We have reviewed the legislative language and report of the stimulus to identify key opportunities as well as potential challenges for states, cities, local governments and municipalities.

We are finding that there is significant misunderstanding with regard to the stimulus legislation. Because so much attention has been paid to the highway and transportation elements of the bill, there has been a significant local focus on state DOT's. But, only $30 billion of the $825 billion in the legislation is for highways. There are close to 200 separate funding elements in the legislation under consideration. For each funding element (program), there is a different distribution mechanism. Funds will be distributed by formula, by competitive grants, by states and through mechanisms that have not yet been developed.

  • Where there are existing allocation formulas, funds will be distributed using those formulas. For example, cities will receive additional CDBG funding. They won't have to do anything to receive that funding.
  • Some funds will go the state, and the state will have control of the funds (they may make funds available to communities, but the state will not be required to do so).
  • Some funds will go to the state, and the state will allocate to communities and other eligible entities. Highway funding will be distributed by the state.
  • Some funds will be allocated by federal agencies through a competitive grant process.
  • And, in some cases, a distribution mechanism has not been developed.

To add to the complexity, there are also a mix of distribution mechanisms for some of the funding elements. For example, transit agencies will receive funds by formula, and there will be completive grants available from the FTA. For public housing agencies, the same situation exists — some funds will be distributed by formula, and there will be significant funding available through competitive grants.

Communities need to know that "one stop shopping" does not exist. If they want to maximize federal funding opportunity, they will need to delve into the details of the legislation and match their funding needs with the various funding opportunities.

Here is a summary of the programs that may become available to states, cities, local governments and municipalities:

  • Title III: Commerce, Justice and Science
  • Title V: Energy and Water
  • Title VII: Interior and Environment
  • Title IX: Labor, Health and Human Services, and Education
  • Title XII: Transportation, Housing and Urban Development
  • Stimulus Tax Provisions  

Title III: Commerce, Justice and Science

State and Local Law Enforcement Activities: Byrne Justice Assistance Grants

$3 Billion

The legislation provides $3 billion for the Byrne JAG grants (formula), which supports a variety of activities, including the purchasing of equipment, operations and support for other associated law enforcement personnel (e.g., public defenders).

State and Local Law Enforcement Activities: Community Oriented Policing Services

$1 Billion

This program provides a three-year subsidy (75 percent federal share) to hire and pay the salaries and benefits of new law enforcement officers. The legislative provision calls for peer-reviewed grants to be awarded within 120 days.

Title V: Energy and Water

Department of the Army

Corps of Engineers

$4.5 Billion

The funding will provide improved flood protection, navigation and hydropower, as well as increase the efficiency of the nation’s existing water resource infrastructure. The funding will be used to accelerate the completion of ongoing capital improvement projects or initiate new elements of existing projects that can be built within the next year. Of the amount provided, $2 billion is allocated to the construction account.

Grants to Institutional Entities for Energy Sustainability and Efficiency

$1 Billion

This funding would provide $1 billion in grants to institutional entities to identify, design and implement sustainable energy infrastructure projects and grants for energy efficiency innovative technologies projects on grounds and facilities of institutions. The term institution includes institutions of higher education, public school districts, local governments and municipal utilities.

Institutional Loan Guarantee Program

$500 Million

Funding in the amount of $500 million is for loans to institutional entities for identifying, designing and implementing sustainable energy infrastructure projects and grants for energy efficiency innovative technologies projects on grounds and facilities of institutions. The $500 million for the loans is estimated to support $5 billion in loans. The term institution includes institutions of higher education, public school districts, local governments and municipal utilities. This program complements the grant program for institutions provided above.

