Is street paving a permissible use of ARP funds?

The U.S. Department of the Treasury (“Treasury”) Coronavirus State and Local Fiscal Recovery Funds (“CSLFRF”) Final Rule  directly states:

In the final rule, Treasury is maintaining the approach under the interim final rule that general infrastructure projects, including roads, streets, and surface transportation infrastructure, would generally not be eligible, unless the project responded to a specific pandemic public health need or a specific negative economic impact.[1]

A recipient funding street paving in response to a specific pandemic public health need or a specific negative economic impact should “(1) describe the harm or need to be addressed; (2) explain why a capital expenditure is appropriate to address the harm or need; and (3) compare the proposed capital expenditure against alternative capital expenditures that could be made.”[2] If the capital expenditure exceeds $1 million, written justification explaining how the capital expenditure meets these standards is required. For more information on required information as part of such a capital expenditure, please see pages 196-201 of the Final Rule. 

However, under the provision of government services, the Final Rule specifically lists “maintenance or pay-go funded building” of roads as a government service and therefore eligible under revenue loss up to the extent of reduction in revenue.[3]

Government services include, but are not limited to, maintenance or pay-go funded building of infrastructure, including roads; modernization of cybersecurity, including hardware, software, and protection of critical infrastructure; health services; environmental remediation; school or educational services; and the provision of police, fire, and other public safety services.[4]

In addition to the revenue loss category, road work would be eligible as required by stormwater system infrastructure projects. The Final Rule states “recipients may use [CSLFRF] funds for road repairs and upgrades that interact directly with an eligible stormwater infrastructure project.”[5] Paving could also be eligible under water and sewer infrastructure as a subsurface drainage measure. “Projects may include, but are not limited to green roofs, bioretention basins, roadside plantings, porous pavement, and rainwater harvesting.”[6]

It should be noted that additional information may be provided when Treasury issues new Frequently Asked Questions ("FAQs") specific to the Final Rule.[7] In addition, Treasury encourages municipalities to consider the guidance issued in the Statement Regarding Compliance with the Coronavirus State and Local Fiscal Recovery Funds Interim Final Rule and Final Rule.[8]

Last Revised: March 9, 2022