Program

COVID-19 Federal Assistance e311

Topics

Federal Funding Streams, Fund Planning & Allocation

Funding Source

FEMA, HUD, Infrastructure Investments and Jobs Act

What criteria should municipalities follow when contracting for external cybersecurity management, monitoring, tracking, and auditing services?

Municipalities should refer to the State and Local Cybersecurity Grant Program (“SLCGP”) Notice of Funding Opportunity (“NOFO”) to guide them in contracting for external cybersecurity management, monitoring, tracking, and auditing services. Eligible incurred costs under the SLCGP must comply with the Uniform Administrative Requirements, Cost Principles, and Audit Requirements outlined at 2 C.F.R. Part 200, including, among other requirements, the requirement that “costs must be incurred, and products and services must be delivered, within the period of performance of the award.”[1]  

Further, the procurement of any services must comport with procurement standards outlined at 2 C.F.R. §§ 200.317–200.327, including following recognized procurement methods and respecting socioeconomic considerations related to soliciting small and minority businesses, women’s business enterprises, and labor surplus area firms.[2]

Generally, costs associated with management and administration fall into one of the seven allowable expense categories enumerated in the SLCGP NOFO.[3] Accordingly, administrative costs related to management, monitoring, tracking, and auditing services could all be considered eligible costs, as long as the costs are reasonable and allocable to the grant, and provided the contracts for the services follow the procurement standards at 2 C.F.R. §§ 200.317–200.327.[4] Finally, the SLCGP Notice of Funding Opportunity specifies that the maximum amount of funding for management and administrative costs is five percent of the SLCGP award.[5]

Last Updated: October 28, 2022

[1] The Department of Homeland Security Notice of Funding Opportunity Fiscal Year 2022 State and Local Cybersecurity Grant Program, at [D. 12.], available at: https://www.fema.gov/fact-sheet/department-homeland-security-notice-funding-opportunity-fiscal-year-2022-state-and-local.

[2] Id., at [H. 5.A].

[3] Id., at [D. 12.].

[4] Id.

[5] Id., at [D. 12. C.].

Program

COVID-19 Federal Assistance e311

Topics

Federal Funding Streams, Fund Planning & Allocation, Program Administration

Funding Source

FEMA

What are good practices to demonstrate the benefits of SLCGP funding on projects in existing or new cybersecurity plans?

An eligible entity can greatly benefit from the State and Local Cybersecurity Grant Program (“SLCGP”) by partnering with one or more other eligible entities to form a multi-entity group.[1] Such a partnership could result in cost savings for the partnering entities equaling 10 percent, as there is no cost share requirement for multi-entity projects during Fiscal Year 2022.[2] Partnerships between multiple diverse entities can also yield several additional benefits, including information sharing that can help improve existing cybersecurity plans, and access to combined resources that can help inform the creation of new plans. Partnerships also allow smaller entities to participate in parts of the procurement process which they may not have otherwise had access to, including benefits associated with major acquisitions.[3] Simultaneously, all participating parties to a multi-entity grant may realize cost savings because of volume purchases.[4] Combining resources through partnerships may also facilitate timely development, prioritization, and implementation of projects by eliminating duplication of efforts and aiding in the identification of planning gaps.

Last Updated: October 31, 2022

[1] The Department of Homeland Security Notice of Funding Opportunity Fiscal Year 2022 State and Local Cybersecurity Grant Program, at [H. 12. Appendix D.], available at: https://www.fema.gov/fact-sheet/department-homeland-security-notice-funding-opportunity-fiscal-year-2022-state-and-local.

[2] Id., at [C. 4.].

[3] Id.

[4] Id.

Program

COVID-19 Federal Assistance e311

Topics

Federal Funding Streams, Fund Planning & Allocation

Funding Source

FEMA

Can a city’s partial or existing cybersecurity plan be integrated into the cybersecurity plan required of eligible entities under the State and Local Cybersecurity Grant Program?

Yes, a city’s partial or existing cybersecurity plan can be integrated into the cybersecurity plan eligible entities are required to submit under the State and Local Cybersecurity Grant Program (“SLCGP”). The SLCGP defines the term “eligible entity” to include “states or tribal governments”.[1]

To receive funding under SLCGP, eligible entities, such as states or territories, must submit a cybersecurity plan that includes certain required elements, as outlined 6 U.S.C. § 665g. [2] These required elements incorporate the development of cybersecurity capabilities across the state or territory and are not specific to local governments.[3]  However, if the eligible entity is a state, input and feedback from local governments and associations of local governments should be incorporated.[4]

Cities are only eligible for SLCGP funding as subapplicants and should work with the eligible entity’s Cybersecurity Planning Committee to receive subawards.[5] Accordingly, cities are not required, under the SLCGP, to integrate their partial or existing cybersecurity plans into the eligible entity’s final cybersecurity plan but may do so.   

