IMX Attendees Learn Of Expanded Funding For Capital Construction

Travis Black, director of the Maritime Administration’s St. Louis Gateway Office, and Daniel Ladd, director of MarAd’s Office of Financial Approvals since 2013, gave attendees at the Inland Marine Expo in Nashville, Tenn., a quick and informative tour of new federal funding opportunities opened up by recent legislation. These include changes that make inland operators, ports and/or shipyards eligible for funding assistance for which they previously didn’t qualify. Some long-established grant programs were expanded or broadened in ways that give new opportunities to port districts.

Their session was moderated by Mary Lamie, executive director of St. Louis Regional Freightway and executive vice president of multi-model enterprises for Bi-State Development, an economic development organization serving Missouri and Illinois.

Ladd focused on the Capital Construction Fund, the Small Shipyard Grant Program and the Port Infrastructure Development Program. All of these programs have recently expanded the range of their eligibility, in some cases significantly. Ladd said his role is to ensure that any grant money dispensed by these programs is going to strong, financially viable entities.

Title XI Ship Building Fund

The Title XI program was set up to lower the cost of capital to shipbuilders by providing federal loan guarantees. The program has provided $9.3 billion to date in loan guarantees for the purpose of constructing new vessels or rebuilding existing vessels. Eligible vessels need to be ABS-classed and properly insured. Successful applicants can get guaranteed loans with favorable Treasury-based rates—currently about 4.025 percent.

Under new language designed to encourage wind farm production, vessels designed to serve offshore wind farms—including service vessels and supply boats—can qualify as Vessels of National Interest to move ahead in the priority queue for processing loan requests, Ladd said. He noted one company that has financed 17 barges and three towboats through this program, recently signing its 13th deal with MarAd.

Capital Construction Fund

Since the U.S. does not directly subsidize shipyards, they operate at a competitive disadvantage to foreign yards that receive government subsidies. The Capital Construction Fund program was created to counterbalance this situation by helping owners and operators of United States-flag vessels secure the capital necessary to modernize and expand the U.S. merchant marine through the deferment of federal income taxes on certain deposits of money or other property placed into a CCF.

The CCF program was significantly expanded in December 2022 with the passage of the National Defense Authorization Act for Fiscal Year 2023.  Section 3544 of the act expanded the use of the program to “all U.S.-built vessels which are engaged in the domestic or foreign commerce of the United States.”

As Bill Finnecy explained in a recent Waterways Journal article, “By amending the definition of a ‘qualified vessel’ in this manner, the act eliminated the significant limiting geographic trading requirements for vessels constructed or reconstructed with the use of these tax-deferred CCF funds. This ‘qualified vessel’ definition change significantly opens the door for the use of the CCF program by virtually all U.S.-flag vessel owners” (WJ, April 7).

Eligible vessels can remain in the program for up to 25 years, Black said. Companies can make tax-deferred deposits into the fund for the purposes of financing replacement vessels—which was the program’s original purpose. The CCF can be used for vessel acquisition and repowerings as well; in fact, the latter are encouraged for environmental reasons.

The tax basis of the vessels is reduced by any amount withdrawn from the fund, but the withdrawal is not considered taxable income.

Ladd noted that the Mark W. Barker, the first new Great Lakes bulker to be built in 40 years, was financed through the CCF.

PIDP, Small Shipyard Grant Programs

The Port Infrastructure Development Act, also part of the Maritime Administration Reauthorization Act, set aside $750 million for the Port Infrastructure Development Program. This year’s notice of funding opportunities closed April 23.

A MarAd program well-known to Waterways Journal readers is the Small Shipyard Grant Program, which was open to inland shipyards from its beginning. It was reauthorized last year at $30 million as part of the Maritime Administration Reauthorization Act. It offers 75 percent matching grants to qualified small shipyards that contribute 25 percent up front to support small shipyard projects that make capital and related improvements or provide training for workers in shipbuilding, ship repair and associated industries. Ladd mentioned a recent Small Shipyard grant of $1.125 million to the Tennessee River Boat Yard for a new 182-ton crawler crane.

Multimodal Programs

Black ran through other multimodal federal transportation-related programs that are available to inland port districts. The U.S. Department of Transportation Mega Grant program (the National Infrastructure Project Assistance program) supports “large, complex projects that are difficult to fund by other means and likely to generate national or regional economic, mobility or safety benefits.” Applicants must be governmental units, including port authorities, and eligible projects include any intermodal freight projects that provide a public benefit.

Under the Bipartisan Infrastructure Law (BIL), ports are one entity that can be eligible for the Promoting Resilient Operations for Transformative, Efficient, and Cost-saving Transportation (PROTECT) Grant program, which provides funding to ensure surface transportation resilience to natural hazards including climate change, sea level rise, flooding, extreme weather events and other natural disasters. The program supports planning activities, resilience improvements, community resilience and evacuation routes and at-risk coastal infrastructure.

In May, the Federal Highway Administration announced a $400 million program in grants to reduce truck emissions at ports. Eligible projects can get FHA grants for projects that can include the use of zero-emissions or low-emissions powertrains on trucks but also access-road improvements designed to reduce idling time.

Port districts may also be eligible for INFRA grants (the Nationally Significant Multimodal Freight & Highway Projects program). The program awards competitive grants for “multimodal freight and highway projects of national or regional significance to improve the safety, efficiency and reliability of the movement of freight and people in and across rural and urban areas.”

Rural Surface Transportation grants support “projects that improve and expand the surface transportation infrastructure in rural areas to increase connectivity, improve the safety and reliability of the movement of people and freight and generate regional economic growth and improve quality of life.” A notice of funding opportunities (NOFO) was published this spring.

Finally, the Rebuilding American Infrastructure with Sustainability and Equity (RAISE) program received funding of $1.5 billion. RAISE grants broadly support “critical freight and passenger transportation infrastructure projects,” and the program’s eligibility requirements “allow project sponsors to obtain funding for projects that are harder to support through other U.S. DOT grant programs.”

‘Good Money But Not Fast Money’

To help guide applicants through what can be an overwhelming process, offices like Black’s dubbed Gateway offices, divided into regions, can help.

Several online resources are also available. The Department of Transportation has put together a Discretionary Grants Dashboard. MarAd has posted an Applicant Roadmap that explains the review process. Many applicants rely on consultants to navigate the complexities of grant programs and help them prepare applications. Reading grant requirements carefully and telling your story to make sure your project fits the requirements is essential, Ladd said.

Black said applicants should expect the entire process to last at least 19 months, and plan accordingly. It takes about 6 to 12 months to get grant agreements in place, and another four to six months to score them. “These programs give good money, but not fast money,” he said.