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HomeMy WebLinkAbout257-22 RESOLUTION113 West Mountain Street Fayetteville, AR 72701 (479) 575-8323 Resolution: 257-22 File Number: 2022-1000 SUBRECIPIENT AGREEMENT WCRC DEAD HORSE MOUNTAIN RD. LAND PURCHASE: A RESOLUTION TO AUTHORIZE MAYOR JORDAN TO SIGN A SUBRECIPIENT AGREEMENT WITH THE WATERSHED CONSERVATION RESOURCE CENTER FOR THE PURCHASE OF ABOUT 223 ACRES OF LAND NEAR DEAD HORSE MOUNTAIN ROAD UTILIZING AMERICAN RESCUE PLAN ACT FUNDS IN THE AMOUNT OF $1,445,400.00, AND TO APPROVE A BUDGET ADJUSTMENT WHEREAS, the City of Fayetteville has received funding from the American Rescue Plan Act (ARPA) that can be used to support the protection of water quality and watersheds and invited non-profit organizations to submit proposals for environmental projects to fund with the available ARPA funding; and WHEREAS, the Watershed Conservation Resource Center submitted an application requesting $1,445,000.00 in American Rescue Plan Act funds for the purchase of about 223 acres of land near Dead Horse Mountain Road for the purpose of conservation, restoration, and enhancement to provide water quality improvements and protection of the Beaver Lake Watershed; and WHEREAS, the property can provide significant ecological, green infrastructure, and social value to the citizens of Fayetteville for generations to come and helps to prevent additional water treatment costs, keeping future drinking water costs for citizens of Fayetteville economical; and WHEREAS, the property treats stormwater runoff and supports water quality protection of our drinking water source for the residents of Fayetteville and Northwest Arkansas; and WHEREAS, the Subrecipient Agreement would provide funding in the amount of $1,445,400.00 in addition to a contribution from the Beaver Water District in the amount of $800,000.00 for the Page 1 Primed on 1112122 Resolution: 257-22 File Number: 2022-1000 purchase of the land. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF FAYETTEVILLE, ARKANSAS: Section 1: That the City Council of the City of Fayetteville, Arkansas hereby authorizes Mayor Jordan to sign a Subrecipient Agreement with the Watershed Conservation Resource Center to provide the amount of $1,445,400.00 in American Rescue Plan Act funds to purchase approximately 223 acres near Dead Horse Mountain Road, and further authorizes Mayor Jordan to execute all other documents necessary to consummate the purchase of the land as well as any additional agreements related to the ownership, use, and conservation of the land. Section 2: That the City Council of the City of Fayetteville, Arkansas hereby approves a budget adjustment, a copy of which is attached to this Resolution. PASSED and APPROVED on 11/1/2022 Attest: ,�����tii r 3 r�►�����i 'AYETTEVlLL, Kara Paxton, City Clerk Treasur—qrr� % C. �yL Page 2 Printed on 1112122 City of Fayetteville, Arkansas 113 West Mountain Street Fayetteville, AR 72701 (479)575-8323 Text File File Number: 2022-1000 Agenda Date: 11/1/2022 Version: 1 Status: Passed In Control: City Council Meetinq File Type: Resolution Agenda Number: C.1 SUBRECIPIENT AGREEMENT WCRC DEAD HORSE MOUNTAIN RD. LAND PURCHASE: A RESOLUTION TO AUTHORIZE MAYOR JORDAN TO SIGN A SUBRECIPIENT AGREEMENT WITH THE WATERSHED CONSERVATION RESOURCE CENTER FOR THE PURCHASE OF ABOUT 223 ACRES OF LAND NEAR DEAD HORSE MOUNTAIN ROAD UTILIZING AMERICAN RESCUE PLAN ACT FUNDS IN THE AMOUNT OF $1,445,400.00, AND TO APPROVE A BUDGET ADJUSTMENT WHEREAS, the City of Fayetteville has received funding from the American Rescue Plan Act (ARPA) that can be used to support the protection of water quality and watersheds and invited non-profit organizations to submit proposals for environmental projects to fund with the available ARPA funding; and WHEREAS, the Watershed Conservation Resource Center submitted an application requesting $1,445,000.00 in American Rescue Plan Act funds for the purchase of about 223 acres of land near Dead Horse Mountain Road for the purpose of conservation, restoration, and enhancement to provide water quality improvements and protection of the Beaver Lake Watershed; and WHEREAS, the property can provide significant ecological, green infrastructure, and social value to the citizens of Fayetteville for generations to come and helps to prevent additional water treatment costs, keeping future drinking water costs for citizens of Fayetteville economical; and WHEREAS, the property treats stormwater runoff and supports water quality protection of our drinking water source for the residents of Fayetteville and Northwest Arkansas; and WHEREAS, the Subrecipient Agreement would provide funding in the amount of $1,445,400.00 in addition to a contribution from the Beaver Water District in the amount of $800,000.00 for the purchase of the land. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF FAYETTEVILLE, ARKANSAS: Section 1: That the City Council of the City of Fayetteville, Arkansas hereby authorizes Mayor Jordan to sign a Subrecipient Agreement with the Watershed Conservation Resource Center to provide the amount of $1,445,400.00 in American Rescue Plan Act funds to purchase approximately 223 acres near Dead Horse Mountain Road, and further authorizes Mayor Jordan to execute all other documents necessary to consummate the purchase of the land as well as any additional agreements related to the ownership, use, and conservation of City of Fayetteville, Arkansas Page 1 Printed on 111212022 File Number: 2022-1000 the land. Section 2: That the City Council of the City of Fayetteville, Arkansas hereby approves a budget adjustment, a copy of which is attached to this Resolution. City of Fayetteville, Arkansas Page 2 Printed on 111212022 Walk -On at Agenda Session by Council Member Turk 10/25/22 at 2:36 pm. Legistar ID No.: 2022-1000 AGENDA REQUEST FORM FOR: Council Meeting of November 1, 2022 FROM: Council Member Teresa Turk ORDINANCE OR RESOLUTION TITLE AND SUBJECT: A RESOLUTION TO AUTHORIZE MAYOR JORDAN TO SIGN A SUBRECIPIENT AGREEMENT WITH THE WATERSHED CONSERVATION RESOURCE CENTER FOR THE PURCHASE OF ABOUT 223 ACRES OF LAND NEAR DEAD HORSE MOUNTAIN ROAD UTILIZING AMERICAN RESCUE PLAN ACT FUNDS IN THE AMOUNT OF $1,445,400.00 APPROVED FOR AGENDA: City Council Member Teresa Turk Asst. City Attorney Blake Pennington Approved as to form I012-s6,2- Date I()/r/,:: �� g Date RESOLUTION NO. A RESOLUTION TO AUTHORIZE MAYOR JORDAN TO SIGN A SUBRECIPIENT AGREEMENT WITH THE WATERSHED CONSERVATION RESOURCE CENTER FOR THE PURCHASE OF ABOUT 223 ACRES OF LAND NEAR DEAD HORSE MOUNTAIN ROAD UTILIZING AMERICAN RESCUE PLAN ACT FUNDS IN THE AMOUNT OF $1,445,400.00 WHEREAS, the City of Fayetteville has received funding from the American Rescue Plan Act (ARPA) that