Program

COVID-19 Federal Assistance e311

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Program Administration

Is there a cap on program administration, whether for the recipient city, or for subrecipients if the City contracts the funds out for services? And are there limitations on what is considered admin (i.e. regular labor, leave, benefits, etc)?

A.  Administrative Expenses/Costs and the Interim Final Rule and FAQ Guidance

The Interim Final Rule (the “Rule”) explains that “Expenditures for the mitigation and prevention of COVID-19 include: (i) Expenses related to COVID-19 vaccination programs and sites, including staffing, acquisition of equipment or supplies, facilities costs, and information technology or other administrative expenses.”[1]

Furthermore, expenses which “Improve Efficacy of Public Health or Economic Relief Programs” include “administrative costs associated with the recipient’s COVID-19 public health emergency assistance programs, including services responding to the COVID-19 public health emergency or its negative economic impacts, that are not federally funded.”[2]

According to the U.S. Department of Treasury, “Recipients may use funds to cover the portion of payroll and benefits of employees corresponding to time spent on administrative work necessary due to the COVID–19 public health emergency and its negative economic impacts. This includes, but is not limited to, costs related to disbursing payments of Fiscal Recovery Funds and managing new grant programs established using Fiscal Recovery Funds.”[3]

B.  References to CRF

The Rule also indicates that “many of these expenses were also eligible in the CRF. Generally, funding uses eligible under CRF as a response to the direct public health impacts of COVID-19 will continue to be eligible under the ARPA,” with two exceptions spelled out in the Rule.[4] See below for the exceptions.

Additionally, the CRF FAQs indicate administrative expenditures by State, territorial, local or Tribal government may in certain circumstances be allowable: “If the administrative expenses represent an increase over previously budgeted amounts and are limited to what is necessary. For example, a State may expend Fund payments on necessary administrative expenses incurred with respect to a new grant program established to disburse amounts received from the Fund.”[5]

C.  Administrative Costs and Mitigating Factors

The Rule acknowledges that the ARP “will generate administrative costs relative to a pre-statutory baseline. This includes, chiefly, costs required to administer Fiscal Recovery Funds, oversee subrecipients and beneficiaries, and file periodic reports with Treasury.”[6]

Treasury expects that the administrative burden associated with this program will:

  • “Be moderate, specifically [because] the recipients (direct or indirect) [that] receive funding from Federal government programs may have familiarity with administration and reporting for Federal funds or grant programs; and
  • [Recipients] will have received CRF funds and rely heavily on the administrative processes developed over the last year.”

The above suggests that Treasury expects the administrative burden from running these programs to be light.[7]

Furthermore, “Treasury expects to provide technical assistance to defray the costs of administration of Fiscal Recovery Funds to further mitigate burden. In making implementation choices, Treasury has hosted numerous consultations with a diverse range of direct recipients—States, small cities, counties, and Tribal governments—along with various communities across the United States, including those that are underserved. Treasury lacks data to estimate the precise extent to which this Interim Final Rule generates administrative burden for State, local, and Tribal governments, but seeks comment to better estimate and account for these costs, as well as on ways to lessen administrative burdens.”[8] As of now, however, neither the ARP itself nor the guidance released from the Treasury specifies a “cap” on costs of program administration.

D.  Conclusion

While the Rule indicates the above situations where administrative costs are seemingly allowable, there is limited specific guidance and Treasury suggests that the costs should be low.  A municipality should ensure any administrative expenditures fit within an eligible use category.  Secondly, the Rule indicates that many expenses originally eligible under CRF continue to be eligible under ARP.[9]  This fact suggests that key verbiage from the CRF guidelines such as “reasonable” and “necessary” could also apply to administrative expenses under the ARP as well.  The CRF FAQs provide further guidance along these lines by indicating administrative expenses which “represent an increase over previously budgeted amounts” and are “necessary” will potentially be eligible.  The Treasury, however, does acknowledge the many ways in which administrative expenses have been or should be mitigated to reduce the amounts expended.

Last Revised: May 24, 2021

 

[2] U.S. Department of the Treasury Coronavirus State and Local Fiscal Recovery Funds Interim Final Rule, 31 CFR Part 35 RIN 1505-AC77, §35.6 at 141.

[4] U.S. Department of the Treasury Coronavirus State and Local Fiscal Recovery Funds Interim Final Rule, 31 CFR Part 35 RIN 1505-AC77, §35.6 at 18, See, footnote 41 (“two exceptions: 1) the standard for eligibility of public health and safety payrolls has been updated (see details on page 20) and 2) expenses related to the issuance of tax-anticipation notes are no longer an eligible funding use (see discussion of debt service on page 44)).”

[5] Treasury Coronavirus Relief Fund Frequently Asked Questions Updated as of October 19, 2020, at Q39.

[6] U.S. Department of the Treasury Coronavirus State and Local Fiscal Recovery Funds Interim Final Rule, 31 CFR Part 35 RIN 1505-AC77, §35.6 at 122.

[7] Id.

[8] Id.

[9] U.S. Department of the Treasury Coronavirus State and Local Fiscal Recovery Funds Interim Final Rule, 31 CFR Part 35 RIN 1505-AC77, §35.6 at 18, See, footnote 41.

Program

COVID-19 Federal Assistance e311

Topics

Fund Planning & Allocation, Tourism

Can a municipality use ARP funds to support “friends of” organizations for specific parks, venues, or other tourism-related activities?

The Interim Final Rule (the “Rule”) released by the U.S. Department of the Treasury (“Treasury”) “encourages recipients to provide assistance to those households, businesses, and non-profits in communities most disproportionately impacted by the pandemic.”[1] Further, the Rule indicates that “aid to tourism, travel, hospitality, and other impacted industries in response to the negative economic impacts of the COVID-19 public health emergency” is an eligible use of Coronavirus State and Local Fiscal Recovery Funds (“CLFRF”).[2] Additionally, the FAQ associated with CLFRF states that transfers may be made by municipalities to non-profit organizations.[3]

Accordingly, it seems that a municipality may use funds from the ARP’s CLFRF to support “friends of” organizations for specific parks, venues, or other tourism-related activities, so long as the funds are used in a manner that responds to a demonstrable and negative impact of the COVID-19 pandemic and the organization is an eligible not-for-profit. Treasury does not make any CLFRF awards directly to such organizations. They can receive funding only as a subrecipient from state and local governmental units designated as recipients of CLFRF.[4]

Municipalities should strongly consider whether it is more appropriate to undertake the grant funded activity before determining a subgrant is the best means for achieving the stated objective.

Prior to providing aid to these sectors, municipalities must determine whether the need for such aid is due to the COVID-19 pandemic instead as opposed to unrelated longer-term economic or industrial trends.[5] Aid may be considered responsive to the negative economic impacts of the pandemic if it supports businesses, attractions, business districts, and Tribal development districts operating prior to the pandemic and affected by required closures and other efforts to contain the pandemic.

The Rule demonstrates various ways in which such aid can be allotted to the specifically named industries is needed as a result of the COVID-19 pandemic. For instance, the Rule states that “small businesses and non-profits faced significant challenges in covering payroll, mortgages or rent, and other operating costs as a result of the public health emergency and measures taken to contain the spread of the virus.”[6]  Additionally, “[n]on-profits, which provide vital services to communities, have similarly faced economic and financial challenges due to the pandemic.”[7] Again, aid provided to specific permitted industries can only be provided if responsive to the negative impacts that the pandemic has had on the specific industry in question.

The Rule also specifies that aid may be used to implement COVID-19 mitigation and infection prevention measures to enable safe resumption of tourism, travel, and hospitality services.[8] The Treasury Department has identified several examples of mitigation and infection prevention measures that qualify:

  • improvements to ventilation;
  • physical barriers or partitions;
  • signage to facilitate social distancing;
  • provision of masks or personal protective equipment; and
  • consultation with infection prevention professionals to develop safe reopening plans.[9]

The Rule requires that municipal governments publicly report assistance provided under this eligible use, including details on how this assistance remedies negative economic impacts of the pandemic.[10] Recipients must maintain records to assess how businesses or business districts receiving assistance were affected by the negative economic impacts of the pandemic and how the aid provided in response to these impacts.[11]

Regarding the transfer of CLFRF funds from a municipal government to a subrecipient, the Rule permits local governments “to transfer [CLFRF] funds to other constituent units of government …or private entities” beyond those specified in the statute.”[12] At this time, this broad language does not include further restrictions. However, when considering whether to utilize CLFRF for “friends of”/non-profit entities, municipalities must monitor and oversee the subrecipient’s use of CLFRF funds to ensure the subrecipient’s compliance with statutory and regulatory requirements. Smaller organizations often do not have the training and experience to understand how to comply with Federal grant requirements and may require assistance from grant recipients. Smaller organizations may require assistance regarding the eligible uses of funds and the terms and conditions of awards. Municipalities remain responsible for reporting to Treasury on their subrecipients’ use of payments from the CLFRF funds for the duration of the award.[13]

Last Updated: August 3, 2021

[1] Treas. Reg. 31 CFR 35, at 11, available at: https://home.treasury.gov/system/files/136/FRF-Interim-Final-Rule.pdf

[2] Id. at 141. 

[3] Coronavirus State and Local Fiscal Recovery Funds, Frequently Asked Questions (as of July 19, 2021) – FAQ #1.8, at 3, available at: https://home.treasury.gov/system/files/136/SLFRPFAQ.pdf.

[4] Id.

[5] U.S. Department of the Treasury Coronavirus State and Local Fiscal Recovery Funds Interim Final Rule, 31 CFR Part 35 RIN 1505-AC77, at 37, https://home.treasury.gov/system/files/136/FRF-Interim-Final-Rule.pdf

[6] Id. at 34.

[7] Id. at 26-27.

[8] Id.

[9] Id. at 36.

[10] Id. at 37-38.

[11] Id. at 38.

[12] Id. at 105-106.

[13] Id. at 106. 

Program

COVID-19 Federal Assistance e311

Topics

Lost Revenue & Revenue Replacement

When determining what constitutes the “negative economic impacts” of COVID-19, should municipalities look to FY2020 or prior fiscal years for comparison?

