KEENE, N.H. (MyKeeneNow) Despite losing out on a competitive federal grant for the second year in a row, Keene officials say the city’s long-planned downtown infrastructure overhaul remains fully funded and is still set to begin construction next spring.

The city had applied for a $13.7 million grant through the Better Utilizing Investments to Leverage Development (BUILD) program—now renamed—hoping to cover more than half of the estimated $17.4 million cost. The grant would have allowed Keene to broaden the scope of the project, including a proposed extension of water and sewer utilities along Gilbo Avenue that would have raised the total cost to $22.7 million.

Although 30 projects nationwide received funding in this round, Keene’s application was once again not selected.

City Manager Elizabeth Ferland said the rejection, while disappointing, was anticipated. “We understood from the outset that it was a highly competitive process,” Ferland said in a statement. “However, the grant was not included as part of the project’s funding plan, as the City has been preparing for this project for many years.”

Ferland emphasized that the downtown reconstruction is backed by a mix of capital reserves, water and sewer enterprise funds, state grants, and low-interest loans—some of which include debt forgiveness. She noted that the city’s long-range capital planning is designed to avoid financial shocks to residents by spreading infrastructure costs predictably over time.

Public Works Director Don Lussier previously said the BUILD grant would have helped soften the taxpayer impact even with the proposed scope increase, but the Gilbo Avenue expansion remains uncertain for now. The plans still include the extension, but a final decision will depend on the city’s internal budget reviews.

City councilors voted earlier this year to delay construction by one year in hopes of securing the federal funds. While the city didn’t succeed this round, there may be another opportunity to reapply this fall when the program reopens.

Still, there is some positive movement on the federal funding front. Senator Jeanne Shaheen has included Keene’s downtown improvements—specifically sidewalks, bike lanes, and related infrastructure—on her list of proposed earmarks for fiscal year 2026. If approved, that could bring in an additional $2.85 million.

In the meantime, Keene officials remain committed to getting shovels in the ground next spring.

Mayor Jay Kahn is expected to discuss the grant process and next steps during an interview Monday morning on WKBK’s Good Morning with Dan Mitchell show.