can be used to support the protection of water quality and watersheds and invited non-profit organizations to submit proposals for environmental projects to fund with the available ARPA funding; and WHEREAS, the Watershed Conservation Resource Center submitted an application requesting $1,445,000.00 in American Rescue Plan Act funds for the purchase of about 223 acres of land near Dead Horse Mountain Road for the purpose of conservation, restoration, and enhancement to provide water quality improvements and protection of the Beaver Lake Watershed; and WHEREAS, the property can provide significant ecological, green infrastructure, and social value to the citizens of Fayetteville for generations to come and helps to prevent additional water treatment costs, keeping future drinking water costs for citizens of Fayetteville economical; and WHEREAS, the property treats stormwater runoff and supports water quality protection of our drinking water source for the residents of Fayetteville and Northwest Arkansas; and WHEREAS, the Subrecipient Agreement would provide funding in the amount of $1,445,400.00 in addition to a contribution from the Beaver Water District in the amount of $800,000.00 for the purchase of the land. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF FAYETTEVILLE, ARKANSAS: Section 1: That the City Council of the City of Fayetteville, Arkansas hereby authorizes Mayor Jordan to sign a Subrecipient Agreement with the Watershed Conservation Resource Center to provide the amount of $1,445,000.00 in American Rescue Plan Act funds to purchase approximately 223 acres near Dead Horse Mountain Road, and further authorizes Mayor Jordan to execute all other documents necessary to consummate the purchase of the land as well as any additional agreements related to the ownership, use, and conservation of the land. PASSED and APPROVED this Pt day of November, 2022. APPROVED: RM ATTEST: LIONELD JORDAN, Mayor KARA PAXTON, City Clerk/Treasurer Additional Information Attachment 1: Floodplain Conservation to Protect Water Quality: General Vicinity Map Attachment 2: Beaver Water District Letter of Financial Commitment Attachment 1 240 acre Conservation Flood Plain on the WFWR General Vicinity Map ' Attachment-1 ,.��, �:r,•�;��- # - -,, ; � Floodplain Conservation to Protect Water Quality t,� ; r_,_� WCRC and City of Fayetteville Property Vicinity Map` _6198 Acres T � , j � 14n• t ' River Floodwayr �1 22 Acres of Wetlands m + t � � 4 � I _ 100 year Floodplain ; ",• , _ Al .7: 1 2-5 Miles of Riverfront 1 Goff Farm Rd r• !, tr Combs Park J Lake Proposed Floodplain Purchase tr Beaver Lake 224 +I- MIL acres Location of Pump Station Dam �__.....�, Properly ��, Watershed low S!'1 'ti • It ' i r West Fork White River 100-year Flood Zone a r' WCRClCity Property Boundary � ''. •._� y � „ '�:•.? x `� � e`4 ti Proposed Floodplain Purchase �� � • 0 500 1,000 2,000 3,000 Feel .. � a. - • s Z F>r Attachment 2 Beaver Water District Letter of Financial Commitment BeaverWaterDistrict April 25, 2022 Sandi Formica, Executive Director Watershed Conservation Resource Center 380 W. Rock St. Fayetteville, AR 72701 RE: Floodplain Conservation to Protect Water Quality Dear Sandi, Beaver Water District is the drinking water provider for over 350,000 residents of Northwest Arkansas. To continue to provide our customers with clean, safe drinking water, we maintain a multiple barrier approach including consumer education, source water protection, and state of the art treatment and disinfection. Protection of the quality of the water in the reservoir is critical to our overall protection program and we have been active in that effort for more than 30 years. One of our strategies for protecting the water quality of Beaver Lake is through land conservation, with a focus towards riparian areas and floodplains of the tributaries that flow to our water supply. These are critical areas that function to slow down the water in flooded rivers and remove sediment and nutrients before they reach the lake. With the rapid growth being experienced in Northwest Arkansas, our opportunities to conserve and protect these areas grow smaller every day. Beaver Water District will supply up to $800,000 toward the purchase of the Collier property along the West Fork of the White River to conserve it as a functioning floodplain. Matching funds dollar for dollar will be required to complete the purchase of greater than 200 acres as indicated by a completed real estate contract. Sincerely, M. Lane Crider, P.E. Chief Executive Officer Beaver Water District Copies via email: Kevan Inboden (kinboden@bwdh2o.org) James McCarty Omccarty@bwdh2o.org) P.O. Box 400 Lowell AR 72745 Ph 479.756.3651 Fx 479.751.4356 CITY of FAYETTEVILLE CITY OF FAYETTEVILLE y ARKANSAS AMERICAN RESCUE PLAN ACT 2022 SUBRECIPIENT GRANT APPLICATION NOTE: Submission of a Subrecipient Grant Application provides no guarantee that the applicant will receive funding. All organizations selected to receive funds will be subject to entering into a contract with the City of Fayetteville and subject to the rules and regulations pertaining to the American Rescue Plan Act. Please review the City of Fayetteville American Rescue Plan Act 2022 Subrecipient Grant Application Guide for more information on the required items listed in this application. PART 1 APPLICANT IDENTIFICATION Total Amount of Funding $1,445,400 Requested (whole dollar) [Minimum $25,000] Applicant/Organization Name Watershed Conservation Resource Center Mailing Address 380 West Rock Street, Fayetteville, AR 72701 (street, city, zip) Organization Website watershed conservation. org XZ1LGWGULGJ6 SAM Unique Entity ID Number 81-0594071 Organization FEIN/SSN PART 2 APPLICANT CONTACT INFORMATION Contact for Project Sandi J Formica, Executive Director and Project Coordinator (name & title) Contact Phone Number (479) 444-1916 Contact Email formica@watershedconservation.org Signature Authority Sandi J Formica, Executive Director (name, title & email address) formica@watershedconservation.org I PART 3 PROJECT INFORMATION Project Name Floodplain Conservation to Protect Water Quality Project Address (street, city, zip) Dead Horse Mountain Road, Fayetteville, AR 72701 American Rescue Plan Act PART 3 PROJECT INFORMATION continued Is anyone with control over the Organization (i.e. owner, manager, director, board member, or other) or any member of that person's immediate family, an employee or elected official of the City of Fayetteville If Yes, above, please identify person and position with the City Project Summary (brief synopsis of proposed project) Describe previous experience in providing similar services Programs will typically be funded for a time period not to exceed 12 months from the signed date of the subrecipient agreement. Please describe your organization's ability to plan and utilized requested funds within that timeframe. 