Data watch: A rare surge of federal dollars unleashes a wave of city innovations

For U.S. city leaders, the more than $67 billion flowing in from Washington through the American Rescue Plan Act is a generational opportunity to tackle their communities’ biggest challenges.

For once, perennially cash-strapped city halls have large sums of flexible dollars available to pursue truly transformational changes. And it comes at a moment when community needs are great, due to the economic and social shocks felt by every community over the past two years.

To get a read on what cities are looking at doing with these federal funds, Bloomberg Cities conducted an in-depth analysis of spending plans in 20 U.S. cities selected for diversity in geography and size. They range from big cities like Phoenix to smaller cities like Morgantown, W.Va., and include places that have completed their spending plans as well as those that are still in process. 

While this is a story that is still unfolding, what we can begin to see across this sample is a picture of where local leaders see their greatest needs and opportunities today:

• 17 of the 20 cities are using some of the funding to address housing insecurity. Portland, Ore., for example, is putting $16 million toward alternative sheltering arrangements for homeless residents, including a new outdoor shelter model known as  “Safe Rest Villages.” 
• 17 of the 20 cities are very focused on rebuilding their local economies and supporting businesses. Seattle, for example, is allocating $22 million to grants to help small businesses and arts organizations recover. 
• 12 of the 20 cities have earmarked funds to support expanding internet access in underserved communities. For example, Phoenix is putting $10 million toward expanding a community wireless network in the city’s poorest neighborhoods. 

Some of these cities are thinking really big. Austin, Texas, for example, is putting $107 million in local and federal funding—including  nearly half of its total allotment—toward homeless services. Those funds are leveraging additional dollars coming in through Travis County and private sources to work toward an ambitious and collaborative goal of housing 3,000 people in three years. 

Detroit has put $67 million toward combating intergenerational poverty through initiatives that help vulnerable residents to buy a home or fix up the one they own. The city has already started work on one part of that program, helping seniors and persons with disabilities to fix their roofs. 

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In other cases, cities are using the funds to run small-scale programs that could be scaled up later. For example, Alexandria, Va., Minneapolis, and Sacramento, Calif., all are piloting programs that would give some families a guaranteed basic income of several hundred dollars a month, in hopes of lifting residents out of poverty.

A lot of cities are still working out the details of their plans. They have some time: Half of the money they’re getting from Washington will not arrive until next year. Some cities indicated that they wanted to see what was included in the $1.2 trillion federal infrastructure law that recently passed before finalizing their own plans. (The U.S. Treasury Department released its final rule on how cities can spend American Rescue Plan Act dollars in January, 2022.)

Many city leaders are working extra hard to engage residents for their ideas, to make sure their spending priorities align closely with what the community needs. For example, in developing their spending plan, Detroit leaders held 65 public meetings and an online survey received 743 responses — a process they say amounted to one of the largest community engagement efforts the city has ever conducted. 

Whatever local leaders decide to do with their federal dollars, there’s two things they can’t forget to do. First, they need to set up systems for how to measure the impact of these investments over time. That’s both because they have to—cities above 250,000 population are required to report on the outcomes of their programs—and because it’s only right that city leaders be held accountable for how they spend the money and deliver impact for residents.

Second, they need to think about how they’re going to tell the story of the investments they’re making. Opportunities like this one don’t come around often. Residents will want to know how their local leaders are making the most of it. 

Bloomberg Cities wants to know, too. We’ll keep following the story of how cities are spending these federal dollars and will continue reporting back with new insights and trends. 

Read more on the American Rescue Plan Act:

• Answers to questions from city leaders
• How cities are using data to build their spending plans
• Using federal funds to build innovation capacity