On April 14, 2021, the U.S. Department of the Treasury announced the creation of the Office of Recovery Programs.[1] This new office will be led by a Chief Recovery Officer and is intended to lead the Treasury’s administration of components of the American Rescue Plan Act (“ARP”) of 2021, including the Coronavirus Local Fiscal Recovery Fund (“CLFRF”).[2] On May 10, 2021, this new office issued the Coronavirus State and Local Fiscal Recovery Funds Interim Final Rule (the “Rule”).[3]

The exact definition under the ARP of “negative economic impacts” of COVID-19 remains very broad.  As with guidance previously released for the Coronavirus Relief Fund (“CRF”), broad discretion remains in terms of determining a nexus between economic impacts and COVID (thus triggering programmatic allowability). A non-exhaustive list of eligible uses is available in the Rule.[4]

In analyzing certain losses, Section 603(c)(1)(C) introduces the concept of fiscal year comparison as: 

for the provision of government services to the extent of the reduction in revenue of such metropolitan city, non-entitlement unit of local government, or county due to the COVID–19 public health emergency relative to revenues collected in the most recent full fiscal year of the metropolitan city, non-entitlement unit of local government, or county prior to the emergency[.][5]

Under Section 603(c)(1)(C) of the Social Security Act, as amended by Section 9901 of the ARP, an allowable use of funds is specific to the provision of government services and revenue loss. Other types of beneficiaries, such as households or small businesses, are identified in Section 603(c)(1)(A) and would not necessarily follow a formal fiscal year; strict comparisons between fiscal years therefore should not apply. When allocating funding, municipalities should consider a formal, documented, and consistent process to determine negative economic impacts related to COVID-19. The Rule specifically refers to four categories of negative economic impacts, including:

  • impacts on households and individuals;
  • impacts on businesses;
  • impacts to state, local, and tribal governments; and
  • exacerbation of pre-existing disparities.[6]

The Rule also provides guidance as to the growth rate that can be presumed in the counterfactual trend when calculating revenue loss for replacement purposes. The recipient can either use the recipient’s average annual growth rate over the past three full fiscal years prior to the COVID-19 pandemic, or 4.1% per year across all State and local government “General Revenue from Own Sources,” as defined by the U.S. Census Bureau – whichever is greater.[7]

Last Revised: May 24, 2021

 

[1] U.S. Department of the Treasury, Press Releases, Treasury Establishes New Office to Lead Implementation of Relief and Recovery Programs, https://home.treasury.gov/news/press-releases/jy0121.

[2] American Rescue Plan Act of 2021 § 9901, Pub. L. No. 117-2, amending 42 U.S.C. § 801 et seq., Section 603, https://www.congress.gov/bill/117th-congress/house-bill/1319/text#H7C2075B5C62541F9A348BDF1DDBECEB6.

[4] Id. at 138.

[5] American Rescue Plan Act of 2021 § 9901, Pub. L. No. 117-2, amending 42 U.S.C. § 801 et seq., Section 603, https://www.congress.gov/bill/117th-congress/house-bill/1319/text#H7C2075B5C62541F9A348BDF1DDBECEB6.

[6] U.S. Department of the Treasury Coronavirus State and Local Fiscal Recovery Funds Interim Final Rule, 31 CFR Part 35 RIN 1505-AC77, at 23, https://home.treasury.gov/system/files/136/FRF-Interim-Final-Rule.pdf.

[7] Id. at 57-60; see also U.S. Census Bureau, Annual Survey of State and Local Government Finances, https://www.census.gov/programs-surveys/gov-finances.html.

Program

COVID-19 Federal Assistance e311

Topics

Fund Planning & Allocation, Workforce & Economic Development

May municipalities use ARP funds to invest in small businesses in the community or private sector start-up investment funds to support economic growth?

According to recent guidance from the U.S. Department of the Treasury ("Treasury"), municipalities may use ARP funds to address a wide range of small business needs.

Section 9901 of the ARP P.L. 117-2 created the Coronavirus State Fiscal Relief Fund (“CSFRF”) and the Coronavirus Local Fiscal Relief Fund (“CLFRF”) (together, “CSLFRF”).[1]

The ARP authorizes recipients of these funds to use the assistance in several ways, one of which is:

(A) to respond to the public health emergency with respect to the Coronavirus Disease 2019 (COVID–19) or its negative economic impacts, including assistance to households, small businesses, and nonprofits, or aid to impacted industries such as tourism, travel, and hospitality. (emphasis added).

This language indicates that investments in some small businesses and nonprofits within a municipality’s community are eligible activities under the ARP.

Treasury's Interim Final Rule (the "Rule") implementing the CSLFRF further interpreted the ARP's authorized uses of funds. The Supplementary Information discussion which accompanies the Rule states:

  • Small Businesses and Non-profits. As discussed above, small businesses and non-profits faced significant challenges in covering payroll, mortgages, rent, and other operating costs as a result of the public health emergency and measures taken to contain the spread of the virus. State, local, and Tribal governments may provide assistance to small businesses to: (i) adopt safer operating procedures; (ii) weather periods of closure, or (iii) mitigate financial hardship resulting from the COVID-19 public health emergency, including:
  • Loans or grants to mitigate financial hardship such as declines in revenues or impacts of periods of business closure, for example by supporting payroll and benefits costs, costs to retain employees, mortgage, rent, or utilities costs, and other operating costs;
  • Loans, grants, or in-kind assistance to implement COVID-19 prevention or mitigation tactics, such as physical plant changes to enable social distancing, enhanced cleaning efforts, barriers or partitions, or COVID-19 vaccination, testing, or contact tracing programs; and
  • Technical assistance, counseling, or other services to assist with business planning needs.[2]

Thus, ARP funds can be used to address a broad range of small business needs.

In addition to the statutory and regulatory provisions cited above, Treasury has also published a series of Frequently Asked Questions (FAQs) relating to the implementation of ARP.  Question 2.5 in the June 21, 2021 version of the FAQs addresses the question of eligible use of funds for small businesses:

  • Loans or grants to mitigate financial hardship such as declines in revenues or impacts of periods of business closure, for example by supporting payroll and benefits costs, costs to retain employees, mortgage, rent, or utilities costs, and other operating costs;
  • Loans, grants, or in-kind assistance to implement COVID-19 prevention or mitigation tactics, such as physical plant changes to enable social distancing, enhanced cleaning efforts, barriers or partitions, or COVID-19 vaccination, testing, or contact tracing programs; and
  • Technical assistance, counseling, or other services to assist with business planning needs.[3]

Note that the eligible services are in response to the negative economic impacts of COVID-19.

Another of Treasury’s June 21, 2021 FAQs addresses assistance for private sector start-up investment funds to support economic growth:

As discussed in the Interim Final Rule, recipients may provide assistance to small businesses that responds to the negative economic impacts of COVID-19. The Interim Final Rule provides a non-exclusive list of potential assistance mechanisms, as well as considerations for ensuring that such assistance is responsive to the negative economic impacts of COVID-19.

Treasury acknowledges a range of potential circumstances in which assisting small business startups could be responsive to the negative economic impacts of COVID-19, including for small businesses and individuals seeking to start small businesses after the start of the COVID-19 public health emergency. For example:

  • A recipient could assist small business startups with additional costs associated with COVID-19 mitigation tactics (e.g., barriers or partitions; enhanced cleaning; or physical plant changes to enable greater use of outdoor space).
  • A recipient could identify and respond to a negative economic impact of COVID- 19 on new small business startups; for example, if it could be shown that small business startups in a locality were facing greater difficult accessing credit than prior to the pandemic, faced increased costs to starting the business due to the pandemic, or that the small business had lost expected startup capital due to the pandemic.
  • The Interim Final Rule also discusses eligible uses that provide support for individuals who have experienced a negative economic impact from the COVID-19 public health emergency, including uses that provide job training for unemployed individuals. These initiatives also may support small business startups and individuals seeking to start small businesses.[4]

Recipients or subrecipients of Fiscal Relief Fund (“FRF”) assistance cannot anticipate every potential issue that might arise while using FRF assistance. Therefore, municipalities may wish to involve counsel to ensure compliance with federal, state, and local laws.

In addition, section 3301 of the ARP provides $10 billion to State and Tribal governments to fund the State Small Business Credit Initiative (“SSBCI”),[5] an allocation that will expand the scale of the previously-authorized SSBCI to include:

  • $500 million to support very small businesses with fewer than ten employees;
  • $1.5 billion for states to support businesses owned by socially and economically disadvantaged people;
  • $1 billion for an incentive program to boost funding tranches for states that show robust support for businesses owned by socially and economically disadvantaged individuals; and
  • $500 million for technical assistance.[6]

The Small Business Association (“SBA”) website also includes resources related to COVID-19 relief funded under ARP and other federal programs that may provide insight on additional ways municipalities can assist small businesses.[7]

Last Updated: July 7, 2021

[1] American Rescue Plan Act (HR 1319 Subtitle M Section 603(c)(1)(A),  https://www.congress.gov/bill/117th-congress/house-bill/1319/text#HC028912924A04512A1F80BFA0F1C1051.

[2] Treas. Reg. 35 CFR 31 at 34-35, available at: https://home.treasury.gov/system/files/136/FRF-Interim-Final-Rule.pdf.

[3] U.S. Department of the Treasury Coronavirus State and Local Fiscal Recovery Funds, Frequently Asked Questions (as of June 24, 2021), at FAQ #2.5, at 4-5, available at: https://home.treasury.gov/system/files/136/SLFRPFAQ.pdf

[4] Id at FAQ #2.20, at 11-12.

[5] American Rescue Plan Act (H.R.1319, 117th Cong. § 9901 (amending 42 U.S.C § 801  

et seq., at Subtitle C Section 3301)), available at: https://www.congress.gov/117/bills/hr1319/BILLS-117hr1319enr.pdf. 

[7] Small Business Administration COVID-19 relief options, https://www.sba.gov/funding-programs/loans/covid-19-relief-options.

Program

COVID-19 Federal Assistance e311

Topics

Education

How can a city use ARP funds to address school safety?