0 Yes (�) No N/A The Watershed Conservation Resource Center (WCRC), a 501 (c) (3) nonprofit organization, is proposing to purchase 223 +/- ML acres of floodplain property along the West Fork of the White River (WFWR) to protect water quality and restore riparian and wetland habitat. The property is located in the Fayetteville City limits and 2.5 miles of the WFWR flows along its west side, and there are at least 22 acres of wetlands. Protection of the WFWR floodplain is important to the City and to the Region to ensure we have clean drinking water from Beaver Lake now and for future generations. The Watershed Conservation Resource Center (WCRC) has restored over 20 sites in Northwest Arkansas that includes river channel, riparian, and wetlands. The WCRC is committed to every restoration site and finds funding to monitor and maintain theses ecological systems for the benefit of the environment and the local communities. Currently, the WCRC is working towards restoring wetlands and prairie at the Dead Horse Mountain property owned by both the City and WCRC. The primary project objective is to purchase floodplain property along the West Fork White River off of Dead Horse Mountain Road to protect water quality. The WCRC has an agreement with the landowner, so if selected for funding the property purchase will proceed to closing. The closing should take around 6 to 8 weeks. American Rescue Plan Act PART 4 PROJECT BENEFICIARIES Projected number of 90,515 Fayetteville beneficiaries jBecause the federal rules vary depending on the type of project for which funds are being requested, the city has grouped project requests in 3 focus categories: Social Services, Economic, and Environmental. Please choose the corresponding category below that most closely identifies your project. PART 4A SOCIAL SERVICES APPLICATIONS ONLY Will ALL beneficiaries live, work and/or go to school in Fayetteville ® Yes 0 Yes ONo 0 No Will ALL beneficiaries meet US Treasury Low to Moderate Income (LMI) Guidelines (please see Application Guide, Exhibit A). Will ALL beneficiaries have been negatively impacted by 0 Yes O No COVID-19 O Yes ©No Does this request respond to a negative COVID-19 impact? If answering Yes to the question above, please describe the COVID-19 impact and how this proposal will aid in responding to the impact Please indicate how the proposed project meets eligibility standards and requirements described in the U.S. Department of the Treasury's Final Rule for Coronavirus State and Local Fiscal _Recovery Funds American Rescue Plan Act PART 4B ENVIRONMENTAL APPLICATIONS ONLY Please describe the effect of the proposed environmental impact or benefit. Please indicate how the proposed project meets eligibility standards under the EPA's Clean Water State Revolving Fund CWSRF), Drinking Water State Revolving Fund D( WSRF), or eligible projects as described in the U.S. Department of the Treasury's_ Final Rule for Coronavirus State and Local Fiscal Recovery Funds. See Subrecipient Application Guide for more information. The "Floodplain Conservation to Protect Water Quality" project meets the eligibility standards under the EPA's Clean Water State Revolving Fund for Section 603(c)(2) Eligibility: Section 319. Publicly or privately owned projects that implement NPS management programs established under Section 319 of the CWA are eligible. This project is located in the West Fork White River (WFWR) watershed. The WFWR is a major tributary of the White River which forms Beaver Lake, the primary drinking water source for over 350,000 people in Northwest Arkansas. This project satisfies Section 319 eligibility requirements and meets Arkansas's 2018-2023 Nonpoint Source (NPS) Management Plan objectives. The NPS Management Plan identifies the Upper White River and Kings River as a priority watershed for nonpoint source pollution reduction. Included in this is the West Fork White PART 4C ECONOMIC APPLICATIONS ONLY Please describe the residents or industry sector this grant request is intended to serve or benefit. Please indicate how the proposed project meets eligibility standards and requirements described in the U.S_._ Department of the Treasury's Final Rule for Coronavirus State and Local Does this request respond to ®Yes a negative COVID-19 impact If yes, please describe the COVID-19 impact and how this proposal will aid in the City's economic recovery American Rescue Plan Act 4 PART 5 FAYETTEVILLE BUSINESS LICENSE City Code Chapter 118 Business Registry and Licenses delineates what businesses are required to have a Fayetteville Business License. Submission of this grant application indicates that, if required, a current business license is in place. PART 6 SIGNATURE OF SIGNATURE AUTHORITY AND DATE I am an authorized employee/agent of the applicant organization and I am authorized to submit this application. I have read and reviewed the American Rescue Plan Act documentation. I understand that as a subrecipient of the City of Fayetteville's American Rescue Plan Act funds, I will be responsible for maintaining records, complying with provisions of the subrecipient agreement, and providing any/all records and information necessary for the City of Fayetteville to report on this award. All applications and documentation are subject to disclosure pursuant to the Arkansas Freedom of Information Act. All documentation may be provided to Federal and/or State government agencies for accounting and auditing purposes. Sandi J. Formica/Executive Director/April 30, 2022 Name/Title/Date American Rescue Plan Act PART 7 ORGANIZATION DESCRIPTION Provide a brief description of your organization and the services offered. Year of Incorporation Philosophy, Purpose and/or Mission Statement IP4111N3 The Watershed Conservation Resource Center is a non-profit organization that strives to protect, conserve, and restore natural resources by utilizing the watershed approach, environmental outreach, and providing planning and technical assistance to landowners, communities, and government. Provide a brief description of your organization including information about programs and/or services other than the proposed project. Safeguarding our Nation's natural resources requires initiative from well organized individuals, strategic funding mechanisms, and broad community support. Scientific information and effective communication of environmental data are necessary for protection and conservation of our rivers, lakes, wetlands, forest, & drinking water. With this in mind, Sandi J. Formica and Matthew Van Eps, P.E. formed the WCRC to provide technical support to communities to address