Though not required, cities and eligible entities are encouraged to connect and collaborate regarding the integration of partial or existing cybersecurity plans into the eligible entities’ required plans.

The Department of Homeland Security recommends that eligible entities take the following steps in crafting their SLCGP cybersecurity plans:

  • review existing governance and planning documents;
  • review existing assessments and evaluations (e.g., reports, after action reports) conducted by state, local, tribal, and territory governments;  
  • identify any governance, planning, assessment, or evaluation gaps that should be addressed by the cybersecurity plan; and
  • identify potential SLCGP projects to address identified gaps and prioritize mitigation efforts.[6]

Like eligible entities under SLCGP, cities are also encouraged to review the above guidance from the Department of Homeland Security as they craft and/or update their own cybersecurity plans. 

Last Updated: November 9, 2022

 

[1] 6 U.S. Code § 665g(a)(4).

[2] Id at Section 665g (e)(2).

[3] FEMA, “Fiscal Year 2022 State and Local Cybersecurity Grant Program FAQs,” available at: https://www.fema.gov/fact-sheet/fiscal-year-2022-state-and-local-cybersecurity-grant-program-faqs.

[4] 6 U.S. Code § 665g(e)(2)(A)(ii).

[5] FEMA, “Fiscal Year 2022 State and Local Cybersecurity Grant Program FAQs,” available at: https://www.fema.gov/fact-sheet/fiscal-year-2022-state-and-local-cybersecurity-grant-program-faqs.

[6] FEMA, The Department of Homeland Security Notice of Funding Opportunity Fiscal Year 2022 State and Local Cybersecurity Grant Program, at Appendix C, available at: https://www.fema.gov/fact-sheet/department-homeland-security-notice-funding-opportunity-fiscal-year-2022-state-and-local.

Program

COVID-19 Federal Assistance e311

Topics

Federal Funding Streams, Fund Planning & Allocation, Program Administration

Funding Source

FEMA

Can municipalities use the same cybersecurity plan for the entire duration of the SLCGP period of performance, ending August 31, 2026?

The State and Local Cybersecurity Grant Program (“SLCGP”) requires eligible entities to submit a comprehensive and strategic cybersecurity plan to reduce cybersecurity risks and increase capacity to address cybersecurity vulnerabilities as part of their grant application. A municipality’s Cybersecurity Committee and Chief Information Officer/Chief Information Security Officer must approve the plan. A municipality’s cybersecurity plan should cover two to three years.[1] The plan will initially be approved for two years and will require annual approval thereafter.[2] The Notice of Funding Opportunity for the SLCGP does not address any extension of the annual plan approvals. Note that all eligible entities within a multi-entity group must already have a Cybersecurity Plan in place for the multi-entity group to be eligible for an award; multi-entity groups are not eligible for awards to develop a Cybersecurity Plan.

Last Updated: October 28, 2022

[1] The Department of Homeland Security Notice of Funding Opportunity Fiscal Year 2022 State and Local Cybersecurity Grant Program, at [Appendix C], available at: https://www.fema.gov/fact-sheet/department-homeland-security-notice-funding-opportunity-fiscal-year-2022-state-and-local.

[2] Id., at [D. and E.].

Program

COVID-19 Federal Assistance e311

Topics

Federal Funding Streams, Fund Planning & Allocation

Funding Source

FEMA, HUD, Infrastructure Investments and Jobs Act

Can an application for funding originally submitted for another Infrastructure Investment and Jobs Act programs be repackaged and submitted for the State and Local Cybersecurity Grant Program?

The Notice of Funding Opportunity for State and Local Cybersecurity Grant Program (“SLCGP”) does not specifically address repackaged applications.[1] However, an eligible entity may be able to repackage and submit to the SLCGP an application previously submitted for another Infrastructure Investment Jobs Act (IIJA) program, provided the application is complete, includes all information required for eligibility under the program being applied to, and did not result in funding under another grant program.

Determinations of FY22 SLCGP funding allocations will be formula-based as described in the notice of funding opportunity (“NOFO”). SLCGP also requires a non-federal cost share. The SLCGP NOFO states that even if the actual cost of an SLCGP grant application or project exceeds the grant amount under SLCGP, the grant amount will not change. The NOFO, however, does not specifically state anything about use of other federal grants to fund any potential cost overrun.

If a previously submitted application for another IIJA program resulted in funding allocation, in addition to SLCGP requirements, applicants should review the requirements of the other grant program and confirm that there are no restrictions against submitting that application for SLCGP and does not result in funding for the same projects (a duplication of benefits). 

