Treasury Publishes Final Rules on ARPA State & Local Recovery Funds
The Coronavirus State and Local Fiscal Recovery Funds (SLFRF) program, a part of the American Rescue Plan, delivers $350 billion to state, local, and Tribal governments across the country to support their response to and recovery from the COVID-19 public health emergency. On January 6, the U.S. Department of the Treasury released the final rule, which takes effect on April 1, 2022, though recipients can choose to take advantage of its flexibilities and simplifications now.
The final rule offers a standard allowance for revenue loss of $10 million, allowing recipients to select between a standard amount of revenue loss or complete a full revenue loss calculation. Recipients that select the standard allowance may use that amount – in many cases their full award – for government services, with streamlined reporting requirements.
Clarifies that recipients can use funds for capital expenditures that support an eligible COVID-19 public health or economic response. For example, recipients may build certain affordable housing, childcare facilities, schools, hospitals, and other projects consistent with final rule requirements.
Provides an expanded set of households and communities that are presumed to be “impacted” and “disproportionately impacted” by the pandemic, thereby allowing recipients to provide responses to a broad set of households and entities without requiring additional analysis. Further, the final rule provides a broader set of uses available for these communities as part of COVID19 public health and economic response, including making affordable housing, childcare, early learning, and services to address learning loss during the pandemic eligible in all impacted communities and making certain community development and neighborhood revitalization activities eligible for disproportionately impacted communities.
Allows for a broader set of uses to restore and support government employment, including hiring above a recipient’s pre-pandemic baseline, providing funds to employees that experienced pay cuts or furloughs, avoiding layoffs, and providing retention incentives.
Broadens the share of eligible workers who can receive premium pay without a written justification while maintaining a focus on lower-income and frontline workers performing essential work.
Broadens eligible broadband infrastructure investments to address challenges with broadband access, affordability, and reliability, and adds additional eligible water and sewer infrastructure investments, including a broader range of lead remediation and stormwater management projects.
Authorizes services to address vacant or abandoned properties as eligible ARPA SLFRF expenditures in areas disproportionately impacted by the COVID-19 health and economic crisis. Eligible activities include:
Costs related to rehabilitation, renovation, and securing of vacant or abandoned properties;
Remediation of environmental hazards;
Demolition or deconstruction of vacant or abandoned buildings;
Greening of vacant lots;
Conversion of properties to affordable housing.
From the Archives: Below is our blog post was originally published on May 6, 2021 outlining the principles that communities should follow when deciding how to employ ARPA funds in their communities. GOPC will occasionally repost blogs from the past with important information that is relevant to ongoing public discussions.
As local leaders start to think about deploying American Rescue Plan funds in their communities, we wanted to share principles that we believe can help Ohio’s legacy cities and communities fully benefit from these dollars. These principles are based on the great thinking of local leaders, national thought leaders, and our own research and work in legacy communities across Ohio.
Slow down the spending, speed up the planning. Cities have until December 31, 2024 to spend their ARP funds. Spending a few months planning the use of those dollars will pay dividends for years to come.
Think about ARP money in three buckets: Dig out of the COVID hole; stabilize; invest in the future. Hat tip to a number of other thinkers who also thinking roughly in these categories (Brookings, New Localism, Enterprise).
Use ARP to begin rectifying inequities. ARP offers the opportunity to invest heavily in residents and neighborhoods that have been marginalized or under-invested. Beyond the local allocations, there are other ARPA “funding pots” that can be utilized to help communities pursue more equitable outcomes, such as the EDA Economic Adjustment Assistance, Child Care Stabilization Funds, or EPA grants for pollution in low-income communities.
Plug ARP funds into existing plans to achieve the community’s vision faster than had been expected. Quantitatively and qualitatively, the strongest performing cities in Ohio have visions; they bend new funds to their needs. They do not change course every time new funding opportunities appear. Sometimes, this means working within an inch of program noncompliance to achieve the desired outcomes.
Always ask—to what end are we making this investment? Does it advance a strategic community priority? Pet projects of city council members or local nonprofits may or may not always help advance a community priority. Think critically on whether former ways of doing things need to be the way they are done in the future.
Be aware of the limits of one-time money. ARP funds must be spent by December 31, 2024. Avoid hiring new staff that will have to be laid off in 3 years unless there is a plan to keep the program sustainable in the long term.
One-time money should go into programs that become self-sustaining through debt repayment or by attracting private/nonprofit/philanthropic capital. Think about seeding revolving loan funds, credit enhancement tools, risk-mitigation tools like loan loss reserve funds. Our friends at CDFA and NDC have lots of good examples and ideas for creating financial tools for a range of common community priorities.
Be transparent about how the money will be used and how funding decisions were made. Tying funding decisions to clear community priorities and community plans make it easier for everyone to understand why some programs or ideas are funded and others are not. Clearly spell out how funding decisions are in support of a community priority to limit confusion.
Invest in existing places. Ohio has hundreds of cities and villages with historic architecture, solid homes, and walkable neighborhoods. Many of these places are older and may need repairs. Invest in broadband, sewer/water, streetscaping of existing places to keep them vibrant for existing residents and potential new residents. Limit (ideally, avoid) investing in new development that will add to long term maintenance costs. Strong Towns makes the case here.
Assign a city project manager or multi-sector team to help cities tap every available dollar, coordinate resources, and avoid redundancy.
Collaborate. Get input from all sectors, get input from historically marginalized voices. Communities have the opportunity come back from COVID stronger and more equitable than before if they work together. Talking across sectors and stakeholders (like schools, hospitals, etc.) can help cities surface a range of diverse, strategic, projects that can utilize other pots of ARP funds besides the local allocations. Collaboration can also lead to leveraged or matching dollars from other sources.