate for purposes of this takings inquiry, and this supports the conclusion that no regulatory taking occurred here.” According to the Supreme Court, there are two guidelines relevant for determining when a government regulation constitutes a taking. First, “with certain qualifications . . . a regulation which ‘denies all economically beneficial or productive use of land’ will require compensation under the Takings Clause.” Palazzolo v. Rhode Island, 533 U. S. 606, 617 (quoting Lucas v. South Carolina Coastal Council, 505 U. S. 1003, 1015). Second, a taking may be found based on “a complex of factors,” including (1) the economic impact of the regulation on the claimant; (2) the extent to which the regulation has interfered with distinct investment-backed expectations; and (3) the character of the governmental action. Palazzolo, supra, at 617 (citing Penn Central Transp. Co. v. New York City, 438 U. S. 104, 124).

The timeline of this case starts in 1960 when the first plot of land was purchased in 1960 and the title was placed in the Murr’s private plumbing company. On the first lot the Murr’s built a family cabin. In 1963 the Murr’s bought the adjacent lot which has remained vacant. In the 1970’s environmental regulations reduced the usable size of each lot to less than an acre. In the location of Murrs’ property, state and local regulations prevent the use or sale of adjacent lots under common ownership as separate building sites unless they have at least one acre of land suitable for development. So in 1995 when the lots were brought under common ownership the St. Croix County ordinance that states if abutting properties have less than an acre of economically developable lands and they are owned by a single entity the lots are too be considered as one property. The Murr’s land was subject to this regulatory burden, moreover, only because of voluntary conduct in bringing the lots under common ownership after the regulations were enacted. As a result, the valid merger of the lots under state law informs the reasonable expectation they will be treated as a single property, according to the Supreme Court.

The Court also agrees that “the physical characteristics of the property support its treatment as a unified parcel. The lots are contiguous along their longest edge. Their rough terrain and narrow shape make it reasonable to expect their range of potential uses might be limited.”  The Murrs’ could have also “anticipated public regulation might affect their enjoyment of their property, as the Lower St. Croix was a regulated area under federal, state, and local law long before petitioners possessed the land.”

Lastly Court agreed that the prospective value of the two lots supports considering the two as one parcel for purposes of determining if there is a regulatory taking. The Murrs’ are prohibited from selling the lots separately or from building separate residential structures on each. Yet this restriction is mitigated by the benefits of using the property as an integrated whole, allowing increased privacy and recreational space, plus the optimal location of any improvements. The special relationship of the lots is further shown by their combined valuation. The combined lots are valued at $698,300, which is far greater than the summed value of the separate regulated lots Lot F with its cabin at $373,000 and Lot E as an undevelopable plot at $40,000. The value added by the lots’ combination shows their complementarity and supports their treatment as one parcel.

The factors stated above are why the Supreme Court upheld the decision that the taking clause did not apply in this case. The guidance given by the is that “Courts must instead define the parcel in a manner that reflects reasonable expectations about the property. Courts must strive for consistency with the central purpose of the Takings Clause: to “bar Government from forcing some people alone to bear public burdens which, in all fairness and justice, should be borne by the public as a whole.”” Chief Justice Roberts dissented stating, “Basing the definition of “property” on a judgment call, too, allows the government’s interests to warp the private rights that the Takings Clause is supposed to secure.”

The previous Supreme Court case that affected economic development was Kelo v. City of New London. The Court held that the general benefits a community enjoyed from economic growth qualified private redevelopment plans as a permissible "public use" under the Takings Clause of the Fifth Amendment.  Unlike in Kelo v. City of New London, it is not clear if the the Murr v. Wisconsin ruling will affect economic development in a positive manner. On one hand there is the potential to reduce the amount economic burden that is incurred when a development uses emanate domain to acquire property.   On the other hand Murr v. Wisconsin did not provide any clarity to the issue of the Takings Clause and the uncertainty of the regulations could impact the decision of individuals and firms to purchase adjacent plots of land.

 Urban economists have long argued about the detrimental effects of land use regulation which is the lynchpin of this case. The regulation requiring minimum lot parcel size for this property to be sold is detrimental to economic growth. Land use regulations are the reason that in many metropolitan areas rents are skyrocketing. Instead of allowing the market to determine the efficient use of the space and allow innovations local and state governments are inhibiting growth. Hsieh and Moretti (2015) have estimated that “lowering regulatory constraints” on land use in regional economic centers would “increase U.S. GDP by 9.5%.”  

