HIGHLIGHTS:

  • The U.S. Department of Transportation (DOT) has issued a Notice of Funding Opportunity (NOFO) for the $1.5 billion in surface transportation grants provided by the FY 2018 Omnibus Appropriations legislation.
  • This client alert provides key details regarding the Better Utilizing Investments to Leverage Development (BUILD) grants, which replaces the Transportation Investment Generating Economic Recovery (TIGER) program.
  • BUILD grants may not be less than $5 million and not greater than $25 million, except that for projects located in rural areas where the minimum grant size is $1 million.

On April 20, 2018, the U.S. Department of Transportation (DOT) issued a Notice of Funding Opportunity (NOFO) for the $1.5 billion in surface transportation grants provided by the FY 2018 Omnibus Appropriations legislation. The Transportation Investment Generating Economic Recovery (TIGER) program has been renamed as Better Utilizing Investments to Leverage Development (BUILD).

This client alert provides the key details and interest points regarding the funding opportunity.

Deadline: Applications must be submitted by 8 p.m. Eastern on July 19, 2018. The FY 2018 Omnibus Appropriations bill, enacted on March 23, required that the NOFO be issued within 60 days of enactment of the bill. DOT released the NOFO in only 28 days.

Rural Projects Will Be Prioritized for BUILD: "The FY 2018 BUILD Transportation program will continue to give special consideration to projects located in rural areas." During the 2017 round, DOT awarded 64 percent of the funds to rural projects even though the FY 2017 Appropriations bill had a rural set-aside of 20 percent. The FY 2018 Omnibus Appropriations bill increased the rural set-aside to 30 percent.

DOT's Priorities: DOT staff have said that the agency's priorities are rural, road, freight/intermodal, and innovation (AVs, ITS, etc.). In addition, the NOFO includes a section for applicants to explain new transportation revenue.

The FY 2018 appropriations bill was specific about the DOT not prioritizing cost share: "the Secretary shall not use the Federal share as a selection criteria in awarding projects." However, the NOFO does indicate that DOT is still focusing on this issue:

"The Administration believes that attracting significant new, non-Federal revenue streams dedicated to transportation infrastructure investment is desirable to maximize investment in transportation infrastructure. The Department will assess the extent that applications provide evidence that the applicant will secure and commit new, non-Federal revenue to transportation infrastructure investment. New revenue means revenue that is not included in current and projected funding levels and results from specific actions taken to increase transportation infrastructure investment. For example, an applicant may generate new revenue through asset recycling, tolling, tax-increment financing, or sales or gas tax increases.
New revenue does not include the proceeds of a new bond issuance unless an applicant raises or commits to raising new revenue to repay the bonds. The Department will consider actions to create new revenue only if those actions occurred after January 1, 2015 or will occur in the future; it will not consider actions that occurred before January 1, 2015. For applications that propose to generate revenue over multiple years, the maximum time period that should be used is 10 years, beginning on January 1, 2018. Among otherwise similar applications, applicants that generate more new non-Federal revenue for future transportation infrastructure investment will be more competitive. The Department recognizes that applicants have varying abilities and resources to generate non-Federal revenue. If an applicant describes broader legal or fiscal constraints that affect its ability to generate non-Federal revenue, the Department will consider those constraints. As mandated by the FY 2018 Appropriations Act, the Department will not use the Federal share as a selection criterion in awarding projects."

Award Size/State Allocation: Grants may not be less than $5 million and not greater than $25 million, except that for projects located in rural areas and the minimum grant size is $1 million. There is no statutory minimum grant size, regardless of location, for BUILD Transportation Planning grants.

No more than 10 percent, or $147.5 million, can be awarded to a single state, as specified in the FY 2018 Omnibus Appropriations bill.