environmental problems. Now 18 years old, over 50-years of combined experience, and a staff of 11, the WCRC are experts in watershed management and stream and ecological restoration. Establishing strong partnerships, the WCRC has conducted a variety of watershed -based assessments focused on sediment and nutrients sources from river instability, off -road vehicles, urbanization, and agriculture. The WCRC develops solutions to identified environmental problems and are leaders in designing and implementing ecological -based river restorations. The WCRC has successfully completed projects ranging from small urban streams to large rivers throughout Northwest Arkansas (NWA). The WCRC most recently used their assessment techniques and successful partnership collaboration to create the first watershed plan authorized by the NRCS to utilize PL-566 funding to implement river restoration projects at priority sites in the West Fork White River (WFWR) watershed. The WFWR is a major tributary to Beaver Lake, NWA's drinking water source. A first in the Nation, the WFWR PL-566 program is funding restoration of highly unstable areas along the WFWR and has the potential for millions of federal dollars to be directed to this area. For the City of Fayetteville, this effort will have a huge positive impact, because 40% of Fayetteville drains to the WFWR, and the river runs through the East side of the City limits and planning area. American Rescue Plan Act PART 7 ORGANIZATION DESCRIPTION continued The WFWR is an untapped natural resource for the City and as it is restored through the PL-566 program, the river can provide a water trail through the City, boating and fishing recreation, and natural area hiking to Fayetteville residents 20 minutes or less from their home. The WCRC has secured over $7 million in federal grants and has leveraged at least that amount in local funding and in -kind services, to conduct watershed and conservation initiatives mostly in NWA that result in ecological restoration, enhanced recreation, and cleaner water. The WCRC is recognized for its expertise in designing and implementing stream restoration plans which include the restoration of stream channel, wetlands, and riparian areas. Working with multiple landowners and partners, the WCRC has successfully implemented 21 stream restoration projects that includes over 30,450 feet of restoration and stabilization including projects on small urban streams and large rivers in rural settings. The WCRC provides project management and collects the field data, conducts the stream stability assessment, develops the restoration design along with construction drawings and specifications, obtains and coordinates construction materials, provides construction oversight, and develops and implements site native re -vegetation plans. The WCRC continues to monitor and maintain all of these sites to ensure their success. Implementation of these projects has resulted in the reduction of sediment and phosphorus loadings in the Beaver Lake and Illinois River watersheds. These projects have restored aquatic and wildlife habitat, while creating recreational opportunities for residents to enjoy these natural environments through boating, wading, fishing, and exploring. The stream restoration projects not only protect NWA's drinking water source, Beaver Lake, but also protect city parks, utility infrastructure, a historic cemetery, and private property from erosion, damage, and loss from major flood events. Implementing watershed -based actions and protecting water quality requires the support and cooperation of an array of local entities including landowners, government agencies, businesses, and the general public. A central component to all projects designed and conducted by the WCRC is the development of robust partnerships that encourage communication amongst stakeholders. The element of dynamic partnerships has allowed the WCRC to develop a solid technical basis to support proposed solutions to identified environmental problems. The WCRC has enjoyed working with many partners including: Cities of Fayetteville, Greenland, Rogers, Bentonville, Bella Vista, Eureka Springs, Fort Smith, and Little Rock; Beaver Water District; Walton Family Foundation, USDA Natural Resource Conservation Service; NWA Land Trust; Beaver Watershed Alliance; Illinois River Watershed Partnership; Arkansas Game and Fish Commission; USDA National Forest Service; Arkansas Department of Agriculture, Natural Resource Division (ANRD); U.S. Environmental Protection Agency; University of Arkansas; Audubon Arkansas; the Nature Conservancy; Winrock International; and many landowners. American Rescue Plan Act 7 PART 8 PROJECT BUDGET Provide a descriptive line -item budget for the entire project including the American Rescue Plan Act (ARPA) funds being requested. Provide specific information on how American Rescue Plan Act funds will be used and include any necessary supporting documentation. Please indicate whether any American Rescue Plan Act funds have been requested or received from other sources, and if so, provide detailed information on the source and proposed use of those funds. Please indicate how you will spend all awarded ARPA funding by the project end date. Floodplain Conservation to Protect Water Quality Project Budget Land Acquisition: $2,185,400 Closing Costs: $10,000 Preliminary Site Management and Restoration Plan: $30,000 Year-1 Site Management: $25,000 Total Project Cost: $2,250,400 In -Kind Contributions Beaver Water District: $800,000 (see Additional Information, Attachment 2) Watershed Conservation Resource Center: $5,000 ARPA 2022 Grant Amount Requested $1,445,400 American Rescue Plan Act U. PART 9 PROJECT DESCRIPTION Describe the proposed project and provide the information requested under PART 9 of the American Rescue Plan Act 2022 Subrecipient Application Guide. Please provide any additional information that will assist in evaluating the project. The Watershed Conservation Resource Center (WCRC), a 501(c) (3) nonprofit organization, is proposing to purchase 223 +/- ML acres of floodplain property along the West Fork of the White River (WFWR) to protect water quality and restore riparian and wetland habitat. The property is located in the Fayetteville City limits and 2.4 miles of the WFWR flows along its west side (see Additional Information, Attachment 1). Based on a cursory review, there are approximately 22 or more acres of wetlands. Cost of the property is $9,800 per acre. Beaver Water District (BWD) has committed $800,000 towards the property purchase price of $2,185,400. See Additional Information, Attachment 2 for BWD's letter of commitment. One of the fastest growing areas in the United States, Northwest Arkansas