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Federal Funding Streams, Infrastructure & Maintenance Investments

What are the best sources of funding for planning projects aimed at fulfilling NEPA environmental review requirements, outreach, or design? How should cities think about applying for IIJA funding if they will be applying for larger grants in the future?

Overview of IIJA

The Infrastructure Investment and Jobs Act (“IIJA”) introduces over 350 funding programs across more than a dozen federal departments and agencies. [1]

The IIJA authorizes $1.2 trillion in funding and is a combination of: (1) the reauthorization of many existing federal funding programs at the previous year’s funding levels; (2) multi-year funding increases in those existing programs; and (3) new funding programs. The new funding accounts for $550 billion and will be allocated to states, municipalities, and other eligible entities through either formula or competitive grants.[2] The White House Bipartisan Infrastructure Law Guidebook provides information about IIJA funding, eligibility, timelines, and other application considerations.[3]

Under the IIJA, municipalities seeking funding for major infrastructure projects must generally follow the environmental permitting process under the National Environmental Policy Act (“NEPA”).[4] The IIJA defines the NEPA process as:

the assessment and analysis of any impacts, alternatives, and mitigation of a proposed action, and any interagency participation and public involvement required to be carried out before the Secretary undertakes a proposed action.[5]

This process applies to all “major projects”[6] as defined under the NEPA. For further information regarding the NEPA process, award recipients should consult the IIJA as well as applicable federal agencies tasked with conducting the process for eligible major projects. [7] 

Part 1: Funding Sources for Planning Projects – Environmental Review, Outreach, and Design

Municipalities should analyze the various components of their projects to identify what aspects of their program may constitute an eligible use of grant funds. Municipalities can then consult the White House Bipartisan Infrastructure Law Guidebook[8] and the White House Guidebook Data Set,[9] which identifies each grant’s eligible uses, to identify grant opportunities under the IIJA that may fund environmental review, planning, outreach, and design projects. Below are select examples of grant opportunities that identify environmental review, planning, outreach, and design as eligible uses:

Environmental Review, Outreach, and Planning

The Railroad Crossing Elimination Grants, administered by the U.S. Department of Transportation (“USDOT”), is a competitive grant program that provides $3 billion for the funding of highway-rail or pathway-rail grade crossing improvement projects that focus on improving the safety and mobility of people and goods.[10] The planning, environmental review, and design of eligible projects are eligible uses of Railroad Crossing Elimination Grants.

Eligible projects include:

  • A grade separation or closure, including through the use of a bridge, embankment, tunnel, or combination thereof;
  • Track relocation;
  • The improvement or installation of protective devices, signals, signs, or other measures to improve safety, provided that such activities are related to a separation or relocation project described previously;
  • Other means to improve the safety and mobility of people and goods at highway-rail grade crossings (including technological solutions); and
  • A group of related projects described previously that would collectively improve the mobility of people and goods.[11]

The 2022 Notice of Funding Opportunity for the Railroad Crossing Elimination Grants is anticipated in June 2022.[12] For further information on Railroad Crossing Elimination Grants, municipalities may refer to the USDOT Federal Railroad Commission website.[13]

Design

The Pumped Storage Hydropower Wind and Solar Integration and System Reliability Initiative, administered by the U.S. Department of Energy, is a cooperative agreement program that provides $10 million for financial assistance to eligible entities carrying out project design, transmission studies, power market assessments, and permitting for a pumped storage hydropower project to facilitate the long-duration storage of intermittent renewable electricity. Eligible projects must:

  • Be designed to provide not less than 1,000 megawatts of storage capacity;
  • Be able to provide energy and capacity for use in more than one organized electricity market;
  • Be able to store electricity generated by intermittent renewable electricity projects located on Tribal land; and
  • Have received a preliminary permit from the Federal Energy Regulatory Commission.[14]

Although an application date has not been announced as of May 2022, municipalities may refer to the Water Power Technologies Office of the Department of Energy for further information.[15]

Part 2: Application for Funding Under IIJA and Other Grants

Municipalities may have infrastructure needs that could be eligible for funding under both the IIJA and other federal grant programs.

Strategic Planning

Municipalities should conduct strategic planning to identify their specific local infrastructure needs and the corresponding IIJA programs that may provide funding. After identifying these needs and corresponding programs, municipalities should survey eligible uses and federal matching requirements to further narrow applicable programs. After identifying the programs relevant to local infrastructure needs, municipalities may review evaluation criteria and desired outcomes (e.g., social equity and environmental protection) of the IIJA and other grant programs to build a strategic foundation on which to pursue federal funding.

For example, under the American Rescue Plan Act of 2021, Coronavirus State and Local Fiscal Recovery Funds (“CSLFRF”) may be used to support infrastructure-related initiatives, such as to: (1) train workers needed to build high quality infrastructure; (2) hire back public sector workers needed to help manage potential federal investments; and (3) improve water, sewer, and broadband initiatives.[16]

A recipient could potentially use these CSLFRF funds and other sources of funding (like the IIJA) to fund an infrastructure project, provided that the costs meet each program’s eligibility requirements and any other statutory and regulatory requirements and policies.

Municipalities should also review each funding source’s authorities and program requirements to determine whether they may be subject to any compliance and/or reporting obligations.

Additionally, award recipients should pay particular attention to “duplication of benefits”[17] when assessing grant opportunities for which to apply. Per guidance from the Stafford Act, 

duplication of benefits occurs when federal financial assistance is provided to a person or entity through a program to address losses resulting from a federally declared emergency or disaster, and the person or entity receives or would receive financial assistance for the same costs from any other source, and the total amount received exceeds the total need for those costs. Recipients must establish and maintain adequate procedures to prevent any duplication of benefits.[18]

Discretion

The IIJA does not provide discretion to state, local, and tribal governments to determine the best use of funds. Municipalities should identify grants, like the CSLFRF, that do provide such flexibility for recipients to determine the particular local needs of their communities. If a program cost qualifies for funding under both the IIJA and a discretionary grant like the CSLFRF, the municipality should consider applying for IIJA funding to preserve their discretionary spending capacity.

Last Updated: May 15, 2022

[1] The White House, A Guidebook to the Bipartisan Infrastructure Law for State, Local, Tribal, and Territorial Governments, and Other Partners, (as of January 31, 2022), at 3, available at: https://www.whitehouse.gov/wp-content/uploads/2022/01/BUILDING-A-BETTER-AMERICA_FINAL.pdf.

[2] Minnesota Legislature, Office of Senate Counsel, Research, and Fiscal Analysis, “The Federal Infrastructure

Investment and Jobs Act (IIJA),” available at: https://www.senate.mn/storage/scrfa/IIJA-FIB-12-21-21.pdf.

[4] 42 U.S.C. § 4321 et seq., National Environmental Policy, available at: U.S.C. Title 42 - THE PUBLIC HEALTH AND WELFARE (govinfo.gov).

[5] Infrastructure Investment and Jobs Act, H.R. 117th Cong. (2021), Pub. L. No. 117-58, at § 157, available at: https://www.congress.gov/117/plaws/publ58/PLAW-117publ58.pdf

[6] 42 U.S.C. § 4321 et seq., National Environmental Policy, available at: U.S.C. Title 42 - THE PUBLIC HEALTH AND WELFARE (govinfo.gov).

[7] Executive Office of the President, Executive Order 13807: Establishing Discipline and Accountability in the Environmental Review and Permitting Process for Infrastructure Projects, available at: Federal Register: Establishing Discipline and Accountability in the Environmental Review and Permitting Process for Infrastructure Projects.

[8] The White House, A Guidebook to the Bipartisan Infrastructure Law for State, Local, Tribal, and Territorial Governments, and Other Partners, (as of January 31, 2022), available at: https://www.whitehouse.gov/wp-content/uploads/2022/01/BUILDING-A-BETTER-AMERICA_FINAL.pdf.

[9] The White House, The Guidebook to the Bipartisan Infrastructure Law for State, Local, Tribal, and Territorial Governments, and Other Partners (as of January 31, 2022) – Guidebook Dataset,  available at: https://view.officeapps.live.com/op/view.aspx?src=https%3A%2F%2Fwww.whitehouse.gov%2Fwp-content%2Fuploads%2F2022%2F01%2FGuideBookDataset_FINAL.xlsx&wdOrigin=BROWSELINK.

[10] The White House, A Guidebook to the Bipartisan Infrastructure Law for State, Local, Tribal, and Territorial Governments, and Other Partners, (as of January 31, 2022), at 55, available at: https://www.whitehouse.gov/wp-content/uploads/2022/01/BUILDING-A-BETTER-AMERICA_FINAL.pdf; U.S. Department of Transportation, Building a Better America Fact Sheet for Rural Communities, available at: Building a Better America Fact Sheet for Rural Communities | US Department of Transportation.

