New Inclusive Development Models Help Ensure Equitable Infrastructure Investments

Over the past three years, the federal government has made a historic $2 trillion investment through various programs and initiatives toward improving the nation’s infrastructure with ancillary goals of advancing climate resilience, workforce development, and economic recovery. This unprecedented commitment represents not only a huge amount of funding, but when combined with the Justice40 Initiative, the Biden administration’s broad environmental justice effort, signals the government’s dedication to equitable distribution of those funds.

However, policymakers at all levels of government face significant challenges in ensuring that historically underserved communities have access to this opportunity.

To better understand how to overcome these challenges, The Pew Charitable Trusts’ state fiscal policy project brought together 40 industry experts, advocates, and policymakers to discuss how stakeholders can help local communities take advantage of federal and state programs.

Attendees at the day-long workshop held last fall shared successful models of equitable infrastructure development and ideas on how they can be replicated. Key principles underlying these strategies include:

1. Engage communities at all stages of the process—particularly at the very start, before project design and development.

   Voices and concerns of community members should be integrated into the planning process at the earliest stages and then throughout the project development cycle to help identify potential challenges or opportunities that may have been overlooked and to ensure that community needs and priorities are addressed.

   For example, Colorado’s redesign of a section of its interstate system, the Central 70 project, used pre-development engagement and community involvement to shape the initiative. As a result, the state removed a highway structure dividing the adjacent communities and replaced it with a below-ground segment of highway. That helped to improve safety and create connections between residents and businesses on both sides of the expressway. The project also created space to develop a 4-acre park that includes sports fields for an adjacent school district as well as an amphitheater, splash park, and shaded green space.

   These community-centric outcomes were not an accident. The Colorado Department of Transportation (CDOT) prioritized public outreach from project inception in 2003. Officials conducted more than 300 public meetings and often provided translation services for Spanish-speaking residents, who comprise a significant portion of the population. Throughout construction, CDOT maintained its commitment to community engagement. This included organizing smaller in-person gatherings to facilitate in-depth discussion and providing virtual office hours for those unable to attend meetings to capture input from a broader segment of the affected population.

2. Equity must be integrated into funding models.

   Infrastructure investments have a long and unfortunate history of negatively affecting low-income communities and communities of color, which have disproportionately shouldered the burden of development, displacement, and environmental health risks along with physical and social barriers. By incorporating equity outcomes into funding models, public investments can help to mitigate these potential harms and lead to more effective and sustainable infrastructure development for all communities.

   For example, the Chicago Transit Authority (CTA) has employed an innovative approach to funding a $3.6 billion expansion of its light rail system into the city’s far South Side – an economically disadvantaged community with no current access to rapid transit. The CTA will construct four new fully accessible stations as well as a modern railcar storage yard and maintenance facility. Planners see these stations, equipped with multimodal connections including bus, bike, pedestrian, and park and ride facilities, as not only transit hubs but also catalysts for neighborhood revitalization in a community in which 18% of residents are unemployed and 25% travel more than an hour to work.

   Federal grants will provide $1.97 billion of the total cost. Much of the remainder, however, will come from $950 million from what is known as tax increment financing (TIF)—a financing tool that captures the increase in property and other taxes resulting from new development in a specified area or district and dedicates that revenue to subsidize the project, typically through borrowing against those future gains.

   But Chicago’s approach to TIF financing is unique. The city specified a TIF district—billed as a first-of-its-kind “equity TIF”—that extended into affluent, transit-rich areas in which incremental improvements were being made so that the resulting revenue increases from those areas could be used to subsidize the extension of rapid transit to the South Side.

3. Community time and expertise should be valued and included in project budgeting.

   Recognizing community expertise and placing monetary value on community engagement helps to foster better, community-informed infrastructure development. By establishing funding mechanisms that incentivize and support community involvement, planning officials and policymakers can ensure a more inclusive and participatory approach to infrastructure project development and investment. It also promotes procedural justice and improved outcomes for affected communities.

