ARPA Tips for Municipalities | Best Best & Krieger LLP

Six main categories of recipients, write lawyers Ana Schwab, Andre Monette and Gerard Lavery Lederer in AudienceCEO

The US Treasury has deployed its Provisional Final Rule on Coronavirus State and Local Fiscal Recovery Funds on May 10. With more than $350 billion available to state and municipal governments, below is an overview of how municipalities of all sizes and budgets can benefit from the program.

Disbursement of funds
As provided by Congress, the funds are allocated to two categories of governments: metropolitan cities which receive money directly from the Treasury and non-eligible units of local government which are funded by their respective state. While funds to NEU governments are first sent to their state, the interim final rules provide that states cannot impose any additional restrictions, rules or compliance.

When can funds be used?
All municipalities have until the end of 2024 to commit the funds received, but have until the end of 2026 to spend the funds. In general, ARPA is intended to help communities in a forward-looking way, but there are three important exceptions:

  1. premium for essential staff,
  2. assistance to households and small businesses and
  3. the calculation of the shortfall.

This differs from other federal resources available to municipalities seeking to offset costs incurred during the pandemic. Because there are multiple avenues of funding, Best Best & Krieger LLP recommends that a municipality first explore available dedicated funding sources before using ARPA funds which have greater flexibility to meet challenges today. today and over the next two years.

Use of State and Local Fiscal Stimulus Funds for Coronavirus
As the Department of Finance explains, “State and Local Coronavirus Fiscal Stimulus Funds provide eligible state, local, territorial and tribal governments with a substantial infusion of resources to meet pandemic response needs. and rebuild a stronger and fairer economy as the country recovers.”

BB&K has identified six main categories for recipients to use state and local coronavirus fiscal stimulus funds:

1. Support public health spending- Indicate how the funds were used to respond to COVID-19 and the broader health impacts of COVID-19. When using funds in this category, the recipient must: 1) identify a need or adverse impact of the COVID-19 public health emergency and 2) identify how the program, service, or other intervention addresses the need or the identified impact.

2. Address the negative economic impacts caused by the public health emergency – In direct response to the economic impact of the COVID-19 pandemic, state and local coronavirus tax funds can be used by local governments to provide widespread assistance to individuals, households, small businesses and affected industries. . Here are some examples of how this can be done:

-Help for the unemployed
-Professional training
-Assistance to households facing food, housing or other financial insecurities
-COVID-19 Survivor Benefits
-Rehire public sector staff and replenish unemployment insurance trust funds (both to pre-pandemic levels)
Loans, grants and in-kind assistance to small businesses to address financial challenges due to the COVID-19 pandemic and mitigation
-Support local tourism, travel and hospitality
-Investments in technology infrastructure

3. Serve the hardest hit communities and families- The funds can be used to address the disproportionate public health and economic impacts of the COVID-19 pandemic on the hardest hit communities, populations and households. Under this section, local governments may provide one-time support on services within a qualified census tract, to families living in a qualified census tract, by tribal government, or to other populations, households, or geographical areas disproportionately affected by the pandemic.​

4. Replace lost public sector revenue – A local government can calculate its revenue loss and predict that the calculation will match the magnitude of the revenue reduction by comparing actual revenue to an alternative representative of what might have happened in the absence of the pandemic. The Treasury clarifies that any decline in actual revenues from the expected trend can be presumed to be due to the COVID-19 public health emergency.

5. Provide wage premium to essential workers- Recognizing the continued work of essential workers during the pandemic, the funds can be used for premium payments directly or through grants to private employers for essential workers who were or are physically present at their job, including those whose job is to protect the health and well-being of their communities.

6. Invest in water, sewer and broadband infrastructure – Funds can be used in a variety of ways related to water and sewer infrastructure. Water and wastewater projects are eligible when the project(s) align with, and would qualify for, the Clean Water State Revolving Fund or the Drinking Water State Revolving Fund. This includes projects that will upgrade or construct facilities and the transmission, distribution, storage and replacement of lead service lines.

With respect to broadband, investments in wired infrastructure that will provide a symmetrical 100 Mbps standard can only be made in unserved or underserved areas, defined as an area lacking a wired connection capable of providing 25/3 Mbps speed.

Make a plan for funds
ARPA funds are broadly designed to support communities across the country, and municipalities are encouraged to plan how each item fits into an eligible use category. When developing the plan, it is important to note that an intended use can belong to more than one category. The municipality must clearly identify which eligible use category is intended for reporting and compliance purposes.

This article first appeared in AudienceCEO July 20, 2021. Republished with permission.

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