City's Push for Infrastructure Funding: What You Need to Know
Cities must act now on infrastructure funding: discover key strategies and trends to secure your future!
American cities are sitting on a ticking clock. Bridges rated structurally deficient. Water mains that date back to the Eisenhower administration. Power grids that buckle under summer heat loads they were never designed to handle. The American Society of Civil Engineers gave U.S. infrastructure a C- in its 2021 report card — and that grade hasn't meaningfully improved since.
The question isn't whether cities need infrastructure funding; it's whether they know how to get it, structure it, and actually deploy it before the next failure makes the evening news.
What Infrastructure Funding Actually Covers (And What It Doesn't)
Infrastructure funding sounds like a catch-all term, but the mechanics matter enormously when you're trying to secure it. Broadly, it refers to capital allocated for building, repairing, or upgrading physical systems that support economic activity and quality of life — roads, water systems, broadband, transit, energy grids, stormwater management, and increasingly, EV charging networks and battery storage facilities.
What catches cities off guard is how narrowly many federal and state programs define eligible uses. A grant designed for "transportation infrastructure" may exclude pedestrian bridges. An energy resilience program may fund battery storage but not the transmission upgrades needed to connect it. Understanding these distinctions upfront isn't bureaucratic nitpicking — it's the difference between a funded project and a stranded application.
There's also a critical distinction between capital funding and operational funding. Federal programs almost exclusively target capital expenditures: building the thing, not running it. Cities that win infrastructure grants without modeling the long-term operational costs often find themselves owning expensive assets they struggle to maintain.
The Funding Landscape Has Shifted — But Not Equally for Everyone
The Bipartisan Infrastructure Law (BIL), passed in 2021, injected $1.2 trillion into infrastructure over five years, with $550 billion representing genuinely new federal spending. The Inflation Reduction Act added another layer of incentives, particularly for clean energy infrastructure, with tax credits that developers and municipalities can now stack in ways that weren't possible three years ago.
On paper, this is the most significant federal infrastructure investment in a generation.
In practice, smaller and mid-sized cities are struggling to access it. The application processes for programs like the RAISE grant (formerly BUILD) or the new Clean Communities Investment Accelerator require levels of technical capacity — grant writers, engineers, legal counsel, financial modelers — that many municipalities simply don't have on staff. Cities with populations under 100,000 are leaving hundreds of millions of dollars on the table not because they lack qualifying projects, but because they lack the institutional bandwidth to pursue them.
This is the non-obvious story inside the infrastructure funding boom: the gap between announced dollars and deployed dollars is enormous, and it's widest in the places that need the money most.
Strategies That Actually Work for Securing Funding
Build the Coalition Before You Build the Application
The most successful infrastructure funding pursuits share a common trait: they're rarely single-entity efforts. Regional coalitions of cities, counties, and utility districts routinely outcompete individual municipal applicants because they demonstrate broader impact, shared risk, and larger project scale — all factors that federal reviewers weigh heavily.
A practical example: several smaller Midwest cities have pooled resources to jointly apply for EPA Water Infrastructure Finance and Innovation Act (WIFIA) loans, which have a $5 million minimum project size that individual towns couldn't reach alone. The coalition approach cleared the threshold and unlocked favorable loan terms — 25-year repayment periods at Treasury rates — that no single city could have negotiated independently.
Leverage Private Capital as a Proof Point
Public-private partnerships have moved well beyond the toll road model. Today, clean energy developers, data center operators, and telecommunications companies are actively seeking municipal partners for infrastructure projects where they share underlying assets — land, grid connections, fiber conduit, water access.
For cities, the strategic play is to use committed private capital as a match requirement that unlocks federal grants, rather than treating private and public funding as competing sources.
The math here is compelling. Many federal infrastructure programs require a 20-30% local match. If a solar developer or battery storage company is already committing capital to a co-located project on city-owned land, that commitment can often satisfy the match requirement — effectively giving a city leverage to access federal dollars without drawing down its own reserves.
Don't Sleep on Tax Credit Monetization
Post-IRA, cities and other tax-exempt entities can now directly monetize clean energy tax credits through a mechanism called direct pay (also called elective pay). This is a genuine structural change that most municipal finance officers haven't fully integrated into their capital planning.
Under elective pay, a city that builds a qualifying solar installation, EV charging infrastructure, or battery storage system can receive the equivalent of the federal investment tax credit as a direct cash payment — even though municipalities don't pay federal income tax. For a $10 million solar-plus-storage project, that could mean $3 million in direct federal payments before a single grant application is filed.
Cities That Got It Right: Lessons from the Field
Georgetown, Texas, became a case study in municipal clean energy procurement when it transitioned to 100% renewable electricity — but the financial structure was as important as the headlines. Georgetown locked in long-term power purchase agreements with solar and wind developers, using the price certainty of those contracts to refinance existing utility debt at lower rates. The infrastructure play and the financing strategy were inseparable.
Columbus, Ohio, won a $40 million Smart Columbus grant in 2016 by doing something straightforward but rare: it quantified the economic value of its proposed transportation infrastructure improvements in terms federal reviewers could evaluate — reduced vehicle miles traveled, air quality improvements, projected EV adoption curves. The lesson isn't that Columbus had better projects; it's that they told a better story with better data.
On the clean energy infrastructure side, Pueblo, Colorado, offers a more recent example. By positioning itself as a hub for battery manufacturing and grid-scale storage — leveraging its existing industrial land base and transmission access — Pueblo attracted private investment that then supported successful federal grant applications for workforce and infrastructure development. The city didn't wait for a funding program to chase; it built the asset base that made it fundable.
Where Infrastructure Investment Is Heading Next
Grid modernization and energy storage are absorbing an increasing share of infrastructure capital, and the trend will accelerate. The growth of data centers — which require extraordinary power density and grid reliability — is already reshaping how utilities and cities think about transmission infrastructure investment. A single hyperscale data center can consume 100+ megawatts of power, effectively requiring the infrastructure equivalent of adding a small city to the grid.
The cities that will win the next decade of infrastructure investment aren't necessarily the largest or the wealthiest — they're the ones that understand their geographic and grid assets clearly enough to make themselves indispensable to private developers.
Sustainability considerations are no longer optional or reputational. Increasingly, federal infrastructure programs score applications on climate resilience, emissions reduction, and environmental justice criteria. A water system upgrade that incorporates green infrastructure — permeable pavement, bioswales, urban tree canopy — scores higher than one that doesn't, often enough to tip a competitive application.
The cities still treating sustainability as a box to check are going to fall behind the ones embedding it into infrastructure design from the start.
The funding is real. The programs exist. The private capital is circulating. What's scarce is the strategic clarity to connect those pieces — understanding which programs fit which projects, which partners de-risk which applications, and which assets a city already controls that it hasn't fully leveraged.
That's the work. The cities doing it aren't waiting for someone to tell them the moment is urgent; they already know.
Explore more about infrastructure funding opportunities here!