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Federal Stimulus Bill Provides Development Opportunities in Transportation Infrastructure

By Peter N. Kochansky and Elizabeth B. Lorenz
February 2009
People: Douglas M. Husid, Peter N. Kochansky

On January 28, the U.S. House of Representatives passed the American Recovery and Reinvestment Act of 2009 (the “House Stimulus Bill”), which is intended to create jobs through investment in education, health care, energy efficiency, and transportation infrastructure. The Senate has been considering its own version, and a final vote on the Senate stimulus bill may occur as early as today.

The stimulus legislation’s emphasis on highway and mass transit infrastructure will generate transit-oriented development opportunities and can provide funding for public infrastructure improvements that are necessary for private development projects to proceed. State and municipal governments are identifying eligible “shovelready” projects and initiatives. Given the intense competition for these funds and the immediacy of their distribution, public agencies will need to assess quickly the ability of individual projects to create jobs and promote economic development.

Of the $819 billion in federal funding and tax cuts provided for in the House Stimulus Bill, approximately $46 billion would fund improvements to highways, railroads, public transit, bridges, airports, and other transportation related projects. In awarding funds for infrastructure investment, the federal government, states, and municipalities are directed to give preference to projects that can begin quickly after enactment of the stimulus legislation and can be completed expeditiously, as further described below.

Transportation infrastructure projects eligible to receive funding under the House Stimulus Bill include:

Highway Infrastructure

$30 billion would be allocated for highway construction projects, the bulk of which would be distributed among the states and territories. Priority would be given to projects that can award contracts within 90 days of enactment of the stimulus legislation, are included in an approved Statewide Transportation Improvement Program or Metropolitan Transportation Improvement Program, are projected for completion within three years, and are located in economically distressed areas.

Public Transit

House Stimulus Bill funding would be directed to public transit projects, including $2 billion for capital projects to modernize existing transit systems, $2.5 billion for new commuter rail or other light rail systems, and $7.5 billion to increase public transportation and improve transit facilities. Generally, priority would be given to projects currently in construction or able to award contracts within 90 days of enactment of the Stimulus Bill.

Infrastructure Improvements on Public Lands and Parks

Additionally, the House Stimulus Bill designates approximately $3 billion for infrastructure projects on federal lands including the restoration and repair of roads, bridges and trails.

Please contact us if we can assist you in analyzing the stimulus legislation’s application to a particular project.

The authors, Peter Kochansky and Elizabeth Lorenz, are members of the real estate group and can be reached at pkochansky@goulstonstorrs.com and elorenz@goulstonstorrs.com.

For questions about the information contained in this alert, please contact:

Douglas M. Husid

Peter N. Kochansky


As of this writing, the Senate is still in active negotiations on the Senate stimulus bill, so the provisions of that bill continue to evolve. The January 27th draft of the Senate Stimulus Bill would reduce the funds available for highway infrastructure and public transit but increase funding for railroad infrastructure. The Senate version would fund $5.5 billion in competitive grants to be awarded by state and local governments for highway, transit, rail, and port infrastructure projects that will have a significant impact on the nation, a region, or a metropolitan area. Additionally, the Senate Stimulus Bill includes $100 million in grants to small shipyards for improvements and $60 million in grants for the construction of ferry transportation systems. The Senate Stimulus Bill favors shovel-ready projects, but its requirements generally are not as strict as those in the House Stimulus Bill. For example, in many cases grantees must make use of 50% of the awarded funds within 180 days of receipt instead of 90 days.

This client advisory should not be construed as legal advice or legal opinion on any specific facts or circumstances. The contents are intended for general informational purposes only, and you are urged to consult your own lawyer concerning your situation and any specific legal questions you may have.

Pursuant to IRS Circular 230, please be advised that, this communication is not intended to be, was not written to be and cannot be used by any taxpayer for the purpose of (i) avoiding penalties under U.S. federal tax law or (ii) promoting, marketing or recommending to another taxpayer any transaction or matter addressed herein.

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