Per the Uniform Administrative Requirements in 2 C.F.R. 200, entities should ensure that SLCGP funds do not duplicate other federal funding sources.[2] FEMA describes Duplication of Benefits (“DOB”) for entities using multiple federal funding sources in FAQs as follows:

A DOB occurs when an entity receives (i.e., draws down/takes possession of) multiple sources of federal funding assistance, or outside funding (e.g., insurance), for a specific eligible cost or activity where funding has already been used for the entirety of that particular cost or activity, or in excess of the amount needed for that specific eligible cost or activity.[3]

Last Updated: November 7, 2022

Program

COVID-19 Federal Assistance e311

Topics

Federal Funding Streams, Fund Planning & Allocation

Funding Source

FEMA

How is State and Local Cybersecurity Grant Program funding calculated?

The State and Local Cybersecurity Grant Program (“SLCGP”) provides $185 million in funding.[1] States, the District of Columbia, and Puerto Rico will receive a minimum of $2 million, with additional funds to be allocated based on a recipient’s total population and the ratio of each state’s population residing in a rural area.[2] Each of the four U.S. territories will receive $500,000.[3]

The funding for the fiscal year 2022 will be awarded by the U.S. Department of Homeland Security (“DHS”) based on baseline minimums and population as required by the Homeland Security Act of 2002.[4] According to the Federal Emergency Management Agency (“FEMA”):

Each state and territory will receive a baseline allocation using thresholds established in the Homeland Security Act of 2002. All 50 States, the District of Columbia, and the Commonwealth of Puerto Rico will receive a minimum of $2,000,000 each, equaling 1% of total funds appropriated to DHS in FY 2022. Each of the four territories (American Samoa, Guam, the Northern Mariana Islands, and the U.S. Virgin Islands) will receive a minimum of $500,000, equaling 0.25% of the total funds appropriated to DHS in FY 2022. $90,500,000, 50% of the remaining amount will be apportioned based on the ratio that the population of each state or territory bears to the population of all states and territories. The remaining $90,500,000, equaling the other 50% of the remaining amount, will be apportioned based on the ratio that the population of each state that resides in rural areas bears to the population of all states that resides in rural areas.[5]

A detailed listing of allocations per state and territory is available on the Department of Homeland Security Notice of Funding Opportunity Fiscal Year 2022 State and Local Cybersecurity Grant Program.[6]

Last Updated: October 24, 2022

[1] The Department of Homeland Security Notice of Funding Opportunity Fiscal Year 2022 State and Local Cybersecurity Grant Program, at B. 1. available at: https://www.fema.gov/fact-sheet/department-homeland-security-notice-funding-opportunity-fiscal-year-2022-state-and-local.

[2] Id.

[3] Id.

[4] Id.

[5] Id.

[6] Id.

Program

COVID-19 Federal Assistance e311

Topics

Compliance & Reporting

Funding Source

American Rescue Plan Act

Is SAM.gov registration required to receive Coronavirus State and Local Fiscal Recovery Funds? How can award recipients mitigate award delays caused by Sam.gov registration backlogs?

Yes, a full SAM.gov registration is required of all contractorrs, subrecipients, and beneficiaries receiving Coronavirus State and Local Fiscal Recovery Funds (“CSLFRF”), except where explicitly excluded (e.g., individuals and households).[1] In addition, all eligible payees are required to have a Unique Entity Identifier as part of registration and must maintain the SAM.gov registration in active status.[2]

General Requirements

The Code of Federal Regulations, 2 CFR, § 200. 214 restricts federal award recipients from providing subawards to or engaging in contracts with disbarred, suspended, or otherwise excluded and ineligible entities.[3] The SAM.gov registration serves as a tool to help ensure that a recipient is not suspended or disbarred from receiving federal funds.   

Exceptions

CSLFRF Compliance and Reporting Guidance states that recipients should maintain procedures for obtaining information evidencing a given contractor, subrecipient, or beneficiary’s eligibility, including a SAM.gov registration (except with respect to individuals or households for which a SAM.gov registration is not required).[4]

This guidance also provides that individuals and organizations that received CSLFRF funds as end users do not qualify as “subrecipients.” Such individuals and organizations, in this case, are instead characterized as “beneficiaries.” Though the audit requirements of the Single Audit Act and 2 CFR, § 200 (f) do not apply to beneficiaries,[5] organizations that are beneficiaries do not appear to be excluded from the SAM.gov registration requirement.

Suggestions and Action Items to Mitigate Award Delays

To mitigate award delays caused by SAM.gov registration, cities could consider contracting  prior to full clearance of the SAM.gov registration and adding terms and conditions in the contract solicitation and contract requiring a complete SAM.gov registration to be received within an allotted timeframe (e.g., 30, 60, or 90 days).

Executing a contract before the contractor provides support for full SAM.gov registration is a mitigative measure which may speed up the contract award, but which also increases the risk that cities could contract with a party which the federal government has debarred, suspended, or otherwise excluded from participation in federally funded programs. The federal government typically takes these suspension and debarment actions in response to serious problems with a contractor or subrecipient. As a result, the federal government could retroactively render contract expenditures ineligible for reimbursement, if it is later confirmed through the clearance of the SAM.gov registration that the contractor has been excluded from participation in federal programs.

