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Is street infrastructure work intended to make streets safer for people to recreate outdoors eligible under ARP?

The American Rescue Plan Act (“ARP”) authorizes infrastructure-related expenditures in specified areas that make “necessary investments in projects that improve access to clean drinking water, improve wastewater and stormwater infrastructure systems, and provide access to high-quality broadband service.”[1] The U.S. Department of the Treasury (“Treasury”) Coronavirus State and Local Fiscal Recovery Funds (“CSFRF / CLFRF”) Interim Final Rule (“Rule”) identifies several acceptable uses of CSLFRF funds for infrastructure enhancements.[2]

According to Treasury’s CSFRF / CLFRF Frequently Asked Questions (“FAQs”), general infrastructure spending is specifically noted as ineligible for CSLFRF funds, except for specific pandemic response purposes:

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).[3] (emphasis added)

The Rule also introduces the section of eligible use for public health and economic impacts with a description of an expectation that the “types of uses that would be responsive to the impacts of the COVID-19 public health emergency.”[4]

Although “general infrastructure” spending is not an eligible use of CSLFRF, unless used for (i) necessary investment in water, sewer, and broadband; or (ii) in response to a specific pandemic-related public health need, the second justification may be relevant to this initiative. The Treasury FAQs, updated June 24, 2021, respond to inquiries regarding investments in “improving outdoor spaces,” describing several potential justifications for such improvements as eligible uses of CSLFRF allocations as part of a response to the COVID-19 pandemic.[5] This guidance is important for municipalities to review when evaluating priorities for CSLFRF activity selection. Of note, Treasury specifically incorporates comments stating that activity under this provision should “build stronger neighborhoods and communities and address health disparities and the social determinants of health” as well as the need to create additional open spaces to facilitate social distancing.[6]

Street infrastructure work intended to open streets and calm traffic appears to have a less direct nexus to a specific pandemic-related public health need as compared to the example cited in the Rule of investment for vaccine delivery facilities. However, given that the municipality’s apparent intent is to address the pandemic’s need for social distancing and aid impacted industries (which may include improving outdoor accessibility through crowd-thinning techniques) to decrease the spread of disease, a cautious approach to public space development and transportation corridor modification may be seen as an eligible use of funds.  

As stated in the Treasury guidance, States and municipalities can use CSFRF or CLFRF funds for infrastructure projects if they can both identify a negative impact of the COVID-19 public health emergency and sufficiently link the proposed infrastructure project to the mitigation of the identified negative impact.[7] In an abundance of caution, this would be an appropriate area for a municipality to await further guidance from Treasury before committing time and effort to any road or street related project, even one with design parameters to address specific public health improvements.  

However, there may be other relevant provisions in the guidance from the Rule. From an administrative standpoint, the revenue loss provision of the ARP may provide a path to States and municipalities for the use of CSFRF or CLFRF funds on street infrastructure projects. More specifically, CLFRF funds can be used for the “provision of government services to the extent of the reduction in revenue experienced due to the COVID-19 public health emergency.”[8] The Rule states that the ARP used nonspecific language in this provision in order to “provide recipients with broad latitude” to use FRF funds for this purpose.[9] A list of examples of eligible government services includes:

  • maintenance or pay-go funded building of infrastructure, including roads;
  • health services;
  • school or educational services; and
  • the provision of police, fire, and other public safety services.[10]

Street infrastructure projects designed to make streets safer for people to recreate outdoors despite social distancing requirements may be an eligible use of revenue loss funds under the Rule and relevant guidance. The answer is far from certain, but one municipalities may choose to pursue as long as they understand the risks of doing so.

Last Updated: June 28, 2021

[1] American Rescue Plan Act of 2021 § 9901, Pub. L. No. 117-2, amending 42 U.S.C. § 801 et seq., at Section 9901 (amending Section 603(c)(1)), available at: https://www.congress.gov/bill/117th-congress/house-bill/1319/text#H7C2075B5C62541F9A348BDF1DDBECEB6.

[3] U.S. Department of the Treasury Coronavirus State and Local Fiscal Recovery Funds, Frequently Asked Questions

issued June 24, 2021 - FAQ#4.2 at 17, available at: https://home.treasury.gov/system/files/136/SLFRPFAQ.pdf

[5] U.S. Department of the Treasury Coronavirus State and Local Fiscal Recovery Funds, Frequently Asked Questions issued June 23, 2021 - FAQ#2.18 at 10, available at: https://home.treasury.gov/system/files/136/SLFRPFAQ.pdf

[6] Id.

[7] Id.

[8] Id. at 51.

[9] Id. at 60.

[10] Id.