is expected to double its population by 2045. Beaver Lake is the primary drinking water source for this booming area. The WFWR is a major tributary of the White River, which forms Beaver Lake. 40% of the City of Fayetteville (City) drains to the WFWR and White River. Protection of the WFWR is important to the City and to the Region to ensure we have clean drinking water for future generations. The floodplain of the WFWR is uniquely wide at this location. From the headwaters, the river flows from south to north and then takes a turn to the east on the proposed property resulting in an exceptionally wide floodway and 100-year floodplain. Also, there are a series of wetland complexes in which many are old channel scars. The expansive floodplain and wetlands are important natural features that serve to filter out sediment and nutrients from floodwaters, which in turn helps to protect Northwest Arkansas' drinking water source, Beaver Lake. In addition to water quality protection, the WFWR's floodplain provides benefits to the community: 1) Flood risk is reduced by a. Slowing and reducing velocities of flood waters as they travel over the floodplain. Restoration of the floodplain will improve this benefit once a healthy stand of native trees are established along the riparian and native grasses and shrubs in the open areas. b. Storing flood waters 2) The extensive wetlands within the WFWR flood plain improve the quality of the local environment by providing habitat for fish and other wildlife 3) Reduces stress on the river channel; therefore, reducing the potential for accelerated streambank erosion, which can contribute thousands tons of sediment and pounds of phosphorus to the watershed 4) Provides groundwater recharge which is important to water quantity and the local ecology. American Rescue Plan Act PART 9 PROJECT DESCRIPTION continued Unfortunately, these benefits are often overlooked when local land -use decisions are made, which is why the property needs to be purchased for conservation and restoration purposes. There are mechanisms within the floodplain regulations that could allow for partial development of the property, which would threaten all of the beneficial uses stated above. Loss of those uses can result in water quality and wildlife habitat degradation. A recent survey conducted by the Northwest Arkansas Council saw that a majority of residents in this region feel clean water is a high priority. Secondary benefits to conserving this property is it is adjacent to the WCRC/City Dead Horse Mountain (DHM) Property. The property can provide secondary walking trails and support the native plant program the WCRC is providing to the local community. With 2.5 miles of river frontage, the property allows for additional boating opportunities for the community with canoe/kayak access at the DHM property. In addition, the property is located across from an area where the City's demographics show a substantially lower average income. The Beaver Water District and the WCRC will co-own the property, and the WCRC will manage the property. A portion of the property has an existing conservation easement, and it is expected that most of the remaining property will also be placed in a conservation easement. American Rescue Plan Act 10 PART 10 PROJECT TIMELINE Provide a complete and specific timeline for all activities related to proposed project. Following the grant award: First 60 days: Property will be purchased Remaining 10 months: Site management will be initiated and a conceptual restoration plan will be developed American Rescue Plan Act 11 PART 11 DATA COLLECTION, RECORD MAINTENANCE, AND REPORTING Describe how the organization will collect data and maintain records to track program activities and eligibility verification. Please also describe your organization's ability to produce required documentation including financial reports, performance reports, progress reports, expenditure information, etc. The WCRC is a non-profit organization that has been in operation for 18 years. The organization has a proven administrative track record built upon the completion of a multitude of donor and partner funded projects that required documentation of project progress and financial activities. Periodic and final reports are generated on a regular basis as prescribed by grant workplans and donor requirements. The WCRC maintains an accounting system that tracks accounts payable, accounts receivable, payroll, and procurement of goods and services that is audited by independent 3rd party entities and can produce verifiable financial reports as needed. Concerning project reporting, the WCRC has successfully completed a multitude of grants funded by local, state, and federal government agencies as well as foundations. The WCRC keeps records of data collected and report documentation as required by the funding entities in files and mostly on their local server with off -premise backup services. The WCRC provides progress reports that includes deliverables and other documentation that the work has been completed as required by the funding entity. American Rescue Plan Act 12 PART 12 PROJECT EVALUATION I OBJECTIVES AND OUTCOMES List the objectives (not activities) of the proposed project. Describe how each objective will be measured to determine if it has been met. Use the following format Objective #: Outcome(s): Method of Measurement: The objectives of the Floodplain Conservation to Protect Water Quality Project is to 1) Purchase 225 acres of floodplain that includes wetlands along the West Fork White River to a. protect water quality of White River and Beaver Lake, the drinking water source of NWA b. initiate the restoration of the wetlands and floodplain to improve contaminant removal and restore aquatic and terrestrial habitat 2) Develop a conceptual restoration plan for the site The outcomes are 1) Floodplain and wetlands are protected, as well as water quality of our drinking water source 2) Conceptual restoration plan The method of measurement is a deed showing the joint ownership of the property between Beaver Water District and the Watershed Conservation Resource Center will be filed at the Washington County Court House. American Rescue Plan Act 13 PART 13 PARTIAL FUNDING Indicate whether the project can proceed with partial funding. If YES, indicate the minimum amount the applicant will accept with line items arranged from highest to lowest priority. Describe the impact that partial funding will have on the_project. If NO, the project will not be considered for partial funding, It would be difficult to proceed with partial funding for this project, because of the limited time of 45 days to provide a commitment to the landowner for the stated purchase price. At