[11] U.S Department of Transportation Federal Railroad Administration, “Railroad Crossing Elimination Grant Program Fact Sheet,” available at: https://railroads.dot.gov/elibrary/railroad-crossing-elimination-grant-program-fact-sheet.

[12] U.S. Department of Transportation Federal Railroad Administration, “Calendar of Upcoming FRA Publications,” available at: https://railroads.dot.gov/elibrary/calendar-upcoming-fra-publications-april-december-2022.

[13] U.S. Department of Transportation Federal Railroad Administration, “Bipartisan Infrastructure Law Information from BIL,” available at: https://railroads.dot.gov/BIL.

[14] The White House, A Guidebook to the Bipartisan Infrastructure Law for State, Local, Tribal, and Territorial Governments, and Other Partners, (as of January 31, 2022), at 222, available at: https://www.whitehouse.gov/wp-content/uploads/2022/01/BUILDING-A-BETTER-AMERICA_FINAL.pdf.

[15] U.S. Department of Energy Office of Energy Efficiency and Renewable Energy, Water Power Technologies Office Budget: Hydropower and Marine Energy Funding in the Bipartisan Infrastructure Law, available at: Water Power Technologies Office Budget | Department of Energy.

[16] The White House, “FACT SHEET: Competitive Infrastructure Funding Opportunities for Local Governments,” at 7, available at: https://www.whitehouse.gov/wp-content/uploads/2022/01/BIL-Factsheet-Local-Competitive-Funding.pdf.

[17] Legal Information Institute, 44 CFR Part 206: Duplication of Benefits, available at: 44 CFR § 206.191 - Duplication of benefits. | CFR | US Law | LII / Legal Information Institute (cornell.edu).

[18] FEMA, Duplication of Benefits, available at: Duplication of Benefits | FEMA.gov.

Program

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Compliance & Reporting

My municipality is using American Rescue Plan Act (“ARP”) funds to demolish abandoned and unoccupied homes in an effort to remove blight. Which expenditure category would this project fall under? Are we required to undertake an environmental review?

Expenditure Category

The U.S. Department of the Treasury’s (“Treasury”) Compliance and Reporting Guidance regarding the American Rescue Plan Act of 2021’s (“ARP”) Coronavirus State and Local Fiscal Recovery Funds (“CSLFRF”) provides that a municipality’s demolition of abandoned and unoccupied homes may fall under the three following expenditure categories: Public Health, Negative Economic Impacts, or Lost Public Sector Revenue Replacement.[1]  

Public Health or Negative Economic Impacts

Treasury’s Final Rule states that CSLFRF funds are available to municipalities to respond to the public health or negative economic impact of the pandemic. Treasury’s Final Rule further recognizes that “high rates of vacant or abandoned properties in a neighborhood may exacerbate public health disparities,” and states that services for “demolition or deconstruction of vacant or abandoned buildings paired with  greening or other lot improvements as part of a strategy for neighborhood revitalization . . . are eligible to address the public health and negative economic impacts of the pandemic on disproportionately impacted households or communities.”[2] Eligible demolition of abandoned property projects may include projects designed to eliminate public health risks, promote healthier communities, create new opportunities for housing or green space to support long-term stability and community resilience, address crime and homelessness, or provide opportunities for affordable housing.[3]

Lost Public Sector Revenue Replacement

Treasury’s Final Rule states that CSLFRF funds are available to municipalities that have experienced revenue loss due to the COVID-19 public health emergency. CSLFRF funding “may be used to pay for ‘government services’ in an amount equal to the revenue loss experienced by the [municipality] due to the COVID-19 public health emergency.”[4] In determining the amount of revenue lost, a municipality may either: (1) elect a “standard allowance” of up to $10 million; or (2) calculate their actual revenue loss according to the formula articulated in the Final Rule.[5] 

Treasury’s Final Rule acknowledges that the Lost Public Sector Revenue Replacement category is the “most flexible,” and could include “any service traditionally provided by a government, unless Treasury has stated otherwise,” including environmental remediation or health services.[6]

Environmental Review

Treasury does not appear to require that municipalities perform an environmental review before demolishing abandoned single-family homes using CSLFRF funding. However, municipalities should consult their federal, state, and local environment regulations to confirm whether there are applicable laws that require an environmental review. The Final Rule states:

Recipients must also comply with all federal, state, and local public health and environmental laws or regulations that apply to activities under this eligible use category, for example, requirements around the handling and disposal of asbestos containing materials, lead paint, and other harmful materials may apply, as well as environmental standards for any backfill materials used at demolition sites. Treasury encourages recipients to consult and apply best practices from the Environmental Protection Agency as well.[7]

Examples of Municipalities Embarking on Similar ARP-Funded Demolition Projects

  1. Dayton, Ohio: Dayton, Ohio plans to expend approximately $15 million in ARP funds over the next three years to demolish approximately 1,000 houses, with an ultimate objective of neighborhood revitalization.[8]
  2. Florence, South Carolina: In January 2022, the Florence City Council allocated $500,000 of ARP funds to start the process of demolishing more than 100 homes. Objectives of the project include eliminating crime and revitalizing the area.[9]
  3. Baltimore, Maryland: Baltimore, Maryland has allocated $39.7 million in ARP funds to eliminate and prevent housing-related blight. This funding is expected to reduce public health disparities caused by environmental standards and tackle housing instability.[10]

Last Updated: May 13, 2022

[1] U.S. Department of the Treasury, Compliance and Reporting Guidance, at 35-37, available at: https://home.treasury.gov/system/files/136/SLFRF-Compliance-and-Reporting-Guidance.pdf.

[2] Treas. Reg. 31 CFR Part 35, at 133-134, available at: https://home.treasury.gov/system/files/136/SLFRF-Final-Rule.pdf.

[3] U.S. Department of the Treasury, Coronavirus State & Local Fiscal Recovery Funds: Overview of the Final Rule, at 18-20, available at: https://home.treasury.gov/system/files/136/SLFRF-Final-Rule-Overview.pdf.  

[4] Id., at 9.

[5] Id.

[6] Id., at 9, 11.

[7] Treas. Reg. 31 CFR Part 35, at 137, available at: https://home.treasury.gov/system/files/136/SLFRF-Final-Rule.pdf.

[8] WHIO News, “City of Dayton investing nearly $1M to tear down abandoned, vacant buildings,” available at: https://www.whio.com/news/city-dayton-investing-nearly-1m-tear-down-abandoned-vacant-buildings/HY5VODDU2FFDLKF2CTWSEWL43I/.

[9] News 13, “Florence City Council votes to use federal money to demolish abandoned homes,” available at: https://www.wbtw.com/news/pee-dee/florence-city-council-votes-to-use-federal-money-to-demolish-abandoned-homes/.

[10] City of Baltimore, “City’s Review of Vacant Properties Complete, Mayor Announces $100 Million ARPA Commitment Towards Housing Equity,” available at: https://mayor.baltimorecity.gov/news/press-releases/2022-03-11-city%E2%80%99s-review-vacant-properties-complete-mayor-announces-100-million.

Program

COVID-19 Federal Assistance e311

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Workforce & Economic Development

Can municipalities use Coronavirus State and Local Fiscal Recovery Funds (“CSLFRF”) to fund the full salary of a newly hired grants manager when the grants manager is coordinating use of both American Rescue Plan (“ARP”) and non-ARP funds?

I. Use of CSLFRF to Fund Grants Manager Position

Yes. Payment of a grants manager’s salary that coordinates both ARP and non-ARP programs would likely be an eligible use of CSLFRF funds. A municipality should document the nature of the position and track the expenditure category under which the position falls to assist with the municipality’s reporting and compliance obligations under the ARP. The following three scenarios are illustrative of potential funding methods:

A. Position focused solely on CSLFRF grants management, fully funded by CSLFRF.

In the case of a grants manager position fully dedicated to CSLFRF grant management, the position could likely be fully funded by CSLFRF. The Expenditure Category could be: 1) 7.1 Administrative/Administrative Expenses if the focus of the position is program administration; or 2) 3.4 Public Sector Capacity/Effective Service Delivery if the focus of the position is program implementation/evaluation.

B. Position focused on CSLFRF and non-CSLFRF grant management, partially funded by CSLFRF.

In the case of a grants manager position dedicated to both CSLFRF and non-CSLFRF programs, the position could likely be partially funded by CSLFRF and partially funded from another source (such as administrative costs allowed by other grants), provided appropriate mechanisms and controls are put in place to track time and allocate costs to the appropriate funding source. As with the above scenario, the CSLFRF aspects of the program would fall under Expenditure Category 7.1 or 3.4, depending on the CSLFRF-related focus of the position.

