Accessing federal funds for your local government project


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I recently had the opportunity to attend an excellent Minnesota Transportation Alliance workshop on accessing federal funds for local transportation projects and would like to share some highlights.

Three paths to federal funds

There are three paths to obtaining federal funds for your project under the Infrastructure Investment and Jobs Act (IIJA), the current federal transportation bill: formula funds, discretionary grants, and Congressionally directed spending projects.

Formula funds are distributed through the Area Transportation Partnerships (ATPs) Program administered by MnDOT State Aid. The additional funds from IIJA have been successfully distributed for one annual cycle. (See “Federal infrastructure law increases funds for local agencies” article in the December 2022 issue of the Technology Exchange for a discussion.)

The funds were essentially folded into the existing ATP process. They can be used on existing programmed projects, cover increased project costs due to inflation, and fund new programs.

A new Federal Bridge Fund Program, funded by General Revenue funds rather than the Highway Trust Fund, will be of special benefit to local governments. The program will be administered through the ATPs and include an amount set aside for off-system bridges.

The Transportation Alternatives Program continues with increased funding. These funds, often used for bicycle and pedestrian facilities, will continue to be administered through the ATPs. Formula funds are 90 percent of the federal transportation funds distributed to the states.

Discretionary grants are the focus of this article. This is a very complex program, with grants available for many transportation purposes. A list of grants and their descriptions is beyond the scope of this article; however, MnDOT has prepared one-pagers for each grant (see below). The State of Minnesota received $219 million for 42 successful grant applications. In 2022, local governments received grants for airport infrastructure, an airport terminal, an airport contract tower, buses and bus facilities, bridge investment program planning, low-emission vehicle charging, several grants for roads and bridge projects under the RAISE program, reconnecting communities for a land bridge, and several comprehensive safety plans under the Safe Streets for All program. With careful searching, there is probably a grant program for your special transportation-related needs, but unless your agency has a planning and investments staff, it may require a consultant experienced with the program to assist you.

Congressionally directed spending projects are included in the annual federal appropriations bill. Representatives from the offices of Senator Klobuchar and Senator Smith suggested local governments apply to both senators and to their district’s House of Representatives office. Contact their offices for application forms and the annual application schedule. Visits with local and Washington, DC, congressional staff are also very helpful in sharing details and benefits of your project as well as establishing a personal working relationship with congressional staff. In 2022, 13 of 63 requested local projects were approved at an average funding of $3.5 million each. In 2023, at least 20 transportation-related grants will be awarded.

Technical grant assistance program for discretionary grants

To assist local governments in applying for discretionary grants, the 2023 Legislature under Chapter 68 Article 1 Section 2 Subdivision 5a provided funds for a technical grant assistance program. Grants of up to $30,000 for preparing grants for projects meeting evaluation criteria are available. Cities, counties, and tribes are eligible to apply. A local government may use these funds for grant application-related purposes including hiring a consultant to identify applicable grants, developing a benefit-cost analysis (BCA) project planning, pre-engineering, and preparation of the grant application.

The legislature also approved matching funds under Chapter 68 Article 1 Section 2 Subdivision 5a for federally funded construction projects, including local government projects, in an amount of the needed match up to $10,000,000. The legislature provided $216,400,000 for this purpose available to June 30, 2027.

MnDOT State Aid is developing grant information and forms, which will be posted on its website soon. Your State Aid engineer and State Aid Central Office, as usual, will be a great asset in developing a successful discretionary grant project. MnDOT has done an excellent job of programming for this new and complex federal transportation bill. With lots of programs, many recipients, and public and elected official transparency and accountability, this is a challenging task.

Grant applications will be evaluated by the FHWA and compete nationally, perhaps with some consideration for geographical equity. Since the grant applications can be costly and time-consuming to prepare, it is suggested the BCA be done first to ensure this critical criterion is met. Partnerships with other local, state, and private partners show support for the project and are valuable in winning a grant.

Be persistent with your project—if your grant is rejected, determine why and resubmit with an improved project. The FHWA (for road and bridge projects) and the FTA (for transit projects) are open to reviewing rejected applications with you to aid in developing a stronger application for the next funding cycle.

Discretionary grant projects: Hennepin and Clay Counties

At the Alliance workshop, Hennepin and Clay Counties presented successful discretionary grant projects. Some lessons learned: federal review is detailed and time-consuming, and it may be an iterative process requiring multiple grant submittals. Some tips:

  • Start early.
  • Develop partnerships to share cost and show strong local and state support.
  • Do careful planning and preliminary environmental, economic, and engineering to develop a strong, competitive application.

The Moorhead project in Clay County is an excellent example illustrating these steps to success. Two railroad lines with heavy traffic cut through the downtown area, interrupting the flow of traffic and delaying emergency vehicles. The city, state, and county had been working together for several years to develop a large railroad/roadway separation project. A funding package of $63 million state bonding, $10.7 million MnDOT, $0.5 million Clay County, $4.0 million BNSF, and $3.0 million City of Moorhead had been developed to fund the project.

However, increased costs due to inflation left a $33.5 million gap. A BCA was developed showing safety, environmental sustainability, mobility, and connectivity and economic competitiveness benefits clearly exceeded project costs, for a BCA of 1.41. Preliminary engineering and environmental analysis showed the feasibility of the project and readiness to proceed. Multiple local funding sources showed the partnership effort and local support.

The FHWA evaluated the strong application and awarded a discretionary RAISE grant of $33.5 million, allowing the project to proceed. A great project, thorough project development—and persistence paid off!

Learn more:

One-pagers describing transportation grants developed by SRF for MnDOT: