April 28, 2009

Federal Stimulus Package Brings Construction Money to Minnesota

The American Recovery and Reinvestment Act of 2009 (ARRA)—commonly known as the federal economic stimulus package—includes more than $130 billion in spending on construction projects nationwide. Approximately $2 billion of that money is available for construction projects in Minnesota.

Minnesota construction stimulus money includes the highly publicized pool of $502 million designated for highway construction, as well as funding for water and energy infrastructure, environmental cleanup—and even some vertical construction projects.

The following summary details amounts allotted to Minnesota under the ARRA and how the money will likely be spent.

Transportation Infrastructure

Highway Construction

More than $502 million in highway construction funds have been apportioned to Minnesota by means of the National Surface Transportation formula. The funds will be distributed by the Minnesota Department of Transportation (MnDOT), Metropolitan Council, and various municipalities and counties.

Transit and Fixed Guideway Modernization

Allocations to Minnesota for transit spending and fixed guideway modernization projects total about $88 million. Approximately $69 million of the total transit allocation will be spent by the Metropolitan Council in coordination with suburban transit providers and counties. The Metropolitan Council has indicated, however, that its first priority for use of the funds is to apply them toward eligible costs included in the transit operating budget rather than for capital expenditures.

The remaining $19 million of the state's transit money will be spent in greater Minnesota by MnDOT and various greater Minnesota transit systems. Although much of the state's transit money will be spent on the purchase of buses, several million dollars of this funding will likely go toward construction and improvement of transit facilities.

Competitive Grants

The stimulus package includes $1.5 billion for competitive grants to state and local governments and transit agencies for highway and transit capital improvements deemed to have significant impact on the nation, a region or a metropolitan area. The grants will range from $20 million to $300 million—and no single state can obtain more than 20 percent of the total. MnDOT is working to obtain some of this grant money.

The ARRA includes $8 billion in funds for high-speed rail corridors and intercity passenger rail service. These funds will be distributed through a competitive grant process by the Federal Railroad Administration to intercity high speed rail projects. The FRA is currently developing grant requirements and procedures. MnDOT is working to review and nominate eligible projects.

Airport Improvements

More than $23 million in grants for airport improvements have been approved by the Federal Aviation Administration to various Minnesota airports, including those located in Albert Lea, Baudette, Bemidji, Brainerd, Duluth, Hibbing, Mankato, Minneapolis (Flying Cloud), Redwood Falls, St. Cloud and Windom.

Water Infrastructure

Water Supply Infrastructure

Approximately $107 million has been allocated to Minnesota under the U.S. Environmental Protection Agency (EPA) Clean Water and Drinking Water state revolving funds programs. The Minnesota Public Facilities Authority, in coordination with the Minnesota Pollution Control Agency (MPCA) and Minnesota Department of Health (MDH), will distribute this money through loans and grants to local units of government for drinking water infrastructure projects and wastewater treatment and collection facilities. Eligible projects must be ranked on the project priority lists maintained by the MPCA and MDH.

The federal stimulus package includes $1 billion to be used by the U.S. Bureau of Reclamation for water infrastructure projects in the western United States. The Bureau of Reclamation has already allocated that money among a number of projects, including several projects in North Dakota and South Dakota. An allocation of $56 million will be used for construction of a system water treatment plant for the Lewis and Clark Rural Water System, which includes parts of southwestern Minnesota, northwestern Iowa and southeastern South Dakota.

Watershed Infrastructure

The U.S. Department of Agriculture's Natural Resources Conservation Service (NRCS) will distribute $340 million in federal stimulus funds for watershed infrastructure projects and the purchase and restoration of floodplain easements across the country. To date, the NRCS has identified two projects in Minnesota—Whitewater River ($299,000) and Kanaranzi-Little Rock ($245,000).

Environmental Cleanup

South Minneapolis Superfund Site

The EPA will spend between $10 and $25 million to accelerate the hazardous cleanup of the South Minneapolis Residential Soil Contamination Superfund Site. These funds will be used to clean up arsenic-contaminated soils at more than 500 homes in south Minneapolis.

