The Reed Smith Public Policy & Infrastructure Practice continues to monitor discussions and developments concerning implementation of the "American Recovery and Reinvestment Act of 2009," Public Law 111-5, ("ARRA"). The most recent development is the announcement from the Department of Education ("Department") of $59.4 million in grants under the Impact Aid Discretionary Construction Program funding for public elementary and secondary school facilities. These projects fall in two areas: 1) emergency repair projects that address threats to the health and/or safety of students and staff, such as the need for upgraded fire alarm systems; 2) modernization projects that either help address enrollment concerns, such as the construction of new classrooms, or support educational programs, such as the construction of a science laboratory (Catalog of Federal Domestic Assistance (CFDA) Number 84.401).

This Client Alert describes the Impact Aid Program and its funding under ARRA as well as details of this specific funding opportunity, including: average grant awards; allowable and prohibited activities; preferences for funding; selection criteria; and deadlines for submission of applications.

We also note that eligibility is limited specifically to school districts eligible to receive "Impact Aid" funding from the federal government, and discuss this eligibility below.

Since the passage of ARRA, the Public Policy & Infrastructure Practice has worked with a number of Reed Smith clients in crafting competitive applications for grant funding and complementary strategies to achieve funding, including obtaining support and assistance from Members of Congress. Reed Smith also has a significant Education Practice assisting with this effort. We remain available to help complete a competitive application for funds under this program.

  1. The Impact Aid Program and the Construction component and its funding under ARRA

Congress established the Impact Aid Program "to assist local school districts that have lost property tax revenue due to the presence of tax-exempt Federal property, or that have experienced increased expenditures due to the enrollment of federally connected children, including children living on Indian lands" (www.ed.gov). It has four components: 1) Payments for Federal Property, which provides property tax assistance for school districts with federal land; 2) Basic Support Payments, for districts that educate children who live on federally connected lands, including Indian lands, and those who reside in federally subsidized low-rent housing; 3) Children with Disabilities Payments; 4) Construction Grants to pay for construction and repair of school buildings.

ARRA appropriates $100 million for construction under the Impact Aid Construction Program: $39.6 million for formula grants, and $59.4 million for competitive discretionary construction grants, which is the subject of the announcement.

  1. Eligibility is limited

Eligibility under this grant program is limited to school districts that were eligible in Fiscal Year 2008 to receive federal assistance under either the Payments for Federal Property or Basic Support Payments components of the Impact Aid Program, as described above. In addition, a school district must "have a total assessed value for real property that is taxable for school purposes of less than $100 million OR an assessed value of real property per pupil that may be taxed for school purposes that is less than the State average assessed value per pupil."

  1. Funding, allowable and prohibited activities, Department preferences, and average grant awards

According to the announcement, $59.4 million in funding is available for grants for emergency repairs and modernization of school facilities. Of the two, projects dealing with emergency repairs will receive a higher ranking and be awarded an additional 5 points by the Department in the review process. In addition, 2 extra points will be awarded for those projects that can be completed within 12 months of the grant award, and 1 extra point will be awarded to those projects that can be completed from 12-24 months from the time of the grant award.

Allowable activities: the Department of Education website notes: "[f]unds ... may generally be used for elementary and secondary school construction activities, including the preparation of drawings and specifications for school facilities; erecting, building, acquiring, altering, remodeling, repairing, or extending school facilities; and inspecting and supervising the construction of school facilities." (www.ed.gov)

Prohibited activities: defined to include:

  • Improvements to facilities for which the school district does not have full title or other interest, such as a lease-hold interest;
  • Improvements to, or repairs of, school grounds, such as environmental remediation, traffic remediation, and landscaping, that do not directly involve instructional facilities;
  • Repair, renovation, alteration, or construction for stadiums or other facilities that are primarily used for athletic contests, exhibitions, and other events for which admission is charged to the general public;
  • Improvements to, or repairs of, teacher housing;
  • The partial or complete replacement of an existing school facility, unless it is less expensive or more cost effective to do so;
  • Acquisition of any interest in real property, except in the limited circumstances when new construction is permissible;
  • Maintenance costs associated with any school facilities;
  • Supplanting or replacing other available non-federal construction money. (www.ed.gov)

Of the $5.5 million in available funding, the Department estimates grants to range from $50,000 to $5,000,000, with an average grant of $2,500,000. The Department also estimates to award 24 grants total.

  1. Cost Share

There is no cost-share required, but the Department will consider all amounts of funds available to a district in determined awards and adjust accordingly.

  1. Review Criteria

For emergency repair projects, the announcement notes the following criteria and weights:

  • Need for project/severity of facility problem, including identification of valid emergency condition, impact on the health and safety of occupants, and project urgency (up to 34 points total);
  • Extent to which the proposed project addresses the emergency condition (up to 26 points);
  • Extent to which the project will use energy-efficient and recyclable materials (up to 12 points);
  • Extent to which the project will use non-traditional or alternative building methods (up to 12 points);
  • Ability to respond or pay (up to 16 points).  

For modernization projects, the following criteria and weights apply:

  • Justification that the project is a valid modernization need due to either 1) problems with meeting enrollment, or 2) problems with providing programs (up to 34 points total);
  • Extent to which the proposed project addresses the modernization need (up to 26 points);
  • Extent to which the project will use energy-efficient and recyclable materials (up to 12 points);
  • Extent to which the project will use non-traditional or alternative building methods (up to 12 points);
  • Ability to respond or pay (up to 16 points).  
  1. Deadlines for submission of applications

Applications are due by October 1, 2009. The Department notes that, with limited exception, applications must be submitted electronically. Exceptions will only be granted to those who do not have access to the federal "E-application" requirement or the Internet. In those instances, notice must be sent to the Department no later than two weeks prior to the application deadline