Thursday, July 6, 2017

EDA announces $30 million in funding for distressed coal communities

posted by: Kirill Abbakumov

On June 23, the Economic Development Administration (EDA) has published a Notice of Funding Availability (NOFA) of $30 million to assist coal communities and create jobs through the 2017 Assistance to Coal Communities (ACC 2017) initiative. In distributing the funding, EDA expects to accept ACC 2017 proposals and applications on an ongoing basis throughout FY2017 until all available funding has been obligated.

The $30 million in ACC 2017 funds available for application are targeted to directly assist communities and regions severely impacted by the declining use of coal through activities and programs that support economic diversification, job creation, capital investment, workforce development and re-employment opportunities. Under the ACC 2017 initiative, EDA is seeking applications for projects and activities that will:

  • Support the creation of new businesses and jobs in a variety of industry sectors;
  • Create or implement economic diversification strategies targeting affected workers and businesses;
  • Develop a business incubator program;
  • Enhance access to and use of broadband services to support job growth;
  • Facilitate access to private capital investment, and provide related capacity building and technical assistance;
  • Promote market access for goods and services created and manufactured by businesses in the impacted community/region.

The initiative is part of Trump administration’s efforts to reverse burdensome regulations that have squeezed the American energy sector and rural communities, as well as to block the anti-coal initiatives by the Environmental Protection Agency (EPA) and other agencies.

Prospective applicants are encouraged to refer to the NOFA on grants.gov for more details on the ACC 2017 funding, including eligibility, matching-fund requirements, and other information.

Thursday, July 6, 2017

Trump administration clarifies plans for infrastructure investment

posted by: Kirill Abbakumov

On June 8th, the President Donald Trump announced his new $200 billion plan to rebuild and modernize American roads, rails, ports, and airports in order to create more jobs, maintain U.S. economic competitiveness, and connect communities to more opportunities. This plan will build on a more ambitious $1 trillion infrastructure plan which made up the campaign promise of President Trump and which he actively advocated for in the first half of 2017.

The new infrastructure investment plan is one of President Trump’s regulatory reforms designed to spur growth and investment in America. Federal rules and regulations apply to virtually all infrastructure investments, while the federal government accounts only for one-fifth of all infrastructure spending. The new plan aims to make the nation more competitive by unleashing private sector capital by significantly reducing permitting time for major infrastructure projects from 10 years to 2 years, as well as slashing regulations to establish tangible response. Federal investments into infrastructure will be more targeted and awarded to projects of high priority. Additional responsibility will be transferred to the States in order to reduce the regulatory burden for infrastructure investment and spending.

Original goal of $1 trillion investment in infrastructure still stands. The administration will dedicate $200 billion in federal funding for infrastructure, while the originally promised $1 trillion in infrastructure investment will be funded through a combination of new federal funding, incentivized non-federal funding, and newly prioritized and expedited projects. Funding will be structured to incentivize additional non-federal funding. As such, the administration is committed to pursuing numerous funding proposals:

  • Expand the Transportation Infrastructure Finance and Innovation Act (TIFIA) to finance surface transportation projects through direct loans, loans guarantees, and lines of credit;
  • Remove the $15 billion cap on Private Activity Bonds (PABs) and expand eligibility to other non-federal public infrastructure to issue tax-exempt bonds on behalf of private entities;
  • Provide competitive grants to urbanized areas mitigating congestion through the Urban Partnership Agreement Program and the Congestion Reduction Demonstration Program;
  • Liberalize tolling policy, which is generally restricted on interstate highways and prevents public and private investment in such infrastructure;
  • Fund EPA’s Water Infrastructure Finance and Innovation Act (WIFIA) loan program designed to leverage private investments in large drinking water and wastewater infrastructure projects.

The administration is also considering two proposals to support better fiscal restraint:

  • Federal Capital Revolving Fund to fund federally-owned civilian capital assets with annual appropriations and address underinvestment in capital assets driven by large upfront costs;
  • Partnership Grants for Federal Assets to fund private partners to build or improve federal facilities and donate it to the federal bodies, since government cannot loan itself funding.

As each $1 billion invested in infrastructure development has the potential to support more than 18,000 well-paying jobs, the American economy would benefit enormously from an ambitious increase in public investment and infrastructure investment. Such investment would not only create jobs, but also lock-in genuine full employment in the near-term, and would provide a needed boost to productivity growth in the medium-term.