The U.S. Department of Education announced that the American Rescue Plan (ARP) includes $122 billion for Elementary and Secondary School Emergency Relief (ESSER) funding for each state to support efforts to reopen K-12 schools safely.[1] 

According to the U.S. Department of Education, the following are some uses of ESSER funds that are consistent with the permissible uses of ESSER funds under the CARES Act:[2]

  • Investing in resources to implement CDC’s K-12 operations strategy for in-person learning to keep educators, staff, and students safe; improving ventilation; purchasing personal protective equipment (PPE); and obtaining additional space to ensure social distancing in classrooms;
  • Hiring additional school personnel, such as nurses and custodial staff, to keep schools safe and healthy;
  • Providing for social distancing and safety protocols on school buses; and
  • Additional uses as allowed in the statute.

With regards to the last bullet above, ARP, Section 2001, d, (e), (2) (Q) authorizes the use of the funds for “developing strategies and implementing public health protocols including, to the greatest extent practicable, policies in line with guidance from the Center for Disease Control and Prevention for the reopening and operation of school facilities to effectively maintain the health and safety of students, educators, and other staff.”[3]

The Department of Health and Human Services (HHS) also announced that the Centers for Disease Control and Prevention (CDC) will provide $10 billion to states to support COVID-19 screening testing for K-12 teachers, staff, and students in schools.[4]  According to the Department of Health and Human Services (HHS), the “CDC’s Operational Strategy for K-12 Schools through Phased Mitigation, released in February 2021,[5] makes clear that screening testing is a tool schools can utilize to help reopen safely as part of a comprehensive COVID-19 mitigation approach. Using existing funding mechanisms, this funding will be able to be deployed quickly as part of a strategy to help get schools open in the remaining months of this school year. In addition to ensuring diagnostic testing of symptomatic and exposed individuals, serial screening testing will help schools identify infected individuals without symptoms who may be contagious so that prompt action can be taken to prevent further transmission. With this ARP funding, states can support the critical testing and testing supports schools need to implement screening testing programs.  Recognizing that establishing a testing program is new for many schools, CDC and state and local health departments will support technical assistance to assist states and schools in standing up and implementing these programs.”

The CDC’s Operational Strategy includes a section titled Prevention Strategies to Reduce Transmission of SARS-CoV-2 in Schools that references the following five key prevention strategies that are essential to safe delivery of in-person instruction and help to prevent COVID-19 transmission in schools:[6]

  1. Universal and correct use of masks
  2. Physical distancing
  3. Handwashing and respiratory etiquette
  4. Cleaning and maintaining healthy facilities
  5. Contact tracing in combination with isolation and quarantine

The CDC’s Operational Strategy also notes that schools providing in-person instruction should prioritize two prevention strategies:

  1. Universal and correct use of masks should be required
  2. Physical distancing should be maximized to the greatest extent possible.

There is also the CDC’s K-12 Schools COVID-19 Prevention Toolkit that includes resources, tools, and checklists to help school administrators and school officials prepare schools to open for in-person instruction and to manage ongoing operations. These tools and resources include considerations for addressing health equity, such as class sizes, internet connectivity, access to public transportation, etc.[7]

It is suggested that cities consult with their local school district representatives, as sub-recipients of these funds, to ensure that the ESSER funding received is adequate to support ongoing response and recovery efforts that ensure the safety of students, teachers, and other staff inside of schools.

Last Revised: April 14, 2021

 

Program

COVID-19 Federal Assistance e311

Topics

Compliance & Reporting

What documentation will cities need to provide to show that city expenses are in response to the “public health emergency with respect to COVID-19 or its negative consequences”?

The American Rescue Plan Act (“ARP”) of 2021 outlines broad, but not unlimited, discretion to local governments as to how they may use their allocation of funds within four broad categories:

  1. to respond to the COVID-19 public health emergency and its negative economic impacts;
  2. to provide premium pay to essential workers;
  3. to provide government services to the extent of eligible governments’ revenue losses; and
  4. to make necessary water, sewer, and broadband infrastructure investments.[1]

The May 10, 2021 Interim Final Rule (the “Interim Final Rule”) notes that the four eligible uses listed above reflect Congress’s judgment that Coronavirus Local Fiscal Recovery Funds (“CLFRF”) should be expended in particular ways that support recovery from the COVID-19 public health emergency.[2] The Interim Final Rule also lays out further examples of eligible and ineligible uses of the CLFRF under each of the four eligible uses.[3] While these lists are not fully exhaustive, and further guidance may be issued delineating additional eligible and ineligible uses, any use listed as eligible in the Interim Final Rule is an acceptable expenditure of funds.

All uses of CLFRF funds must be documented and reported. The Interim Final Rule lists documentation and reporting requirements that will be required for CLFRF, which include a description of how the projects or expenditures are eligible uses of the funds.[4]

Additional details regarding the interim, quarterly, and annual reporting requirements can be found on pages 110-112 of the Interim Final Rule.[5] Please note that the Treasury Department is expected to issue further guidance regarding reporting requirements.[6]

Examples of general best practices regarding allowability and documentation include, but are not limited to:

Demonstration of compliance and validation that your municipality met the rules and requirements of the different programs. Failure to meet documentation requirements, or documentation that does not adequately support a municipality’s claim under any given funding source may result in having to forgo eligible funding or de-obligation. Cities should be prepared to not only determine that a nexus to COVID exists in accordance with the eligible uses listed in the text of the ARP and further addressed by the Interim Final Rule,[7] but also be able to show documentation of this determination and any supporting materials. It would be helpful to record and save all documentation, invoices, proofs of payments, procurement methodologies, etc. To help prevent duplication of benefits (DOB), demonstrate a COVID nexus, and maximize additional funding, it may be helpful to maintain documentation that is:

  • detailed;
  • stored centrally and electronically; and
  • organized logically

In addition to meeting the Federal program requirements, cities should be prepared to show that they also followed the same policies and procedures it uses for procurements from its non-Federal funds.[8]

Detailed tracking of costs is critical to avoid duplication of benefits. No two funding sources can provide funding for the same item, service, or scope.[9]  In some cases, multiple funding sources may be eligible to provide funding for the same item, so each municipality will have to identify and choose which funding source will best meet its needs.  For example, many COVID-19 funding sources may cover the cost of purchasing Personal Protective Equipment (PPE), but it is important to ensure that two or more funding sources are not used to reimburse the purchase of the same PPE, including donations.

Last Revised: May 20, 2021

 

[1] American Rescue Plan Act of 2021, H.R. 1319, 117th Cong. (2021) (amending 42 U.S.C. § 301-1305), at Section 9901 (amending Section 603(c)(1)), https://www.congress.gov/bill/117th-congress/house-bill/1319/text#H7C2075B5C62541F9A348BDF1DDBECEB6.

[2] U.S. Department of the Treasury Coronavirus State and Local Fiscal Recovery Funds Interim Final Rule, 31 CFR Part 35 RIN 1505-AC77, at 79, https://home.treasury.gov/system/files/136/FRF-Interim-Final-Rule.pdf.

[3] Id. at 138-145.

[4] Id. at 110-112.

[5] Id.

[6] Id. at 112.

[7] Id. at 138-145.

[9] 44 CFR § 206.191.

Program

COVID-19 Federal Assistance e311

Topics

Procurements, Program Administration

Are ARP funds "emergency" funds and, if so, do they therefore have the flexibility of emergency dollar disbursement protocols?

The American Rescue Plan Act (ARP) of 2021 recently passed and there are no compliance supplements from prior years for reference. Municipalities should thus exercise caution; a municipality that treats ARP funds as subject to emergency dollar disbursement protocols risks its ability to use the Coronavirus Local Fiscal Recovery Fund (CLFRF) monies for those purposes. On May 10, 2021, Treasury published guidance on the ARP and its various funding processes, but did not address whether the ARP funds will have the flexibility of emergency dollar disbursement protocols.

As background the ARP’s CLFRF is a form of federal financial assistance, making it subject to many of the provisions of the Uniform Guidance (2 CFR 200). [1]  

In question number 46 of the CLFRF Frequently Asked Questions (“FAQ”) [2] document issued on May 10, 2021, the U.S. Department of Treasury (Treasury) addressed which provision of 2 CFR Part 200 will be applicable:

“Most of the provisions of the Uniform Guidance (2 CFR Part 200) apply to this program, including the Cost Principles and Single Audit Act requirements. Recipients should refer to the Assistance Listing for detail on the specific provisions of the Uniform Guidance that do not apply to this program. The Assistance Listing will be available on beta.SAM.gov.”

In general, in the absence of any specific “emergency dollar disbursement protocols” language from Treasury, municipalities should follow their usual procurement policies and practices.  If a municipality would not pursue a disbursement transaction with its own funding, the municipality in all likelihood ought not consider doing so with CLFRF funds.  

Last Revised: May 24, 2021

 

[1] American Rescue Plan Act of 2021, H.R.1319, 117th Cong. § 9901 (2021). Modifying, The United States Code: Social Security Act 42 U.S.C § 301-1305, at § 603 (Suppl. 4 1934).

[2] Coronavirus State and Local Fiscal Recovery Funds Frequently Asked Questions, May 10, 2021, https://home.treasury.gov/system/files/136/SLFRPFAQ.pdf

Program

COVID-19 Federal Assistance e311

Topics

Program Administration, Workforce & Economic Development

May cities expend ARP funds to support events aimed at economic recovery, including tourism or supporting small businesses?

