Program

COVID-19 Federal Assistance e311

Topics

Fund Planning & Allocation, Infrastructure & Maintenance Investments, Program Administration

May a city use ARP funds for public-private partnerships for infrastructure or economic recovery programs, such as community benefit agreements?

The text of the ARP states that funding can be used to combat the “negative economic impacts [of COVID-19], including assistance to [ ] small businesses [ ] and nonprofits.”[1] More specifically, the Rule grants recipients “wide latitude to identify investments in water and sewer infrastructure that are of the highest priority for their own communities, which may include projects on privately-owned infrastructure.”[2] The Rule also allows CLFRF recipients to “transfer Fiscal Recovery Funds to other constituent units of government or private entities beyond those specified in the statute, as long as the transferee abides by the transferor’s eligible use and other requirements.”[3] This, combined with the Rule’s favorable reference to Community Benefit Agreements,[4] indicates that the use of CLFRF funds for public-private partnerships is likely permissible.

Municipalities may consider where to implement infrastructure and economic recovery programs. The Rule acknowledges that funds may be used to promote the economic and social advancement of qualified census tracts (“QCTs”). The use of funds is permissible if infrastructure and economic recovery programs can be determined to impact QCTs in a manner outlined in the Rule positively. For example, funds may be used if the services provide QCT residents “assistance relocating to neighborhoods with higher levels of economic opportunity and … reduce concentrated areas of low economic opportunity.”[5]

On July 14, 2021, Treasury provided additional clarity on transferring funds to nonprofits and private organizations in its FAQ document. Recipients may transfer funds to private nonprofit organizations, Tribes, public benefit corporations involved in the transportation of passengers or cargo, or special-purpose units of State or local government.[6] The examples provided are not exhaustive.[7] A transferee receiving a transfer from a recipient is considered a subrecipient and must comply with all subrecipient reporting requirements.[8] Treasury also points out that because nonprofits and private organizations are not direct recipients of CLFRF, those entities can seek funds from direct recipients such as municipalities.[9] As such, Treasury encourages municipalities to work with nonprofits and private organizations through partnerships and subgrants.

Last Updated: August 11, 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)(A)), https://www.congress.gov/bill/117th-congress/house-bill/1319/text#HC028912924A04512A1F80BFA0F1C1051.

[3] Id. at 105-106.

[5] Id., at [142]

[6] 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.

[7] Id.

[8] Id.

[9] Id.