Thursday, July 6, 2017

President Trump launches air traffic control reform

posted by: Kirill Abbakumov

On June 5, the Trump administration has begun rolling out reform for American air-traffic control system (ATC). The FY2018 federal budget request proposes to create a nongovernmental entity to manage the nation’s ATC system. Many countries have corporatized their air traffic control function, separating it from the governmental aviation safety regulation function. Calling for the separation of the ATC from the Federal Aviation Administration (FAA) will reduce congestion, flight times, and fuel usage, and will allow America to use and develop modern technology and communication equipment. This will improve safety and enhance America’s role in modern aviation technology.

President Trump announced his support of a proposal to shift the ATC function of the FAA to an independent, non-profit, non-governmental organization, while safety and regulatory functions would remain in the hands of the FAA.. Delays, wait times, and route inefficiencies prevalent in the current American system cost an estimated $25 billion a year in economic output. The reform would reduce aviation passenger taxes and the new entity would be responsible for setting and collecting fees directly from users based on their use of the American airspace. 

The new ATC privatization initiative will also benefit the U.S. aviation industry, which currently supports 1 out of every 14 American workers. The new non-profit corporation will not need any taxpayer funding and the privatization of ATC will reduce spending caps by $10 billion annually between 2021 and 2027. Additionally, the FY2018 budget proposes to reduce the various aviation excise taxes by an estimated $116 billion over the same period.

Last year, while debating a new FAA Reauthorization bill, Chairman Shuster pushed hard for ATC privatization, but in the end had to settle for an extension of the last authorization after the votes could not be mustered to support the spinoff.  With the president now providing support, Chairman Shuster has doubled-down on his efforts to see this privatization provision become a central part of a new authorization, due by the end of September 2017. 

Countries are major players in the debate over the reform of the ATC system as they own and operate 34% of the nation’s public airports. A central question remains as to the fate of smaller civil aviation facilities under privatization, as both local control and employment questions come to the forefront with the possibility of remote towers replacing manned towers at airport facilities. Some critics fear that a private corporation would decide it is more “economically viable” to maintain a current tower or consolidate control functions to a centralized location hundreds of miles away. In his remarks, President Trump did add assurances that rural airport facilities would benefit from the new ATC privatization push. However, he offered no specifics at this time.

Thursday, June 1, 2017

EDA announces new rounds of funding opportunities for entrepreneurs and EDOs

posted by: Kirill Abbakumov

On May 10th, 2017 the U.S. Economic Development Administration (EDA) today published the Notice of Funding Availability (NOFA) for its 2017 Regional Innovations Strategies (RIS) program with $17 million being made available to help spur innovation capacity-building activities in regions across the nation. Under this competition, EDA is seeking applications for two separate funding opportunities: the i6 Challenge and the Seed Fund Support (SFS) Grant competition.

  • The $13 million i6 Challenge helps entrepreneurs overcome barriers in building new companies and creating jobs by supporting the creation and expansion of programs that increase the rate at which innovations, ideas, intellectual property, and research are translated into products, services, viable companies, and, ultimately, jobs.
  • The $4 million Seed Fund Support (SFS) Grant Competition provide early-stage companies with funding for technical assistance and operational costs that support the planning, formation, launch, or scale of cluster-based seed funds that will invest their capital in innovation-based start-ups with a potential for high growth.

Prospective applicants are encouraged to refer to the Notice of Funding Availability on grants.gov for more details. The application period will close June 23, 2017.

On May 12th, 2017, the U.S. Department of Commerce announced the availability of funding for the FY 2017 International Engagement Ready Communities Competition. This $600,000 program seeks to help drive foreign direct investment (FDI) in U.S. communities with diverse economic development needs by enhancing their FDI attraction and export promotion efforts. The program also seeks to reduce resource constraints on economic development organizations (EDOs) that focus on investment promotion.

Through this program, EDA, SelectUSA, and the Trade Promotion Coordinating Committee (TPCC) will support empirical research on successful international engagement strategies and develop best practice reports and a competitiveness assessment tool. These elements will be incorporated into a user-friendly EDO toolkit and training guide to help local communities assess and increase their ability to become globally competitive while enhancing their trade and FDI promotion activities.

Eligibility is open to organizations engaged in economic or infrastructure development opportunities, including state and local governments, Tribal organizations, institutions of higher learning, and other related public or private organizations or associations.