Petroleum-Contaminated Sites

The EPA has also assigned more than $4 million to Minnesota under the Leaking Underground Storage Tank Program to be used primarily for the investigation and cleanup of petroleum-contaminated sites. The MPCA has identified approximately 75 sites that fit eligibility criteria for use of this money.

Brownfield Properties

The Minnesota Department of Employment and Economic Development, St. Paul Port Authority, Minneapolis Community Development Agency, Hennepin County, and the cities of St. Paul and Little Falls have received a combined total of more than $4 million in stimulus funds under the EPA Brownfield Program for cleanup of soil and ground water on property with potential for economic development.

Housing and Economic Development

Public Housing Rehabilitation

The U.S. Department of Housing and Urban Development (HUD) has allocated under the ARRA more than $47 million directly to various Minnesota public housing authorities to rehabilitate and retrofit public housing units.

Native American Housing Block Grants

Ten separate Indian tribes located in Minnesota have been allotted a combined total of more than $7 million in stimulus funds under the HUD Native American Housing Block Grants program. This money can be used for new construction, acquisition, rehabilitation and infrastructure development activities. Another $255 million in grants will be allocated to Indian tribes across the country by competitive funding to be used for developing, operating, maintaining and supporting affordable housing for rental and homeownership housing.

Low Income Housing Tax Credit Projects

More than $28 million in federal stimulus money has been allocated to Minnesota under the HUD Tax Credit Assistance Program, which provides capital investment for low-income housing tax credit projects in the form of gap financing for projects that received tax credits in 2007, 2008 and 2009. The Minnesota Housing Finance Agency will distribute these funds on a competitive basis under its qualified application plan.

Community Development Block Grants

The Minnesota Department of Employment and Economic Development received approximately $5.5 million in HUD Community Development Block Grants under ARRA. In addition, 17 Minnesota cities and counties received a combined total of almost $10 million in these grants. The grants are intended to fund community development activities designed to create suitable living environments, provide decent affordable housing and create economic opportunities, primarily for persons of low and moderate income.

Weatherization Assistance Program

The U.S. Department of Energy (DOE) has allocated approximately $132 million in ARRA funds to Minnesota under the Weatherization Assistance Program. The funds will be assigned to a number of service providers statewide and will be used to make low-income homes more energy efficient. The funds will be administered by the Minnesota Office of Energy Security.

Grants and Loans for Energy Retrofit, Green Investment

The federal stimulus package also includes $250 million in grants and loans for energy retrofit and green investments in low-income housing. Owners of Section 202, Section 811 or Section 8 project based assistance properties are eligible to apply for this money. It is not yet known if any grants or loans will be awarded to properties in Minnesota.

Education Stabilization Funding

Restoration of Budget Cuts

Under the ARRA, Minnesota has been allotted approximately $816.5 million in state fiscal stabilization funds by the U.S. Department of Education. Of that amount, $667.9 million will be apportioned among local school districts and public institutions of higher education in an order to restore budgetary funding cuts. School districts can use the funds for a broad array of expenditures, including the modernization, renovation and repair of public school facilities and the construction of new facilities. But it is not yet known how much of these funds, if any, will be used for construction.

Modernization and Repair of Facilities

The remainder of Minnesota's fiscal stabilization funds—$148.6 million—is supposed to be used for public safety and other government services, including the modernization, renovation or repair of public school facilities and institutions of higher education. The Department of Education has recommended states use these funds to create jobs, stabilize and improve state economies, and avoid tax increases. States have wide discretion in the use of the money, however, making it impossible to know how much will be spent on construction activities in Minnesota.

The U.S. Department of Education has also allocated a combined total of $650,000 in stimulus funds to six separate school districts that are located on federal lands in Minnesota to help repair and modernize the facilities and alleviate overcrowding.

Military and Veteran Affairs Construction

Construction and Modernization of Military Facilities

Of more than $7 billion in total federal stimulus money for the construction and modernization of military facilities across the country, less than $5 million has been allocated to projects in Minnesota. Approximately $2 million is dedicated to the repair of the aircraft parking apron at the Minneapolis-St. Paul IAP Air Reserve Station, and roughly $2.8 million will be divided among 14 different projects to improve energy efficiency at various Army National Guard facilities in the state.