1. ARP rules which are generally applicable:

The American Rescue Plan Act of 2021 (“ARP”) Coronavirus Local Fiscal Recovery Fund (“CLFRF”) Interim Final Rule (the “Rule”) provides guidance for municipal governments intending to use CLFRF to respond to the COVID-19 public health emergency and mitigate the economic crisis impacts of the pandemic, including to affected industries such as tourism and to small businesses. Specifically:

Sections 602(c)(1) and 603(c)(1) of the ARP provide that funds may be used for the following: a) To respond to the public health emergency or its negative economic impacts, including assistance to households, small businesses, and nonprofits, or aid to impacted industries such as tourism, travel, and hospitality.[1]

Additionally:

[S]ection 602 and section 603 also describe several types of uses that would be responsive to the impacts of the COVID-19 public health emergency, including assistance to households, small businesses, and nonprofits and aid to impacted industries; such as tourism, travel, and hospitality.[2]

Furthermore:

[A]ssessing whether a program or service “responds to” the COVID-19 public health emergency requires the recipient to, first, identify a need or negative impact of the COVID-19 public health emergency and, second, identify how the program, service, or other intervention addresses the identified need or impact.[3]

Treasury does not make transfers directly to nonprofits or private organizations as part of CLFRF. However, municipalities receiving CLFRF allocations may transfer funds to a “private nonprofit organization…, a Tribal organization…, a public benefit corporation involved in the transportation of passengers or cargo, or a special-purpose unit of State or local government” as well as other constituent units of governments and other private entities.[4] Any such transferee is to be considered a subrecipient and is expected to comply with all regulation regarding the uses of such funds, including only using funds in manners determined to be eligible under the Rule, as well as subrecipient reporting requirements.[5] Additionally, the municipality is responsible for oversight of their subrecipients, as well as reporting upon the uses of the funds by the transferee as part of its regular CLFRF reporting process.[6]

2. Tourism:

“A recipient may provide aid to support the safe reopening of businesses in the tourism, travel and hospitality industries and to districts that were closed during the COVID-19 public health emergency.”[7] A recipient may also provide aid to support a “planned expansion or upgrade of tourism, travel and hospitality facilities delayed due to the pandemic.”[8]

The Rule specifies that aid may be used to implement COVID-19 mitigation and infection prevention measures to enable safe resumption of tourism, travel, and hospitality services.[9] Treasury has identified several examples of mitigation and infection prevention measures that would qualify:

  • Improvements to ventilation;
  • Physical barriers or partitions;
  • Signage to facilitate social distancing;
  • Provision of masks or personal protective equipment; and
  • Consultation with infection prevention professionals to develop safe reopening plans.[10]

3. Small Businesses:

The Rule states that eligible uses of CLFRF funds include “Assistance to small businesses, including loans, grants, in-kind assistance, technical assistance or other services, that responds to the negative economic impacts of the COVID-19 public health emergency.”[11]

Small business assistance may include:

  • Loans or grants to mitigate financial hardship such as declines in revenues or impacts of periods of business closure, for example by supporting payroll and benefits costs, costs to retain employees, mortgage, rent, or utility costs, and other operating costs;
  • Loans, grants, or in-kind assistance to implement COVID-19 prevention or mitigation tactics, such as physical plant changes to enable social distancing, enhanced cleaning efforts, barriers or partitions, or COVID-19 vaccination, testing, or contact tracing programs; and
  • Technical assistance, counseling, or other services to assist with business planning needs.[12]

Additional criteria may be considered to “target assistance to businesses in need, including small businesses.” Such criteria may include the following:

  • Businesses facing financial insecurity, substantial declines in gross receipts (e.g., comparable to measures used to assess eligibility for the Paycheck Protection Program), or
  • Other economic harm due to the pandemic, as well as businesses with less capacity to weather financial hardship, such as the smallest businesses, those with less access to credit, or those serving disadvantaged communities.[13]

“Recipients should consider local economic conditions and business data when establishing such criteria.”[14]

4.  Additional Considerations

Relative to Public Health and Economic Impact use, the Rule further requires State, local, and Tribal governments to:

[P]ublicly report assistance provided to private-sector businesses under this eligible use, including tourism, travel, hospitality, and other impacted industries, and its connection to negative economic impacts of the pandemic. Recipients also should maintain records to support their assessment of how businesses or business districts receiving assistance were affected by the negative economic impacts of the pandemic and the aid provided in response to these impacts.[15]

Last Revised: July 29, 2021

[2] Id., at 10.

[3] Id.

[4] Id., at 105.

[5] U.S. Department of the Treasury Coronavirus State and Local Fiscal Recovery Funds, Frequently Asked Questions (as of July 19, 2021) – FAQ #1.8 at 3-4, available at: https://home.treasury.gov/system/files/136/SLFRPFAQ.pdf.

[6] Department of Treasury, Coronavirus State and Local Fiscal Recovery Funds: “Guidance on Recipient Compliance and Reporting Responsibilities,” at  17-18, available at: https://home.treasury.gov/system/files/136/SLFRF-Compliance-and-Reporting-Guidance.pdf.

[7] U.S. Department of the Treasury Coronavirus State and Local Fiscal Recovery Funds Frequently Asked Questions (as of July 19, 2021) – FAQ #2.9, at 6, available at: https://home.treasury.gov/system/files/136/SLFRPFAQ.pdf.

[8] Id.

[10] Id.

[11] Id, at 141.

[12] Id., at 34-35.

[13] Id., at 35.

[14] Id.

[15] Id., at 37-38.

Program

COVID-19 Federal Assistance e311

Topics

Program Administration

What steps should a municipality take when planning how to allocate ARP funds?

Below are a few non-exhaustive steps municipalities can take to prepare for the distribution of funds: 

  1. Assess your government’s potential needs and uses for ARP funds:
    1. Complete an Unmet Needs Assessment / Gap Analysis – As a first step, municipalities should (i) identify unmet needs in current COVID-19 response and recovery operations; (ii) determine which COVID-19 response and recovery costs meet the municipality’s operational budgets (and which costs exceed the operational budgets); and (iii) determine which of those needs cannot be covered through additional funding sources provided through previous COVID-19 legislation, FEMA Public Assistance, or private funding sources. Eligible costs related to COVID-19 under the ARP can include, but are not limited to:
      1. vaccination programs;
      2. medical care;
      3. testing;
      4. contact tracing;
      5. support for isolation or quarantine;  
      6. support for vulnerable populations to access medical or public health services;
      7. public health surveillance (e.g., monitoring case trends, genomic sequencing for variants);
      8. enforcement of public health orders;
      9. public communication efforts;
      10. enhancement to health care capacity, including through alternative care facilities;
      11. purchases of personal protective equipment;
      12. support for prevention, mitigation, or other services in congregate living facilities (e.g., nursing homes, incarceration settings, homeless shelters, group living facilities) and other key settings like schools;
      13. ventilation improvements in congregate settings, health care settings, or other key locations;
      14. enhancement of public health data systems;
      15. public health responses; and
      16. capital investments in public facilities to meet pandemic operational needs, such as physical plant improvements to public hospitals and health clinics or adaptations to public buildings to implement COVID-19 mitigation tactics.[1]
    2. Identify Capital Improvement Priorities – Municipalities should consider identifying existing capital plans that could be expedited through ARP funding and would assist the community in recovering from the COVID-19 public health emergency. Costs for water, sewer, and broadband infrastructure are included as allowable uses within the ARP.[2] Certain other capital improvement projects may be funded using the Revenue Loss Reimbursement provision.
    3. Address Budget Impacts Through Revenue Loss Reimbursement – Municipalities can identify anticipated loss of revenue projections towards which ARP funds may be applied. The U.S. Department of the Treasury’s (“Treasury”) Interim Final Rule (“the Rule”) establishes a methodology by which each recipient can calculate its reduction in revenue. Under the Rule, recipients compute the extent of their reduction in revenue by comparing their actual revenue to an alternative revenue number which represents what could have been expected to occur in the absence of the pandemic.[3]
      1. Municipalities can analyze relevant trends by reviewing the last full fiscal year prior to the public health emergency and projecting forward at either (a) the average annual revenue growth over the three full fiscal years prior to the public health emergency; or (b) 4.1%, the national average state and local revenue growth rate from 2015-18 (the latest available data).[4]
      2. Generally, upon receiving funds, recipients may immediately calculate the 2020 reduction in revenue and deploy funds to address any shortfall. Recipients should have the opportunity to re-calculate revenue loss at several points throughout the program, which can help support entities experiencing lagging effects on revenue.[5]
      3. Treasury published additional guidance related to revenue loss in its Frequently Asked Questions (“FAQs”). Recipients are not required to use audited financials when calculating revenue loss. Further, where audited data is not available, recipients are not required to obtain audited data. Having said that, it is of course critical for fund recipients to submit complete and accurate information.[6] Treasury also makes clear that, “recipients should use their own data sources to calculate general revenue, and do not need to rely on published revenue data from the Census Bureau.”[7],[8] Recipients may provide data on a cash, accrual, or modified accrual basis, provided that recipients are consistent in their choice of methodology throughout the covered period and until reporting is no longer required.[9]
    4. Assess and Catalog Available Funding to Prioritize Needs – Municipalities should identify all available funding to create a strategy that defines when and how funds should be used, from most to least restrictive, to maximize all resources. Short-term and long-term fiscal impact of fund uses should also be considered. Cities should develop a fund deployment strategy that: (i) positively influences their credit rating; (ii) enables them to finance new projects; and (iii) assists in refinancing of existing debt.
  2. Engage stakeholders to identify priorities and additional unmet needs:
    1. Coordinate with Community Partners – Municipalities should consider working with community partners in response to the COVID-19 public health emergency. Municipalities can receive feedback and strategic direction from community partners to identify ways they can support the community’s recovery. In certain circumstances, ARP funding may be shared with subrecipients responding to the COVID-19 public health emergency for both new and existing programs.[10]
    2. Consider Public Engagement Opportunities Municipalities should consider holding public hearings to obtain feedback from residents on ways to best serve the community in responding to and recovering from the COVID-19 pandemic.
  3. Prepare to take Potential Certification Steps:
    1. Certification for Metropolitan Cities – Metropolitan cities (generally populations over 50,000) can now apply to receive funds directly through the Treasury Submission Portal.[11] Individuals applying on behalf of their municipality will be asked to provide the following information, at a minimum:
      1. Jurisdiction name, taxpayer ID number, DUNS Number, and address.
      2. Authorized representative name, title, and email.
      3. Contact person name, title, phone, and email.
      4. Funds transfer information, including recipient’s financial institution, address, phone, and routing number and account number.
      5. Completed certification document (to be signed by the authorized representative).