Grant applications are due by June 12. For more information about how to apply, visit: https://www.grants.gov/web/grants/view-opportunity.html?oppId=293705, or contact: RNTA@eda.gov

Wednesday, May 31, 2017

NAWB launches online learning program to enhance workforce development

posted by: Kirill Abbakumov

On May 9th, 2017, the National Association of Workforce Boards (NAWB) and their network of American Job Centers announced the launch of Study Workforce, an online learning platform to support workforce board members, workforce development professionals, elected officials, and agency staff seeking to build their knowledge and skills in the workforce development sphere.

The Study Workforce platform is designed to help professionals involved in the workforce development arena to understand how the Workforce Innovation and Opportunity Act (WIOA) can be leveraged in support of a workforce and economic development agenda that builds communities and benefits constituents. Understanding how the workforce development system functions under WIOA can help professionals meet their goals of improving the lives of residents through education and job training, and enabling economic success and business competitiveness.

NAWB is a membership organization and advocate for more than 550 workforce development boards. The Study Workforce project was funded through a grant from the U.S. Department of Labor’s Employment and Training Administration.

Tuesday, May 30, 2017

New analytical tools released to assist economic developers

posted by: Kirill Abbakumov

On April 20, the Census Bureau has released the 2015 County Business Patterns, which provides detailed annual information on the number of establishments, employees, and first quarter and annual payroll at the national, state, county, metropolitan, congressional district, and five-digit ZIP code levels for nearly 1,200 industries. County Business Patterns debuted 71 years ago and has been published annually for the past 51 years. County Business Patterns data can be accessed by using multiple tools available via the Census Bureau website, including American FactFinder, QuickFacts, Census Business Builder, and My Congressional District.

In addition, USAFacts is a new data-driven portrait of the American population, government finances, and the government’s impact on society. The site relies on data from over 70 government agencies in order to present reliable, current data for use by various users, including economic developers.

The Economic Development Administration (EDA) has also recently updated numerous data tools for economic developers. In partnership with businesses and universities through its Research and National Technical Assistance program, EDA develops and promotes instrument that help communities develop strategic plans, locate and evaluate regional clusters, as well as explore existing innovation capacity.

The StatsAmerica Innovation Index 2.0 Tool is one of the instruments providing economic developers a quick and easy way to calculate whether a country, region, or neighbourhood meets EDA eligibility threshold for unemployment and income. This tool delivers an easy-to-compare method of assessing the innovation capacity of a region with data on: human capital, economic dynamics, productivity and employment, and well-being. The updated 2.0 tool expands on the original index by adding more than 50 new measures, such as an ability to account for regional knowledge spillovers, technology diffusion, and foreign direct investment.

Another tool that offers significant support to businesses, policy makers, academics, and economic developers is U.S. Cluster Mapping and Registry Tool. Funded by EDA and created in partnership with the Harvard University’s Institute for Strategy and Competitiveness, the U.S. Cluster Mapping tool is a national initiative that provides data on regional clusters and economies to support U.S. business, innovation and policy. The site also provides a cluster registry where cluster organizations can connect with key businesses, both up and down supply chains, in their respective regions to help advance cluster initiatives.

Together, these analytic tools offer comprehensive data and analysis that can inform stakeholders’ collective action and can guide complex decision-making at the regional level by identifying region’s capabilities, challenges, and potential.

Tuesday, May 30, 2017

FEMA’s disaster deductible proposal raises concern

posted by: Kirill Abbakumov

The Federal Emergency Management Agency (FEMA) has recently announced a proposal to implement a “disaster deductible” that would require states to satisfy an insurance-like deductible before receiving Public Assistance funding from the federal government to repair and rebuild damaged infrastructure after major disasters. After receiving initial comments from stakeholders in 2016, FEMA released the second iteration of the proposal in January 2017 to solicit further feedback.

The state deductibles would range from a high of nearly $53 million for California to a low of $1 million for Alaska, Vermont, and Wyoming. FEMA claims that states could cut their deductibles and earn “credits” by adopting and enforcing activities that support readiness, preparation, mitigation, and resilience. That would include things like revising building codes in areas prone to flooding or reducing dense brush and invasive plant species where wildfires might take place.

The recognisable danger in the proposal is that it would potentially violate current federal law that requires the federal government to provide a minimum of a 75% contribution on all public assistance funding provided following a disaster. The proposal is unclear on whether there are deductible offsets for investments that local governments made, and whether states have the sole authority to determine which projects would, and would not, receive funding when state deductibles have not been satisfied.