C. Position focused on CSLFRF and non-CSLFRF grants management, fully funded by CSLFRF.

In the case of a grants manager position dedicated to both CSLFRF and non-CSLFRF programs, the position could likely be fully funded by CSLFRF under either the Public Sector Capacity/Effective Service Delivery or Revenue Replacement provisions.  

  1. Public Sector Capacity/Effective Service Delivery

If the municipality seeks to use funding to restore staffing to pre-pandemic levels, it may be able to fund the non-CSLFRF related grants management position under Expenditure Category 3.4 Public Sector Capacity/Effective Service Delivery. This provision may provide funding to the municipality to: 1) restore staffing to pre-pandemic levels by hiring staff to fill eliminated or unfilled positions; or 2) add staffing up to a maximum of 7.5% over the pre-pandemic baseline.[1]  

  1. Revenue Replacement

If the municipality experienced revenue loss due to the pandemic, it may be able to fund the position under Expenditure Category 6.1 Revenue Replacement/Provision of Government Services, subject to the Final Rule’s restrictions that funding may not be used for extraordinary pension contributions, payment of judgements, or contributions to a rainy day fund.[2] This provision may permit funding to the municipality if the municipality: 1) demonstrates its revenue loss due to the pandemic (as calculated per the Final Rule); or 2) elects to take the standard allowance for revenue loss up to $10 million. Expenditure Category 6.1 Revenue Replacement/Provision of Government services is the most flexible of all CSLFRF funding categories. Therefore, if the position qualifies for funding under a different eligibility category, such as Expenditure Category 3.4 Public Sector Capacity/Effective Service Delivery, the municipality may wish to elect such category and preserve its ability to use Expenditure Category 6.1 to fund other eligible projects.

II. Strategies to Leverage CSLFRF Funding and Address Long-Term Budgetary Impacts

The CSLFRF period of performance expires on December 31, 2026, after which no additional CSLFRF funds may be expended. A municipality may consider implementing the following potential strategies to leverage CSLFRF funding while also minimizing the budgetary impacts of filling long-term positions using CSLFRF funds:

A. Attrition Planning

A municipality could use attrition planning to help mitigate the impact of grant-funded positions on its budget by forecasting the positions that it anticipates may be subject to natural attrition, such as retirements and expected turnover. The municipality could then consider using CSLFRF funds to hire replacements for these employees, prior to the expected natural attrition. Under this strategy, there would be an increase in employees during the grant period of performance, which would adjust to the prior normal levels once the municipality’s expected turnover occurs. This strategy may allow CSLFRF to serve as a temporary solution to immediate staffing needs without creating long-term impacts.

B. Diminished-Based Funding

A municipality could consider using a diminished-based funding strategy to mitigate the impact of the CSLFRF’s sunset provision on its budget. Under this strategy, the municipality could use CSLFRF funds to pay for the full cost of an employee’s salary at the beginning of the period of performance and reduce the grant share as the grant term continues. This strategy may provide a “glidepath” for grant recipients and allow time for the cost of new positions to be integrated into existing budgeting. 

Other municipalities have used this type of diminished-based funding strategy to mitigate the impact of federal grant-funded sunset provisions (i.e., various Department of Justice policing programs) on their budgets.

C. Retention Incentives

Retention incentives are explicitly authorized as eligible uses of CSLFRF in the Final Rule under Expenditure Category 3.4 Public Sector Capacity/Effective Service Delivery.[3] A municipality could therefore consider using CSLFRF funding to fund retention training, including programs to obtain licenses or certifications, along with quarterly or periodic bonuses to assist with long-term workforce stability.

One county developed a similar retention training program for bus drivers. The county examined its workforce and determined that it lacked commercial drivers. The county worked with its local workforce development board and transit authority to fund a commercial driver’s license training program for commercial drivers who would be placed into public sector jobs. This program subsidized training costs and worker salaries for the period of time that the workers attended training. The county also layered on retention bonuses for those commercial drivers that completed the training program, and met certain quarterly or periodic milestones, to encourage retention.

Similar retention training and retention bonus programs have been developed in the school transportation, education, and hospital system sectors.

D. Temporary and Seasonal Employees

A municipality may be able to use CSLFRF funds to pay for temporary employees, as well as seasonal contract employees related to summer youth, prisoner re-entry, and cleanliness projects under Expenditure Category 3.4 Public Sector Capacity/Effective Service Delivery and/or Expenditure Category 6.1 Revenue Replacement/Provision of Government Services, as described in Section I. above.

There may not be a difference in the applicability of CSLFRF to full-time versus temporary/seasonal positions. However, the municipality should review its applicable state and local personnel/civil service laws and labor agreements to determine any potential limitations. For example, a local government’s bargaining unit agreement may prohibit the use of temporary employees entirely or beyond a certain limited term.

III. Compliance Considerations

A municipality should consider implementing a robust compliance infrastructure to help it meet its administration and reporting obligations under the CSLFRF program. As with any federal program, establishment of appropriate internal controls[4] and maintenance of proper documentation is essential preparation for future audits.

Specifically, a municipality should consider implementing a compliance program that addresses the following three areas: 1) strategy and planning; 2) administration and management; and 3) program design and implementation.

Last Updated: May 13, 2022

[1] Treas. Reg. 31 CFR 35 at 179-81, available at: https://home.treasury.gov/system/files/136/SLFRF-Final-Rule.pdf.

[2] Id., at 259-60.

[3] Id., at 178-85.

[4] Uniform Guidance 2 CFR Part 200.303, available at: https://www.ecfr.gov/current/title-2/subtitle-A/chapter-II/part-200#200.303.

Program

COVID-19 Federal Assistance e311

Topics

Federal Funding Streams, Infrastructure & Maintenance Investments

Which specific IIJA programs focus solely on active transportation (pedestrian, bicycle, scooter, etc.) projects?

The Infrastructure Investment and Jobs Act (“IIJA”) does not include programs that focus solely on active transportation. Instead, the IIJA addresses multimodal transportation, including pedestrian, bicycle, scooter, and trail transportation.[1]

The Infrastructure for Rebuilding America (“INFRA”) program;[2] National Infrastructure Project Assistance (“Megaprojects” or “MEGA”);[3] Promoting Resilient Operations for Transformative, Efficient, and Cost Saving Transportation (“PROTECT”) program;[4] Reconnecting Communities Pilot Program;[5] Rural Surface Transportation Grant Program (“Rural”);[6] Rebuilding American Infrastructure Sustainably and Equitability (“RAISE”) program;[7] and Safe Streets and Roads for All (“SS4A”)[8] are all IIJA-funded competitive or formula grant programs that may support projects related to safety and mobility. Depending on the specific circumstances, municipalities may be able to apply for and receive funding for active transportation projects through one or more of these IIJA grant programs. Each competitive grant program selects projects based on different sets of criteria.

  • INFRA is a grant program providing $7.25 billion in available funding. Municipalities may apply for funding of eligible projects that “improve safety, generate economic benefits, reduce congestion, enhance resiliency, and hold the greatest promise to eliminate freight bottlenecks and improve critical freight movements.”[9] Applications are due by May 23, 2022. [10] The U.S. Department of Transportation (“USDOT”) has authored an overview of previously approved projects and their descriptions, including programs focused on active transportation, that municipalities may consult.[11] Additionally, USDOT has published INFRA Frequently Asked Questions that may provide further guidance on funding opportunities.[12]
  • Megaprojects is a new grant program with $5 billion in available funding. Municipalities may apply for funds that “support large, complex projects that are difficult to fund by other means and likely to generate national or regional economic, mobility, or safety benefits.”[13] Applications are due by May 23, 2022.[14] Examples of eligible projects include intercity passenger rail projects and certain public transportation projects that are eligible for Federal Transit Administration funding of Title 49 of the United States Code.[15] USDOT has posted Frequently Asked Questions that may provide further guidance on funding opportunities.[16]
  • PROTECT is a new grant program with $7,299,999,998 in available funding. The first round of funding was “apportioned in December 2021.”[17] States may apply for funding of eligible projects that “conduct resilience planning, strengthen and protect evacuation routes, and increase the resilience of surface transportation infrastructure from the impacts of sea level rise, flooding, wildfires, extreme weather events, and other natural disasters. Highway, transit, and certain port projects are eligible.”[18]
  • RAISE (previously known as BUILD and TIGER grants) is a grant program with $7.5 billion available in recent funding. RAISE applications were due on April 14, 2022. Eligible projects include those that reflect community connectivity, mobility, accessibility for travelers, universal design, and increased mobility for supply chain and freight efficiency.[19] Municipalities may find it useful to explore existing USDOT guidance and overviews of previously approved projects and their descriptions.[20]
  • The Reconnecting Communities Pilot Program is a new grant program with $1 billion in available funding. Grants of greater than $5 million are available for capital construction projects, while planning grants of less than $2 million are available for eligible projects that “restore community connectivity by removing, retrofitting, or mitigating highways or other transportation facilities that create barriers to community connectivity, including to mobility, access, or economic development.”[21] USDOT will issue a Notice of Funding Opportunity with further details on Grants.gov in June 2022.[22]
  • Rural is a new grant program with $1 billion in available funding.[23] Municipalities may use funding for eligible 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.”[24] Applications are due by May 23, 2022.[25] An example of an eligible project includes a “project on a publicly-owned highway or bridge improving access to certain facilities that support the economy of a rural area.”[26] USDOT has posted Frequently Asked Questions that may provide further guidance on funding opportunities.[27]
  • Safe Streets and Roads for All is a new grant program with $5 billion in available funding. Applications are expected to open in May 2022.[28] Metropolitan planning organizations, political subdivisions of states, Tribal governments, and multijurisdictional groups of the above entities can submit applications for eligible projects that “support local initiatives to prevent death and serious injury on roads and streets, commonly referred to as ‘Vision Zero’ or ‘Toward Zero Deaths’ initiatives.”[29] Recipients must “(A) develop a comprehensive safety action plan; (B) conduct planning, design, and development activities for projects and strategies identified in a comprehensive safety action plan; or (C) carry out projects and strategies identified in a comprehensive safety action plan.”[30] USDOT has released additional information, including an informational webinar, on how municipalities can prepare for the anticipated grant application.[31]