this time the Beaver Water District has agreed to pay for $800,000 of the property purchase. There is not another funder at this time, so this grant would need to pay for the remaining cost. If the WCRC is awarded this grant, at that time, the WCRC will try to leverage the money to bring in additional funding to restore the property. American Rescue Plan Act 14 PART 14 ADDITIONAL DOCUMENTATION CHECKLIST Please provide these items with your application. See page 10 of the 2022 American Rescue Plan Act Subrecipient Application Guide for more information 21 Accessibility Narrative 21 Board of Directors 21 Bylaws 21 Certificate of Good Standing 17/1 Financial Audit (see Application Guide for more information) 1z Intake Forms 1z Non -Profit Status Verification [IRS 501(c)(3) letter, IRS form 990 or 990-EZ, etc.] 0 Resumes (Executive Director and Project Coordinator) System Award Management (SAM) UEI registration Status of Funding (if applicable) Additional Documentation Checklist (this page) Additional Information American Rescue Plan Act 15 City of Fayetteville, Arkansas - Budget Adjustment Form (Legistar) Budget Year Division Adjustment Number Non -Departmental (800) 2022 /Org2 Requestor: Council Member Teresa Turk BUDGET ADJUSTMENT DESCRIPTION / JUSTIFICATION: A RESOLUTION TO AUTHORIZE MAYOR JORDAN TO SIGN A SUBRECIPIENT AGREEMENT WITH THE WATERSHED CONSERVATION RESOURCE CENTER FOR THE PURCHASE OF ABOUT 223 ACRES OF LAND NEAR DEAD HORSE MOUNTAIN ROAD UTILIZING AMERICAN RESCUE PLAN ACT FUNDS IN THE AMOUNT OF $1,445,400.00 AND APPROVAL OF A BUDGET ADJUSTMENT. RESOLUTION/ORDINANCE COUNCIL DATE: 1 1 /15/2022 LEGISTAR FILE ID#: 2022-1000 KeA/t wspv'by� 1012512022 5:26 PM Budget Director Date TYPE: D - (City Council) JOURNAL #: GLDATE: CHKD/POSTED: TOTAL 1,445,400 1,445,400 Increase / (Decrease) Account Number Expense Revenue Proiect.Sub# Project Sub.Detl AT v.20221019 Account Name 2246.800.9718-5805.00 1,445,400 - 20023 2021 EX Land - Acquisition 2246.800.9246-4309.01 - 1,445,400 20023 2021 RE Federal Grants - Operational H:\BudgetAdjustments\2022—Budget\CITY COUNCIL\1 1-15-22\2022-1000 - BA ARPA WCRC Land Purchase Dead Horse Mtn.xlsm 1 of 1 Watershed Conservation Resource Center Subrecipient Agreement City of Fayetteville Staff Review Form 2022-1134 Legistar File ID N/A City Council Meeting Date - Agenda Item Only N/A for Non -Agenda item Steve Dotson 11/30/2022 INTERNAL AUDIT(036) Submitted By Submitted Date Division/Department Action Recommendation: Recommend Mayor's signature of approval of a subrecipient agreement with the Watershed Conservation Resource Center in the amount of $1,445,400.00 to provide funding from the American Rescue Plan Act to purchase about 223 acres of land near dead horse mountain road. Resolution 257-22 passed on 11/1/22 as a walk- on item included the funding arrangements and authorized Mayor Jordan to sign the subrecipient agreement. Account Number Project Number Budgeted Item? Budget Impact: Current Budget Funds Obligated Current Balance Does item have a cost? Item Cost Budget Adjustment Attached? Budget Adjustment Remaining Budget Fund Project Title v202t0s22 Purchase Order Number: Previous Ordinance or Resolution It Change Order Number: Approval Date: 12/01/2022 Original Contract Number: Comments: CITY OF .'FAYETTEVILLE STAFF MEMO ARKANS ARKANSAS TO: Mayor THRU: Susan Norton, Chief of Staff FROM: Steve Dotson, Internal Auditor DATE: November 30, 2022 SUBJECT: Subrecipient Agreement—WCRC Dead Horse Mountain Rd. Land Purchase Recommend Mayor Jordan's signature on the WCRC subrecipient agreement. BACKGROUND: Resolution 257-22, passed and approved on 11/1/22, authorized Mayor Jordan to sign a subrecipient agreement with the Watershed Conservation Resource Center for the purchase of about 223 acres of land near Dead Horse Mountain Road utilizing American Rescue Plan Act Funds in the amount of $1,445,400.00. DISCUSSION: WCRC submitted a request for funding under the ARPA program as a subrecipient, to purchase approximately 223 acres of land for the purpose of conservation, restoration, and enhancement to provide water quality improvements and protection of the Beaver Lake Watershed. Resolution 257-22 authorized Mayor Jordan to execute all other documents necessary to consummate the purchase of land as well as any additional agreements related to the ownership, use, and conservation of the land. BUDGETISTAFF IMPACT: Land will be purchased with American Rescue Plan Act funds. Attachments: ARPA Subrecipient Contract with WCRC with Resolution 257-22 attached at the end of the subrecipient contract. Mailing Address: 113 W. Mountain Street www.fayetteville-ar.gov Fayetteville. AR 72701 ,r`,,,-^ CITY OF FAYETTEVILLE ARKANS ARKANSAS SUBRECIPI ENT AGREEMENT for AMERICAN RESCUE PLAN City of Fayetteville, AR and WATERSHED CONSERVATION RESOURCE CENTER City of Fayetteville Subrecipient# ARPA-0004 This Subrecipient Agreement (Agreement) is entered into and effective on this 2nd day of December 2022 between the City of Fayetteville, hereafter referred to as ("the City) and Watershed Conservation Resource Center (hereinafter referred to as "WCRC" or the "subrecipient"). WHEREAS, WCRC requested funding to purchase approximately 223 acres of floodplain property located in the Fayetteville city limits along a 2.5 mile section of the West Fork of the White River (WFWR) to protect water quality and restore riparian and wetland habitat; and WHEREAS, Protection of the WFWR floodplain is important to the City and to the Region to ensure we have clean drinking water from Beaver Lake now and for future generations; AND WHEREAS, The City of Fayetteville has received funding through the American Rescue Plan Act ("ARPA" or the "Act"), from the United States Department of the Treasury; WHEREAS, it shall be hereby disclosed this Agreement shall make WCRC a subrecipient/ pass -through entity under 2 CFR 200.1 receiving a subaward under sections 602(c)(3) and 603(c)(3) of the Act and be considered for this subaward to carry out a program or project on behalf of the City with the Otys Federal award funding; WHEREAS, the City notifies the subrecipient: (1) that this funding shall be considered a subaward of AREA funds; (2) subrecipient shall adhere to any and all compliance requirements for use of AREA funds; and (3) any and all reporting requirements for expenditures of AREA funds; and WHEREAS, this Agreement is reflective of requirements issued and identified with the Final Rule of the Department of the Treasury; specifically, that AREA funds may be used for investments in water and sewer infrastructure, and that AREA aligns eligible uses with categories eligible under the Environmental Protection Agency's (EPA) Clean Water State Revolving Fund (CWSRF) or Drinking