The current disaster deductible proposal by FEMA raises serious concern for local governments. According to the Congressional Research Service, there have been 13 disasters since 2000 that have each cost FEMA more than $500 million, while the agency’s disaster relief budget now exceeds $5 billion.

Friday, May 26, 2017

Fiscal 2018 White House budget proposal released and it is not good

posted by: Kirill Abbakumov

On May 23rd, 2017, the White House released its first full budget proposal calling for dramatic cuts to a range of federal programs, and providing a fresh insight into the administration’s priorities. While the proposed cuts were not unexpected, given the previously-released “skinny” budget in March that highlighted topline cuts to many agency budgets, the full budget documents released in on May 23rd provide more specific information about targeted programs.

The Department of Agriculture would see a myriad of programs eliminated under the FY 2018 budget. The Rural Business and Cooperative Program, Rural Water and Waste Disposal Program, as well as the Rural Economic Development program would all be eliminated given their “failure to meet program goals and duplicating efforts of other agencies.”

For the Department of Commerce, the FY 2018 budget would seek to eliminate the Economic Development Administration on the basis that its grant programs are duplicative of other economic development programs. Federal funding would also be slashed for the Manufacturing Extension Partnership (MEP) in order to save $124 million from “duplicate efforts of other federal programs and private sectors.” Similar fate and reasoning would await the Minority Business Development Administration (MBDA).

The Department of Education would see a 13.5% reduction in funding from $68.2 billion down to $59 billion in the proposed FY 2018 budget. The proposal would include cuts of roughly $168 million, or 15%, for career and technical education state grants under the Carl D. Perkins CTE Act; $96 million in cuts, or 16% to adult education state grants under WIOA Title II; and more than $500 million in cuts to the federal work-study program that support lower-income college students. The budget proposes eliminating the $730 million Supplemental Educational Opportunity Grants (SEOG). The budget does include funding for the Pell Grant program.

In the proposed FY 2018 budget, the Department of Labor would see a 19.8% decrease in funding from $12.1 billion down to $9.7 billion. The Workforce Innovation and Opportunity Act (WIOA) would see cuts of approximately $1 billion from the three state formula grants under Title I of WIOA, cutting WIOA Adult from $816 million to $490 million, Dislocated Worker state grants from just over $1 billion to $615 million, and reducing youth grants from $873 million to $416 million. This represent about a 40% reduction from current funding levels.

The Department of Housing and Urban Development would see a decrease of funding by 13.2%, from $46.9 billion down to $40.7 billion. Choice Neighborhoods, Community Development Block Grant (CDBG) program, and HOME Investment Partnership program are all slated for elimination, recognizing a greater role for state and local government and the private sector to address community revitalization needs.

The Department of Transportation would receive 12.7% cuts to its current $18.6 billion funding levels, down to $16.2 billion. The FY 2018 budget would seek to effectively eliminate funding for the “unauthorized TIGER discretionary grant program,” as it is suspected in awarding grants to projects that are eligible for funding under existing surface transportation formula programs.

The Budget proposes to eliminate the Appalachian Regional Commission, the Delta Regional Authority, the Denali Commission, and the Northern Border Regional Commission.

Though Congress is not expected to adopt all of the President’s proposals, the budget sets an unfortunate baseline for policymakers as they begin the FY 2018 budget and appropriations process.

Friday, May 19, 2017

Report on NAFTA highlights benefits for US manufacturers and SMEs

posted by: Kirill Abbakumov

In April, the U.S. Chamber of Commerce have published a report on the North American Free Trade Agreement (NAFTA) titled The Facts on NAFTA: Assessing Two Decades of Gains in Trade, Growth, and Jobs. The report highlights that a rising tide of commerce between the U.S. and Mexico has boosted competitiveness of American manufacturers and increased exports of small and medium-sized enterprises.

The report is published on the premise that there appear to be new opportunities for faster growth, deeper investment, and stronger North American competitiveness. This optimism stems from Trump administration’s commitment to revitalizing economic growth and maintaining a rocksteady strategic and economic partnership with Canada and Mexico.

The report also argues in favor of modernizing the trade agreement in order to strengthen economic ties that benefit Canada, U.S., and Mexico. Given that 14 million American jobs depend on the NAFTA agreement, which remains crucial to U.S. manufacturing, services, and agricultural sectors., there have been arguments in favor of modernizing the NAFTA agreement. Inclusion of such things as e-commerce and the digital economy would stimulate growth among 125,000 American small and medium-size businesses that rely on NAFTA for their exports.