Several other grant programs incorporate an active transportation element. The Pilot Program for Transit Oriented Development,[32] Energy Efficiency and Conservation Block Grant,[33] and Carbon Reduction Program all specifically address modes of active transportation.[34]

  • The Pilot Program for Transit Oriented Development is a grant program with $68,864,631 in available funding. This program assists Federal Transit Administration grant recipients with “improving public transportation.”[35] Eligible projects must “improve economic development and ridership, foster multimodal connectivity and accessibility, improve transit access for pedestrian and bicycle traffic, engage the private sector, identify infrastructure needs, and enable mixed-use development near transit stations.”[36] The Notice of Funding Opportunity containing further details is expected in May 2022.[37]
  • The Energy Efficiency and Conservation Block Grant Program is a new grant program with $550 million in available funding that is expected to be released in Fall 2022.[38] This program assists “states, local governments, and Tribes to reduce energy use, reduce fossil fuel emissions, and improve energy efficiency.”[39] There are fourteen listed eligible uses for this funding, such as the “development of infrastructure, such as bike lanes and pathways and pedestrian walkways.”[40]
  • The Carbon Reduction Program is a new grant program with $6,419,999,998 in available funding. The first round of funds was “apportioned in December 2021.”[41] This program will provide “formula grants to States to reduce transportation emissions or the development of carbon reduction strategies.”[42] Eligible projects “support the reduction of transportation emissions, including: the construction, planning, and design of trail facilities for pedestrians, bicyclists, and other nonmotorized forms of transportation; public transportation projects; and congestion management technologies.”[43]

Last Updated: May 4, 2022

[1] The White House, A Guidebook to the Bipartisan Infrastructure Law for State, Local, Tribal, and Territorial Governments and Other Partners (as of January 31, 2022), available at: https://www.whitehouse.gov/wp-content/uploads/2022/01/BUILDING-A-BETTER-AMERICA_FINAL.pdf.

[2] Id., at 19.

[3] Id., at 21.

[4] Id., at 274.

[5] Id., at 34.

[6] Id., at 28.

[7] Id., at 18.

[8] Id., at 121.

[9] U.S. Department of Transportation: The INFRA Grants Program, available at: https://www.transportation.gov/grants/infra-grants-program.

[10] Id.

[11] U.S. Department of Transportation, INFRA FY 2021 Proposed Project Selections, available at: https://www.transportation.gov/sites/dot.gov/files/2022-03/FY-2021-INFRA-Proposed-Project-Selections-v2.pdf.

[12] U.S. Department of Transportation, MPDG – Frequently Asked Questions, available at: https://www.transportation.gov/grants/mpdg-frequently-asked-questions.

[13] U.S. Department of Transportation: The Mega Grant Program, available at: https://www.transportation.gov/grants/mega-grant-program.

[14] U.S. Department of Transportation, MDGP – How to Apply, available at: https://www.transportation.gov/grants/mpdg-how-apply.

[15] The White House, A Guidebook to the Bipartisan Infrastructure Law for State, Local, Tribal, and Territorial Governments and other Partners (as of January 31, 2022), at 21, available at: https://www.whitehouse.gov/wp-content/uploads/2022/01/BUILDING-A-BETTER-AMERICA_FINAL.pdf.

[16] Department of Transportation, MPDG – Frequently Asked Questions, available at: https://www.transportation.gov/grants/mpdg-frequently-asked-questions.

[18] Id.

[19] Id., at 18.

[20] U.S. Department of Transportation: RAISE Discretionary Grants, available at: https://www.transportation.gov/RAISEgrants.

[21] The White House, A Guidebook to the Bipartisan Infrastructure Law for State, Local, Tribal, and Territorial Governments and other Partners (as of January 31, 2022), at 34, available at: https://www.whitehouse.gov/wp-content/uploads/2022/01/BUILDING-A-BETTER-AMERICA_FINAL.pdf.

[22] U.S. Department of Transportation, Upcoming Notices of Funding Opportunity Announcements in 2022, available at: https://www.transportation.gov/bipartisan-infrastructure-law/upcoming-notice-funding-opportunity-announcements-2022.

[23] The White House, A Guidebook to the Bipartisan Infrastructure Law for State, Local, Tribal, and Territorial Governments and other Partners (as of January 31, 2022), at 28, available at: https://www.whitehouse.gov/wp-content/uploads/2022/01/BUILDING-A-BETTER-AMERICA_FINAL.pdf.

[24] U.S. Department of Transportation: MPDG – Frequently Asked Questions, available at: https://www.transportation.gov/grants/mpdg-frequently-asked-questions.

[25] U.S. Department of Transportation, MDGP – How to Apply, available at: https://www.transportation.gov/grants/mpdg-how-apply.

[26] The White House, A Guidebook to the Bipartisan Infrastructure Law for State, Local, Tribal, and Territorial Governments and other Partners (as of January 31, 2022), at 28, available at: https://www.whitehouse.gov/wp-content/uploads/2022/01/BUILDING-A-BETTER-AMERICA_FINAL.pdf.

[27] U.S. Department of Transportation, MPDG – Frequently Asked Questions, available at: https://www.transportation.gov/grants/mpdg-frequently-asked-questions.

[28] The White House, A Guidebook to the Bipartisan Infrastructure Law for State, Local, Tribal, and Territorial Governments and other Partners (as of January 31, 2022), at 121, available at: https://www.whitehouse.gov/wp-content/uploads/2022/01/BUILDING-A-BETTER-AMERICA_FINAL.pdf.

[29] Id.

[30] Id.

[31] U.S. Department of Transportation, Safe Streets and Roads for All (SS4A) Grant Program, available at: https://www.transportation.gov/SS4A.

[32] The White House, A Guidebook to the Bipartisan Infrastructure Law for State, Local, Tribal, and Territorial Governments and other Partners (as of January 31, 2022), at 86, available at: https://www.whitehouse.gov/wp-content/uploads/2022/01/BUILDING-A-BETTER-AMERICA_FINAL.pdf.

[33] Id., at 180-181.

[34] Id., at 275.

[35] Id., at 86.

[36] Id.

[37] U.S. Department of Transportation, Upcoming Notices of Funding Opportunity Announcements in 2022, available at: https://www.transportation.gov/bipartisan-infrastructure-law/upcoming-notice-funding-opportunity-announcements-2022.

[38] The White House, A Guidebook to the Bipartisan Infrastructure Law for State, Local, Tribal, and Territorial Governments and other Partners (as of January 31, 2022), at 180-181, available at: https://www.whitehouse.gov/wp-content/uploads/2022/01/BUILDING-A-BETTER-AMERICA_FINAL.pdf.

[39] Id.

[40] Id.

[41] Id., at 275.

[42] Id.

[43] Id.

Program

COVID-19 Federal Assistance e311

Topics

Federal Funding Streams

How should municipalities structure project funding sources to optimize federal leverage?

The White House recommends that municipalities identify their community needs and develop a project pipeline.[1] When developing a project pipeline, municipalities should: (1) consider opportunities to leverage existing funding opportunities “to help prepare for the transformative investments included” in the Infrastructure Investment and Jobs Act (“IIJA);[2] (2) prioritize application for restrictive infrastructure grants; (3) consider applicable grant matching requirements; (4) avoid duplication of benefits; and (5) develop and monitor project budgets.  