CSLFRF awards, as with most federal grants, require meticulous attention to the many nuances of grant administration. Cities can consider the following proactive measures to help them navigate delays in SAM.gov registration processing:

  • Communicate the requirement to potential contractors proactively and emphasize the importance of providing any required documentation in a timely manner.
  • Establish robust and documented internal controls for compliance and monitoring of recipient, subrecipient, contractor, and beneficiary relationships.
  • Conduct thorough eligibility reviews for all subrecipients, including financial integrity and merit reviews, and pre-award risk assessments.
  • Include SAM.gov registration requirements in all contract solicitations, requests for proposals, contracts, documents, and agreements.
  • Where reasonable and feasible, consider use of revenue loss funding in which no subrecipient relationship would be established, thereby reducing reporting requirements under the Uniform Guidance.
  • Monitor compliance with and completion of all established pre and post award requirements including confirmation of SAM.gov registration.

Municipalities should regularly review Treasury guidance and portals, as sub-regulatory guidance and frequently asked questions will likely reflect the most updated information. Municipalities may also wish to consult with counsel and their accounting team to ensure compliance with federal, state, and local laws.

Last Updated: November 4, 2022

[1] U.S. Department of the Treasury,  Compliance and Reporting Guidance: State and Local Fiscal Recovery Funds, Eligibility, at 9, available at: https://home.treasury.gov/system/files/136/SLFRF-Compliance-and-Reporting-Guidance.pdf.

[2] U.S. Department of the Treasury, Coronavirus State and Local Fiscal Recovery Funds Final Rule: Frequently Asked Questions, at 46, available at: https://home.treasury.gov/system/files/136/SLFRF-Final-Rule-FAQ.pdf.

[3] 2 CFR, § 200.214.

[4] U.S. Department of the Treasury,  Compliance and Reporting Guidance: State and Local Fiscal Recovery Funds, Eligibility, at 9, emphasis added, available at: https://home.treasury.gov/system/files/136/SLFRF-Compliance-and-Reporting-Guidance.pdf.

[5] U.S. Department of the Treasury, Compliance and Reporting Guidance: State and Local Fiscal Recovery Funds, at 11, available at: https://home.treasury.gov/system/files/136/SLFRF-Compliance-and-Reporting-Guidance.pdf.

Program

COVID-19 Federal Assistance e311

Topics

Due Diligence & Fraud Protection

What are some good practices for grant managers to follow when assessing the health of grant programs within an inherited portfolio?

There are several ways a grants manager may approach evaluating the health of various grant programs within a newly inherited portfolio. The following recommendations are based on the experiences of financial management professionals skilled in designing and implementing grant programs across various stages of the grant lifecycle. These recommendations may assist new grants managers with ways to familiarize themselves with a grants program. However, these recommendations may not apply to every government organization. Municipalities may wish to consult with counsel and their accounting team to ensure compliance with federal, state, and local laws.

  • Review program requirements for each grant program within the portfolio. A grant manager should identify and review relevant information for each grant program within the portfolio to gain insight into the program’s eligibility requirements, allowable activities, performance periods, reporting, and any applicable Uniform Guidance provisions. To understand the requirements for each grant program, it may be helpful to identify the “assistance listing” associated with the specific programs, if this information is available. Assistance listings outline all requirements associated with federal awards and can be accessed here: https://sam.gov/content/assistance-listings.[1]
  • Review previous audit or Single Audit reports. For most federal programs, recipients who expend more than $750,000 in federal funding in any given fiscal year are required to conduct a Single Audit.[2] Single Audits typically focus on:
  • Eligibility
    • Allowable Costs and Activities
    • Cash Management
    • Equipment and Real Property Management
    • Matching, Level of Effort, and Earmarking
    • Period of Performance
    • Procurement, Suspension, & Debarment
    • Program Income
    • Reporting
    • Subrecipient Monitoring
    • Special Tests and Provisions

Audit reports can inform a grants manager of any weaknesses, deficiencies, adverse conditions, or changes identified during the audit. Audit reports also include recommendations for improvements to the areas outlined above.

  • Review financial or performance reports. Most federal, state, and local grant programs require a progress report, including financial and programmatic data. These reports are often submitted on a quarterly or annual basis and outline the status of the grant program and how funding has been spent. Reviewing these reports may be another way to identify if program requirements are being met.
  • Read Legislative Updates on grant programs, if available. Most legislative bodies are responsible for the appropriation of grant funding for an organization. Often, program managers and department directors prepare legislative updates for general legislative meetings or budget hearings. Reading these reports may provide additional details on how the program was established, legislative input and feedback on the design of the program, and any program status updates.
  • Review grant program documentation. To better understand an inherited grant program, it may be useful to review existing grant program documentation, including standard operating procedures, or other administrative policies establishing internal controls. These documents may help provide additional information on the efficiency of a grant program.
  • Request a transition meeting or status update from existing grant program managers or relevant stakeholders on the progress of the grant program. Speaking directly with program stakeholders, such as the program manager, may assist a grants manager with understanding the overall requirements and status of each grant program, including:
    • Eligibility requirements associated with a grant;
    • Funding available under a grant program;
    • Proposed timelines for implementation of a grant project;
    • Performance metrics associated with a grant project; and
    • Internal or external reporting requirements associated with a grant project.