Highlights of the report:

  • Trade with Canada and Mexico supports nearly 14 million American jobs, and nearly 5 million of these jobs are supported by the increase in trade generated by NAFTA.
  • NAFTA supports tens of thousands of jobs in each of the 50 states—and more than 100,000 jobs in each of 17 states.
  • Trade with Canada and Mexico accounts for $1.3 trillion, and the two countries buy more than one-third of U.S. merchandise exports.
  • NAFTA allowed U.S. manufacturers to add more than 800,000 jobs in the four years after NAFTA entered into force. Canadians and Mexicans purchased $487 billion of U.S. manufactured goods in 2014, generating nearly $40,000 in export revenue for every American factory worker.
  • NAFTA has helped U.S. agricultural exports to Canada and Mexico to increase by 350%.
  • With NAFTA, U.S. services exports to Canada and Mexico have tripled from $27 billion in 1993 to $92 billion in 2014.
  • Canada and Mexico are the top two export destinations for more than 125,000 of U.S. small and medium-size enterprises selling goods and services abroad in 2014.
Tuesday, May 16, 2017

Workforce and education programs largely maintained in FY 2017 omnibus package

posted by: Kirill Abbakumov

The funding levels for the rest of the year has been established as the FY 2017 omnibus package passed through Congress on May 3rd, and the set is now being set for what is expected to be a contentious FY 2018 process.

The Labor-HHS-Education section of the bill largely sustains or increases investments in federal workforce and education programs. The bill increases funding for apprenticeship programs at the Department of Labor (DOL) from $90 million in FY 2016 to $95 million in FY 2017, with DOL to build on ApprenticeshipUSA initiative and to focus on expanding opportunities for women in apprenticeship. Training and education services to young adults received an increase of $15 million over FY 2016 levels. The package also restores year-round Pell Grants, which allow low-income students to access a second Pell award in a calendar year in order to accelerate their studies.

For most other programs, the bill maintains spending levels, including state formula grants under Title I of the Workforce Innovation and Opportunity Grant (WIOA), adult education grants under Title II of WIOA, and Perkins career and technical education (CTE) grants. The bill does include modest cuts to certain programs, including elimination of funding for the Women in Apprenticeship and Non-Traditional Occupations (WANTO) grant program, as well as cutting $34 million for Senior Community Service Employment Program (SCSEP).

The Trump administration had pushed for significant cuts to FY 2017 spending, but ultimately Congress has rejected most of the administration’s proposals and instead focused on completing the current bill in order to avoid a potential government shutdown. It remains to be seen whether this support will carry over into FY 2018 appropriations process, where the President has suggested cuts of around 21% to the DOL budget and about 13% for Department of Education programs, including deep reductions in Pell Grants.

A detailed chart of spending levels for workforce and education can be found here.

Thursday, May 11, 2017

Congress outlines FY 2017 spending levels in omnibus spending package

posted by: Kirill Abbakumov

Congress outlines FY 2017 spending levels in omnibus spending package

After a last-minute effort to avoid the government shutdown on May 5th, Congress has passed an omnibus spending bill in order to fund the government for the rest of the fiscal year. The massive legislation contains more than $1 trillion that funnels extra money to the military, but rejects many of President Trump’s other signature spending proposals.

The omnibus bill provides an annualized total of $1.07 trillion in base spending for fiscal 2017 and contains the 11 unfinished fiscal 2017 appropriation bills. The legislation provides renewed spending instructions for every facet of the federal government that begins after the May 5th deadline of the previous continuing resolution that extended funding by a week.

Democratic leaders consider the bill a victory, claiming to have blocked 160 “poison pill” Republican policy riders and stymied many of President Trump’s priorities. No funding was included for the proposed wall on the Southern border or a so-called deportation force, but the package would provide another $1.5 billion for border security efforts including new technology and repairing existing infrastructure. $15 billion is also included for supplemental defense spending, about half the amount sought previously, which somewhat reduces the burden on federal economic development programs.

The legislation also addresses such national urgencies as:

  • $593 billion for defense;
  • More than $8 billion in emergency and disaster relief funding to fight wildfires, flooding and other extreme weather events in North Carolina, California, Louisiana, West Virginia and more;
  • $34 billion for the National Institutes of Health, a $2 billion or 6.2% increase from current levels;
  • Restored year-round Pell Grants for low-income college students;
  • $990 million in emergency famine relief, including $300 million for Food For Peace program;
  • $103 million to combat opioid abuse;
  • $1 billion in funding for miner’s health care;
  • Rejection of cuts to women’s health group Planned Parenthood.