Prepare for IIJA Investments

The White House recommends that municipalities leverage American Rescue Plan Act of 2021 (“ARP”) funding to help prepare for resources available under the IIJA. For example, funding may be available under the ARP to train the “workers needed to build high quality infrastructure; hir[e] back the public sector workers needed to help manage potential federal investments; and get[] a jump start on water, sewer, and broadband projects that could complement investments from the infrastructure law.”[3]

Prioritize Restrictive Infrastructure Grants

In general, municipalities may be able to optimize federal leverage by prioritizing the usage of funding sources with more stringent limitations on allowable expenditures, prior to utilizing less restrictive sources of federal funding that allow for greater flexibility in allowable usage, such as Coronavirus State and Local Fiscal Recovery Funds (“CSLFRF”). This prioritization allows municipalities to preserve more flexible funding for activities not covered by the more restrictive funding source, thus optimizing overall federal funding available. For example, municipalities may consider pursuing reimbursement for eligible COVID-19 related costs under the Federal Emergency Management Agency (“FEMA”) Public Assistance (“PA”) program, as opposed to utilizing CSLFRF. FEMA has published COVID-19 guidance, which may help applicants determine whether their needs fall into eligible PA categories.[4] Municipalities may also review the FEMA Fact Sheet on coordinating public assistance and other sources of federal funding.[5] 

Consider Grant Matching Requirements

Municipalities should examine the program requirements for grants available under the IIJA, and identify grants that require a non-federal match. Municipalities should then identify and apply for grants that may satisfy the IIJA’s non-federal match requirement, like funding available under the CSLFRF. [6]

Avoid Duplication of Benefits

If municipalities wish to pursue multiple funding sources for a project, they will need to ensure that the project is eligible for each funding source. Additionally, municipalities must analyze all specifications, requirements, and deadlines for each of the federal funding sources to be used for any given project. Municipalities should be aware that many grant programs established under the IIJA have not yet released definitive program details and deadlines, which may pose challenges for applicants that are trying to simultaneously leverage multiple funding sources while avoiding duplication of benefits.[7]  

Develop and Monitor Project Budgets

Project budgets are generally mandatory in any case where an applicant elects to pursue multiple federal funding sources.[8] As a good practice, applicants should specifically differentiate between funding sources as separate line items or categories and clearly delineate how each funding source (public, private, federal, or other) contributes to the overall project or project component in their budgets, which will also help to maintain organized files in case of an audit during or after the project is completed.

Funded municipalities or other applicants must responsibly steward any awarded federal funds. Each government unit should focus on ensuring detailed tracking of project costs and preventing any duplication of benefits derived from federal funding. In addition, as a good practice, municipalities should understand how each funding source disburses funds and potential resulting impacts on their planned projects. Where a project would be large enough to span multiple fiscal years, funded municipalities should understand the impact of funding different sources on fiscal reports, reserve impacts, bond rating, or other financial reporting effects.

Last Updated: May 5, 2022

[1] The White House, Fact Sheet: “Competitive Infrastructure Funding Opportunities for Local Governments,” at 6-7, available at: https://www.whitehouse.gov/wp-content/uploads/2022/01/BIL-Factsheet-Local-Competitive-Funding.pdf.

[2] Id., at 6-7.

[3] Id.

[4] FEMA, Coronavirus (COVID-19) Pandemic: Work Eligible for Public Assistance (Interim), available at:  https://www.fema.gov/sites/default/files/2020-09/fema_public-assistance-eligibility-for-covid_policy_9-1-2020.pdf.

[5] FEMA, Fact Sheet: “Coronavirus Disease 2019 (COVID-19) Public Health Emergency: Coordinating Public Assistance and Other Sources of Federal Funding,” available at: https://www.fema.gov/sites/default/files/2020-07/FEMA-COVID-19_coordinating-public-assistance-and-other-sources-of-federal-funding_07-01-2020.pdf.

[6] Department of Treasury, Coronavirus State & Local Fiscal Recovery Funds: Overview of the Final Rule (as of January 2022), at 43, available at: https://home.treasury.gov/system/files/136/SLFRF-Final-Rule-Overview.pdf.

[7] The White House, A Guidebook to the Bipartisan Infrastructure Law for State, Local, Tribal, and Territorial Governments, and Other Partners (as of January 31, 2022), at 6, available at: https://www.whitehouse.gov/wp-content/uploads/2022/01/BUILDING-A-BETTER-AMERICA_FINAL.pdf.

[8] Municipalities may consider implementing similar project budget practices as those used for similar funding sources such as Federal Emergency Management Agency (“FEMA”) Public Assistance and Hazard Mitigation Assistance. See FEMA, “Public Assistance Project Worksheets,” available at: https://www.fema.gov/assistance/public/tools-resources-statistics/public-assistance-project-worksheets; FEMA, “Hazard Mitigation Assistance Guide,” available at: https://www.fema.gov/grants/mitigation/hazard-mitigation-assistance-guidance.

Program

COVID-19 Federal Assistance e311

Topics

Compliance & Reporting

How can a city fulfill the requirement to demonstrate that it is serving a disadvantaged community? When using CSLFRF to provide services for unhoused persons, are cities required to document the income of service beneficiaries or other data points?

Part 1.

The U.S. Department of the Treasury’s (“Treasury”) Final Rule governs the Coronavirus State and Local Fiscal Recovery Funds (“CSLFRF”) established under the American Rescue Plan Act of 2021 (“ARP”). Under the ARP, a municipality is eligible to receive CSLFRF funds to alleviate the negative public health and economic impacts of the COVID-19 public health emergency on communities. Treasury’s Final Rule identifies populations that are presumed to have been “impacted” or “disproportionately impacted” by the pandemic, which allows CSLFRF recipients to respond to a broad set of households and entities without requiring additional impact analysis.

Recipients are also able to designate additional classes as having been disproportionately impacted by the pandemic outside of these presumptively eligible categories by performing analysis of available research and data. Recipients must then provide reporting to Treasury that justifies these designations.

Presumptively Impacted or Disproportionately Impacted Communities

Treasury’s Final Rule identifies various disadvantaged communities where CSLFRF funds can be applied. Treasury recognizes households qualifying for the following programs as impacted and disproportionately impacted by the pandemic, and thus eligible for CSLFRF assistance:

  • Impacted Households:
    • Children’s Health Insurance Program;
    • Childcare Subsidies through the Child Care and Development Fund Program;
    • Medicaid;
    • National Housing Trust Fund, for affordable housing programs only; and;
    • Home Investment Partnerships Program, for affordable housing programs only.
  • Disproportionately Impacted Households:
    • Temporary Assistance for Needy Families;
    • Supplemental Nutrition Assistance Program;
    • Free and Reduced-Price Lunch and/or School Breakfast programs;
    • Medicare Pard D Low-Income Subsidies;
    • Supplemental Security Income;
    • Head Start and/or Early Head Start;
    • Special Supplemental Nutrition Program for Women, Infants, and Children;
    • Section 8 Vouchers;
    • Low-Income Home Energy Assistance Program; and,
    • Pell Grants.[1]

The Final Rule also identifies communities living in Qualified Census Tracts (“QCTs”) as a “common, readily accessible, and geographically granular method of identifying communities with a large proportion of low-income residents” as a disproportionately impacted group.[2]

Analysis of Impacted or Disproportionately Impacted Communities

In addition to Treasury’s expressly identified populations, a recipient may identify classes of households, communities, or populations that have experienced a disproportionate impact based on academic research or government research publications, through analysis of their own data, or through analysis of other existing data sources. To augment their analysis, or when quantitative data is not readily available, a recipient may also consider qualitative sources like resident interviews or feedback from relevant state and local agencies, such as public health departments or social services departments. In either case, a recipient should consider the quality of the research, data, and applicability of analysis to their determination. To the extent municipalities rely on household income levels as a relevant data point, the Final Rule defines low income as:

(i) income at or below 185 percent of the Federal Poverty Guidelines (FPG) for the size of its household based on the most recently published poverty guidelines by the Department of Health and Human Services (HHS) or (ii) income at or below 40 percent of the Area Median Income (AMI) for its county and size of household based on the most recently published data by the Department of Housing and Urban Development (HUD).[3]

Similarly, the Final Rule defines moderate income as:

(i) income at or below 300 percent of the FPG for the size of its household based on the most recently published poverty guidelines by HHS or (ii) income at or below 65 percent of the AMI for its county and size of household based on the most recently published data by HUD.[4]

For those municipalities that identify one or more disproportionately impacted populations or households, the CSLFRF Compliance and Reporting Guidance states that recipients must respond to the following questions, incorporating in their analysis the definitions and guidelines provided in Treasury guidance:

  • What Impacted and/or Disproportionally Impacted population does this project primarily serve? Please select the population primarily served.
  • If this project primarily serves more than one Impacted and/or Disproportionately Impacted population, please select up to two additional populations served.[5]

When responding to these questions, recipients must select from the options listed on pages 20 and 21 of the Compliance and Reporting Guidance. Additionally, municipalities must “develop and implement effective internal controls to ensure that funding decisions under the [CSLFRF] award constitute eligible use of funds, and document determinations.”[6] Municipalities should familiarize themselves with Uniform Guidance 2 CFR § 200.303 in preparation for developing aid with the creation of internal controls for programs.[7]

Part 2.