Program stakeholders may also be able to assist a grants manager with obtaining access to key program documentation relevant to the transition from one grants management team to the next.

Last Revised: September 2, 2022

[1] Assistance listings do not track state and local grant programs.

[2] National Archives, “Code of Federal Regulations,” at Part 200, Subpart F, “Audit Requirements,” available at: https://www.ecfr.gov/current/title-2/subtitle-A/chapter-II/part-200/subpart-F.     

Program

COVID-19 Federal Assistance e311

Topics

Community Engagement & Local Partnerships, Workforce & Economic Development

What are some strategies for ensuring grant-funded initiatives are inclusive and aligned with community needs/desires?

A municipality should first ensure any grant-funded programs and activities are compliant with grant requirements, including but not limited to civil rights laws, ADA regulations, and Fair Housing regulations.  

If a municipality has staff that monitors and conducts legislative analysis, the municipality should incorporate that resource into its overall strategy for ensuring compliance and inclusivity relative to specific grant programming.  

For a municipality’s programs and projects, an equity framework should be considered from planning through completion. To consider equity considerations, it is important to have an open and transparent planning process that includes routine engagement with elected officials, stakeholders, and the public.

It is also important to ensure a public involvement plan is in place to address the ways a municipality will engage with the community. This plan should employ strategies that are creative and engage diverse populations so there is equal access to programs services.  The plan should outline strategies to reach underserved populations with messaging regarding grant funded services, including communications in locations where such populations socialize. A municipality could consider holding public meetings and civic gatherings, as well as providing information and targeted outreach to underserved populations before, during, and after grant programming is initiated. The plan should also consider how to provide meaningful access to limited English proficient (“LEP”) individuals. Agency training should also be provided to ensure staff comprehension of both regulatory compliance requirements and inclusive approaches under any given grant program. In developing the plan, a municipality may wish to utilize in-house Geographic Information Services (“GIS”) to update demographic data and assist with identifying and meeting program objectives with respect to areas that are considered underserved, marginalized, and adversely affected. If the municipality does not have a GIS resource, the municipality may use the data gathering and analysis tools available on the US Census Bureau’s website, including tools that populate maps of underserved areas and identify Qualified Census Tracts (“QCTs”).[1] Other resources for demographic information may include Metropolitan Planning Organizations and regional or state municipalities. It is also important to be aware of local and national political, social, and economic events which impact community health and viability, such as employment rates, job availability, education and workforce training, food deserts, public transportation, among other issues.

Municipalities may also consider engaging with community-based organizations, non-profits, and the public to help build an understanding of the community’s needs and to help facilitate impact.

Finally, municipalities should aim to garner trust within the community. An example of this can be to highlight for the community updates and advertise local opportunities for engagement and community input. This may be done on the municipality website but can also be shared through community-based organizations (“CBO”) such as media outlets. Fostering an inclusive environment for community members to voice concerns regarding inequities will help solidify trust and facilitate critical feedback. It will also become an invaluable resource for determining program needs more generally.

Last Revised: July 6, 2022

[1] United States Census Bureau, available at: https://data.census.gov/cedsci/.

Program

COVID-19 Federal Assistance e311

Topics

Federal Funding Streams

Funding Source

Infrastructure Investments and Jobs Act

What funding sources are available for the implementation of building energy performance standards?

A direct funding source for the implementation of building energy performance standards is available through the Building Codes Implementation for Efficiency and Resilience competitive grant program, which is funded by the Infrastructure Investments and Jobs Act (“IIJA”). Additionally, building code activities, including adoption and enforcement activities, are eligible uses under the Federal Emergency Management Agency’s (“FEMA”) Building Resilient Infrastructure and Communities (“BRIC”) program and Hazard Mitigation Grant Program (“HMGP”).