Water State Revolving Fund (DWSRF) and projects eligible under the CWSRF or DWSRF are presumed to be necessary investments under the Final Rule of the Department of the Treasury; and WHEREAS, eligible projects under the CWSRF include projects designed to control non -point sources of pollution and to protect waterbodies from pollution and the WCRC proposal qualifies under the eligibility standards under the EPA's CWSRF, section 603(c)(2), section 319 of the Clean Water Act (CWA), where publicly or privately owned projects that implement nonpoint source management programs established under section 319 of the CWA are eligible. City of Fayetteville, AR and Watershed Conservation Resource Center City of Fayetteville Subrecipient Agreementif ARPA-0i Page 1 of 27 CITY OF FAYETTEVILLE ARKANS ARKANSAS NOW, THEREFORE, inconsideration of the covenants and conditions hereinafter set forth, the City and subrecipient agree as follows: 1. INFORMATION REQUIRED BY THE UNIFORM GRANT GUIDANCE IUGGI ✓i200 332 a) Subrecipient Name (must match the name associated with its Unique Entity Identifier): Watershed Conservation Resource Center 380 West Rock Street Fayetteville, Arkansas 72701 EIN: 81-0594071 Subrecipient's Unique Entity Identifier (formerly known as DUNS number): XZILGWGULGl6 b) Subaward Budget Period: Subaward budget period shall be set forth in Section 4 below. c) Total Amount of Federal Funds obligated to the subrecipient by the City: $1,445,400.00 d) Name of Federal Awarding Agency and Contact Information: United States Department of Treasury (US Treasury) Attn: State and Local Fiscal Recovery Funds 1500 Pennsylvania Avenue NW, Washington, DC 20220 SLFRPCdtreasury.Rov Telephone: 202-622-6415 Website: httos://home.treasury.Rov/policy-issues/coronavirus/assistance-for-state-local- and -tribal- gove rnments/state-and-local-fisca I -recovery -fund Contact Information for the dry: Paul A. Becker Chief Financial Officer 113 W. Mountain Fayetteville, AR 72701 PbeckerCdfavetteville-a r.Rov Telephone: 479-575-8330 Contact Information for the Subrecipient: Watershed Conservation Resource Center Attn: Sandi Formica 380 West Rock Street Fayetteville, Arkansas 72701 City of Fayetteville, AR and Watershed Conservation Resource Center City of Fayetteville Subrecipient Agreement# ARPA-0p04 Page 2 of 17 CITY OF FAYETTEVILLE ARKANS ARKANSAS e) Assistance Listings Number and Title: 21,027 Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) (AKA the American Rescue Plan Local Recovery Funds, hereinafter ARPA) See https�/Isam.gov/fal/7cecfdef62dc42729a3fdcd449bd62b8/-v-iew This subaward is a program grant and not for Research and Development. f) Indirect Cost Rate: (de minim is cost rate) maximum of 10%of direct costs if indicated in the budget. 2. AGREEMENT: This Agreement, contains the entire agreement and understanding between the parties hereto and supersedes any prior or contemporaneous written or oral agreements, representations and warranties between them respecting the subject matter hereof. This Agreement is also composed of the following appendices: a. Appendix A —Scope of Work& Project Allocation b. Appendix B— Department of the Treasury, 31 CFR Part 35, RIN 1505-AC77, Coronavirus State and Loral Fiscal Recovery Funds, Action: Final Rule c. Appendix C—Compliance and Reporting Guidance, State and Local Fiscal Recovery Funds 3. PROPERTY OWN ERSHIP/ADDITIONAL REQUIREMENTS: a. The property shall be owned by Watershed Conservation Resource Center, Beaver Water District, and the City of Fayetteville as tenants in common. b. Prior to closing on the property, Watershed Conservation Resource Center, Beaver Water District, and the City of Fayetteville shall enter into a separate agreement setting forth the final terms of theirjoint purchase and ownership of the property, permitted and non -permitted uses of the property, the obligations of each party with respect to ongoing maintenance and restoration of the property, and any other matters the parties believe are necessary to address. 4. PERIOD OF PERFORMANCE: This Agreement shall commence on the effective date stated above and shall expire one year from commencement. The Agreement may be extended or shortened upon mutual written agreement of the parties. 5. STANDARDS OF WORK: Subrecipient agrees that the performance of the work and services of this Agreement shall conform to the highest professional standards. 6. TAXES: Subrecipient shall pay all current and applicable local, city, county, state and federal taxes, licenses and assessments related to the Scope of Work to be performed by Subrecipient including but not limited to those payments required by all federal, state and local laws, and any other laws and Acts under which Subrecipient may be liable. 7. COMPLIANCE WITH APPLICABLE LAWS: Subrecipient shall perform all activities funded by this Agreement in accordance with all applicable federal, state and local laws, including without limitation laws which regulate the City of Fayetteville, AR and Watershed Conservation Resource Center City of Fayetteville Subrecipient Agreement# ARPA-0004 Page 3 of 17 CITY OF FAYETTEVILLE ARKANS ARKANSAS use of funds allocated under ARPA. The term "federal, state and local laws" as used in this Agreement shall mean all applicable statutes, rules, regulations, executive orders, directives or other laws, including all laws as presently in effect and as may be amended or otherwise altered during the Agreement Term, as well as all such laws which may be enacted or otherwise become effective during the Agreement Term. The term "federal, state and local laws" shall include, without limitation: a. Federal Requirements: i. Subrecipient agrees to comply with the requirements of section 603 of the ARPA, regulations adopted by Treasury pursuant to section 603(f) of the Act, and guidance issued by Treasury regarding the foregoing. The Subrecipient also agrees to comply with all other applicable federal statutes, regulations, and executive orders, and the Subrecipient shall provide for such compliance by other parties in any agreements it enters into with other parties relating to this award. ii. Federal regulations applicable to this award include, without limitation, the following: Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, 2 C.F.R. Part 200, other than such provisions as Treasury may determine are inapplicable to this Award and subject to such exceptions as may be otherwise provided by Treasury. Subpart F — Audit Requirements of the Uniform Guidance, implementing the Single Audit Act, shall apply to this award. The following 2 CFR Part 200 Policy requirements are excluded from coverage under this assistance listing: For 2 CFR Part 200, Subpart C, the following provisions do not