Energy Efficiency & Conservation Block Grants

$3.5 Billion

The Energy Efficiency and Conservation Block Grant Program will assist states, local governments and Indian tribes in implementing strategies to reduce fossil fuel emissions created as a result of activities within the jurisdictions of the eligible entities and reduce the total energy use. Activities eligible to receive funding include conducting residential and commercial building energy audits, establishing financial incentives programs for energy efficiency improvements, grants to nonprofits organizations to perform energy efficiency retrofits, developing/implementing programs to conserve energy used in transportation, developing and implementing building codes and inspections services to promote building energy efficiency, installing light emitting diodes (LEDs) and developing, implementing and installing on or in any government building onsite renewable energy technology that generates electricity from renewable sources.

Transportation Electrification

$200 Million

Federal funding is provided to implement a grant program to states, local governments and metropolitan transportation authorities for qualified electric transportation projects that reduce emissions, including shipside electrification of vehicles, truck stop electrification, airport ground support equipment and cargo handling equipment. The identified projects range from replacing diesel engines with electric to installation of dockside electrification capability to reduce the emissions from ships.

Alternative Fueled Vehicles Pilot Grant Program

$400 Million

This funding would be used to establish a grant program through the DOE Clean Cities Program to encourage the use of plug-in electric drive vehicles or other emerging electric vehicle technologies. This grant program may provide up to 30 geographically dispersed project grants. Grant recipients include state governments, local governments, metropolitan transportation authorities, air pollution control districts and private or nonprofit entities. These grants may be used for the acquisition of alternative fueled vehicles, fuel cell vehicles or hybrid vehicles, including buses for public transportation and ground support vehicles at public airports. The installation or acquisition of infrastructure necessary to directly support an alternative fueled vehicle, fuel cell vehicle or hybrid vehicle project funded by the grant is also eligible.

Title VII: Interior and Environment

State and Tribal Assistance Grants: Clean Water State Revolving Fund

$6 Billion

Funding is distributed by a statutory formula to states and territories to capitalize their revolving loan funds which then finance publicly owned water infrastructure improvements. Stipulations include requirements for states to use 50 percent of the capitalization grant received to provide assistance in the form of additional subsidization, including forgiveness of principal, negative interest loans and grants to municipalities for projects that are included on the state's priority lists. Additionally, 80 percent of which will be for projects that benefit municipalities that meet affordability criteria as determined by the Governor of the state, and 20 percent will be for projects that address water-efficiency goals, energy efficiency goals, mitigate storm water runoff or encourage environmentally sensitive project planning, design and construction.

State and Tribal Assistance Grants: Drinking Water State Revolving Fund

$2 Billion

Funding is provided for grants distributed by formula to states to capitalize their revolving loan funds which will then finance drinking water infrastructure improvements. States must use 50 percent of the amount received for additional subsidization, including forgiveness of principal, negative interest loans and grants to municipalities for projects that are included on the state's priority lists.

State and Tribal Assistance Grants: Diesel Emissions Reduction Act (DERA) Grants and Loans

$300 Million

Funding is provided for grants and loans to states and local governments for projects that reduce diesel emission. Priority projects include those that maximize public health benefits by significantly reducing particulate matter emissions which are a significant threat to both human health and a likely contributor to global warming. The program also targets geographic areas with high air pollution and air toxics and areas that receive a disproportionate quantity of air pollution, such as truck stops and ports. By statute 70 percent of the monies fund nation-wide, competitive grants, which are matched $1.38 for every dollar awarded according to the EPA. The remaining 30 percent will fund grants to states with approved programs. Projects funded through DERA grants require technology and equipment manufactured through three sectors: auto parts manufacturing, auto repair and maintenance, and heavy duty truck manufacturing.

Examples include:

  • Establish anti-idling programs
  • Technologies to retrofit emission exhaust systems, such as on school buses and other vehicles, replace engines and vehicles

State and Tribal Assistance Grants: Brownfields

$100 Million

Funding is provided brownfields competitive grants to address environmental site assessment and cleanup, 25 percent of which are mandated by law to address petroleum contamination. Funds will capitalize revolving funds and provide low interest loans, job training grants and technical assistance to local governments and nonprofit organizations.

