Does the ARP allow for funding of site preparation to lower the cost of development of vacant or abandoned property?

Yes, the ARP allows funding of site preparation for the development of vacant or abandoned property in many circumstances.

On January 6, 2022, the U.S. Department of the Treasury (“Treasury”) released the Final Rule implementing the Coronavirus State Fiscal Recovery Fund and the Coronavirus Local Fiscal Recovery Fund (collectively, the “CSLFRF”).[1] This guidance states that certain services for vacant or abandoned properties are eligible for CSLFRF funding when used to address the public health and negative economic impacts of the pandemic on disproportionately impacted households or communities.[2] The guidance defines vacant or abandoned properties as “generally those that have been unoccupied for an extended period of time or have no active owner.”[3] Specifically, demolition and greening (or other structure or lot remediation) of vacant or abandoned properties, including residential, commercial, or industrial buildings, is an eligible use of funds.[4]

In one section, entitled “Building strong, healthy communities through investments in neighborhoods,”[5] Treasury enumerates several eligible activities relating to services for vacant or abandoned properties. They include the following:

• Rehabilitation, renovation, maintenance, or costs to secure vacant or abandoned properties to reduce their negative impact;
• Costs associated with acquiring and securing legal title of vacant or abandoned properties and other costs to position the property for current or future productive use;
• Removal and remediation of environmental contaminants or hazards from vacant or abandoned properties, when conducted in compliance with applicable environmental laws or regulations;
• Demolition or deconstruction of vacant or abandoned buildings (including residential, commercial, or industrial buildings) paired with greening or other lot improvement as part of a strategy for neighborhood revitalization;
• Greening or cleanup of vacant lots, as well as other efforts to make vacant lots safer for the surrounding community;
• Conversion of vacant or abandoned properties to affordable housing; and
• Inspection fees and other administrative costs incurred to ensure compliance with applicable environmental laws and regulations for demolition, greening, or other remediation activities.

Recipients should also be aware of federal, state, and local laws that apply to these eligible activities, and potential effects on low-income housing. The Final Rule states the following:

Treasury presumes that demolition of vacant or abandoned residential properties that results in a net reduction in occupiable housing units for low- and moderate-income individuals in an area where the availability of such housing is lower than the need for such housing would exacerbate the impacts of the pandemic on disproportionately impacted communities and that use of [C]SLFRF funds for such activities would therefore be ineligible. This includes activities that convert occupiable housing units for low- and moderate-income individuals into housing units unaffordable to current residents in the community. Recipients may assess whether units are “occupiable” and what the housing need is for a given area taking into account vacancy rates… local housing market conditions (including conditions for different types of housing like multi-family or single-family), and applicable law and housing codes as to what units are occupiable. Recipients should also take all reasonable steps to minimize the displacement of persons due to activities under this eligible use category, especially the displacement of low-income households or longtime residents.[6]

Last Updated: February 3, 2022