Guide to Local Recovery Update: June 21

Federal agencies released proposed guidance on clean energy tax credits that could allow cities to build related projects more quickly and affordably. Also, the U.S. Department of Transportation and the U.S. Department of Agriculture released information on upcoming grant programs, including a combined grant application and two programs targeted at rural communities. The National League of Cities and Local Infrastructure Hub are both hosting infrastructure webinars.

Proposed federal guidance would increase the benefit of clean energy tax credits

Federal agencies issued proposed guidance on elective pay and transferability mechanisms in the Inflation Reduction Act that would allow cities, rural energy cooperatives, and other stakeholders to fully benefit from clean energy tax credits. The proposed guidance clarifies tax credit eligibility, processes, and timelines, as well as temporary regulations for an electronic pre-filing registration requirement.

The Inflation Reduction Act allows tax-exempt and governmental entities to receive elective payments for 12 clean energy tax credits, including the major Investment and Production Tax credits, as well as tax credits for electric vehicles and charging stations.

According to the Internal Revenue Service, this should help local governments build projects more quickly and affordably. The proposed regulations are now in the formal 60-day public comment period.

The U.S. Department of the Treasury will hold a June 29 virtual briefing on the proposed guidance. The Internal Revenue Service plans to hold public hearings later this summer to provide opportunities for further feedback. The White House also released a simplified overview of elective pay.

Transportation Department to issue a combined application for equity-focused grants

The U.S. Department of Transportation will soon release a combined application for the Reconnecting Communities Pilot program and the Neighborhood Access and Equity program. The new program will be known as the Reconnecting Communities and Neighborhoods Program.

The new program includes three grant types: $1.15 billion for capital construction, $185 million for community planning, and $450 million for regional planning. Although the grants are separate for the purposes of funding, they share many common characteristics including:

• Prioritizing disadvantaged communities.
• Aiming to improve access to daily needs, such as jobs, education, healthcare, food, and recreation.
• Fostering equitable development and restoration.
• Reconnecting communities by removing, retrofitting, or mitigating highways or other transportation facilities that create barriers to community connectivity, mobility, or economic development.

The Transportation Department will evaluate applications using common criteria and considerations. The announcement will be published on the Reconnecting Communities and Neighborhoods Grant Program portal.

USDA releases details on largest rural energy investment program since 1936

The U.S. Department of Agriculture will soon begin accepting applications for two rural energy grant programs — both funded by the Inflation Reduction Act. The $9.7 billion New Empowering Rural America (ERA) program will help rural electric cooperatives deploy renewable energy, zero-emission, and carbon capture systems. For the purposes of the program, “predominantly rural” refers to a service territory where at least 50% of consumers are rural. Cooperatives can apply for fixed-rate loans, grants, or both.

The $1 billion Powering Affordable Clean Energy (PACE) program will provide partially-forgivable loans to renewable-energy developers and electric service providers — including municipals and cooperatives — to finance large-scale renewable energy and energy storage projects. The maximum loan amount is $100 million. Cities and cooperatives can get up to 40% of their loan forgiven.

The combined $11 billion in funding is the largest investment in rural electrification since the 1936 Rural Electrification Act.

ERA letters of interest are due by Aug. 31. Application invitations will be sent to the top-ranked letters. PACE letters of interest are due before Sept. 29 and will be evaluated as they are received. The initial application window for both programs opens at the end of June.

National League of Cities and Local Infrastructure Hub webinars

The National League of Cities is holding a June 22 webinar on wastewater and water workforces. Industry experts will share their insights on upskilling local staff, engaging third parties, and financing for future staffing retention and expansion. Presenters also will showcase promising wastewater monitoring practices and highlight potential opportunities to leverage support from multisector organizations.

The Local Infrastructure Hub is also holding two infrastructure webinars, one on urban freight management and another on economic mobility. Both are tied to specific federal grant programs.

On June 28, speakers will highlight awards made through the SMART Grants Program. The COVID-19 pandemic noticeably accelerated the growth of online shopping, creating an unprecedented freight flow. This has created significant safety, congestion, and greenhouse gas emissions challenges for cities.

During the July 11 webinar, policy experts and mayors will discuss the best strategies for securing funding under the former Reconnecting Communities Pilot program. Soon to be under the Reconnecting Communities and Neighborhoods Program umbrella, the program helps mitigate the harm made by past transportation infrastructure decisions.

City officials looking for additional information about the American Rescue Plan Act, Bipartisan Infrastructure Law, the Inflation Reduction Act, or additional recovery tools can visit the Cal Cities Guide to Local Recovery portal.