The Final Rule states: “[i]n determining whether an individual is eligible for a program designed to address a harm experienced by a class, the recipient need only document that the individual is within the class that experienced a public health impact.”[8]

Further, the Final Rule states:

Recipients may determine whether to measure income levels for specific households or for a geographic area based on the type of service to be provided. For example, recipients developing a program that serves specific households (e.g., a subsidy for internet access, a childcare program) may measure income at the household level. Recipients providing a service that reaches a general geographic area (e.g., a park) may measure median income of that area.[9]

Recipients may need to identify individual household income if the household does not fall in a qualified category or population as described in Part 1 of this Q&A.

Last Updated: May 5, 2022

[1] Treas. Reg. 31 CFR Part 35, at 41, available at: https://home.treasury.gov/system/files/136/SLFRF-Final-Rule.pdf.

[2] Id., at 45.

[3] Id., at 30.

[4] Id., at 30-31.

[5] Department of Treasury Compliance and Reporting Guidance: State and Local Fiscal Recovery Funds (Revised February 28, 2022), at 20, available at: https://home.treasury.gov/system/files/136/SLFRF-Compliance-and-Reporting-Guidance.pdf.

[6] Id., at 7.

[7] Code of Federal Regulations, 2 CFR § 200.303, available at: https://www.ecfr.gov/current/title-2/subtitle-A/chapter-II/part-200/subpart-D/section-200.303.

[8] Treas. Reg. 31 CFR Part 35, at 21, available at: https://home.treasury.gov/system/files/136/SLFRF-Final-Rule.pdf.

[9] Id., at 31.

Program

COVID-19 Federal Assistance e311

Topics

Community Engagement & Local Partnerships, Housing & Rental Assistance

If a city wants to act as a pass-through entity to grant funds to a non-profit to purchase and operate a campground/affordable housing, in which entity will the property vest? Must the property be disposed of in accordance with 2 CFR §§ 200.311, 313?

Municipalities may likely be eligible to procure real property with Coronavirus State and Local Fiscal Recovery Funds (“CSLFRF”) to benefit programs that address the public health emergency caused by COVID-19 and its negative economic impacts.[1]

According to 2 CFR § 200.311,[2] any property acquired using CSLFRF vests in the non-federal entity (here either the municipality or non-profit entity) that purchases the property. Whether the property vests with the municipality or non-profit depends on the terms of the agreement between these parties. The municipality should create a written agreement that identifies which entity (i.e., the non-profit or municipality) has ownership and is responsible for maintenance both during and after the grant period.

Regardless of whether the property vests with the municipality or non-profit, both parties are subject to the CSLFRF rules applicable to real property. Real property must be purchased, maintained, and disposed of in accordance with Uniform Administrative Requirement, Cost Principles and Audit Requirements for Federal Awards (“Uniform Guidance”), specifically § 200.313 and §§ 200.317 – 200.327, and Treasury’s Compliance and Reporting Guidance, which states:

Any purchase of equipment or real property with [CSLFRF] funds must be consistent with the Uniform Guidance at 2 CFR Part 200, Subpart D. Equipment and real property acquired under this program must be used for the originally authorized purpose. Consistent with 2 CFR 200.311 and 2 CFR 200.313, any equipment or real property acquired using [CSLFRF] funds shall vest in the non-Federal entity. Any acquisition and maintenance of equipment or real property must also be in compliance with relevant laws and regulations.[3]

In addition, the municipality or non-profit in which the property vests must hold the property in trust for the beneficiary of the project or program, under 2 CFR § 200.316.[4]

Ultimately, the municipality will be responsible for monitoring the use of CSLFRF. As a good practice, the municipality should monitor the projects and funds that the municipality awards to any non-profits or other subrecipients.[5] The municipality should also report the non-profit’s (or other subrecipient’s) use of funds on a quarterly and annual basis, as required by Treasury’s Compliance and Reporting Guidance.[6]

Last Updated: April 21, 2022

[3] Department of the Treasury, Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance (as of February 28, 2022), Version: 3.0, at 8, available at: https://home.treasury.gov/system/files/136/SLFRF-Compliance-and-Reporting-Guidance.pdf.

[5] Department of the Treasury, Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance (as of February 28, 2022), Version: 3.0, at 5, available at: https://home.treasury.gov/system/files/136/SLFRF-Compliance-and-Reporting-Guidance.pdf.

[6] Id., at 7.

Program

COVID-19 Federal Assistance e311

Topics

Lost Revenue & Revenue Replacement

Do municipalities need to follow Uniform Guidance procurement rules to use CSLFRF revenue replacement money for government services? For example, if a convention center component plans to do marketing, does it need to follow Uniform Guidance?

The U.S. Department of the Treasury’s (“Treasury”) Final Rule governs the Coronavirus State and Local Fiscal Recovery Funds (“CSLFRF”) established under the American Rescue Plan Act.

Under the Final Rule, a recipient must follow the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (“Uniform Guidance”)[1] and federal, state, and local laws as applicable.[2]

The Final Rule specifies that as municipalities design and implement projects, they should establish a framework that ensures compliance with the Uniform Guidance. A strong compliance framework mitigates the risk of fraud, waste, and abuse of federal funds. Municipalities should consider developing internal controls and management practices, procurement and contracting standards, risk-based assessments for subawards, and subrecipient monitoring requirements when developing their compliance framework.

The Uniform Guidance also sets forth cost principles[3] and procurement requirements[4] that municipalities should follow when handling marketing expenses. Specifically, municipalities should consider including procurement controls in their purchasing or procurement policies, including (but not limited to):

  • Provisions addressing a competitive bidding process;
  • Standards of conduct for contract performance;
  • Prohibitions on dealing with suspended or debarred parties;
  • Provisions setting forth procedures to avoid acquisition of unnecessary items;
  • Record retention procedures;
  • Provisions addressing the allowable use of time and materials;
  • Dispute resolution provisions; and
  • Provisions addressing bonding requirements.

When developing internal controls and a compliance framework, municipalities should ensure that projects only fund eligible activities, and that project staff, subrecipients, and/or contractors follow the Final Rule, Uniform Guidance, and federal, state, and local laws, as applicable.

Last Updated: April 11, 2022

Program

COVID-19 Federal Assistance e311

Topics

Lost Revenue & Revenue Replacement

How should a municipality account for cost increases beyond the amount of revenue loss when allocating money under the revenue loss eligibility? May a municipality pay increased costs that exceed the amount of lost revenue?

The U.S. Department of the Treasury’s (“Treasury”) Final Rule governs the Coronavirus State and Local Fiscal Recovery Funds (“CSLFRF”) established under the American Rescue Plan Act of 2021 (“ARP”).[1] For municipalities facing challenges caused by the rising cost of goods and services, the following information and recommendations summarize guidance under the Final Rule and provide a strategy for risk mitigation.

The Final Rule explicitly states that “[a] recipient may use funds for the provision of government services to the extent of the reduction in the recipient’s general revenue due to the public health emergency.”[2] Treasury notes that “recipients have broad latitude to use funds for government services up to their amount of revenue loss due to the pandemic.”[3] Treasury’s language “to the extent of” and “up to” indicates an upper limit to the amount of funds eligible under this eligible use category. Treasury appears to describe “the reduction in the recipient’s general revenue” and “their [municipality’s] amount of revenue loss” as this upper limit.[4]

Regarding the overall use of funds, Treasury expressly limits the amount of eligible funds to the amount of lost revenue due to the COVID-19 pandemic.[5] Furthermore, the Final Rule and its accompanying guidance does not appear to identify any cases in which municipalities have authorization to exceed revenue loss funds, for any reason. Therefore, municipalities may not expect flexibility to exceed the amount of funds set by the revenue loss calculation or standard allowance.

Because Treasury guidance does not expressly authorize municipalities to spend funds beyond the upper limit identified by the Final Rule, exceeding that upper limit for any reason would likely be considered a violation of the Final Rule, which could cause Treasury to recoup such funds.[6]

Municipalities experiencing cost increases that exceed their revenue loss funds may consult the Final Rule to determine whether those costs satisfy another eligible use under the ARP. 

Last Updated: April 5, 2022

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

[2] Id., at 423.

[3] Id., at 9.

[4] Id., at 9 and 423.

[5] Id., at 233.

[6] Id., at 433.