Spending Requirements for BUILD Funds: Funds are only available for obligation through September 30, 2020. Obligation occurs when a selected applicant and DOT enter into a written grant agreement after the applicant has satisfied applicable administrative requirements, including transportation planning and environmental review requirements. All FY 2018 BUILD funds must be expended (the grant obligation must be liquidated or actually paid out to the grantee) by September 30, 2025.

Cost Sharing: For a project located in an urban area, the Federal share of the costs for which an expenditure is made under a BUILD Transportation grant may not exceed 80 percent. DOT "will not consider previously incurred costs or previously expended or encumbered funds towards the matching requirement for any project."

Eligible Projects

  • Highway, bridge, or other road projects eligible under title 23, United States Code
  • Public transportation projects eligible under Title 49
  • Passenger and freight rail transportation projects
  • Port infrastructure investments, including inland port infrastructure and land ports of entry
  • Intermodal projects
  • Planning: For the first time since 2014, the FY 2018 Omnibus Appropriations bill allows grant program to fund planning grants. Allows up to $15 million for the planning, preparation or design of projects. Activities eligible for funding under Planning Grants include: planning, preparation, or design – including environmental analysis, feasibility studies, and other pre-construction activities of surface transportation projects.

Funding Project Components: DOT often provides TIGER grant funding for a project components. The NOFO states that DOT "strongly encourages applicants to identify in their applications the project components that have independent utility and separately detail costs and requested BUILD Transportation funding for those components. If the application identifies one or more independent project components, the application should clearly identify how each independent component addresses selection criteria and produces benefits on its own, in addition to describing how the full proposal of which the independent component is a part addresses selection criteria."

Independent utility is defined as "the component will represent a transportation improvement that is usable and represents a reasonable expenditure of DOT funds even if no other improvements are made in the area, and will be ready for intended use upon completion of that component's construction."

Criteria

The Department encourages applicants to either address each criterion or expressly state that the project does not address the criterion.

"To minimize redundant information in the application, the Department encourages applicants to cross-reference from this section of their application to relevant substantive information in other sections of the application."

  • Safety is still a priority and remains the same as the 2017 NOFO: "The applicant should include information on, and to the extent possible, quantify, how the project would improve safety outcomes within the project area or wider transportation network, to include how the project will reduce the number, rate, and consequences of transportation-related accidents, serious injuries, and fatalities among transportation users, or how the project will eliminate unsafe grade crossings or contribute to preventing unintended releases of hazardous materials."
  • State of Good Repair: This priority is largely the same, but the NOFO adds a reference to border security infrastructure. As in the previous NOFO, mentions life-cycle costs.
  • Economic Competitiveness: Similar to previous NOFO but drops the public-private partnerships that was included in last year's NOFO.
  • Environmental Protection: Renamed. This was previously called environmental sustainability. Same as previous NOFOs.
  • Quality of Life: New language has been added to emphasize Indian tribal needs and rural broadband integration with infrastructure:
Americans living in rural areas and on Tribal lands continue to disproportionately lack access and connectivity, and the Department will consider whether and the extent to which the construction of the transportation project will allow concurrent installation of fiber or other broadband deployment as an essential service.
  • Innovation: This NOFO promoted innovation to a primary selection criterion. DOT staff have emphasized that this is one of their top priorities for awarding BUILD grants.
    • Innovative Technologies
    • Innovative Project Delivery: Applicants should "describe those project delivery methods and how they are expected to improve the efficiency of the project development or expedite project delivery."
    • Innovative Financing: "Incorporate innovative funding or financing, the applicant should describe the funding or financing approach, including a description of all activities undertaken to pursue private funding or financing for the project and the outcomes of those activities."

DOT Review

First, technical evaluation teams made up of career DOT staff will determine whether projects satisfy statutory requirements and rate how well they address the selection criteria outlined in the NOFO, and will provide a score. Then, a Senior Review Team, comprising of DOT leadership, will consider the applications and the technical evaluations to determine which projects will advance to the Secretary for consideration. Finally, the Secretary will make the final selection for awards.