Certification for Non-Entitlement Cities – Non-entitlement cities are subject to rules and regulations of their State and generally are expected to receive guidance and payment from their State within 30 days of the State’s receipt of ARP funds.[12]

  1. Assess Available Resources to Manage ARP Funds:
    1. Municipalities in receipt of ARP funds are also responsible for ensuring proper oversight and management of funds. Based on each municipality’s unmet needs, additional internal resources may be required to monitor the implementation of ARP funds. Municipalities should assess internal resources and consult staff with significant experience to determine if there are any limitations or gaps in the support staff’s capabilities.

Considerations for Tribal Governments

In addition, Tribal governments should be aware of and prepare for the Treasury guidance regarding the disbursement in two tranches of Fiscal Recovery Funds specific to Tribes. Treasury’s Coronavirus State and Local Fiscal Recovery Funds Frequently Asked Questions (“FAQs”) document addressed this and then further refined this topic on July 19, 2021.[13]

The $1.9 trillion ARP funds are administered by numerous federal agencies, each of which sets its own rules regarding allowable uses of the funds. Distribution methodologies, application methods, and allowable uses vary from program to program. Some ARP funds may be received directly or indirectly by municipalities, as outlined below.

ARP Funds that Municipalities May Receive Directly

Program: ARP Coronavirus State and Local Fiscal Recovery Funds (“CSLFRF”)[14]
Federal Agency: Department of Treasury
Distribution Method: 
Metropolitan municipalities (generally, population over 50k) will receive a direct allocation from the US Treasury. Non-entitlement units (generally population under 50k) must apply through their state government. Award amounts are based on the population of non-entitlement units.
How to Apply for Funds: Metropolitan municipalities can apply directly for funds on the Treasury's Submission Portal[15]Municipalities requesting funds will be asked to provide:(1) Jurisdiction name, taxpayer ID number, DUNS; (2) Number, and address; (3) Authorized representative name, title, and email; (4) Contact person name, title, phone, and email; (5) Funds transfer information, including recipient’s financial institution, address, phone, and routing number and account number. Completed certification document (to be signed by the authorized representative). Typically, states are required to distribute funding to non-entitlement units (“NEUs”) within 30 days of receipt of funding, unless an extension is requested and approved. Contact your State's Governor’s Office to identify which State agency will oversee the distribution of funds and follow updates as available. In addition to the information listed above, NEUs must also submit copies of their total operating budget for the year that included January 27, 2020, to the state when requesting their allocations.
Allowable Uses: (1) Lost revenue (during the pandemic, compared to the prior full fiscal year).
(2) Addressing negative economic impacts of COVID-19 (including assistance to households, small businesses, and nonprofits, or aid to impacted industries such as tourism, travel, and hospitality). (3) Premium pay to eligible workers performing essential work during the pandemic. (4) Necessary investments in water, sewer, or broadband infrastructure. Specific examples of how CSLFRF funds may be used can be found within
Interim Final Guidance or within the Treasury's Frequently Asked Questions guidance.

Program: Emergency Rental Assistance (“ERA2”)[16]
Federal Agency: Department of Treasury
Distribution Method: Direct Allocation to local governments with more than 200,000 residents.
How to Apply for Funds: Local governments receiving funding may apply using the same account used to apply for CSLFRF in the Treasury's Submission Portal[17]
Municipalities requesting funds will be asked to provide:
(1) Grantee Name and address; (2) DUNS Number; (3) Taxpayer Identification Number; (4) Authorized representative name and title
Allowable Uses: At least 90 percent of awarded funds must be used for direct financial assistance, including rent, rental arrears, utilities and home energy costs, utilities and home energy costs arrears, and other expenses related to housing.  Remaining funds are available for housing stability services, including case management and other services intended to keep households stably housed. ERA2 funds generally expire on September 30, 2025, in comparison to ERA1 funds, that generally expire on September 30, 2022.

Program: FTA Grants for Public Transportation[18]
Federal Agency: Federal Transit Administration
Distribution Method: Municipalities who operate transit agencies should receive direct allocations. Additional competitive planning grants have been made available.
How to Apply for Funds: Airports will most likely have to apply directly for funds from the Federal Transit Administration (“FTA”), but the agency has not yet provided an application on their website. Monitor updates by using the hyperlink provided in column B.
Allowable Uses: Intended to support public transportation systems. Funds should be available for payroll and operations (unless the recipient certifies that it has not furloughed any employees), payroll for public transit providers, including private providers of public transportation, operating costs of public transit during the public health emergency, including the purchase of personal protective equipment, and administrative leave for operations or contractor personnel due to reductions in service. Funds must be obligated by September 30, 2024, and disbursed by September 30, 2029. Additional funding is available under separate programs for Intercity Buses (an allocation to the State) and for Transportation for Seniors and the Disabled.

Program: FAA Airport Rescue Grants[19]
Federal Agency: Federal Aviation Administration
Distribution Method: Municipalities who operate commercial and non-primary commercial airports to receive direct allocations.
How to Apply for Funds: Airports will most likely have to apply directly for funds from the Federal Aviation Agency (“FAA”), but no updates have been provided by the agency since 3/16/21. Monitor updates by using the hyperlink provided in column B.
Allowable Uses: Intended to support all airports that are part of the national airport system, including all commercial service airports, all reliever airports, and some public-owned general aviation airports available at 100% federal share. $6.5B to be allocated for primary commercial service airports with more than 10,000 annual passenger boardings. $800M for relief to eligible in-terminal airport concessions. $100M for non-primary commercial service and general aviation airports.

ARP Funds available to States: These funds may be distributed to municipalities, community partners, or individuals/families and businesses within your community.

Program: Elementary and Secondary School Emergency Relief (“ESSER”) funding[20]
Federal Agency: Department of Education
Distribution Method: Direct Allocation to States. States will distribute funding to local school districts.
Generally, How to Apply for Funds: States will ultimately decide how to distribute ESSER funds to local school districts. Municipalities can work in partnership with local school districts to understand their ARP plan and identify any additional unmet needs that a City may support.
Allowable Uses Generally: Intended to help meet a wide range of needs arising from the coronavirus pandemic, including reopening schools safely, sustaining their safe operation, and addressing students’ social, emotional, mental health, and academic needs resulting from the pandemic.

Program: State Small Business[21]
Federal Agency: Department of the Treasury
Distribution Method: Direct Allocation to States, States to manage program. State to directly pay businesses.
Generally, How to Apply for Funds: Businesses can apply for assistance through each State's economic development agency or other agency designated to oversee the distribution of funds. Municipalities can monitor the State's economic development agency or Governor's Office for updates on how businesses can apply. Municipalities seeking to support businesses should share resources with their community on how to access funds.
Allowable Uses Generally: Intended to provide support to small businesses recovering from the economic effects of the COVID-19 pandemic, ensure that small businesses owners and socially and economically disadvantaged people have access to credit and investment, and to provide technical assistance to small businesses applying for support programs. States can use the funds to inject capital into state programs that support small businesses and provide small businesses with access to capital, provide collateral support, facilitate loan participation, and enable credit guarantee programs.

Program: Homeowner Assistance Fund[22]
Federal Agency: Department of the Treasury
Distribution Method: Direct Allocation to States; States to manage program. State to directly pay individuals.
Generally, How to Apply for Funds: Individuals can apply for assistance through each State's housing agency or other agency designated to oversee the distribution of funds. Municipalities can monitor each State's Housing or Governor's Office for updates on how individuals can apply. Municipalities seeking to support individuals should share resources on how to access funds with their community.
Allowable Uses Generally: Intended to prevent mortgage delinquencies and defaults, foreclosures, loss of utilities or home energy services, and displacement of homeowners experiencing financial hardship after January 21, 2020. Generally, funds from the HAF may be used for assistance with mortgage payments, homeowner’s insurance, utility payments, and other specified purposes. The law prioritizes funds for homeowners who have experienced the greatest hardships, leveraging local and national income indicators to maximize the impact.

Last Revised: August 2, 2021

[1] U.S. Department of the Treasury, Coronavirus State and Local Fiscal Recovery Funds, Frequently Asked Questions (as of July 19, 2021), FAQ #2 at 4, available at: https://home.treasury.gov/system/files/136/SLFRPFAQ.pdf.

[2]American Rescue Plan Act of 2021 § 9901, Pub. L. No. 117-2, amending 42 U.S.C. § 801 et seq. Section 603(c)(1)(D)), available at: https://www.congress.gov/117/bills/hr1319/BILLS-117hr1319enr.pdf.

[3] Treas. Reg. 35 CFR 31, at 58-59, available at: https://home.treasury.gov/system/files/136/FRF-Interim-Final-Rule.pdf

[4] U.S. Department of the Treasury, Coronavirus State and Local Fiscal Recovery Funds Frequently Asked Questions (as of July 19, 2021), FAQ #3.5, at 14, available at: https://home.treasury.gov/system/files/136/SLFRPFAQ.pdf.

[5] Treas. Reg. 35 CFR 31, at 118-119, available at: https://home.treasury.gov/system/files/136/FRF-Interim-Final-Rule.pdf.

[6] U.S. Department of the Treasury, Coronavirus State and Local Fiscal Recovery Funds, Frequently Asked Questions (as of July 19, 2021), FAQ #3.10 at 16, available at: https://home.treasury.gov/system/files/136/SLFRPFAQ.pdf.

[7] U.S. Department of the Treasury, Coronavirus State and Local Fiscal Recovery Funds, Frequently Asked Questions (as of July 19, 2021), FAQ #3.11 at 16, available at: https://home.treasury.gov/system/files/136/SLFRPFAQ.pdf.

[8] Due to differences in timing, data sources, and definitions, recipients’ self-reported general revenue figures may differ somewhat from those published by the Census Bureau.

[9] U.S. Department of the Treasury, Coronavirus State and Local Fiscal Recovery Funds, Frequently Asked Questions (as of July 19, 2021), FAQ #3.12 at 16, available at: https://home.treasury.gov/system/files/136/SLFRPFAQ.pdf.

[10] American Rescue Plan Act of 2021 § 9901, Pub. L. No. 117-2, amending 42 U.S.C. § 801 et seq. Section 603(c)(1)(A)), available at: https://www.congress.gov/117/bills/hr1319/BILLS-117hr1319enr.pdf.

