The funding for transformative infrastructure is there. The application process to obtain it still needs to be improved.

More than $850 billion in Infrastructure Investment and Jobs Act (IIJA) funding is currently flowing to state and local governments. This investment has the potential to make communities safer, fairer and more resilient. And to achieve these results, communities of all sizes, including thousands of small and medium-sized rural and low-income municipalities, must successfully apply for, obtain, and manage large federal and state grants and loans.

Yet, while the country’s political ambitions continue to evolve, the processes and requirements for applying for funding, by and large, have not. Standards and regulations have been created with major cities and large traditional “grey” infrastructure projects in mind. This means that infrastructure funding and funding tends to go to the same types of applicants and projects – and often in “wealthier white communities” while leaving behind first-time, low-capacity or smaller-scale applicants.

Without major updates to the grant application processes at the federal and state levels, IIJA funding will go to the communities best able to apply for funds, not necessarily to the places that need it the most.

Federal agencies recognize that this dynamic poses a significant risk to the implementation of the IIJA. More resources than ever are available to smaller, low-capacity state and local governments applying for funding, and agencies communicate more clearly and regularly with potential candidates. For example, the National Telecommunications and Information Administration webinars ahead of the recent notice of funding opportunity announcements to help state and local leaders prepare applications for the five new broadband grant programs included in the IIJA.

The Office of Management and Budget (OMB) also seeks to address some of these dynamics in their recently published guidelines to help federal agencies ensure effective and equitable implementation of IIJA money. While some guidelines are encouraging—they call on federal agencies to improve infrastructure permitting practices for projects and reduce charges for low-capacity applicants—it’s up to each agency to implement them. Importantly, it does not affect state agencies, which are responsible for allocating the majority of all IIJA funds.

Although progress is being made, most is piecemeal. What is really needed is a fundamental rethink of how small, rural and low-income communities can more successfully apply for federal and state grants and loans.

First-time or smaller funding applicants need standardized resources and applications that allow communities to represent themselves and their projects as part of a larger project pipeline. From there, they can make informed decisions about whether and how to move forward based on the expectations of the application and funding processes. In line with this, the OMB guidelines state that agencies should “simplify [Notice of Funding Opportunities] making solicitations clear and accessible, simplifying documentation requirements, and reducing reporting requirements that can place undue burdens on recipients. It’s a step in the right direction, but it only affects federal agencies, not states.

The Department of Transportation (DOT) is beginning to implement these guidelines through the recent establishment of its Discretionary Grant for Multimodal Projects (MPDG), which combines three grant programs into one application with common criteria to reduce application barriers. The combined application should also give DOT a more complete understanding of its project portfolio and enable it to holistically evaluate projects that would otherwise have been submitted in multiple individual applications. Other federal agencies should evaluate the MPDG closely and seek to take advantage of the lessons that can be learned from it.

The OMB guidelines also require agencies to app information more accessible by “producing user-friendly online tools…and resources that increase engagement with end-users and program beneficiaries.” If executed well by agencies, it should help address the lack of transparency that many potential applicants experience. In the past, potential applicants were often required to schedule meetings or phone calls with agency officials to discuss their interest, especially for state-administered programs. The formality of scheduling a meeting can prevent potential applicants from entering the project pipeline as they don’t have answers about basic eligibility, funding availability, or application questions to feel comfortable with. with an official discussion.

Even when detailed application information is available online, it is often protected behind a login screen where registrants must create full profiles in the name of their city or utility. For example, the New Jersey Environmental Infrastructure Trust requires municipalities to create an account with an “authorized official,” who then designates an “authorized representative” for each project, who can then add “collaborators” to individual projects. These steps must be taken before potential applicants can even view loan information and assess whether they are worth applying for.

This is an illustrative example of a seemingly innocuous door that can act as a barrier preventing low-income, rural and smaller communities from entering the project pipeline. Making basic information visible in advance without logging in allows junior and middle officials to identify opportunities and then provide informed recommendations to decision makers on the benefits of applying. It is important that local government leaders feel informed about the process before entering the required pre-bid meetings.

Worse still, many funders and licensing agencies include a long list of up-front requirements for quantitative estimates. From a federal perspective, having clear measures to ensure fiscal accountability is essential. However, these types of questions are usually mixed with other less clear requirements for project performance details at an early stage. This means that to submit initial applications, local governments must find a way to go far enough in a design process to generate reasonable and defensible cost and performance estimates without any dedicated resources or capacity. For qualified candidates who lack the personnel capacity, basic data or resources to hire technical consultants, this is often an insurmountable prerequisite.

Without precautions taken, this dynamic could worsen with recent OMB guidance, which requires agencies to develop implementation plans that “define key performance measures and…identify key programs iimplementation milestones. If introduced too early in the application process, these requirements could deter low ability applicants from applying. Financial accountability and project performance are both important, but they are also very different. Clearly separating these types of data requests in funding requests can help federal agencies screen qualified applicants first and then source quality projects. It can also reveal who may need additional planning or pre-development support to develop high-quality projects.

All applicants would benefit from clearer federal and state guidance on expectations for preliminary quantitative estimates of project performance for different types and sizes of projects. A park designed to divert and retain stormwater is not the same as a sewage treatment plant. Knowing where applicants are in their project development cycles and avoiding asking for quantitative estimates too early in a design process can lower barriers to entry. For example, where detail is needed, applicants in the pre-feasibility phase should be allowed to select ranges rather than enter specific estimates, and agencies should indicate that initial estimates are not binding and may be revised later in time. the design process.

Effective performance measurement is an ongoing process that takes time and resources. Low-capacity, first-time federal grant applicants cannot be expected to generate useful measurements and estimates without technical assistance and resources. Federal agencies should consider how defining project performance measures and conducting evaluations can be funded upfront and incorporated into proposed budgets at various stages of design, development, and implementation of the project.

Even with significant improvements in applications at the federal and state levels, it will still be difficult for low-income, smaller, and rural applicants to navigate the complexities of IIJA funding. To this end, federal and state agencies should designate a single “pioneer” agency to guide projects in targeted communities through funding processes. This recommendation is in line with an idea put forward in a recent McKinsey Report which calls on states to establish infrastructure czars to play a coordinating role, and expands it to focus explicitly on steering projects from traditionally low-capacity communities.

The future of the IIJA’s impact depends on the ability of state and local governments to attract large numbers of applicants from smaller, rural, and low-income communities. Yet this procedural outcome can only happen if federal and state agencies transform their application processes. Otherwise, much of the promise of the law will be wasted.