   To this end, providing financial compensation for community-based organizations (CBOs) and community representatives to actively participate in decision-making processes not only serves as recognition of the value of their input, but also compensates them for their time and effort spent advocating for resident’s interests and shaping infrastructure projects that directly affect their quality of life.

   King County Metro's North Link Project in Seattle, for example, plans to add and restructure a portion of its metro line to enhance transportation accessibility and effectiveness for all users, including historically underserved populations. As part of their outreach and engagement efforts, the project team worked closely with CBOs and compensated them for their involvement. This collaboration resulted in the establishment of a mobility board composed of diverse community members. The board played an active role in creating the service change proposal with the transit agency project team.

4. States can play a significant role in promoting equitable, community needs-based infrastructure development.

   With such a large amount of federal funding moving through states, state governments are now a critical locus of intervention and innovation. Policymakers can provide tailored support and resources to bolster the capacity of underserved communities. This support can take various forms, including technical assistance, capacity-building programs, and streamlining contracting and reporting requirements—all of which can empower underserved communities to navigate the complexities of infrastructure development more easily and effectively.

   Michigan's approach demonstrates how state-led technical assistance can offer tangible benefits for communities facing systemic challenges. The state recently established a technical assistance office within the Michigan Infrastructure Office that offers services ranging from project planning to grant application and implementation support. By leveraging contracted services and existing contractors, Michigan streamlines the process for stakeholders, making it easier for under-resourced communities to access timely assistance and guidance.

   State-led infrastructure banks can also play an effective role in advancing equitable and community needs-based infrastructure development by providing tailored financial support and resources and promoting innovative financing mechanisms.

   The Rhode Island Infrastructure Bank provides crucial technical assistance, low-interest loans, and pre-funding for localities to identify needs and develop project plans for grant applications. It also partners with municipalities and community organizations to formulate strategic processes and offers accelerated lending programs for communities and nonprofits seeking grants. For example, officials in Central Falls, Rhode Island, employed the state’s infrastructure bank to secure financing for a project that will significantly reduce occurrences of combined sewer overflow events that can contaminate area rivers by capturing and storing surges in infiltration chambers under remediated and improved athletic fields for use by city residents. The New Jersey Infrastructure Bank provides similar support for local water, transportation, and resilience projects.

5. Workforce development and promotion of historically underutilized businesses are an integral part of fostering equity across communities.

   Minority-owned businesses have traditionally been marginalized in economic activities and public procurement processes. Investing in workforce development and promoting these historically underutilized businesses (HUBs) can help foster equity and prosperity across communities, and public agencies are beginning to include support for HUBs in their business practices.

   For instance, the Equity in Infrastructure Project (EIP) offers a concrete example of how workforce development and the promotion of HUBs contribute to fostering equity across communities. EIP, founded in anticipation of the Infrastructure Investment and Jobs Act, supports HUBs to scale up their business and access new opportunities in the infrastructure sector with a goal to advance these businesses from serving as subcontractors to prime contractors on transportation sector projects. Initially launched with five founding transportation agencies, today nearly 60 state transportation departments, public agencies, and private sector firms have taken EIP’s pledge to create more prime, joint venture, and equity contracting opportunities for HUBs.

   Meanwhile, the Chicago Transit Authority (CTA), an inaugural member of EIP, elevates historically underutilized businesses through its interstate certification program for small business enterprises (SBEs). This program allows SBEs to compete as potential prime contractors for small-business set-aside contracts. CTA estimates that it awarded $171.6 million in contracts to 84 certified SBE firms in 2023, an 11% increase over the previous year. Ultimately, these practices deliver far more value for public investment by providing business and economic development in addition to critical infrastructure.

Although there is still much work ahead, with lessons learned and models continuing to develop as federal funding implementation continues, an across-the-board commitment to equity represents a crucial first step in ensuring that future infrastructure investment efforts result in meaningful and long-term outcomes for all communities. As the nation navigates this monumental task, the insights and exemplary practices highlighted at the workshop should serve as an important reminder that a more inclusive, community-centric approach to infrastructure development is possible and within reach.

Susan Banta is a director, Claire Lee is an associate, and Christine Pulfrey is an officer with Pew’s state fiscal policy project.