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

Part 1.

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

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

Presumptively Impacted or Disproportionately Impacted Communities

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

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

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

Analysis of Impacted or Disproportionately Impacted Communities

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

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

Similarly, the Final Rule defines moderate income as:

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

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

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

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

Part 2.

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

Further, the Final Rule states:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Last Updated: April 12, 2022

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

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

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

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

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

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

Projects must:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Other Funding Opportunities:

1. Hazard Mitigation Grant (“HMG”) Program

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

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

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

Information on the next round of HMG funding is pending.

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

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

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

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

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

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

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

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

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

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

Are there opportunities in the Infrastructure Investment & Job Act to repave or reconstruct thoroughfare, arterial, and residential streets?

The Infrastructure Investment & Job Act (“IIJA”) provides many opportunities to improve different types of infrastructure, including roadways, across the country.

Some competitive grant programs that received funding through IIJA to support repairs and improvements to roads are: (1) Infrastructure for Rebuilding America (“INFRA”) Grants Program; (2) National Infrastructure Project Assistance (“Megaprojects”); (3) Promoting Resilient Operations for Transformative, Efficient, and Cost Saving Transportation (“PROTECT”) grants; (4) the Reconnecting Communities Pilot Program, Rural Surface Transportation Grant Program (“Rural”); (5) Rebuilding American Infrastructure Sustainably and Equitability (“RAISE”) grants; and (6) Safe Streets and Roads for All.[1]

Each of these competitive grant programs select projects (including roadway projects) based on different sets of criteria:

• INFRA – eligible projects “improve safety, generate economic benefits, reduce congestion, enhance resiliency, and hold the greatest promise to eliminate freight bottlenecks and improve critical freight movements.”[2]
• Megaprojects – eligible projects “support large, complex projects that are difficult to fund by other means and likely to generate national or regional economic, mobility, or safety benefits.”[3]
• PROTECT – eligible projects “conduct resilience planning, strengthen and protect evacuation routes, and increase the resilience of surface transportation infrastructure from the impacts of sea level rise, flooding, wildfires, extreme weather events, and other natural disasters.” Moreover, “[h]ighway, transit, and certain port projects are eligible.”[4]
• RAISE – eligible projects reflect community connectivity, mobility, accessibility for travelers, universal design, and increased mobility for supply chain and freight efficiency. RAISE grants were previously known as BUILD and TIGER grants.[5]
• Reconnecting Communities Pilot Program – eligible projects “restore community connectivity by removing, retrofitting, or mitigating highways or other transportation facilities that create barriers to community connectivity, including to mobility, access, or economic development.”[6]
• Rural – eligible projects “improve and expand the surface transportation infrastructure in rural areas to increase connectivity, improve the safety and reliability of the movement of people and freight, and generate regional economic growth and improve quality of life.”[7]
• Safe Streets and Roads for All -- eligible projects “support local initiatives to prevent death and serious injury on roads and streets, commonly referred to as ‘Vision Zero’ or ‘Toward Zero Deaths’ initiatives.”[8] The White House is expected to release additional program information in May 2022.[9]

Applicants may refer to USDOT resources for additional information about the INFRA,[10] RAISE,[11] and Mega programs.[12]

At the time of this writing, the U.S. Department of Transportation has published a list of upcoming anticipated Notices of Funding Opportunity, some of which may assist applicants with road repairs.[13] Potential applicants should monitor the White House Bipartisan Infrastructure Law Guidebook for updates on specific deadlines and details pertaining to a number of pending IIJA grant programs.[14]

Last Updated: April 25, 2022

Assuming that the requirement of a negative economic impact due to the COVID-19 public health emergency is met, is general assistance with immigration/naturalization an approved use of ARP funds?

The U.S Department of the Treasury’s (“Treasury”) Final Rule does not identify naturalization and other immigration services as an eligible use of funds under the American Rescue Plan’s (“ARP”) Coronavirus State and Local Fiscal Recovery Funds (“CSLFRF”). However, Treasury has indicated that the eligible uses it identifies in the Final Rule are a non-exhaustive list of programs that qualify for CSLFRF funding. The Final Rule “provides flexibility for recipients to identify other public health or negative economic impacts to additional households, small businesses, or nonprofits, including classes of these entities, and pursue programs and services that respond to those impacts.”[1] Depending on the population being served and how this population was impacted by the pandemic, it is possible that naturalization and other immigration services could fall under the public health and negative economic impact category. Given the lack of specific guidance, municipalities seeking to apply CSLFRF funds for this purpose should obtain prior approval from Treasury.

Municipalities have employed ARP funds to implement a range of programs providing services to immigrant communities, including starting new programs and expanding existing ones. For example, Long Beach, California and Washington, D.C. have expanded existing services providing legal services and deportation defense.[2] North Miami, Florida and Pittsburgh, Pennsylvania have started new programs providing immigration services for residents and Immigrant Court program match, respectively.[3] Meanwhile, Madison, Wisconsin is funding community partners delivering assistance to undocumented individuals and families as they cope with the consequences of the COVID-19 pandemic.[4]

Municipalities considering projects related to naturalization and other immigration services should refer to Treasury’s Framework for Eligible Uses Beyond Those Enumerated, which may assist municipalities in evaluating whether their project is eligible for CSLFRF funding. The two-step process[5] is summarized as follows:

Do the provisions of 2 CFR § 200.316 apply in the case of real property purchased with a federal award, regardless of whether the city or a third party purchases the property?