The omnibus will fund agencies and Congress for the rest of fiscal 2017, which ends September 30.

On April 18, the Small Business Administration (SBA) announced its proposal to amend its small business size regulations to incorporate the Office of Management and Budget's (OMB) North American Industry Classification System (NAICS) revision for 2017, identified as NAICS 2017, into its table of small business size standards.

NAICS 2017 created 21 new industries by reclassifying, combining, or splitting 29 existing industries under changes made to NAICS in 2012 (NAICS 2012). SBA's proposed size standards for these 21 new industries have resulted in an increase to size standards for six NAICS 2012 industries and part of one industry, a decrease to size standards for two, a change in the size standards measure from average annual receipts to number of employees for one, and no change in size standards for twenty industries and part of one industry. SBA proposes to adopt the updated table of size standards, effective October 1, 2017.

Complete information on the relationship between NAICS 2012 and NAICS 2017 is available on the U.S. Bureau of the Census (Census Bureau) website​. Complete information on the proposed size standards and new industries can be found in the Federal Register pertaining to this announcement.

SBA welcomes public comment on this proposed rule until June 19, 2017. Submissions are accepted through the Federal Register or http://www.regulations.gov/.

Thursday, April 20, 2017

Applications open for Rural Cooperative Development Grants

posted by: Kirill Abbakumov

On March 22, 2017, the U.S. Department of Agriculture (USDA) published an announcement that the Rural Business-Cooperative Service agency is accepting fiscal year 2017 applications for the Rural Cooperative Development Grant (RCDG) program.

The primary objective of the RCDG program is to improve the economic condition of rural areas through cooperative development. Grants are awarded on a competitive basis. The maximum award amount per grant is $200,000. Grants are available for non-profit corporations or higher education institutions only. Grant funds may be used to pay for up to 75% of the cost of establishing and operating centers for rural cooperative development. Grant funds may be used to pay for 95% of the cost of establishing and operating centers for rural cooperative development, when the applicant is a Tribal Land Grant Institutions. Centers may have the expertise on staff or they can contract out for the expertise, to assist individuals or entities in the start-up, expansion or operational improvement of rural businesses, especially cooperative or mutually-owned businesses.

Electronic applications must be received by May 26, 2017, to be eligible for grant funding. Please review the Grants.gov Web site at http://grants.gov/​applicants/​organization_​registration.jsp for instructions on the registration process.

Thursday, April 13, 2017

Deteriorating transportation infrastructure begs for Congressional action

posted by: Kirill Abbakumov

On March 9, the American Society of Civil Engineers (ASCE) released its latest Infrastructure Report Card, which serves as a periodic assessment of the condition of American transportation infrastructure system, including roads, bridges, waterways, railways, public transit, and more. These findings confirm that America’s infrastructure is in desperate need of repair.

The report card grades the nation’s infrastructure as a D+ overall, and the study’s scores by category average between D’s and C’s. Some elements of the system were found to have made slight progress, while the rail sector was rated the highest, at B, thanks to a marked increase in private sector investment by the rail industry. However, a few key categories experienced decline, and several remained unchanged from the last analysis in 2013.

Infrastructure has always been the backbone of the U.S. economy and remains crucial for economic development. American businesses of every shape and size rely on airports, interstate highway system, and waterways daily to move their products and serve their customers. Congestion at airports makes travel problematic for business and leisure travelers alike, the main drivers of economic activity. Poor roads and railroads wear on the trucks and trains that carry goods across the country, reducing capacity and slowing the pace of deliveries. Crowded ports delay shipments from making their way onshore and being linked to the next step in the supply chain.

Investing in transportation infrastructure leads to effective development, faster economic growth and higher quality of life in urban and rural communities. Not maintaining the infrastructure will have the reverse effect. The most recent Department of Transportation conditions and performance report highlighted the current state of good repairs needed for highways and bridges at an estimated $830 billion. Of the total backlog, $394.9 billion (18.8%) is required for the Interstate System; $394.9 billion (47.2%) is for the National Highway System, and $644.8 billion (77.1%) is for Federal-aid highways.

President Donald Trump has announced his desire to enact an infrastructure investment package, and many in Congress, including leadership, have expressed a willingness to advance such legislation. During March and April, policymakers have offered various answers, including direct federal funding, revolving loan programs, tax-preferred financing, and public-private partnerships. To increase investment in transportation infrastructure that would benefit American communities directly, an infrastructure package should make use of a variety of funding and financing options to increase investment, while a long-term, sustainable funding source should serve as the anchor. With this, infrastructure will remain as the lifeblood of American businesses and communities, generating growth and prosperity for decades to come.