[11] U.S. Department of the Treasury, Coronavirus Assistance for State, Local and Tribal Governments, Request Funding, available at: https://home.treasury.gov/policy-issues/coronavirus/assistance-for-state-local-and-tribal-governments/state-and-local-fiscal-recovery-fund/request-funding.

[12] American Rescue Plan Act of 2021 § 9901, Pub. L. No. 117-2, amending 42 U.S.C. § 801 et seq. Section 603(b)(2)(C)(ii)(I)), available at: https://www.congress.gov/117/bills/hr1319/BILLS-117hr1319enr.pdf.

[13] Coronavirus State and Local Fiscal Recovery Funds, Frequently Asked Questions (as of July 19, 2021) – FAQ #1.4, at 2-3, available at: https://home.treasury.gov/system/files/136/SLFRPFAQ.pdf.

[14] American Rescue Plan Act of 2021 § 9901, Pub. L. No. 117-2, amending 42 U.S.C. § 801 et seq. Section 603 available at: https://www.congress.gov/117/bills/hr1319/BILLS-117hr1319enr.pdf.

[15] U.S. Department of the Treasury, Coronavirus Assistance for State, Local and Tribal Governments, Request Funding, available at: https://home.treasury.gov/policy-issues/coronavirus/assistance-for-state-local-and-tribal-governments/state-and-local-fiscal-recovery-fund/request-funding.

[16] American Rescue Plan Act of 2021 § 9901, Pub. L. No. 117-2, amending 42 U.S.C. § 801 et seq. Subtitle B Section 3201 available at: https://www.congress.gov/117/bills/hr1319/BILLS-117hr1319enr.pdf.

[17] U.S. Department of the Treasury, Coronavirus Assistance for State, Local and Tribal Governments, Request Funding, available at: https://home.treasury.gov/policy-issues/coronavirus/assistance-for-state-local-and-tribal-governments/state-and-local-fiscal-recovery-fund/request-funding.

[18] American Rescue Plan Act of 2021 § 9901, Pub. L. No. 117-2, amending 42 U.S.C. § 801 et seq. Subtitle D Section 3401 available at: https://www.congress.gov/117/bills/hr1319/BILLS-117hr1319enr.pdf.

[19] Id., Subtitle A Section 7102.

[20] Id., Subtitle A Section 2001.

[21] Id., Subtitle C Section 3301.

[22] Id., Subtitle B Section 3206.

Program

COVID-19 Federal Assistance e311

Topics

Community Engagement & Local Partnerships, Compliance & Reporting, Fund Planning & Allocation, Program Administration

What steps should my municipality consider in developing a plan for use of the ARP funds?

The ARP authorized the newly established Coronavirus State and Local Fiscal Recovery Funds (“CSLFRF”) to provide assistance to state, local, tribal, and territorial (“SLTT”) governments. ARP also authorized other forms of assistance, but this response focuses only on CSLFRF.

ARP provides $350 billion in assistance to SLTT governments through CSLFRF. States, territories, and tribal governments will receive $219.8 billion pursuant to the Coronavirus State Fiscal Recovery Fund (“CSFRF”). Local governments will receive $130.2[1] billion through the Coronavirus Local Fiscal Recovery Fund (“CLFRF”). Of the $130.2 billion, $45.6 billion  is for metropolitan cities based on the Community Development Block Grant (“CDBG”) formula,[2] $65.1 billion is for counties, based on population,[3] and $19.5 billion is for municipalities with populations under 50,000 (Non-Entitlement Units of Government, or “NEUs”), based on population.[4]

As outlined in section 9901 of the ARP, eligible uses of CLFRF assistance include:

  • supporting the COVID-19 public health response;
  • addressing negative economic impacts (e.g., assistance to households, small business and non-profit support, assistance to unemployed workers, etc.);
  • providing premium pay for essential workers;
  • covering payroll expenses for public health and public safety employees;
  • replacing revenue loss due to the COVID-19 public health emergency; and
  • developing water, sewer, and broadband infrastructure.[5]

In addition to this statutory guidance relating to CSLFRF, on May 17, 2021, the U.S. Department of the Treasury (“Treasury”) published an Interim Final Rule (the “Rule”) to implement the new Fiscal Recovery Fund authorities.[6] The Rule emphasizes the flexibility that recipients of this assistance have in deciding how to use funds obtained from CSLFRF.  For example, the Rule states that:

Within the eligible use categories outlined in the Fiscal Recovery Funds provisions of ARPA, State, local, and Tribal governments have flexibility to determine how best to use payments from the Fiscal Recovery Funds to meet the needs of their communities and populations. The Interim Final Rule facilitates swift and effective implementation by establishing a framework for determining the types of programs and services that are eligible under the ARPA along with examples of uses that State, local, and Tribal governments may consider.[7]

The Rule also outlines restrictions imposed upon the use of funds obtained from CSLFRF, including:

  • making deposits into pension funds or “rainy day funds;”
  • using funds for the purpose of reducing taxes collected by states and territories;
  • using funds as a non-federal match for any program that does not authorize the use of federal funds for cost-matching;
  • paying principal or interest on outstanding debt; and
  • paying settlements or judgments, since these would not be considered provision of a government service.[8]

ARP Funding Allocations

How much funding a local government is eligible for depends on whether the municipality is a “metropolitan city” or a “non-entitlement unit of local government,” as defined by the Housing and Community Development Act of 1974.[9]

Treasury directs that states shall distribute funding proportionately among the total population of the non-entitlement cities. The Rule provides further information about the distribution of CSLFRF funds to NEUs.[10] The total amount distributed to NEUs may not exceed an amount equal to 75 percent of the most recent budget for the NEUs as of January 27, 2020.[11]

Allocations to metropolitan cities can be found here on the Coronavirus State and Local Fiscal Recovery page.[12] State governments will receive a specific allocation of these funds from Treasury and are responsible for distributing the funds to NEUs within their State.[13] Award amounts are based on the population of the NEU. The aggregate allocations to states for distribution to NEUs are detailed here. Additionally, the status of payments to states for distribution to NEUs, which was updated on June 9, 2021, is located here.

In addition, Tribal governments should be aware of and prepare for Treasury’s guidance regarding the disbursement in two tranches of CSLFRF funds to Tribes. The CSLFRF Frequently Asked Questions (“FAQ”) document addressed this, and reviewed the topic further on July 19, 2021.[14]

Good Practices - Planning

In addition to following reporting requirements and consideration of eligible and ineligible uses of funds obtained from CSLFRF, local governments receiving assistance from CSLFRF should consider the following non-exhaustive steps in developing a plan for the use of these funds:

  • Stabilize government operations by replacing revenue and rehiring furloughed employees.
  • Conduct a comprehensive capacity assessment and unmet needs analysis.
  • Review eligible uses for funds obtained from CSLFRF and assess potential uses.[15]
  • Identify water, sewer and broadband infrastructure priorities that may be eligible for funding through CSLFRF.[16]
  • Form a cross-sector recovery oversight committee, and engage the public.
  • Assess and catalog available funding to prioritize needs.
  • Develop or update local recovery plan.

Municipalities and local governments may also want to consider designating a representative to monitor changes and new releases to Treasury guidance related to ARP assistance. With respect to CSLFRF, municipalities can sign up for email updates from Treasury for any changes to the Rule or FAQs.

Good Practices – Reporting Requirements

Local governments should also begin preparing to meet the reporting requirements laid out for their use of CSLFRF allocations. Treasury has published Compliance and Reporting Guidance for State and Local Fiscal Recovery Funds.[17] 

Local governments are required to submit one interim report, which will include the local government’s expenditures by category at the summary level.[18] The interim report will cover spending from the date the county receives Funds to July 31, 2021 and is due by August 31, 2021. This report will be similar to the equivalent report for the Coronavirus Aid, Relief, and Economic Security Act Coronavirus Relief Fund (“CRF”) with modifications for expenditure categories and the addition of data elements related to specific eligible uses.[19]

Local governments other than NEUs will be required to submit quarterly project and expenditure reports, including financial data, information on contracts, and subawards over $50,000.[20] The first report will cover spending from the date the county receives funds to September 30, 2021, and is due by October 31, 2021. Subsequent reports, covering only a single quarter, will be due 30 days after that quarter’s end. These reports will also be similar to the equivalent reports for the CRF with modifications for expenditure categories and the addition of data elements related to specific eligible uses.[21]

NEUs will be required to submit project and expenditure reports on an annual basis. The first report will cover spending from the date the NEU receives funds to September 30, 2021 and is due by October 31, 2021. Subsequent reports will be due annually by October 31.[22]

For municipalities with a population of over 250,000 residents, reporting requirements for CSLFRF funds will also require the development of a Recovery Plan Performance Report that includes descriptions of projects funded, information on performance indicators, and the objectives of each award.[23] The initial Recovery Plan Performance Report will cover activities from the date the local government receives CSLFRF to July 31, 2021, and is due by August 31, 2021.[24] Grantees with populations below 250,000 residents are not required to submit this report.

Good Practices – Public Engagement

When Treasury published the Rule, it emphasized the need for public input in the course of recipients’ decision making relating to the use of CSLFRF funds.  For example, the Rule states that:

Implementation of the Fiscal Recovery Funds also reflect the importance of public input, transparency, and accountability… Treasury urges State, territorial, Tribal, and local governments to engage their constituents and communities in developing plans to use these payments, given the scale of funding and its potential to catalyze broader economic recovery and rebuilding.[25]

Therefore, it is important for recipients of CSLFRF funds to take steps to ensure that the public is involved in community decision-making about the use of this assistance.