Almost $150 million has also been allocated to various military construction and modernization projects in the four states bordering Minnesota—Iowa, Wisconsin, and North and South Dakota. The Department of Defense has not yet allocated approximately $800 million in stimulus funds for the modernization of military facilities.

Repair, Renovation and Upgrade of VA Facilities

The U.S. Department of Veterans Affairs (VA) has allotted more than $16.6 million in federal stimulus funds for the repair, renovation and upgrade of VA facilities in Minneapolis and St. Cloud. The VA has also designated almost $5 million for the construction of a 24-bed extended care unit for dementia in Fergus Falls.

Fort Snelling Improvements

The U.S. General Services Administration has allocated $115 million of its stimulus money for the high-performance green modernization of the Bishop Henry Whipple Federal Building at Fort Snelling. The Whipple Federal Building contains offices for the VA, departments of Defense and Homeland Security, and the U.S. Fish and Wildlife Service.

In addition, the National Cemetery Administration has authorized $300,000 to replace paving at various locations at Fort Snelling National Cemetery.

Energy Efficiency and Infrastructure

State and Local Energy Grants

Approximately $91.5 million in stimulus money has been allocated to Minnesota by the DOE in state and local government energy grants.

Around $37.3 million of the total is designated for use by cities and counties to improve energy efficiency in their communities. Those funds can be used for a number of expenditures, including energy audits, building retrofit projects, and efficiency upgrades in traffic signals and street lights, among other things.

The remaining $54.2 million will be distributed by the Minnesota Office of Energy Security through competitive grants for use on a number of energy-efficiency projects, including public building retrofits and renewable energy programs. It is not clear how much of this money will ultimately be used for construction activities.

Grants for National Electric Grid Modernization

The ARRA includes around $4 billion dollars for activities designed to modernize the national electric grid, including the development of "smart grid" technology. Under this program, the DOE will offer grants ranging from $500,000 to $20 million for the deployment of smart grid technology, as well as grants ranging from $100,000 to $5 million for the deployment of grid monitoring technology.

Eligible applicants include electric companies and utilities, organizations that control grid operations, equipment manufacturers, and other firms that wish to install smart grid technology. The DOE is still taking public comment on these grant programs and plans to announce funding opportunities in June.

Miscellaneous Construction

The following additional ARRA funds have also been designated for construction projects in Minnesota.

  • The U.S. General Services Administration has allotted $3 million for green building modernization of the federal courthouse in Minneapolis.
  • U.S. Customs and Border Protection will spend an undisclosed amount for renovations to ports of entry located in Ely, Lancaster, Pinecreek, Roseau and Warroad.

The following agencies could also allocate federal stimulus money for Minnesota projects, but funding decisions have not yet been announced.

Agency

Project

Total Funding

National Telecommunications and Information Administration

Broadband infrastructure grants

$4.7 billion

Rural Utilities Service

Rural broadband infrastructure grants

$2.5 billion

Transportation Security Administration

Explosive detection systems

$1 billion

Army Corps of Engineers

Civil works projects

$4.6 billion

Health Resources and Services Administration

Community health centers

$2 billion

Indian Health Service

Hospitals and health clinics

$500 million

Coast Guard

Bridges and shore facilities

$240 million

Maritime Administration

Assistance to small shipyards

$100 million

Department of Agriculture

Rural drinking water and waste disposal

$1.38 billion

Department of Agriculture

Rural community facilities

$130 million

Department of Agriculture

Facility construction, maintenance or renovation

$200 million

National Science Foundation

Facility construction, maintenance or renovation

$400 million

State Department

Facility construction, maintenance or renovation

$90 million

Bureau of Indian Affairs

Facility construction, maintenance or renovation

$500 million

Bureau of Land Management

Facility construction, maintenance or renovation

$320 million

U.S. Fish and Wildlife Service

Facility construction, maintenance or renovation

$280 million

National Park Service

Facility construction, maintenance or renovation

$750 million

U.S. Forest Service

Facility construction, maintenance or renovation

$650 million

Federal Emergency Management Agency

Public transportation and railroad security grants

$300 million

Federal Emergency Management Agency

Fire station construction grants

$210 million

Economic Development Administration

Economic development grants

$150 million

Department of Labor

Job Corps Centers

$250 million

Services and Industries

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