What requirements must be met by subrecipients who improve real property with ARPA funds under 2 CFR 200.311? What is the federal interest in the property?

Property acquired using revenue loss funds likely is not subject to the applicable provisions of the Uniform Guidance regarding property standards.[1] Property acquired or improved under any of the other eligible use categories are subject to the Uniform Guidance provisions— particularly 2 CFR 200.311—as described below.

Treasury’s FAQ 13.16 indicates: 

After the period of performance, the property, supplies, or equipment must be used consistent with the purpose for which it was purchased or improved or for any other eligible purpose in the same category as the purpose reported to Treasury as of the final reporting period...[2]

Treasury makes clear that during the period of performance, the purpose of the property may be changed to another purpose as long as it continues to meet the eligible use requirements.

After the period of performance, the property may switch eligible purposes, but only if the new use of funds is in the same category as the original category reported to Treasury, as seen in the chart below. For example,

converting a hospital to a behavioral health facility would qualify as being used for the eligible purpose because both expenditures respond to the public health impacts of the public health emergency.[3]

Specifications of 2 CFR 200.311 and Federal Interest

When applicable to ARPA funded projects as indicated above, 2 CFR 200.311 outlines the title, use and disposition of real property. Specifically:

(a)Title. Subject to the requirements and conditions set forth in this section, title to real property acquired or improved under a Federal award will vest upon acquisition in the non-Federal entity.

(b) Use. Except as otherwise provided by Federal statutes or by the Federal awarding agency, real property will be used for the originally authorized purpose as long as needed for that purpose, during which time the non-Federal entity must not dispose of or encumber its title or other interests.

(c) Disposition. When real property is no longer needed for the originally authorized purpose, the non-Federal entity must obtain disposition instructions from the Federal awarding agency or pass-through entity.[4]

The Uniform Guidance provides three distinct, mandatory disposition options pursuant to 2 CFR 200.311(c1-3) relative to real property. This sets the parameters for the federal interest in and disposition of real property occurring if:

• the use of an asset (i.e., property) changes to an ineligible use;
• the asst is sold prior to the end of the period of performance; or
• the asset shifts outside the parameters of the eligible purpose after the period of performance according to the table above.[5]