Program

COVID-19 Federal Assistance e311

Topics

Compliance & Reporting, Program Administration

Has Treasury put together a list of evidence-based practices (“EBPs”) for use of CSLFRF that it affirmatively approves? How should a municipality articulate that a proposed project is an EBP and tailor an EBP to its local community and circumstances?

The U.S. Department of the Treasury (“Treasury”) issued its Final Rule on the American Rescue Plan Act of 2021 (“ARP”) Coronavirus State and Local Fiscal Recovery Funds (“CSLFRF”) program on January 6, 2022,[1] and published its Compliance and Reporting Guidance on February 28, 2022.[2] EBPs are interventions with strong or moderate levels of evidence. Under the Final Rule, a recipient may use CSLFRF funds for EBPs, provided that the recipient reports on their use of the funds.[3] Treasury further notes that recipients are likely exempt from reporting on EBPs in cases where a program evaluation is being conducted in accordance with the standards under OMB M-20-12.[4] Finally, Treasury generally does not review or approve EBPs prior to implementation.[5]

Part 1: Has Treasury put together a list of EBPs for use of CSLFRF that it affirmatively approves?

Treasury has identified the following non-exhaustive list of EBPs as eligible uses of CSLFRF funding:

  • Violence Prevention Projects: Focused deterrence, street outreach, violence interrupters, and hospital-based violence intervention models, complete with wraparound services such as behavioral therapy, trauma recovery, job training, education, housing and relocation services, and financial assistance;[6]
  • Student Needs: Services to address the academic, social, emotional, and mental health needs of students;[7]
  • Improved Outcomes: Program evaluation and evidence resources to support building and using evidence to improve outcomes;
  • Public Health Policy-Making and Program Performance Tracking: Data analysis resources to gather, assess, and use data for effective policy-making and real-time tracking of program performance to support effective implementation of [CSLFRF]-funded programs and programs that respond to the public health emergency;
  • Government Information Technology Systems: Technology infrastructure resources to improve access to and the user-experience of government information technology systems;
  • Information Sharing: Community outreach and engagement resources to support the gathering and sharing of information in ways that improve equity and effective implementation of [CSLFRF]-funded programs and programs that respond to the public health emergency; and
  • Designing, Executing, and Evaluating Programs: Capacity building resources to support using data and evidence in designing, executing, and evaluating programs.[8]

Treasury encourages recipients that implement EBPs to use evidence clearinghouses to assist with evidence assessment. Such evidence clearinghouses include, but are not limited to, the following:

  • U.S. Department of Education’s What Works Clearinghouse;
  • U.S. Department of Labor’s CLEAR;
  • U.S. Department of Health & Human Services’ Childcare & Early Education Research Connections and the Home Visiting Evidence of Effectiveness; and
  • Clearinghouses from the Administration for Children and Families.[9]

Part 2: How should a municipality articulate its position that a proposed project is an EBP?

Treasury permits, but does not require, recipients to use EBPs in CSLFRF-funded programs and/or activities. Treasury generally does not review whether a proposed project is an EBP. Instead, Treasury may require recipients to participate in a national evaluation, which would study their project along with similar projects in other jurisdictions focused on the same set of outcomes.[10]

Treasury also requires “states, territories, metropolitan cities, and counties with a population that exceeds 250,000 residents” to produce, publish, and submit a Recovery Plan Performance Report (“Recovery Plan”) that:

  • Identifies whether [CSLFRF] funds are being used for evidence-based interventions and/or if projects are being evaluated through rigorous program evaluations that are designed to build evidence;
  • Describes the goals of the project, and the evidence base for the interventions funded by the project; and
  • Identifies the dollar amount of the total project spending that is allocated towards evidence-based interventions for each project.[11]

Part 3: How can a municipality tailor an EBP to its local community and circumstances?

Recipients have flexibility to implement EBPs to support CSLFRF-funded programs. Treasury generally does not require a recipient to justify the recipient’s determination that a proposed project is an EBP. Treasury does, however, define evidence-based interventions (in particular regarding educational services) as interventions with “strong or moderate” evidence. Treasury provides the following guidance to assist recipients in determining whether their evidence is strong, moderate, or preliminary:

Strong evidence means that the evidence base can support causal conclusions for the specific program proposed by the applicant with the highest level of confidence. This consists of one or more well-designed and well-implemented experimental studies conducted on the proposed program with positive findings on one or more intended outcomes.

Moderate evidence means that there is a reasonably developed evidence base that can support causal conclusions. The evidence base consists of one or more quasi-experimental studies with positive findings on one or more intended outcomes OR two or more non-experimental studies with positive findings on one or more intended outcomes…

Preliminary evidence means that the evidence base can support conclusions about the program’s contribution to observed outcomes. The evidence base consists of at least one non-experimental study. A study that demonstrates improvement in program beneficiaries over time on one or more intended outcomes OR an implementation (process evaluation) study used to learn and improve program operations would constitute preliminary evidence.[12]

Last Updated: April 12, 2022

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

[2] U.S. Department of the Treasury, Compliance and Reporting Guidance: State and Local Fiscal Recovery Funds (Revised February 28, 2022), available at: https://home.treasury.gov/system/files/136/SLFRF-Compliance-and-Reporting-Guidance.pdf.

[3] Id., at 31.

[4] Id.; see also Executive Office of the President, Office of Management and Budget, Memorandum for Heads of Executive Departments and Agencies regarding Phase 4 Implementation of the Foundations for Evidence-Based Policymaking Act of 2018: Program Evaluation Standards & Practices, available at: https://www.whitehouse.gov/wp-content/uploads/2020/03/M-20-12.pdf.

[5] Coronavirus State and Local Fiscal Recovery Funds, Frequently Asked Questions (as of January 2022) – FAQ #4.5, at 20, available at: https://home.treasury.gov/system/files/136/SLFRPFAQ.pdf.

[6] Treas. Reg. 31 CFR Part 35, at 71, available at: https://home.treasury.gov/system/files/136/SLFRF-Final-Rule.pdf.

[7] Id., at 80.

[8] Id., at 187-189.

[9] Department of Treasury, Compliance and Reporting Guidance: State and Local Fiscal Recovery Funds (Revised February 28, 2022), at 31, available at: https://home.treasury.gov/system/files/136/SLFRF-Compliance-and-Reporting-Guidance.pdf.

[10] Id.

[11] Id.

[12] Id., at 40.

Program

COVID-19 Federal Assistance e311

Topics

Federal Funding Streams, Infrastructure & Maintenance Investments

What funding sources are available to municipalities for the purpose of addressing repairs for flooding?

There are multiple funding sources available related to flooding and infrastructure improvements, including programs administered under the Infrastructure Investment and Jobs Act and American Rescue Plan Act of 2021, among other acts:

Infrastructure Investment and Jobs Act (“IIJA”) Funding Opportunities:

  1. The Building Resilient Infrastructure and Communities (“BRIC”) Program

The Federal Emergency Management Agency (“FEMA”) administers the BRIC program. The IIJA provides $1 billion to FEMA in support of the BRIC program. The BRIC program supports communities undertaking hazard mitigation projects for disaster risk reduction. BRIC funds may be used for:

  • Capability and capacity building activities;
  • Mitigation projects; and
  • Management costs.[1]  

Projects must:

  • Be cost-effective;
  • Reduce or eliminate risk and damage from future natural hazards;
  • Meet either of the two latest published editions of consensus-based codes, specifications, and standards;
  • Align with the applicable hazard mitigation plan; and
  • Meet all environmental and historic preservation requirements.[2]

States, territories, and Tribal governments may apply to FEMA for BRIC funding. Municipalities and local governments may apply for BRIC funding through a sub-application, which must be submitted through their state, territory, or Tribal government. 

Applications for fiscal year 2022 are expected to open no later than September 30, 2022. Municipalities may consult FEMA’s Mitigation Action Portfolio for further information on eligible hazard mitigation activities.[3]

  1. The Flood Mitigation Assistance (“FMA”) Program

FEMA administers the FMA program. The IIJA provides $3.5 billion to FEMA in support of the FMA program. The FMA program provides funds to states, local communities, and federally recognized Tribes to invest in projects that reduce or eliminate the risk of repetitive flood damage to buildings insured by the National Flood Insurance Program (“NFIP”).[4] Additional details, including resources related to project requirements and types, can be found on the FMA homepage.[5] Applications for fiscal year 2022 are expected to open no later than September 30, 2022.