Monday, April 10, 2017

State and local officials eager to support infrastructure investments

posted by: Kirill Abbakumov

President Trump and congressional Democrats have proposed trillion-dollar infrastructure spending sprees, and among their most ardent allies are the nation’s governors who cite years of pent-up demand for fixing or expanding old assets and building new ones.

On February 13, the National Governors Association (NGA), in conjunction with 10 other state and local groups, has issued State and Local Fiscal Facts: 2017, a brief outlining the fiscal condition of state and local governments. In the past few years, the fiscal conditions of state and local governments have stabilized, but improvements have been uneven. Particular emphasis was placed on municipal bonds, which remain a critical tool for financing the construction or improvement of schools, streets, highways, hospitals, bridges, water and sewer systems, ports, airports, and other public works.

Between 2007 and 2016, states, countries, and other localities invested $3.8 trillion in infrastructure through tax-exempt municipal bonds, whereas the federal government provided nearly $1.5 trillion. The report emphasizes that it is now critically important that governors have many tools available in the toolbox to maintain and repair America’s infrastructure.

These efforts were joined on February 15 by National Association of Countries (NACo), as Central Region Representative Cindy Bobbitt emphasized counties' vast transportation infrastructure responsibilities. Counties own and maintain 45% of public road miles and nearly 40% of bridges, and are involved in a third of the nation's public transportation systems and airports. County infrastructure plays a critical role in moving freight and other goods to market, while modernizing industries, higher crop yields and new methods of energy extraction create immense stress on rural roads. Bobbitt underscored that the federal-state-local partnership on infrastructure, informed by county input, is crucial for economic competitiveness.

 “Governors look forward to working with the President to creating a 21st century infrastructure system that boosts the economy” stated NGA Executive Director and CEO Scott Pattison.

Friday, April 7, 2017

Budget request proposes cuts to essential Transportation programs and grants

posted by: Kirill Abbakumov

In the FY 2018 federal budget request released on March 16, the administration targets the reduction of discretionary spending for the Department of Transportation (DOT) by 12.7%, from $18.6 billion to $16.2 billion. It seeks to charter a private non-profit organization to take over air traffic control from the Federal Aviation Administration (FAA) and dismantle competitive grant programs meant to help transportation projects spur economic growth.

Trump’s proposal to spin off air traffic control (ATC) stalled last year, but as Congress begins work on reauthorizing the FAA which expires on September 30, there is now a push for establishing a private non-profit organization or a government corporation to operate the nation’s air traffic control system and separate it from the FAA. With President Trump embarking on loosening regulations and investing in infrastructure, removing the ATC system from federal control would insulate it from governmental “dysfunction.”

The budget also calls for eliminating the Essential Air Service (ESA), a subsidy program for airlines to provide passenger service to small and rural communities that would otherwise not be profitable. The EAS program assists airlines in serving small communities, and the elimination of funding would hurt rural counties where EAS services provide a crucial economic lifeline to communities with no airport in their region. The budget projected that eliminating the program would save $175 million over the annualized CR level.

The budget request also would eliminate the Transportation Investment Generating Economic Recovery (TIGER), a competitive grant program in which state and local governments request federal matching funds for projects with an economic impact. The request gives no details on the savings from the program. It was funded at $500 million in fiscal 2016 and has been proven popular, with the number of applications for TIGER grants exceeding the amount of funding.

The budget outline also would limit funding for the Federal Transit Administration’s New Starts program that provides grants for major rail-based public transportation projects. The White House called for those programs to be funded entirely at the local level. The outline asked Congress to fund only grants that have already been fully agreed to, indicating that no future grants would be approved.

The request would reduce federal funding for Amtrak, a long time target for GOP cuts. The White House called for eliminating federal support for long-distance service, saying it causes most of the organization’s operating losses. That approach would allow for a greater focus on more urgent priorities, like the Northeast Corridor lines and other state-supported passenger services. However, this could impact nearly 500 communities that are served by Amtrak.

The budget document stated the cuts would help the DOT focus on transportation needs of “vital national interests.” The budget request reflects a streamlined DOT that is focused on performing vital functions and reduces or eliminates programs that are either inefficient, duplicative of other Federal efforts, or that involve activities that are better delivered by States, localities, or the private sector.