CSAC Bulletin Article

Treasury Issues Final Rule for ARPA Uses

January 6, 2022

Earlier today, the US Treasury Department issued the final rule for how counties can use the flexible relief funding provided as part of the American Rescue Plan Act. Available online are the rule itself, a user-friendly overview of the rule’s major provisions, and additional guidance for complying with the rule. The Treasury will also be holding webinars to brief and answer questions about the final rule on January 7, January 10, and January 12. For those unable to register, they will post a recording of the first webinar.

Counties, cities, states, and tribal governments have been allowed to obligate funds under the provisions of the interim rule, while Treasury was developing the final rule, and can continue to do so until April 1, when the final rule officially goes into effect. Recipients also have the option of using the flexibilities and simplifications in the new rule immediately.

The final rule features several welcome flexibilities and simplifications. For instance, all recipients may use up to $10 million for the revenue loss category, as an alternative to calculating actual revenue losses, giving more counties the ability to use the most flexible category of allowed uses. The Treasury also made changes to the revenue loss calculations so counties will want to consult the final rules and re-run their numbers to evaluate their position.

The final rules also presume that certain populations were impacted and disproportionately impacted by the pandemic and are therefore eligible for services that are responding to the negative economic impacts of the pandemic. For instance, all low- and moderate-income households and communities, households that experienced unemployment, and households that qualify for Medicaid, are all presumed to have been impacted by the pandemic. The non-exhaustive list of presumed projects and services for which these populations are eligible has likewise been expanded.

Similarly, small businesses and nonprofits operating in certain census tracts are presumed to be disproportionately impacted and do not necessarily need to otherwise qualify to receive funds for uses such as property rehabilitation, technical assistance, expansion costs, and certain microbusiness supports.

As a final example, the final rule broadens the set of eligible infrastructure projects the funds can pay for, including broadband, cybersecurity hardware and software, and certain water and wastewater projects beyond those eligible for drinking water and clean water state revolving funds, if they are deemed necessary.

Counties should keep in mind that though they have considerable flexibility in their use of the funds, certain restrictions still apply. For example, extra deposits into pension funds to reduce an unfunded liability, debt service payments, increasing rainy day funds, and paying settlements or judgements.

Overall, the changes made in the final rule will be welcome news for counties. Counties can find more resources about the State and Local Fiscal Recovery Funds and other COVID-related assistance programs on the US Treasury’s website.

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