Good Practices – Disproportionate Impact Considerations

The Rule includes a number of references to the COVID-19 pandemic’s disproportionate impact on households and small businesses, especially low-income workers and communities and people of color. For example, it notes that:

[A]lthough the pandemic’s impacts have been widespread, both the public health and economic impacts of the pandemic have fallen most severely on communities and populations disadvantaged before it began. Low-income communities, people of color, and Tribal communities have faced higher rates of infection, hospitalization, and death, as well as higher rates of unemployment and lack of basic necessities like food and housing. Pre-existing social vulnerabilities magnified the pandemic in these communities, where a reduced ability to work from home and, frequently, denser housing amplified the risk of infection. Higher rates of pre-existing health conditions also may have contributed to more severe COVID-19 health outcomes. Similarly, communities or households facing economic insecurity before the pandemic were less able to weather business closures, job losses, or declines in earnings and were less able to participate in remote work or education due to the inequities in access to reliable and affordable broadband infrastructure. Finally, though schools in all areas faced challenges, those in high poverty areas had fewer resources to adapt to remote and hybrid learning models. Unfortunately, the pandemic also has reversed many gains made by communities of color in the prior economic expansion.[26]

The Rule also states that:

[T]he pandemic and the necessary actions taken to control the spread had a severe impact on households and small businesses, including in particular low-income workers and communities and people of color. While eligible uses under sections 602(c)(1)(A) and 603(c)(1)(A) provide flexibility to recipients to identify the most pressing local needs, Treasury encourages recipients to provide assistance to those households, businesses, and non-profits in communities most disproportionately impacted by the pandemic.[27]

Therefore, it will be important for recipients of CSLFRF funds to ensure that disproportionate impact considerations are analyzed in the course of making decisions about the use of such assistance.

Last Revised: July 29, 2021

[1] American Rescue Plan Act of 2021 § 9901, Pub. L. No. 117-2, amending 42 U.S.C. § 801 et seq., at Section 603(a) available at: https://www.congress.gov/bill/117th-congress/house-bill/1319/text#H7C2075B5C62541F9A348BDF1DDBECEB6.

[2] Id., at Section 603(b)(1).

[3] Id., at Section 603(b)(3).

[4] Id., at 603(b)(2).

[5]Id., at Section 603(c)(1).

[7] Id., at 8 (emphasis added).

[8] Treas. Reg. 31 CFR 35, at 78-80, available at: https://home.treasury.gov/system/files/136/FRF-Interim-Final-Rule.pdf. See also Coronavirus State and Local Fiscal Recovery Funds, Frequently Asked Questions (as of July 19, 2021) – FAQ #3.8, FAQ #4.1, FAQ #4.3, FAQ #4.4 and FAQ #8.1, available at: https://home.treasury.gov/system/files/136/SLFRPFAQ.pdf.

[9] The Housing and Community Development Act of 1974 (42 U.S.C. § 5302 Section 102(a)(4)) definition includes cities that relinquish or defer their status as a metropolitan city for purposes of receiving allocations under Section 106 of such Act (42 U.S.C. § 5306) for fiscal year 2021. The term ‘non-entitlement unit of local government’ means a ‘city,’ as that term is defined the Housing and Community Development Act of 1974 (42 U.S.C. § 5302(a)(5)), and that is not a metropolitan city.

[10] Treas. Reg. 31 CFR 35, at 108-110, available at: https://home.treasury.gov/system/files/136/FRF-Interim-Final-Rule.pdf.

[11] American Rescue Plan Act of 2021 § 9901, Pub. L. No. 117-2, amending 42 U.S.C. § 801 et seq., at Section 603(b)(1)(C)(iii). Available at: https://www.congress.gov/bill/117th-congress/house-bill/1319/text#H7C2075B5C62541F9A348BDF1DDBECEB6.

[12] U.S. Department of the Treasury, Allocation for Metropolitan Cities, available at: https://home.treasury.gov/system/files/136/fiscalrecoveryfunds-metrocitiesfunding1-508A.pdf.

[13] U.S. Department of the Treasury, Coronavirus State and Local Fiscal Recovery Funds for Non-entitlement Units of Local Government, available at: https://home.treasury.gov/policy-issues/coronavirus/assistance-for-state-local-and-tribal-governments/state-and-local-fiscal-recovery-fund/non-entitlement-units.

[14] Coronavirus State and Local Fiscal Recovery Funds, Frequently Asked Questions (as of July 19, 2021) – FAQ #1.4, at 2-3, available at: https://home.treasury.gov/system/files/136/SLFRPFAQ.pdf.

[15] Coronavirus State and Local Fiscal Recovery Funds, Frequently Asked Questions (as of July 19, 2021) – FAQs #2-6, at 4-33, available at: https://home.treasury.gov/system/files/136/SLFRPFAQ.pdf.

[16] American Rescue Plan Act of 2021 § 9901, Pub. L. No. 117-2, amending 42 U.S.C. § 801 et seq., at Section 603(c)(1)(D)) available at: https://www.congress.gov/bill/117th-congress/house-bill/1319/text#HAECAA3A95C4E4FFAB6AA46CE5F9CB2B5.

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

[18] Coronavirus State and Local Fiscal Recovery Funds, Frequently Asked Questions (as of July 19, 2021) – FAQ #9.2, available at: https://home.treasury.gov/system/files/136/SLFRPFAQ.pdf.

[19] Id.

[20] Id.

[21] Id.

[23] Coronavirus State and Local Fiscal Recovery Funds, Frequently Asked Questions (as of July 19, 2021) – FAQ #9.2, at 22, available at: https://home.treasury.gov/system/files/136/SLFRPFAQ.pdf.

[24] Id., at 22.

[25] Treas. Reg. 31 CFR 35, at 9 (emphasis added), available at: https://home.treasury.gov/system/files/136/FRF-Interim-Final-Rule.pdf.

[26] Id., at 5-6

[27] Id., at 11.

Program

COVID-19 Federal Assistance e311

Topics

Fund Planning & Allocation, Program Administration

What can cities use ARP funds for, broadly speaking?

The ARP authorized the newly established Coronavirus State and Local Fiscal Recovery Funds (“CSLFRF”) to provide assistance to state, local, tribal, and territorial (“SLTT”) governments.

The ARP provides $350 billion in assistance to SLTT governments through CSLFRF. States, territories, and tribal governments will receive $219.8 billion pursuant to the Coronavirus State Fiscal Recovery Fund (“CSFRF”), while local governments will receive $130.2 billion[1] through the Coronavirus Local Fiscal Recovery Fund (“CLFRF”). Of the $130.2 billion, $45.6 billion is apportioned for metropolitan cities based on the Community Development Block Grant (“CDBG”) formula,[2] $65.1 billion is for counties based on population,[3] and $19.5 billion is for municipalities with populations under 50,000 (Non-Entitlement Units of Government, or “NEUs”) based on population.[4]

Eligible Uses

As outlined in section 9901 of the ARP, eligible uses of CLFRF assistance include:

  • supporting the COVID-19 public health response;
  • addressing negative economic impacts (e.g., assistance to households, small business and non-profit support, assistance to unemployed workers, etc.);
  • providing premium pay for essential workers;
  • covering payroll expenses for public health and public safety employees;
  • replacing revenue loss due to the COVID-19 public health emergency; and
  • developing water, sewer, and broadband infrastructure. [5]

Recipients Have Flexibility in Deciding How to Deploy Funds but Must be Mindful of Restrictions

In addition to the statutory guidance relating to CSLFRF mentioned above, on May 17, 2021, the U.S. Department of the Treasury (“Treasury”) published an Interim Final Rule (the “Rule”) to implement the new Fiscal Recovery Fund authorities. [6] The Rule emphasizes the flexibility that recipients have in deciding how to use CSLFRF funds:

Within the eligible use categories outlined in the Fiscal Recovery Funds provisions of ARPA, State, local, and Tribal governments have flexibility to determine how best to use payments from the Fiscal Recovery Funds to meet the needs of their communities and populations. The Interim Final Rule facilitates swift and effective implementation by establishing a framework for determining the types of programs and services that are eligible under the ARPA along with examples of uses that State, local, and Tribal governments may consider. [7]  

The Rule also provides additional information delineating the potential eligibility of projects within the eligible use categories mentioned above. Recipients should consult the Rule prior to committing any funds to projects, even when the planned projects appear to fall within the categories listed in the statute.

Recipients should be aware of the restrictions imposed upon funds obtained from CSLFRF, including but not limited to:

  • making deposits into pension funds or “rainy day funds;”
  • using funds for the purpose of reducing taxes collected by states and territories;
  • using funds as a non-federal match for any program that does not authorize the use of federal funds for cost-matching;
  • paying principal or interest on outstanding debt; and
  • paying settlements or judgments since these would not be considered provision of a government service.[8]

Rules Regarding Funding Allocations

How much funding a local government is eligible for depends on whether the municipality is a “metropolitan city” or a “non-entitlement unit of local government,” as defined by the Housing and Community Development Act of 1974. [9]  

Treasury directs that states shall distribute funding proportionately among the total population of the non-entitlement units of local government (“NEUs”). The Rule provides further information about the distribution of CSLFRF funds to NEUs.[10] The total amount distributed to NEUs may not exceed an amount equal to 75 percent of the most recent budget for the NEUs as of January 27, 2020. [11]

State governments will receive a specific allocation of funds from Treasury and are responsible for distributing the funds to NEUs within their state.[12] Award amounts are based on the population of the NEU. The aggregate allocations to states for distribution to NEUs are detailed here. Additionally, the status of payments to states for distribution to NEUs, which is updated weekly, is located here.

Allocations to metropolitan cities can be found here on the Coronavirus State and Local Fiscal Recovery (“CSLFR”) page. [13]

In addition, tribal governments should be aware of and prepare for Treasury’s guidance regarding the disbursement in two tranches of CSLFRF funds to tribes and may refer to the CSLFRF Frequently Asked Questions (“FAQ”) document which addresses this.[14]

Good Practices: Planning

Local governments receiving assistance from CSLFRF should consider the following non-exhaustive steps in developing plans for the use of funds:

  • Stabilize government operations by replacing revenue and rehiring furloughed employees.
  • Conduct a comprehensive capacity assessment and unmet needs analysis.
  • Review eligible uses for funds obtained from CSLFRF and assess potential uses. [15]
  • Identify water, sewer, and broadband infrastructure priorities that may be eligible for funding through CSLFRF.[16]
  • Form a cross-sector recovery oversight committee and engage the public.
  • Assess and catalog available funding to prioritize needs.
  • Develop or update local recovery plan.
  • Be mindful of the nature of CSLFRF as a one-time source of funds when considering ongoing programs that extend beyond the CSLFRF covered period.