  1. Building Codes Implementation for Efficiency and Resilience Grant Program

The Building Codes Implementation for Efficiency and Resilience competitive grant program, funded by the IIJA, makes available $225,000,000 in federal funds to states and state partnerships.[1] The purpose of the grant program is to promote updates to building energy codes to save consumers money on their energy bills. Grant funding will be awarded to eligible entities to update building codes through eligible activities.[2] Applications will likely open by the end of 2022.[3] Under this grant program, funds may be used to:

  • Create or enable state or regional partnerships to provide training and materials to:

    • (i) builders, contractors and subcontractors, architects, and other design and construction professionals, related to meeting updated building energy codes in a cost-effective manner; and
    • (ii) building code officials, related to improving implementation of and compliance with building energy codes;
  • Collect and disseminate quantitative data on construction and codes implementation, including code pathways, performance metrics, and technologies used;
  • Develop and implement a plan for highly effective codes implementation, including measuring compliance;
  • Address various implementation needs in rural, suburban, and urban areas; and
  • Implement updates to energy codes for:
    • (i) new residential and commercial buildings (including multi-family buildings); and
    • (ii) additions and alterations to existing residential and commercial buildings (including multi-family buildings).[4]

Eligible recipients include states and state partnerships. A state partnership includes a partnership with the relevant state agency and one or more of the following:

  • Local building code agencies;
  • Codes and standards developers;
  • Associations of builders, design, and construction;
  • Local utility energy efficiency programs;
  • Consumer, energy efficiency, and environmental advocates; and
  • Other entities, as determined by the Secretary of Energy.[5]

The Secretary of Energy considers the following in awarding grants to eligible entities:

  • Prospective energy savings and plans to measure these savings;
  • Long-term sustainability of such plans and savings;
  • Prospective benefits and the assessment of such benefits, including assessment of:
    • (i) energy resilience and peak load reduction;
    • (ii) occupant safety and health; and
    • (iii) environmental performance.
  • Demonstrated capacity of the eligible entity to carry out the proposed project;
  • Need of the eligible entity for assistance; and
  • Prioritizing applicants from partnerships.[6]
  1. BRIC and HMGP

Building code activities, including code adoption and code enforcement activities, are eligible activities under the HMGP’s 5 Percent Initiative[7] and the BRIC Capability and Capacity Building Activities, the latter of which was provided funding through the IIJA.[8] However, states may use their discretion to set their own priorities for the types of projects they want to fund through BRIC and HMGP.[9]

The Standard 5 Percent Initiative under HMGP provides opportunities for applicants and sub-applicants to fund certain projects that are difficult to evaluate using cost-effectiveness methods approved by FEMA. Standard 5 Percent Initiative funds cannot be used in situations where mitigation activities can be evaluated under FEMA-approved cost-effectiveness methods but do not meet the required benefit-cost ratio.[10]

The Additional 5 Percent Initiative for Promoting Resilience through Disaster-Resilient Building Codes provides funding that has been set aside to help communities enhance disaster resilience related to building codes, such as adopting the latest International Building Code® and improving a community’s Building Code Effectiveness Grading Schedule score.[11] It is important to keep in mind which retrofits would or would not constitute a hazard risk reduction, as that will determine eligibility under any of the FEMA or Hazard Mitigation Assistance programs.

Last Revised: October 5, 2022

[2] Id.

[3] U.S. Department of Energy, “Building Codes Implementation for Efficiency and Resilience,” available at: https://www.energy.gov/bil/building-codes-implementation-efficiency-and-resilience.

[4] Id.

[5] Infrastructure Investment and Jobs Act, H.R. 117th Cong. (2021), Pub. L. No. 117-58 at §40511 Sec. 309(a), available at: https://www.congress.gov/bill/117th-congress/house-bill/3684/text.

[6]  Id., at § 40511 Sec. 309(c).

[7] Federal Emergency Management Agency, “Clarifying The Additional 5 percent Initiative”, available at: http://www.kymitigation.org/wp-content/uploads/2019/01/FactSheet_Clarifying-Building-Code-Elements_081716.pdf.

[8] Federal Emergency Management Agency, “Before You Apply for Building Resilient Infrastructure and Communities (BRIC) Funds”, available at: https://www.fema.gov/grants/mitigation/building-resilient-infrastructure-communities/before-apply#c&cb.  

[9] Federal Emergency Management Agency, “Clarifying The Additional 5 percent Initiative”, available at: http://www.kymitigation.org/wp-content/uploads/2019/01/FactSheet_Clarifying-Building-Code-Elements_081716.pdf.

[10] Id.

[11] Id.

Program

COVID-19 Federal Assistance e311

Topics

Compliance & Reporting

Funding Source

American Rescue Plan Act

Can a municipality alter its use of ARP funds after it has designated a project in quarterly reporting to Treasury? Would this be allowable if ARP funds expended on the originally planned project were reimbursed with city funds?

The U.S. Department of the Treasury’s (“Treasury”) Final Rule on the American Rescue Plan Act’s (“ARP”) Coronavirus State and Local Fiscal Recovery Funds (“CSLFRF”) does not expressly permit or prohibit changes in project plans, nor does it address a jurisdiction’s internal or regulatory fiscal processes concerning approval by a legislative body in activities such as budget amendments, change orders, and other actions.

