The opportunity created by the federal stimulus packages passed since 2020 is undeniable, but the capacity to optimize this truly historic moment remains unclear. Firms can now find substantial opportunity in the Infrastructure Investment and Jobs Act of November 2021 – and business opportunities for those in the design and construction markets are enormous.
The federal stimulus packages were designed as an infusion of trillions of dollars to keep businesses and governments from feeling too much of the pandemic pain, the primary concern early in the pandemic. In 2021, what transpired from the passage of the American Rescue Plan Act (ARPA) and the Infrastructure Investment & Jobs Act (IIJA) turned federal economic band-aids into steroid shots for the economy and stakeholders in the built environment for years to come.
In March 2021, Congress passed the ARPA and authorized $360 billion in federal investments for every local government across the country no matter how big or small. In January 2022, administrative rulemaking established guardrails for spending the funds and provided broad flexibility, but with some themes of eligibility, such as affordable housing, parks, mobility, hospitals/healthcare facilities, schools, streetscapes, and much more. The overarching goal of the ARPA was to boost local economies with jobs, advance opportunities for infrastructure investments in line with climate change and resiliency, accelerate social equity, and heal the historic scars of under-investment and poor zoning decisions, especially for communities of color and lower/moderate income neighborhoods.
The irony of the timing of this stimulus money is not lost. Many local governments, feeling the sting of the “great resignation” and numerous retirements during the pandemic, coupled with years of long overdue state and federal investment, now lack capacity to plan and prioritize capital improvement projects. This is where the opportunity for the private sector should not be lost. Now more than ever, governments need private sector expertise to help them make good, value-for-money decisions: to vision the projects that, until now, were not vision-able because of funding challenges. They need firms that understand the design, procurement, and construction processes to serve as program managers and project advisors. While some architecture firms have the ability to step into these roles, it is highly likely that the management of many of the capital projects will be through large engineering and design-build operations. This outsourcing of design and construction procurement could challenge the ability of architects to provide innovative services through reasonable contractual obligations.
Similarly, firms can find substantial opportunity in the Infrastructure Investment and Jobs Act of November 2021. While the new law re-authorizes and increases funds for existing infrastructure program spending, it adds an additional $550 billion into new programs for project development. IIJA dedicates almost half of the funds toward the transportation sector, including roads, bridges, transit, rail, ports, airports, electric vehicle infrastructure, and the “Reconnecting Communities” program, and the rest goes toward water, broadband, environmental remediation, power/energy, western water storage, and resilience. Even though the lion’s share of the funding will flow to engineering firms, the increased spending should increase opportunities for architects, landscape architects, and other disciplines as well.
With all of this new spending, the business opportunities for those in the design and construction markets are enormous. Design firms can competitively position themselves and optimize this moment in time by reaching out to state and local officials now who are in responsible charge of development and retrofit decisions. Helping governments prioritize capital investments, such as mapping electric vehicle infrastructure needs, inventorying and planning lead pipe replacements, and inventorying and planning for broadband expansions, would be time well spent. Remember that, similar to ARPA, the Biden Administration favors IIJA investments that are consistent with policy priorities, such as economic development, equity, climate change/resilience, a revival of “Made in America” manufacturing, and the promotion of good paying American jobs.
While ARPA and IIJA are a most welcome infusion of long-overdue federal funding, energy and climate experts continue to push the administration toward passage of the Build Back Better Act (BBBA) that stalled in the Senate last December. Purported to be the main cause of the delay are the social spending aspects of the bill and not the climate provisions. Key to the concern is that energy modeling estimates US policy (even with the climate investments in IIJA) cannot possibly get the US on track to meet its goal to reduce greenhouse gas emissions by 50% by 2030.
The rumor on Capitol Hill from experts negotiating provisions of the BBBA is that the bill is not necessarily dead, but instead has suffered a “mere flesh wound.” Time will tell, and the hope is that this spring, the US Senate can revisit and pass critical provisions of the BBBA that will enable steep declines in emissions by 2030 (or close to that time) through a massive deployment of mature clean technologies (solar, wind, geothermal, battery storage, heat pumps, and electric vehicles) at scale.
Should the BBBA pass this year, federal stimulus spending will rival, and could exceed, that of the Roosevelt era “New Deal” investments. Critical to the economic pay-off for those investments is the private sector’s capacity to lead and help connect the dots between funding and project development that brings value to communities and moves the needle on much-needed climate mitigation and resiliency. Without this partnership and recognition that implementation is very much a “shared endeavor” (as it is called by the White House), funds cannot be obligated and firms could miss the opportunity.
To learn more about the federal stimulus packages and key dates and resources, you can watch a recording of Peek Behind the Curtain: Federal Stimulus and Project Development, a Victor webinar featuring Liz Farmer, a fiscal policy expert, journalist, and consultant.
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