With respect to CSLFRF, municipalities can sign up for email updates from Treasury for any changes to the Rule or FAQs.

Good Practices: Reporting Requirements

Treasury has published Compliance and Reporting Guidance for CSLFRF. [17]    

All recipients of CSLFRF funding other than NEUs were required to submit one Interim Report, which  included the government’s expenditures by category at the summary level.[18] The Interim Report was to cover spending from the date the local government-received funds to July 31, 2021, and was due by August 31, 2021, or 60 days after receiving funding if the funding was received by October 15, 2021. This report is similar to the report required by the Coronavirus Aid, Relief, and Economic Security Act (“CARES”) Coronavirus Relief Fund (“CRF”), but with modifications for expenditure categories and the addition of data elements related to specific eligible uses.[19]

States, territories, metropolitan cities receiving $10 million or more in CSLFRF funding, and Tribal Governments receiving $30 million or more in CSLFRF funding will be required to submit quarterly project and expenditure reports, including financial data, information on contracts, and subawards over $50,000.[20] The first report will cover spending from the date CSLFRF funds are received to December 31, 2021, and is due by January 31, 2022. Subsequent reports, covering only a single quarter, will be due 30 days after each quarter’s end. These reports are also similar to the reports required by the CRF, but with modifications for expenditure categories and the addition of data elements related to specific eligible uses. [21] 

Metropolitan cities receiving less than $10 million, Tribal governments receiving less than $30 million, and all NEUs will be required to submit project and expenditure reports on an annual basis. The first report will cover spending from the date CLSFRF funds are received to March 31, 2022 and is due by April 30, 2022. Subsequent reports will be due annually by April 30 through 2027.[22]

The NEU distribution Template User Guide provides instructions and additional details to assist recipients in completing the Draft NEU Distribution Reporting Template.[23] For reference, states and territories are required to provide an update on distributions to eligible NEUs under the following circumstances:

  • As part of the Interim Report due on August 31, 2021.
  • Every month until all distributions have been made.
  • Where information or status has been changed.[24]

States, territories, and municipalities with a population of over 250,000 residents are required to submit a Recovery Plan Performance Report that includes descriptions of projects funded, information on performance indicators, and the objectives of each award.[25] The initial Recovery Plan Performance Report will cover activities from the date CSLFRF funds are received to July 31, 2021, and was due by August 31, 2021, or 60 days after receiving funding, and due annually thereafter on July 31 through 2026, with the final report due March 31, 2027.[26]

On November 15, 2021, Treasury updated the Recovery Plan Performance Report Template. The Recovery Plan “provides information on the recipient’s projects and how they plan to ensure program outcomes are achieved in an effective and equitable manner.” [27] It is recommended, but not required, that recipients use this template to provide performance data, which is then posted on the recipient’s website and provided to Treasury. [28] Technical guidance published on August 9, 2021, provides recommendations on navigating the Treasury Portal, advises on classifying and submitting formal reports and expenditures, and answers FAQs on reporting to Treasury on the use of CSLFRF. [29] 

Good Practices: Public Engagement

When Treasury published the Rule, it emphasized the need for public input during recipients’ decision-making process relating to the use of CSLFRF funds. For example, the Rule states that:

Implementation of the Fiscal Recovery Funds also reflect the importance of public input, transparency, and accountability… Treasury urges State, territorial, Tribal, and local governments to engage their constituents and communities in developing plans to use these payments, given the scale of funding and its potential to catalyze broader economic recovery and rebuilding. [30]

It is important for recipients of CSLFRF to take steps to ensure that the public is involved in community decision-making about the use of this assistance.

Good Practices: Disproportionate Impact Considerations

The Rule includes several references to the COVID-19 pandemic’s disproportionate impact on households and small businesses, especially low-income workers and communities and people of color. For example, it notes that:

[A]lthough the pandemic’s impacts have been widespread, both the public health and economic impacts of the pandemic have fallen most severely on communities and populations disadvantaged before it began. Low-income communities, people of color, and Tribal communities have faced higher rates of infection, hospitalization, and death, as well as higher rates of unemployment and lack of basic necessities like food and housing. Pre-existing social vulnerabilities magnified the pandemic in these communities, where a reduced ability to work from home and, frequently, denser housing amplified the risk of infection. Higher rates of pre-existing health conditions also may have contributed to more severe COVID-19 health outcomes. Similarly, communities or households facing economic insecurity before the pandemic were less able to weather business closures, job losses, or declines in earnings and were less able to participate in remote work or education due to the inequities in access to reliable and affordable broadband infrastructure. Finally, though schools in all areas faced challenges, those in high poverty areas had fewer resources to adapt to remote and hybrid learning models. Unfortunately, the pandemic also has reversed many gains made by communities of color in the prior economic expansion.[31]

The Rule also states that:

[T]he pandemic and the necessary actions taken to control the spread had a severe impact on households and small businesses, including in particular low-income workers and communities and people of color. While eligible uses under sections 602(c)(1)(A) and 603(c)(1)(A) provide flexibility to recipients to identify the most pressing local needs, Treasury encourages recipients to provide assistance to those households, businesses, and non-profits in communities most disproportionately impacted by the pandemic. [32]

Therefore, it is important for recipients of CSLFRF to ensure that disproportionate impact considerations are analyzed while making decisions about the use of such assistance.

Last Revised: November 19, 2021

[1] American Rescue Plan Act of 2021 § 9901, Pub. L. No. 117-2, amending 42 U.S.C. § 801 et seq., at Sections 602(a) and 603(a), available at: https://www.congress.gov/bill/117th-congress/house-bill/1319/text#H7C2075B5C62541F9A348BDF1DDBECEB6.

[2] Id., at Section 603(b)(1).

[3] Id., at Section 603(b)(3).

[4] Id., at 603(b)(2).

[5] Id., at Section 603(c)(1).

[7] Id., at 8 (emphasis added).

[8] Treas. Reg. 31 CFR 35, at 78-80, available at: https://home.treasury.gov/system/files/136/FRF-Interim-Final-Rule.pdf. See also Coronavirus State and Local Fiscal Recovery Funds, Frequently Asked Questions (as of November  15, 2021) – FAQ #3.8, FAQ #4.1, FAQ #4.3, FAQ #4.4 and FAQ #8.1, available at: https://home.treasury.gov/system/files/136/SLFRPFAQ.pdf.

[9] The Housing and Community Development Act of 1974 (42 U.S.C. § 5302 Section 102(a)(4)) definition includes cities that relinquish or defer their status as a metropolitan city for purposes of receiving allocations under Section 106 of such Act (42 U.S.C. § 5306) for fiscal year 2021. The term ‘non-entitlement unit of local government’ means a ‘city,’ as that term is defined the Housing and Community Development Act of 1974 (42 U.S.C. § 5302(a)(5)), and that is not a metropolitan city.

[10] Treas. Reg. 31 CFR 35, at 108-110, available at: https://home.treasury.gov/system/files/136/FRF-Interim-Final-Rule.pdf.

[11] American Rescue Plan Act of 2021 § 9901, Pub. L. No. 117-2, amending 42 U.S.C. § 801 et seq., at Section 603(b)(2)(C)(iii), available at: https://www.congress.gov/bill/117th-congress/house-bill/1319/text#H7C2075B5C62541F9A348BDF1DDBECEB6.

[12] U.S. Department of the Treasury, Coronavirus State and Local Fiscal Recovery Funds for Non-entitlement Units of Local Government, available at: https://home.treasury.gov/policy-issues/coronavirus/assistance-for-state-local-and-tribal-governments/state-and-local-fiscal-recovery-fund/non-entitlement-units.

[13] U.S. Department of the Treasury, Allocation for Metropolitan Cities, available at: https://home.treasury.gov/system/files/136/fiscalrecoveryfunds-metrocitiesfunding1-508A.pdf.

[14] Coronavirus State and Local Fiscal Recovery Funds, Frequently Asked Questions (as of November  15, 2021) – FAQ #1.4, at 2-3, available at: https://home.treasury.gov/system/files/136/SLFRPFAQ.pdf.

[15] Id. FAQs #4.6, at 19, available at: https://home.treasury.gov/system/files/136/SLFRPFAQ.pdf.

[16] American Rescue Plan Act of 2021 § 9901, Pub. L. No. 117-2, amending 42 U.S.C. § 801 et seq., at Section 603(c)(1)(D), available at: https://www.congress.gov/bill/117th-congress/house-bill/1319/text# HAECAA3A95C4E4FFAB6AA46CE5F9CB2B5.

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

[18] Coronavirus State and Local Fiscal Recovery Funds, Frequently Asked Questions (as of November 15, 2021) – FAQ #9.2, at 35, (emphasis added), available at: https://home.treasury.gov/system/files/136/SLFRPFAQ.pdf.

[19] Id.

[20] Id. (emphasis added).

[21] Id.

[22] Treas. Reg. 31 CFR Part 35, at 111, (emphasis added), available at: https://home.treasury.gov/system/files/136/FRF-Interim-Final-Rule.pdf.

[23] U.S. Department of the Treasury Recovery Plan Template, available at: https://home.treasury.gov/system/files/136/NEU-Distribution-Template-User-Guide.pdf.

[24] Id., at 4.

[25] Coronavirus State and Local Fiscal Recovery Funds, Frequently Asked Questions (as of November 15, 2021) – FAQ #9.2, at 35-36, available at: https://home.treasury.gov/system/files/136/SLFRPFAQ.pdf.

[26] Id.

[27] U.S. Department of the Treasury Recovery Plan Template, at 1, available at: https://home.treasury.gov/system/files/136/SLFRF-Recovery-Plan-Performance-Report-Template.docx.

[28] U.S. Department of the Treasury, “Compliance and Reporting Guidelines”, at 23, available at: https://home.treasury.gov/system/files/136/SLFRF-Compliance-and-Reporting-Guidance.pdf.

[29] Department of Treasury, “State and Local Fiscal Recovery Funds: Treasury’s Portal for Recipient Reporting”, available at: https://home.treasury.gov/system/files/136/SLFRF_Treasury-Portal-Recipient-Reporting-User-Guide.pdf.

[31] Id., at 5-6.

[32] Id., at 11.