Infrastructure Funding (Bipartisan Infrastructure Investment and Jobs Act)

Investments in infrastructure and the strength of real estate markets share a synergistic, mutually beneficial relationship. Infrastructure investment throughout the country was sparked when The Infrastructure Investment and Jobs Act (IIJA) was signed into law in Nov. 2021 by President Biden – after the House and Senate cleared the measure with bipartisan support in a rare show of congressional consensus.

The IIJA is a historic, $1.2 trillion bill that allocates $550 billion in new spending to improve the nation’s “physical” infrastructure (transportation, water, sewer, electric grid, and broadband systems). Ninety percent of funding authorized by the IIJA will be implemented by governors and mayors. The investments in local infrastructure made by possible by the law will help make our communities safe, productive, and supportive of healthy real estate markets.

Position

The Roundtable strongly backed the IIJA as it moved through the legislative process – and is tracking how the implementation of IIJA funding to various programs run by federal agencies impacts commercial real estate.

Infrastructure investments and CRE markets have a significant influence on each other. Commercial tenants and their employees depend on safe and efficient roads, bridges, and mass transit to commute. Buildings depend on reliable supplies of water, power, and broadband to function. In turn, infrastructure depends on healthy real estate markets. Property taxes are the main revenue source for local investments in roads, schools, etc. Higher property values mean more tax revenues to help pay for more infrastructure.

Background

The IIJA helps the U.S. increase GDP, create jobs, and stay globally competitive with a rising China. The U.S. ranks 13th in the world when it comes to the quality of our infrastructure.

Among the law’s many benefits, it makes the largest single investment in the nation’s electric grid in our history. $65 billion will fund new transmission lines that facilitate widespread adoption of solar, wind, etc., so that clean energy can be transported over long distances. Additionally, the IIJA mass transit investments total over $39 billion to help modernize bus, commuter rail, and subway networks. Most of the transit money will go directly to support local agencies. Yet the largest category of IIJA expenditures is $110 billion to modernize roads and bridges — the single largest dedicated bridge investment since the construction of the interstate highway system.

Additional background:

White House Fact Sheet, “The Bipartisan Infrastructure Deal (Nov. 6, 2021)

The Biden administration’s bipartisan infrastructure law “spending guidebook“ from the Biden administration (released Jan. 31, 2022)

Interactive map “dashboard” showing IIJA project funding across the U.S. from the General Services Administration.

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Workplace Return

CRE Conversions

Infrastructure Funding (Bipartisan Infrastructure Investment and Jobs Act)

Public-Private Partnerships

Streamlining the Permitting Process

Cities & Infrastructure

Workplace Return

The work-from-home trend continues to exert negative pressure on commercial real estate property values, reducing municipal tax revenues, harming local businesses, and threatening the viability of public transit systems. On the federal government level, agencies’ actions to promote permanent remote working are out of step with the direction of private sector employers, who are increasingly recognizing the importance of bringing employees back to the workplace.

Cities & Infrastructure

CRE Conversions

Certain commercial real estate assets like office buildings are under significant stress due to pandemic-related issues, including employers’ greater reliance on remote work arrangements. These economic pressures have led asset owners to explore the conversion of offices to other uses, including affordable housing. The Roundtable is encouraging lawmakers to help revitalize cities, boost local tax bases, and address market challenges by enacting incentives that encourage adaptive uses of older, under-utilized buildings.

Cities & Infrastructure

Infrastructure Funding (Bipartisan Infrastructure Investment and Jobs Act)

Cities & Infrastructure

Public-Private Partnerships

Effective Public-Private Partnerships (P3s) can unlock private investment capital and finance major infrastructure projects across the country. Examples of P3s that should be encouraged and improved are low-interest-rate loan programs created by the Transportation Infrastructure Finance Innovation Act (TIFIA).

Policies that encourage appropriate Public-Private Partnerships (P3s) can unleash private equity investments, improve budget certainty, accelerate project delivery, and achieve greater efficiencies and innovations in project design and construction.

Cities & Infrastructure

Streamlining the Permitting Process

Permit delays dampen private sector investment in infrastructure projects and add to overall costs. A report by the nonprofit organization Common Good estimates that a six-year delay in starting construction on public projects costs the nation more than $3.7 trillion.

The need to enact permitting reform policies is an area of general agreement among Washington policymakers, but legislative proposals under consideration in the House and Senate are far apart and have become part of intense discussions over federal budget priorities.