COVID-19 Federal Assistance e311


Community Engagement & Local Partnerships, Fund Planning & Allocation

How can cities balance spending federal funds on transformative internal projects against the desire to give funds directly to the community?

Under the U.S. Department of the Treasury (“Treasury”)’s Interim Final Rule (the “Rule”) for Coronavirus Local Fiscal Recovery Funds (“CLFRF”), municipalities are “encouraged to use payments from the Fiscal Recovery Funds to respond to the direct and immediate needs of the pandemic and its negative economic impacts and, in particular, the needs of households and businesses that were disproportionately and negatively impacted by the public health emergency.”[1]

Initial Analysis

In order to decide whether to spend funds on transformative internal projects or provide funds directly to the community, a municipality should, at a minimum:

  • identify key stakeholders in the community who may have ongoing COVID-19 response and recovery needs;
  • confer with partners established from the onset of the pandemic;
  • identify ongoing unmet community needs;
  • communicate the municipality’s American Rescue Plan Act (“ARP”) objectives;
  • understand ways that these partners would use CLFRF funding within the community and how their ideas may align with the municipality’s overall long-term recovery strategy; and
  • devote time to hear from the community members that these projects impact, allowing for “public input, transparency, and accountability” on the proposed initiatives.[2]

Funding for Internal Projects

Municipalities seeking to utilize CLFRF funding for internal projects should: (i) consider the long-term impact that the deployment of funds may have on the community; and (ii) align each project with the objectives of the larger municipal recovery plan and the goals and requirements of CLFRF.

Last Revised: August 23, 2021

[2] Id., at 9.