Biden's Infrastructure Bill

Key takeaways

• The House of Representatives has passed a comprehensive physical infrastructure bill.
• The bill includes $550 billion of new infrastructure spending which, together with baseline spending, will amount to $1.2 trillion over 8 years.
• The final bill includes innovative provisions for private sector collaboration, and presents an opportunity for the private sector to magnify the bill's funding.

1. Biden got his bill. What happens now?

Just before midnight on November 5, the House of Representatives approved a $1.2 trillion infrastructure bill. President Biden has announced that he will sign the bill, officially titled the Bipartisan Infrastructure Framework (BIF), into law after Congress returns from recess on November 15.

As the name suggests, the House passed the bill after 13 Republicans joined 205 Democrats to pass the biggest infrastructure investment in decades. The finalized bill closes the loop on a process that began when the President released his initial proposal in April.

The BIF is a close cousin of that first plan. It includes funding for almost all of the same infrastructure categories, and its price tag is not far off from the $621 billion in new spending originally proposed. The major difference is that the original package also included an additional $1 trillion of social spending that disappeared after the bill was negotiated in the Senate. That proposal, which includes funding for housing, healthcare, and education, was moved to a separate bill, and will be voted on later this month.

2. How does this impact private-sector opportunities?

We are still making our way through the 2,702-page bill, but it is evident that the BIF presents an array of opportunities for private sector involvement, including the opportunity for public-private partnerships to magnify the funding sources and receive the benefit of an even further stabilized asset class.

In particular, we note that:

• The BIF doubles the cap on tax exempt private activity bonds, from $15 to $30 billion per year. The increase, championed by Transportation Secretary Pete Buttigieg, expands a key funding source for public-private partnerships and provides greater access to fixed income markets.
• Projects valued at $750 million or more that receive certain types of federal funding will be required to undergo a value-for-money analysis. Within two years of the bill's passage, the Department of Transportation will analyze the data and prepare a best practices guide for private infrastructure financing.
• Several grant programs give priority to projects that include private financing, like the funds for highway wildlife crossing, forest fire resilience, and Amtrak's long distance service.
• The BIF requires the USDOT to facilitate grants that will allow local authorities to enter into public-private partnerships for asset concessions.
• The BIF's energy provisions establish a new program for public-private partnerships to provide physical security and cyber security for the electrical grid.

3. What is included?

The following is intended to be a non-exhaustive list of some of the key aspects of the BIF:

BRIDGES, ROADS AND HIGHWAYS
	Highlights Fix the most economically significant large bridges in need of reconstruction, along with the repair of 10,000 smaller bridges. Modernize 20,000 miles of highways and roads.	Breakdown Roads, bridges, and major projects - $110bn Improve road safety - $11bn
PUBLIC TRANSIT AND FREIGHT
	Highlights Modernization of existing public transit and investment to meet rider demand, and funding in order to: address Amtrak's repair backlog; modernize the Northeast Corridor; and improve existing corridors and connecting new city pairs.	Breakdown Passenger/freight railways - $66bn Public transit - $39bn
AIRPORTS, PORTS AND WATERWAYS
	Highlights Airport proposal includes funding for: the Airport Improvement Program (AIP); upgrades to Federal Aviation Administration (FAA) assets; and a new program to support terminal renovations and multimodal connections for convenient, car-free access to air travel.	Breakdown Airports - $25bn Waterways and ports - $17bn
ELECTRIC VEHICLES AND TECHNOLOGY
	Highlights Tax incentives for both automakers and consumers Grant and incentive programs for state and local governments and the private sector to build a national network of 500,000 EV chargers. Electrification of school and transit buses.	Breakdown Electric buses / transit - $7.5bn EV Infrastructure - $7.5bn
BROADBAND AND DIGITAL INFRASTRUCTURE
	Highlights Affordable, "future proof", high-speed broadband infrastructure with 100 percent coverage, including in unserved and underserved areas.	Breakdown Broadband Infrastructure - $65bn
BUILDINGS AND UTILITIES
	Highlights Build a more resilient electric transmission system. Spur jobs modernizing power generation and delivering clean electricity, moving toward 100 percent carbon pollution-free power by 2035. Replace all lead pipes.	Breakdown Power infrastructure including grid authority - $73bn Water infrastructure - $55bn Other infrastructure financing - $20bn Western water storage - $3bn Reconnecting communities - $1bn
RESILIENCE
	Highlights Increase resilience in essential services, including the electric grid, food systems, urban infrastructure, community health and hospitals, and roads, rail and other transportation assets. Remediate and redevelop critical physical, social and civic infrastructure.	Breakdown Resilience - $47bn Environmental Remediation - $21bn