Treasury’s Project and Expenditure Report User Guide for CSLFRF states:

Treasury understands that recipients may use different budget processes. For example, a recipient may consider a project budgeted once a legislature has appropriated funds; whereas another recipient may consider a project budgeted at the moment the funds have been obligated.[1]

While nearly all federal grants require approval on most every component of a project and its associated budget and expenditures, Treasury specifically states that this is not the case with respect to the use of CSLFRF funds:

Treasury is not approving or pre-approving projects or budgets. Treasury will use this information to better understand the intended impact, identify opportunities for further engagement, and understand the recipient’s progress in program implementation. Treasury is also collecting additional descriptive information about the budget process to better understand the context of recipients’ budget processes.[2]

The Project and Expenditure Report User Guide also provides the following information to address steps that must be taken when project plans change on a quarterly or annual basis. This guidance acknowledges that awardees may find it necessary to alter project plans, including changes to previously budgeted and expended project line items.

Treasury’s Project and Expenditure Report User Guide states in relevant part:

Certain data fields may be updated in Treasury’s Portal. In addition, if projects were previously reported under an Expenditure Category that changed or no longer exists, or additional programmatic data is needed, the Project Profile screen will show a yellow pencil icon.[3]

Once a new project is identified and vetted, municipalities should consider thoroughly reviewing Section V. Editing and Revising Your Data, with the proposed project in mind, to better understand the steps required to report project changes, including project updates, revisions, and cancellations.[4] Section V provides instructions to edit and revise data through either manual entry or bulk upload depending upon which method is preferred or previously followed by the recipient.   

Manual entry utilizes the Treasury portal’s web-based forms to edit or change fields individually. Bulk upload functionality would be appropriate when dealing with larger sets of data or records. Using this process, recipients will have the ability to delete any new projects that have been created during the current reporting cycle.[5]   

Projects submitted in prior reporting periods may be removed through cancelling and setting obligations and expenditures to $0.00, and/or creating offsetting entries to capture the project changes. Appropriate edits of subrecipient(s) and subrecipient data can also be made.[6] Further, it may be reasonable to assume that a fully vetted project alteration would likely be allowable provided it complies with all other applicable Treasury guidance. Finally, because Treasury does not provide budget guidance, a municipality may appropriately rely on its own internal procedures and processes as well as any other relevant regulatory provisions regarding budget amendments to reflect changes in use of funds or project allocations.

Last Updated: July 6, 2022

[1] Department of the Treasury, Project and Expenditure Report User Guide State and Local Fiscal Recovery Funds (as of July 8, 2022), Version 3.1, at 16, available at: https://home.treasury.gov/system/files/136/July-2022-PE-Report-User-Guide.pdf.

[2] Id.

[3] Id., at 28.

[4] Id., at 70.

[5] Id.

[6] Id., at 71.

Program

COVID-19 Federal Assistance e311

Topics

Infrastructure & Maintenance Investments

Funding Source

American Rescue Plan Act

Can ARP funds be used to rebuild or replace a government building, such as a fire station or police headquarters?

Coronavirus State and Local Fiscal Recovery Funds (“CSLFRF”) may be used to rebuild or replace government buildings, such as fire or police stations, under the revenue loss eligible use category enumerated in the U.S. Department of the Treasury’s (“Treasury”) Final Rule. However, CSLFRF recipients must undertake an eligibility analysis prior to funding these projects under the public health and negative economic impacts eligibility category.

Treasury provides substantial discretion regarding the distribution and use of CSLFRF. Treasury has outlined four categories of eligible uses for CSLFRF in its Final Rule, stating that funds may be used:

a) To respond to the public health emergency or its negative economic impacts by providing assistance to households, small businesses, and nonprofits, or aid to impacted industries such as tourism, travel, and hospitality;

b) To respond to workers performing essential work during the COVID-19 public health emergency by providing premium pay to eligible workers;

c) To provide government services related to lost revenue due to the COVID–19 public health emergency, including revenues collected in the most recent full fiscal year prior to the emergency; and

d) To invest in water, sewer, or broadband infrastructure.[1]

Treasury provides many enumerated eligible uses of funds. However, for uses of funds that are not explicitly enumerated as eligible, there is the possibility of eligibility under the “public health and negative economic impacts” and “revenue loss” statutory eligible use categories. To determine if ARP funds can be used to rebuild or replace a government building such as a fire station or police headquarters, these categories could offer potential paths for consideration.

To determine if the rebuilding or replacing of government buildings is eligible under the public health and negative economic impacts category per the Final Rule, it is essential to note that a non-exhaustive list of enumerated eligible uses is provided, and therefore not all uses are listed.

