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ARPA Funds Update

Though complex, resources are available for municipalities

As expected, the Department of Treasury released the Final Rule for the Coronavirus State and Local Fiscal Recovery Funds (SLFRF) of the American Rescue Plan Act. This important update provides greater clarity and context, and, in some cases, broadens uses. Still, this bill requires navigation, and CCM is committed in providing additional resources that will help municipalities including an initial summary that covers the Final Rule (FR).

In general, the FR is separated into five broad categories; (1) responding to the public health emergency and the negative economic impacts of COVID-19; (2) replacement of loss revenue; (3) premium pay; (4) water and sewer infrastructure; and (5) broadband infrastructure. And in many cases, the FR was consistent with the Interim Final Rule across the categories.

For instance, under Category 1, responding to the public health emergency, there are plain and obvious uses such as vaccination programs, testing programs, contact tracing, public communication efforts, PPE and more. These are considered enumerated projects. But there is also a two-step process to determine whether an unenumerated program may be eligible. One, a COVID-19 public health or economic impact must be identified, and two, the ARP funds must respond to that impact.

Importantly, the FR maintains most of the administration, compliance, and reporting requirements that have been articulated in the IFR or Treasury’s Compliance and Reporting document. Specifically, the funds must be used for costs incurred after March 3, 2021 and obligated by the end of 2024. And prohibited uses, including deposits into pension funds, replenishments of rainy-day funds, or legal settlements, might result in the recuperation of funds.

ARP funding to Connecticut municipalities is very substantial: towns and cities are anticipated to receive $2.55 billion statewide ($1.56 billion to general government / $995 million to schools). Funding for towns and cities will be distributed in a modified CDBG formula with entitlement cities (those with a population over 50,000) receiving funding directly from the Treasury Department and non-entitlement towns (those with a population under 50,000) distributed by the State as a pass-through.

Importantly, there is a provision that will allow municipalities in states—like Connecticut—to receive additional funds that would have been allocated to counties, if the State had county-level government. For Connecticut towns and cities, that will mean $690 million in funds that otherwise would not have been received.

CCM will continue to update their resources and these will include providing an updated ARP Advisory Toolkit – V2.0, best practices and examples, and develop further assistance in compliance and reporting requirements. You can access a webinar held on the final rule here - https://www.youtube.com/watch?v=ih8mPC6Gxl4