Yes, a municipality that receives funding pursuant to the Coronavirus State and Local Fiscal Recovery Funds (“CSLFRF”), must, along with any subrecipients of those funds, follow the provisions of Title 2, Code of Federal Regulations, Section 200.316 (“2 CFR § 200.316”), regardless of whether the municipality or a subrecipient uses those funds to purchase real property.

The U.S. Department of the Treasury’s (“Treasury”) Final Rule states:

the Uniform Guidance at 2 C.F.R. 200 applies to capital expenditures unless stated otherwise. Importantly, this includes 2 C.F.R. 200 Subpart D on post-federal award requirements, including property standards pertaining to insurance coverage, real property, and equipment; procurement standards; sub-recipient monitoring and management; and record retention and access.[1]  

Treasury also makes clear that the municipality is responsible for monitoring its subrecipients’ use of CSLFRF funds[2]  and must provide quarterly and annual reports to Treasury.[3]

According to 2 CFR § 200.316:

Real property, equipment, and intangible property, that are acquired or improved with a Federal award must be held in trust by the non-Federal entity as trustee for the beneficiaries of the project or program under which the property was acquired or improved. The Federal awarding agency may require the non-Federal entity to record liens or other appropriate notices of record to indicate that personal or real property has been acquired or improved with a Federal award and that use and disposition conditions apply to the property.[4], [5]

Moreover, according to 2 CFR § 200.311:

Except as otherwise provided by Federal statutes or by the Federal awarding agency, real property will be used for the originally authorized purpose as long as needed for that purpose, during which time the non-Federal entity must not dispose of or encumber its title or other interests and when real property is no longer needed for the originally authorized purpose, the non-Federal entity must obtain disposition instructions from the Federal awarding agency or pass-through entity.[6]

Last Updated: April 25, 2022

May governments utilize funds to hire staff back to pre-pandemic levels? If so, what documentation will be needed to support this spending?

Yes, the Coronavirus State and Local Fiscal Recovery Funds (“CSLFRF”) Final Rule identifies restoring pre-pandemic employment levels as an eligible use of funds.[1] The Final Rule allows municipalities to choose between two options to use CSLFRF funding to restore pre-pandemic employment. Municipalities cannot use both options.[2] Municipalities must allocate their payroll and/or covered benefit costs by December 31, 2024 and spend such funds by December 31, 2026.[3]

Option One: The first option allows municipalities to hire public sector employees for the same positions that existed on January 27, 2020, but that were unfilled or eliminated as of March 3, 2021.[4]

Option Two: The second option allows municipalities to increase their number of budgeted employees up to 7.5% above pre-pandemic levels. Under this option, municipalities must document and complete the following steps: [5]

• Identify the municipality’s budgeted full-time equivalent (“FTE”) level on January 27, 2020 (“Pre-Pandemic Baseline”).
• Multiply the Pre-Pandemic Baseline by 1.075 (“Adjusted Pre-Pandemic Baseline”).
• Identify the municipality’s budgeted FTE level on March 3, 2021 (“Actual Number of FTEs”).
• Subtract the Actual Number of FTEs from the Adjusted Pre-Pandemic Baseline to determine the number of FTEs that can be covered by CSLFRF funds.

Under option two, municipalities do not have to hire for the same role that existed pre-pandemic. However, the additional FTEs to be funded by CSLFRF must have started working on or after March 31, 2021.[6]

Under either option, municipalities should maintain documentation sufficient to demonstrate that the costs incurred are consistent with the Uniform Guidance’s Cost Principles at 200 CFR Part 200 Subpart E.[7]

Cities will be entering into contracts to spend funds provided pursuant to the American Rescue Plan Act (“ARP”). Will there be specific rules/goals that pertain to the use of those funds with respect to diverse businesses?

One of the statutory uses of the American Rescue Plan Act of 2021 (“ARP”) is to alleviate the negative public health and economic impacts of the COVID-19 public health emergency on communities.[1] The U.S. Department of the Treasury’s (“Treasury”) Final Rule on the Coronavirus State and Local Fiscal Recovery Funds (“CSLFRF”) identifies populations considered to have been “impacted” or “disproportionately impacted” by the pandemic, allowing CSLFRF recipients to respond to a broad set of households and entities without requiring additional analysis.[2]

In addition to Treasury’s expressly identified populations, a recipient may identify classes of households, communities, small businesses, nonprofits, or populations that have experienced a disproportionate impact based on academic research or government research publications, through analysis of their own data, or through analysis of other existing data sources.[3] To augment their analysis, or when quantitative data is not readily available, a recipient may also consider qualitative sources like resident interviews or feedback from relevant state and local agencies, such as public health departments or social services departments.[4] In either case, a recipient should consider the quality of the research, data, and applicability of analysis to their determination.[5]  

Moreover, the Final Rule indicates the following:

Recipients may also designate a class of small businesses that experienced a negative economic impact or disproportionate negative economic impact (e.g., microbusinesses, small businesses in certain economic sectors), design an intervention to fit the impact, and document that the individual entity is a member of the class.[6]

For example, a recipient could consider designating businesses qualifying as Minority Business Enterprises (“MBE”) within a disproportionately impacted class, so long as the recipient tailors the intervention to address the negative impact of the pandemic and documents the subrecipient as a member of the designated MBE class.

In addition, CSLFRF funds are subject to the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (2 CFR Part 200 or “Uniform Guidance”).[7] Under the Uniform Guidance, a recipient must take all necessary affirmative steps to assure that minority businesses, women’s business enterprises, and labor surplus area firms are used when possible.[8] The Uniform Guidance also requires recipients to comply with their state and local laws and regulations.[9]