The Infrastructure Investment & Jobs Act Offers Obvious & Unexpected Funding

Aug. 15, 2022
In the coming years, new batches of authorized funds could be on the table

The Infrastructure Investment and Jobs Act offers some of the largest federal investments in construction projects seen in years, if not never seen before. But after the law passes, a question arises: How do storm water projects access the money?

For the next several years, waves of funding authorized by the IIJA will flow through existing state and federal agencies to applicants as low-interest loans or grants. Some opportunities apply to stormwater infrastructure directly while others are relevant in a more roundabout way, since managing runoff is inherent to any transit or building project. 

One of the most-visible storm water funding opportunities could be through the Clean Water State Revolving Funds. Set up in 1987, the revolving funds have become a standard method for states to dole out federally-granted money for water quality infrastructure projects. From 2022 to 2026, the funds will offer an extra $11.7 billion due to IIJA allocations.

For the Metropolitan Water Reclamation District of Greater Chicago, the extra money could help tackle projects that have been lingering on the docket. The district receives an average of $88 million a year in clean water low-interest revolving fund loans, which are administered by the Illinois Environmental Protection Agency. In 2022 alone, the Illinois EPA received about $80.5 million for the clean water revolving funds to distribute to municipalities, thanks to the IIJA.

“​This will allow IEPA to work with the District on a larger, possibly multi-year program to address the [project] backlog the District has,” wrote Joanne So Young Dill, chief of strategy and external affairs for Commissioner Marcelino Garcia, MWRD, via email. The MWRD already plans to apply for the low-interest loans for green infrastructure installations, infiltration and inflow repair to sewers, treatment plant upgrades and more.

The MWRD serves 12.72 million people a day — it is a large, relatively resource-rich agency overseeing a combined sewer overflow system. But the thousands of Municipal Separate Storm Sewer Systems in the U.S. might not be as comfortable finding project funding via state revolving funds, said Seth Brown, a consultant with Storm and Stream Solutions, LLC and executive director of the National Municipal Stormwater Alliance.

Historically, nearly all clean water state revolving funds go to waste water, not storm water. Though the IIJA amended some rules around the clean water revolving funds to explicitly make storm water work eligible, MS4 systems might not have experience with applying through the program or state agencies that have previously deprioritized storm water project allotments. A MS4 lacking its own budget could struggle to prove that it could pay back the low-interest loan, a requirement of about half of the IIJA-allocated revolving funds. Creating the drafts necessary to land on the Intended Use Plan — the projects that state agencies draw from to determine what will receive revolving funds — requires money that a MS4 might not have, too.

Logistical challenges aside, there could be some easier avenues for MS4s to pursue for revolving funds. Of the $11.7 billion in clean water revolving funds, 49% has to be spent as grants to “disadvantaged communities.” Though definitions of the term vary by state, qualifying MS4s would not need to pay back the funds. The Sewer Overflow and Stormwater Reuse Municipal Grants (OSG) program could be another place to look for backing. The funding allocated through IIJA could kick in as early as 2023 and will send $1.4 billion through the OSG for storm water capital projects managed by CSO systems and MS4s. Though OSG money might also be dispersed through the state revolving funds, Brown said he thinks it should be easier to access as it was designed with stormwater systems in mind. 

Mark Strudley, the interim executive director of the Pajaro Regional Flood Management Agency based in Santa Cruz, California, also sees how a lack of knowledge about IIJA-based funds could keep disadvantaged communities from tapping into the offerings. The flood control agency he works for has a consultant and lobbyists, which are part of why the area recently received IIJA-based funding for the Pajaro River Flood Risk Management Project. 

“We are a very small flood control agency that is supported by a largely economically-disadvantaged community,” Strudley says. “It gets expensive to just have the right information at your fingertips, let alone to act upon it.”

The project Strudley is working on in California will add levees to protect the city of Watsonville and the town of Pajaro from 100-year floods. Of the $400 million price tag, the Army Corps of Engineers will provide $260 million due to the IIJA setting aside $17.1 billion for the engineering group. Keeping flood waters at bay is the primary goal of the project but stormwater control measures factor into the work, too. Several dozen culverts and a handful of pump stations in Watsonville will have to be replaced, since the structures will intersect with the new levees. It is still unclear whether the pump station and culvert work will be a state or federal responsibility, which determines if the ACOE $260 million goes towards the work, Strudley said. Either way, the ACOE funding pushes the entire construction process forward.

Like with the Pajaro River levees, stormwater projects could benefit from the IIJA if the work is incorporated into other infrastructure overhauls, whether its highway development or a rapid-transit corridor. Both funding pools already exist: The legislation put $1.2 billion towards the Appalachian Development Highway System and $6.4 billion for projects that reduce transit emissions, which could mean developing bike lanes, constructing bus corridors and more. All of these projects deal with runoff. 

“Doing stormwater for the sake of stormwater is the most expensive way of doing it. But if you can fit it into roadway or transit, you can cut the cost in half,” Brown saids.  

Storm water departments and other municipal agencies benefit from planning together and communicating about weaving their work into one another's projects, Brown said, and he has seen significant payoff for the relatively-small amount of internal communication necessary.

“We're the kind of sector that finds funding in the couch cushions,” Brown said. So when it comes to what the IIJA has to offer, “ we need to be aware of all these options.”

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Leslie Nemo

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