Title IX: Labor, Health and Human Services, and Education

Subtitle C: Education: 21st Century Green High-Performing Public School Facilities

$14 Billion

Grants under this section shall be for modernizing, renovating or repairing public school facilities, based on their need for such improvements to be safe, healthy, high-performing and up-to-date technologically. Each state shall be allocated an amount proportionate to the amount received by school districts in Title I funding. States will provide technical assistance to local school districts and develop a database that inventories public school facilities in the state and the modernization, renovation and repair needs of, energy use by and carbon footprint of such schools, and develop a school energy efficiency plan. States will award grants to Title I-eligible local school districts for school modernization, renovation or repair such as:

  • Repairing or replacing roofs;
  • Repairing or replacing heating, ventilation, air conditioning systems; bringing public schools into compliance with fire, health and safety codes; and modifications to comply with the Americans with Disabilities Act;
  • Asbestos or polychlorinated biphenyls abatement or removal;
  • Implementation of measures to reduce or eliminate human exposure to lead-based paint and mold or other environmental remediation;
  • Upgrading and installing educational technology infrastructure, which includes wiring, acquiring hardware or software, connectivity linkages and transmission equipment;
  • Repairing or renovating science and engineering laboratories, libraries and career and technical education facilities;
  • Improvements to building infrastructure to accommodate bicycle and pedestrian access;
  • Installation of renewable energy generation and heating systems; and
  • Other modernization or repairs to public school facilities to improve teachers' ability to teach and students' ability to learn, ensure health and safety of students and staff, make them more energy efficient or reduce class size.

Funds cannot be used for payment of maintenance of costs, stadiums or other facilities used for athletic contests or exhibitions. All iron or steel used in the construction project must be produced in the United States (unless the cost will increase the project by more than 25 percent), and local school districts must contract to make use of funds within the two-year period or return the funds back to the state. At least 25 percent of the funds must be used to deem a building:

  • LEED Green Building Rating System;
  • Energy Star
  • CHPS Criteria; or
  • Green Globes.

In addition, funds will be provided to encourage Youthbuild activities. Local school districts must report to the Secretary of Education on the use of funds for the project.

Title XII: Transportation, Housing and Urban Development

Highway Infrastructure Investment

$30 Billion

Funds are distributed by formula, with a portion of the funds within each state being suballocated by population areas. Approximately 55 percent of highway money will go directly to state department of transportation departments and the remaining 45 percent will be distributed by a formula similar to the Surface Transportation Program (STP; 10 percent is dedicated to transportation enhancements, 62.5 percent is suballocated by population and 37.5 percent is spent at the state DOT's discretion). The U.S. Conference of Mayors is resisting this distribution formula, urging legislators to use the STP formula for all funds.

Set asides are also provided for park roads and parkways; on-the-training programs focused on minorities, women and the socially and economically disadvantaged; a bonding assistance program for minority and disadvantaged businesses; and environmentally friendly transportation enhancements. These funds will be used for ready-to-go, quick spending highway projects for which contracts can be awarded quickly. Priority will be given to projects that meet the following criteria:

  • Are on the Statewide Transportation Improvement Plan (STIP) and/or the Metropolitan Transportation Improvement Plan.
  • Projected to be completed within a three-year time frame
  • Projects must be located in an economically distressed area

Housing and Urban Development: Elderly, Disabled and Section 8 Assisted Housing Energy Retrofit

$2.5 Billion

Funding will be awarded competitively to renovate and retrofit federally-assisted housing, including Housing for the Elderly (Section 202), Housing for Persons with Disabilities (Section 811) and Project-Based Section 8 units. These units are aging and in need of energy efficiency retrofits, which will reduce the carbon footprint, as well as reduce the utility bills for the residents of these homes. Details of this provision include:

  • The loans or grants shall be provided through the Office of Affordable Housing Preservation of the Department of Housing and Urban Development.
  • Eligible owners must have at least a satisfactory management review rating, be in substantial compliance with applicable performance standards and legal requirements, and commit to an additional period of affordability determined by the Secretary.
  • The Secretary may provide additional incentives if such investments resulted in extraordinary job creation for low-income and very low income persons.

