The Treasury Department released comprehensive guidance on the allowable uses of the Coronavirus Local Fiscal Recovery Fund in the American Rescue Plan Act on May 10th. Below is a report that covers the guidance call with the legislative team at the National League of Cities as they unpack the guidance and share resources and recommendations for municipal officials to utilize the funds appropriately.

The recorded version of this presentation and downloadable powerpoint can be found here.

This report is intended to give you an overview and highlight of the discussions on the various topics the committee took up. It is not a verbatim transcript of the hearing but is based upon what was audible or understandable to the observer and the desire to get details out as quickly as possible with few errors or omissions.


  • $65 billion of direct aid to every city, town or village across the country
  • Treasure department released covid fiscal recovery fund
    • Guidance/Interim Final rule
      • Guidance is effective immediately
    • Allocation for metropolitan cities
    • Open portal for metropolitan cities to apply for funding


Framework of interim rule

  • Many of NLC suggestions included in rule
  • Non-exclusive lists of allowable expenditures
    • Includes intervention for qualified census tracks, public health, direct aid, community, infrastructure and economic development
    • Safe harbor uses
  • Encouraged Expenditures
    • Addressing racial disparities, inequities, disproportionate harm
  • Prohibited expenditures
    • Includes: pension funds, legal settlements, federal match requirements…


If a project isn’t listed, doesn’t mean it’s necessarily prohibited, there is a framework to help local officials use their dollars if its eligible.

Framework to Assess Eligibility for projects and services

  • Identify harmful effect of covid the activity will address
  • Assess the casual or compounding connection
  • Asses for disproportionate impact on distressed sectors or populations
    • Like travel/tourism
  • Determine how to prove the expense produces the expected outcome


Metropolitan cities include all cities with populations over 50,000

  • includes cities that relinquish or defer their status as entitlement cities for CDBG.
  • Qualifying cities under 50,000 that accept CDB grants also appear on the Metro List

Non-entitlement units of local governments (NEUs) are the remaining municipalities

  • Don’t know at the moment what non-metro cities are getting or how the 65 billion will be broken up
  • States cannot further restrict funding beyond federal guidelines
  • 50% of funds will be provided beginning in May 2021, other half about 12 months later


Eligible Uses (public health and economic response to pandemic)

  • Responding to public health emergency with respect to covid
    • No more restrictive than the CARES act Coronavirus Relief Fund
    • Medical expenses
    • Behavioral health care including addiction treatment
    • Public safety employees
    • Data, design and execution of programs
    • Health disparities
    • Survivors benefits
  • Response to essential workers during this time
    • Defines who is an essential worker
    • Premium pay to eligible workers
  • Revenue replacement of such metro city in the last fiscal year
    • Measured compared to the first full fiscal year prior to emergency
  • Make necessary investments in water, sewer or other broadband infrastructure


Presumption of Eligibility inside Qualified Census Tracks (QCT)

  • Direct cash and loan interventions
  • Assistance to businesses and nonprofits
    • Allows cities to transfer payments to non-profits to increase size
  • Impacted industries and workers
  • Housing and community development
    • Rental aid or help for those facing eviction
    • Development of affordable housing
    • Housing homeless
  • Homelessness
  • Childcare and education
    • So people can get back to work reliably


Projects requires to maintain level of service that meets safety requirements

  • Clean water state revolving fund
    • Construct, improve, protect and repair water treatment plants
  • Drinking water state revolving fund
    • Build or upgrade facilities to improve quality
  • Cybersecurity
  • Climate change and resilience
  • Lead service line replacement
  • Eligible projects must:
    • Be designed to provide service to underserved and underserved households and businesses.”
    • Specific service areas and locations may be defined by community
    • Provide service that reliably meets or exceeds symmetrical speeds of MBPs or if impossible at least 100/20 MBPs with the ability to scale up
  • Eligible projects are encouraged to:
    • Consider affordability
    • Avoid investing in locations with existing agreements to build reliable wireline service with minimum speeds of 100/20mbps by prioritizing projects that achieve last-mile connections
    • Prioritize municipal, nonprofit, and cooperative-owned networks
  • Digital inclusion


Loss Revenue

  • General revenue draws on census definition of general revenue of own sources
    • Defined
    • Not in bit by bit
  • Recipients should sum across all streams covered as a general revenue
  • What is excluded from GR
    • Refunds and other correcting
    • Proceeds from insurance
    • Utilities


Cities towns and villages will calculate based on what could have been expected to occur in absence of the pandemic

Calculating Loss:

  • Identify revenue collected in most recent full year prior to pandemic→ base year
  • Estimate growth rate using either 4.1% in the three fiscal years prior
  • Identify actual revenue collected over past 12 months
  • LR= expected growth rate less actuals.
    • If actuals exceed expected, then set figure to 0


Reporting requirements:

  • Metropolitan cities must submit an interim report and quarterly Project and Expenditure reports thereafter
  • Met cities with a population in excess of 250,000  will also be required to submit an annual recovery performance plan to treasure
  • Non-entitlement units of local government (NEU) are not required to submit interim reports or RPR but they will have to submit annual