Rebuilding or replacing government buildings for police and fire under the public health and negative economic impacts category is not an explicitly enumerated use.[2] To help determine if other uses of funds are eligible, the Final Rule includes standards that apply to all proposed public health uses.[3]

The Final Rule outlines a two-part framework for determining eligibility:

  1. Designating a Public Health Impact - A negative public heath impact or harm must be experienced by an individual or class and the identified impact or harm must be addressed or responded to by the program, service, or other intervention proposed.
  2. Designating a Negative Economic Impact for identifying and designing a response to a pandemic harm - The response “must be reasonably designed to benefit the individual or class that experienced the public health impact or harm” and must be “reasonably proportional to the extent and type of public health impact or harm experienced.”[4]

In addition to satisfying the two-part framework above, projects with total expected capital expenditure costs of $1 million or greater must undergo additional analysis to justify their capital expenditure. Treasury requires funding recipients to submit a written justification explaining why a certain project meets the substantive requirements for the capital expenditure.[5]

Treasury implemented tiered treatment for eligibility standards that require a written justification.

  • For capital expenditures of less than $1 million, a written justification is not required because these expenditures “would encapsulate the costs of a significant portion of equipment or small renovations. These types of smaller projects are often a necessary and reasonably proportional part of a response to the public health emergency; therefore, the $1 million threshold provides a simplified pathway to complete smaller projects more likely to meet the eligibility standard.”[6]
  • For capital expenditures of $1 million or greater, a written justification is required. The justification helps clarify the framework while considering the needs of different communities, and while also considering that the project may be less responsive to pandemic needs given the length of time a large construction project may take. Further, this type of project may not fit into the timeline constraints of an obligation date of December 31, 2024, and an expended date of December 31, 2026.[7]
  • For capital expenditures of $10 million or more, a written justification is required, and recipients must submit this justification as part of the regular reporting.[8]

As mentioned above, rebuilding or replacing government buildings for police and fire under the public health and negative economic impacts category are not enumerated uses under the negative economic impacts category. Accordingly, recipients should apply the eligibility standards listed above to all proposed projects to develop a case-by-case analysis to determine eligibility.

There is some degree of flexibility regarding the use of funds for government services under the revenue loss provision. For example, if the use of funds is considered an ineligible response to the public health and negative economic impact of the pandemic, the project may be eligible for funding as a government service up to the amount of revenue loss provided other restrictions,[9] as outlined in the Restrictions on Use section of the Final Rule.[10]

Rebuilding or replacing government buildings is an eligible expense under the revenue replacement category in the Final Rule. Utilizing this category, “recipients may use funds up to the amount of revenue loss for government services, generally, services traditionally provided by recipient governments are government services, unless Treasury has stated otherwise.”[11]

The following is a non-exhaustive list of examples from Treasury:

  • Construction of schools and hospitals
  • Road building and maintenance and other infrastructure
  • Environmental remediation
  • General government administration, staff, and administrative facilities
  • Provision of police, fire, and other public safety services (including the purchase of fire trucks and police vehicles)[12]

As the most flexible eligible use category under the CSLFRF program, funds under revenue replacement used to provide government services are subject to streamlined reporting and compliance requirements.[13] It is essential to note that if funds outside revenue replacement are used, capital expenditure eligibility and reporting requirements will apply to the project as defined in the Final Rule.[14] When determining the project’s eligibility beyond revenue replacement, the municipality must consider how the project relates to its public health response.

Last Updated: July 7, 2022

[1] Treas. Reg. 31 CFR Part 35, at 4-5, available at: https://home.treasury.gov/system/files/136/SLFRF-Final-Rule.pdf.

[2] Id., at 14–15.

[3] Id., at 9.

[4] Id., at 21–22.

[5] The purpose of the written justification is to help clarify the application of this interpretive framework to capital expenditures, while recognizing that the needs of communities differ. The written justification must include a description of the harm that needs to be addressed, an explanation of why a capital expenditure is appropriate, and a comparison of the proposed capital project against at least two alternative capital expenditures and demonstration of why the proposed capital expenditure is superior. Department of Treasury, Coronavirus State & Local Fiscal Recovery Funds: Overview of the Final Rule, (as of January 2022), at 30-31, available at: https://home.treasury.gov/system/files/136/SLFRF-Final-Rule-Overview.pdf.

[6] Treas. Reg. 31 CFR Part 35, at 202, available at: https://home.treasury.gov/system/files/136/SLFRF-Final-Rule.pdf.

[7] Id., at 199–200.

[8] Id., at 201.

[9] Id., at 9.

[10] Id., at 314.

[11] Department of Treasury, Coronavirus State & Local Fiscal Recovery Funds: Overview of the Final Rule, (as of January 2022), at 6 (emphasis added), available at: https://home.treasury.gov/system/files/136/SLFRF-Final-Rule-Overview.pdf.

[12] Id., at 11.

[13] Id.

[14] Treas. Reg. 31 CFR Part 35 at 201-208, available at: https://home.treasury.gov/system/files/136/SLFRF-Final-Rule.pdf.