Community Development Block Grants

$1 Billion

The funding provided in this legislation will be distributed through the existing formula, though there will be an accelerated time frame. Funding will help to support community services, provide infrastructure dollars for local governments and will help to stem the number of foreclosures in local communities. As the city is not a direct recipient, it will need to apply to the state for an allocation.

Neighborhood Stabilization Program

$4.19 Billion

Nearly $4 billion was provided for the Neighborhood Stabilization Program through the Housing and Economic Recovery Act of 2008. This funding was provided to local governments and states with high levels of foreclosures as a way for the local community to purchase and rehabilitate this vacant housing. In an effort to eliminate blight and return these vacant units to use as affordable rental housing and affordable homeownership opportunities, this funding will help local communities remediate the consequences of the foreclosure crisis and will increase the number of assisted low-income families.

  • $3.4 billion will be awarded through competition of states, units of local government and nonprofit organizations.
  • $750 million will be awarded through competition to nonprofit entities to provide stabilization assistance.

HOME Program

$1.5 Billion

HOME is a very flexible source of dollars for local jurisdictions, and funding provided through

this account will help to rehabilitate and construct housing. HOME funds will serve as a financing mechanism to fill the gaps left by the private market. Funds are distributed by formula and are meant to encourage building sustainable, low income units with green technologies.

Stimulus Tax Provisions

While tax credits may not benefit the city, these might be incentives for private partners. Also included below are tax incentives that may help the local communities at large—particularly schools and homes — become more green.

Education Investments

Education: The "American Opportunity tax credit" credits up to $2,500 toward the cost of tuition and related expenses. Taxpayers will receive a tax credit based on 100 percent of the first $2,000 spent on tuition and related expenses, including books, and 25 percent of the next $2,000 spent. 40 percent of the credit would be refundable and is subject to a phase out for taxpayers with a adjusted gross income over $80,000 for individuals and $160,000 for couples. The Treasury is also required to do a study on the effectiveness of the credit and another study on the imposition of community service requirements.

Recovery Zone Bonds: The package also provides tax credit bonds to economic “recovery zones” for economic development initiatives such as job training and education. The bill authorizes $10 billion for recovery zone economic development bonds and $15 billion in recovery zone facility bonds to be issued during 2009 and 2010. Any municipality that has significant poverty, unemployment or home foreclosures is eligible.

Renewable Energy Investments

Renewable Energy Production Tax Cut: The bill extends the placed-in-service date through December 31, 2012, for wind facilities, closed-loop biomass facilities, open-loop biomass facilities, geothermal facilities, small irrigation facilities, hydropower facilities, landfill gas facilities, waste-to-energy facilities and marine renewable facilities.

Investment Tax Credits: The bill allows the aforementioned energy facilities that are placed-in-service in 2009 and 2010 to get an investment tax credit for a 10-year period in lieu of a production tax credit.

Clean Renewable Energy Bonds: The bill authorizes $1.6 billion for new clean renewable energy bonds to finance facilities that generate electricity from wind, closed-loop biomass, open-loop biomass, geothermal, small irrigation, hydropower, landfill gas, marine renewable and trash combustion facilities. $533.3 million is available for state, local and tribal governments; $533.3 million is available for public power providers; and $533.3 million is available for electric cooperatives.

Energy Conservation Bonds: The bill authorizes $2.4 billion of qualified energy conservation bonds to finance state, municipal and tribal government programs and initiatives designed to reduce greenhouse gas emissions.

Tax Credits for Energy-Efficient Improvements to Existing Homes: The bill extends tax credits for improvements to energy-efficiency in existing homes through 2010. For 2009 and 2010, the amount of tax credit available will be 30 percent of the amount paid or incurred by the taxpayer for the costs of the improvements. The bill also eliminates the property-by-property dollar caps and provides an aggregate cap of $1,500 on all qualifying properties.