DOT releases P3 funding opportunity for cities, states

FRANK POLICH/Bloomberg News

Cities and states interested in privatizing their assets have until Oct. 1 to submit applications to the Department of Transportation's Build America Bureau.

The DOT Wednesday launched the next phase of its Innovative Finance and Asset Concession Grant Program with a Notice of Funding Opportunity for governments looking to create an inventory of transportation assets like highways, transit, ports and airports, to see if some would be eligible for long-term leases or other types of public-private partnerships.

The $100 million Innovative Finance and Asset Concession Grant program is a closely watched program in the public-private partnership program and a centerpiece of federal P3 policy. Established in the 2021 Infrastructure Investment and Jobs Act, the program sent the first $50 million to 45 governments last year.

Asset recycling remains relatively rare in the U.S., where one of the largest examples remains the $3.8 billion, 75-year long-term lease of the Indiana Toll Road in 2006.

The NOFO will award up to $45.98 million on a competitive basis, covering fiscal years 2024, 2025, and 2026.

The U.S. Department of Transportation's Build America Bureau oversees the program, which is aimed at helping states and cities create an inventory of their assets and consider P3s, including asset concessions, for projects that could "reasonably" be considered eligible for Transportation Infrastructure Finance and Innovation Act loans.

The NOFO comes a month after the DOT increased the TIFIA financing cap to 49% from the current 33% cap for all categories of transportation projects. Traditionally only transit-related development projects have been eligible for the higher cap.

More than 70% of the projects submitted to the program in the first round, whose winners were announced last September, included transit-oriented development, or TOD, and downtown redevelopment initiatives.

The grants are relatively small, around $2 million each, with the first $1 million needing no matching funds. The program offers two types of grants: technical assistance grants to develop, review, or enter into asset concessions to advance TIFIA-eligible projects, and expert services grants for project development of assets, including hiring professional services to explore opportunities for leverage.

The Build America Bureau will hold a webinar for interested applicants on Aug. 27.