As part of the IIJA funding for FMA, FEMA has launched the Swift Current Initiative, a funding opportunity available within the states of Louisiana, Mississippi, New Jersey, and Pennsylvania.[6] The initiative seeks to distribute FMA funding to disaster recovery areas in advance of the normal grant process.[7]

  1. Rebuilding American Infrastructure Sustainably and Equitably (“RAISE”) Grants

Rebuilding American Infrastructure Sustainably and Equitably (“RAISE”) grants are available through the U.S. Department of Transportation “for capital investments in surface transportation that will have a significant local or regional impact.”[8] RAISE 2022 applications were due on April 14, 2022; however, municipalities may consider submitting applications for future deadlines.

  1. Safeguarding Tomorrow Through Ongoing Risk Mitigation (“STORM”) Act

FEMA administers STORM. The IIJA provides $500 million in initial funding to STORM.[9] The STORM Act authorizes FEMA to provide states with capitalization to establish hazard mitigation revolving loan funds. Details regarding the program are pending.

Coronavirus State and Local Fiscal Recovery Funds (“CSLFRF”) Funding Opportunities:

In addition to IIJA and infrastructure-focused grants, municipalities may consider whether projects are eligible under the American Rescue Plan Act of 2021’s (“ARP”) CSLFRF. Necessary investments in water and sewer infrastructure are an eligible use of CSLFRF. Under the U.S. Department of the Treasury’s (“Treasury”) Final Rule on CSLFRF, “[w]ater and sewer services provided broadly to the public as essential services include the provision of drinking water and the removal, management, and treatment of wastewater and stormwater.”[10]

Although the meaning of water and sewer infrastructure for purposes of sections 602(c)(1)(D) and 603(c)(1)(D) of the Social Security Act does not include all water-related uses, Treasury has made clear in this final rule that investments to infrastructure include a wide variety of projects. Treasury interprets the word “infrastructure” in this context broadly to mean the underlying framework or system for achieving the given public purpose, whether it be provision of drinking water or management of wastewater or stormwater.[11]

Treasury acknowledges that “[m]any of the types of projects eligible under either the [Drinking Water State Revolving Fund (“DWSRF”)] or [Clean Water State Revolving Fund (“CWSRF”)] also support efforts to address climate change”[12] and encourages recipients to “consider green infrastructure investments and projects to improve resilience to the effects of climate change.” The Final Rule provides further clarification including eligible and ineligible uses.[13] While Treasury clarifies that general floodplain management and flood mitigation projects were not included in the Final Rule, the Final Rule recognizes that several projects providing mitigation of flood risk are eligible under state revolving fund guidelines and thus are eligible activities for CSLFRF recipients.[14]

Additionally, the Final Rule provides that funds available under the revenue loss provision may satisfy non-federal match requirements unless specifically prohibited by statute (as in the case of Medicaid or CHIP).[15] The availability of revenue loss funds to satisfy non-federal match requirements for mitigation grants may make these funding programs accessible to municipalities that otherwise lack the local match required to leverage federal mitigation funding.

Other Funding Opportunities:

  1. Hazard Mitigation Grant (“HMG”) Program

FEMA administers the HMG program. The HMG program is a multi-hazard mitigation grant program that provides funding to state, local, Tribal, and territorial governments for hazard mitigation planning and mitigation activities in areas affected by a federally declared disaster, such as COVID-19.[16]

Hazard mitigation includes long-term efforts to reduce risk and the potential impact of future disasters, such as flood protection projects designed to:

  • Protect homes and businesses with permanent barriers to prevent floodwater from entering;
  • Elevate structures above known flood levels to prevent and reduce losses;
  • Reconstruct a damaged dwelling on an elevated foundation to prevent and reduce future flood losses; and
  • Reduce flooding through drainage improvement.

Information on the next round of HMG funding is pending.

  1. Community Development Block Grant – Disaster Recovery and Mitigation (“CDBG-DR” and “CDBG-MIT”)

The U.S. Department of Housing and Urban Development (“HUD”) administers CDBG-DR and CDBG-MIT. Following a disaster, Congress may appropriate CDBG-DR funds for affected areas. CDBG-DR funding assists affected areas with housing, infrastructure, and economic revitalization. Municipalities in affected areas that receive a CDBG-DR allocation may develop recovery plans that include flood risk mitigation projects. CDBG-MIT provides additional funding opportunities for impacted communities to increase resilience, including flood remediation.[17]

Municipalities may consult the HUD Exchange program website for further information on CDBG-DR and CDBG-MIT.[18]

Last Updated: April 20, 2022

[2] Id.

[3] FEMA, “Hazard Mitigation Assistance: Mitigation Action Portfolio”, available at: https://www.fema.gov/sites/default/files/documents/feam_fy21-bric-mitigation-action-portfolio.pdf.

[4] FEMA, “Flood Mitigation Assistance (FMA) Grant,” available at: https://www.fema.gov/grants/mitigation/floods.

[5] Id.

[6] FEMA, “Swift Current Initiative,” available at: https://www.fema.gov/grants/mitigation/floods/swift-current.

[7] Id.

[8] Department of Transportation, “RAISE Grants Notice of Funding Opportunity,” available at: https://www.transportation.gov/sites/dot.gov/files/2022-04/RAISE_2022_NOFO_AMENDMENT_1.pdf.

[9] FEMA, “Infrastructure Deal Provides FEMA Billions for Community Mitigation Investments,” available at: https://www.fema.gov/press-release/20211115/infrastructure-deal-provides-fema-billions-community-mitigation-investments.

[10] Treas. Reg. 31 CFR Part 35 at 269, available at: https://home.treasury.gov/system/files/136/SLFRF-Final-Rule.pdf.

[11] Id., at 270.

[12] Id., at 272.

[13] Id., at 274-279.

[14] Id., at 292.

[15] Id., at 368-369.

[16] FEMA, “Hazard Mitigation Grant Program (HMGP),” available at: https://www.fema.gov/grants/mitigation/hazard-mitigation.

[17] HUD, “FHEO Requirements for CDBG Disaster Recovery and Mitigation Programs,” available at: https://www.hud.gov/program_offices/fair_housing_equal_opp/fheo_requirementsfor_community_development_block_grant_%E2%80%93.

[18] HUD Exchange, available at: https://www.hudexchange.info/.

Program

COVID-19 Federal Assistance e311

Topics

Federal Funding Streams, Infrastructure & Maintenance Investments

Does the IIJA earmark any other funding sources for New Starts projects?

The Infrastructure Investment and Jobs Act (“IIJA”) authorizes $3 billion per year through 2026 for the U.S. Department of Transportation’s Fixed Guideway Capital Investment Grant (“CIG”) program. The IIJA also authorizes an additional $1.6 billion in advance appropriations for the CIG program, which may become available to municipalities between fiscal years 2022 through 2026.[1], [2]

New Starts activities are eligible for CIG funding.[3] New Starts activities are projects that design and construct new systems or expand existing systems, with a total estimated project cost of $400,000,000 or more or that seek CIG funding of $150,000,000 or more.[4]

Under the White House Bipartisan Infrastructure Law Guidebook, the funding mechanism for all CIG grants are competitive as required by law.[5], [6] Accordingly, there are no earmarked funding mechanisms under the IIJA for New Starts activities.  

Municipalities should also note that the CIG is “one of the government’s most complex and rigorous grant programs.”[7] As such:

[A] proposed project must be evaluated and receive an overall rating by FTA based on both the project justification and the local financial commitment criteria at several points during the process. A project must receive a ‘Medium’ or better overall rating to advance to the next step in the process, including before it can be considered for a construction grant agreement.[8]

Municipalities can view the list of currently available funding under the IIJA in the White House Bipartisan Infrastructure Law Guidebook.[9] Municipalities may also search for strategic opportunities and filter by funding mechanism using the White House Guidebook Data Set.[10]

Last Updated: April 19, 2022

[1] Federal Transit Administration, Fact Sheet: Capital Investment Grants Program, available at: https://www.transit.dot.gov/funding/grants/fact-sheet-capital-investment-grants-program.

[2] An advance appropriation is “one made to become available one year or more beyond the year for which the appropriations act is passed.” See The White House, “Advance Appropriations,” available at: https://www.whitehouse.gov/wp-content/uploads/2021/05/aaa_fy22.pdf.

[3] FR Doc. 2021-15079 at 2-3, available at: https://public-inspection.federalregister.gov/2021-15079.pdf.

[4] Federal Transit Administration, Fact Sheet: Capital Investment Grants Program, available at: https://www.transit.dot.gov/funding/grants/fact-sheet-capital-investment-grants-program.

[6] Federal Transit Administration, Oversight of the Federal Transit Administration's Capital Investment Grant Program, available at: Oversight of the Federal Transit Administration's Capital Investment Grant Program | US Department of Transportation.

[7] Id.

[8] Id.

[9] The White House, Guidebook to The Bipartisan Infrastructure Law For State, Local, Tribal, And Territorial Governments, and Other Partners, at 66, available at: BUILDING-A-BETTER-AMERICA_FINAL.pdf (whitehouse.gov).