Program

COVID-19 Federal Assistance e311

Topics

Compliance & Reporting, Infrastructure & Maintenance Investments

How should a municipality document the COVID-19 nexus for infrastructure projects outside of the specified eligibility categories?

The U.S. Department of the Treasury’s (“Treasury”) Frequently Asked Questions (“FAQs”) indicate that recipients using revenue replacement funds to provide government services must supply Treasury with a description of the government services provided, either in a narrative or similarly appropriate format. Recipients are encouraged to report based on their existing budget processes.[1] For example, a recipient with $100 in revenue replacement funds available could indicate that $50 were used for personnel costs and $50 were used for pay-go building of sidewalk infrastructure.[2]

Importantly, expenditures for a community center may not qualify as an eligible expenditure under the ARP. If a municipality nonetheless decides to use ARP funds to revamp a community center, it will need to prove that the renovation is in response to the “specific negative economic impact”[3] of COVID-19.

Importantly, the FAQs clearly state that Coronavirus Local Fiscal Recovery Funds (“CLFRF”) may not be used for general infrastructure development:

Under 602(c)(1)(C) or 603(c)(1)(C), recipients may use funds for maintenance of infrastructure or pay-go spending for building of new infrastructure as part of the general provision of government services, to the extent of the estimated reduction in revenue due to the public health emergency.

Under 602(c)(1)(A) or 603(c)(1)(A), a general infrastructure project typically would not be considered a response to the public health emergency and its negative economic impacts unless the project responds to a specific pandemic-related public health need (e.g., investments in facilities for the delivery of vaccines) or a specific negative economic impact of the pandemic (e.g., affordable housing in a Qualified Census Tract).[4]

Last Revised: August 25, 2021

[1] Coronavirus State and Local Fiscal Recovery Funds, Frequently Asked Questions (as of July 19, 2021) – FAQ #9.4, at 36-37, available at: https://home.treasury.gov/system/files/136/SLFRPFAQ.pdf.

[2] Id.

[3] Id. – FAQ #4.2, at 19.

[4] Id.