apply to the CSLFRF program: 2 C.F.R. § 200.204 (Notices of Funding Opportunities); 2 C.F.R. § 200.205 (Federal awarding agency review of merit of proposal); 2 C.F.R. § 200.210 (Pre - award costs);and 2 C.F.R. § 200.213(Reporting a determination that a non - Federal entityis not qualified for a Federal award). For-2 CFR Part200, Subpart D, the following provisions do not apply to the SLFRF program: 2 C.F.R. § 200.308 (revision of budget or program plan); 2 C.F.R. § 200.309 (modifications to period of performance); C.F.R. § 200.305 (b)(8) and (9) (Federal Payment). b. Universal Identifier and System for Award Management (SAM), 2 C.F.R. Part 2S, pursuant to which the award term set forth in Appendix A to 2 C.F.R. Part 25 is hereby incorporated by reference. As SAM is scheduled to be phased out, compliance with a successor government -wide system officially designated by the Office of Management and Budget (OMB). c. Reporting Subaward and Executive Compensation Inftrmatlon, 2 C.F.R. Part 170, pursuant to which the award term set forth in Appendix A to 2 C.F.R. Part 170 is hereby incorporated by reference. City of Fayetteville, AR and Watershed Conservation Resource Center City of Fayetteville Subrecipient Agreement# ARPA-0gg4 Page 4 of 17 C ITV OF ��FAYETTEVILLE ARKANS ARKANSAS d. OMB Guidelines to Agencies on Govern mentwide Debarment and Suspension (Nonprocurement), 2 C.F.R. Part 180, including the requirement to include a term or condition in all lower tier covered transactions (contracts and subcontracts described in 2 C.F.R. Part 180, subpart B) that the award is subject to 2 C.F.R. Part 180 and Treasury's implementing regulation at 31 C.F.R. Part 19. e. Subrecipient Integrity and Performance Matters, pursuant to which the award term set forth in 2 C.F.R. Part 200, Appendix XII to Part 200 is hereby incorporated by reference. f. Governmentwide Requirements for Drug -Free Workplace, 31 C.F.R. Part 20. g. New Restrictions on Lobbying, 31 C.F.R. Part 21. h. Uniform Relocation Assistance and Real Property Acquisitions Act of 1970 (42 U.S.C. §§ 4601-4655) and implementing regulations. L Generally applicable federal environmental laws and regulations. iii. Statutes and regulations prohibiting discrimination applicable to this award include without limitation, the following: a. Title VI of the Civil Rights Act of 1964 (42 U.S.C. §§ 2000d et seq.) and Treasury's implementing regulations at 31 C.F.R. Part 22, which prohibit discrimination on the basis of race, color, or national origin under programs or activities receiving federal financial assistance; Subrecipient and its sub- contractors, sub -recipients, sub -grantees, successors, transferees, or assignees, shall comply with: Title VI of the Civil Rights Act of 1964 (42 U.S.C. § 2000d et seq., 78 stat. 252) and its applicable federal statutory, regulatory authorities, other pertinent directives, circulars, policy, memoranda, and guidance prohibiting discrimination on the basis of race, color, national origin, age, sex, and disability and give assurance that it will promptly take any measures necessary to ensure such compliance. b. The Fair Housing Act Title Vlll of the Civil Rights Act of 196g(42 U.S.C.§§3601 et sec.), which prohibits discrimination in housing on the basis of race, color, religion, national origin, sex, familial status, ordisability; c. Sectlon 504 of the Rehabilitation Act of 1973, as amended (29 U.S.C. § 794), which prohibits discrimination on the basis of disability under any program or activity receiving federal financial assistance; d. The Age Dlscriminatlon Act of 1975, as amended (42 U.S.C. §§ 6101 et seq.), and Treasury's implementing regulations at 31 C.F.R. Part 23, which prohibit City of Fayetteville, AR and Watershed Conservation Resource Center City of Fayetteville Subrecipient Agreement# ARPA-0004 Page 5 of 17 CITY OF FAYETTEVILLE ARKANS ARKANSAS discrimination on the basis of age in programs or activities receiving federal financial assistance; and e. Title II of the Americans with Disabilities Act of 1990, as amended (42 U.S.C. §§ 12101 et sec.), which prohibits discrimination on the basis of disability under programs, activities, and services provided or made available by state and local governments or instrumentalities or agencies thereto. iv. Remedial Actions. In the event of the Subrecipient's noncompliance with section 603 of the Act, other applicable laws, Treasury's implementing regulations, guidance, or any reporting or other program requirements, the City may impose additional conditions on the receipt of a subsequent payments, if any, or take other available remedies as set forth in 2 C.F.R. § 200.339. In the case of a violation of section 603(c) of the Act regarding the use of funds, previous payments shall be subject to recoupment as provided in section 603(e) of the Act. v. Hatch Act. The Subrecipient agrees to comply, as applicable, with requirements of the Hatch Act (5 U.S.C. §§ 1501-1508 and 7324-7328), which limit certain political activities of State or local government employees whose principal employment is in connection with an activity financed in whole or in part by this federal assistance. vi. False Statements. The Subrecipient understands that making false statements or claims in connection with this award is a violation of federal law and may result in criminal, civil, or administrative sanctions, including fines, imprisonment, civil damages and penalties, debarment from participating in federal awards or contracts, and/or any other remedy available by law. vii. Monitoring: The Subrecipient agrees to allow the City and the US Treasury to monitor the subaward in accordance with all applicable statutes, regulations, OMB circulars, and guidelines. The Subrecipient shall allow the City to have oversight of any Subrecipient's spending and monitoring of specific outcomes and benefits attributable to use of subaward funds by Subrecipient. viii. Audits In accordance with the provisions of 2 CFR 200, Subpart F - Audit Requirements, nonfederal entities that expend financial assistance of $750,000 or more in Federal awards will have a single audit conducted for that year. Non-federal entities that expend less than $750,000 a year in Federal awards are exempt from Federal audit requirements for that year, except as noted in 2 CFR 200.503. The City is responsible for resolving audit findings specifically related to the subaward and not responsible for resolving cross -cutting findings (§200.332(d)(4)). ix. Disclosure of Information. Any confidential or personally identifiable information (PII) acquired during the course of the subaward shall not be disclosed by the Subrecipient to any person, firm, corporation, association, or other entity for any reason or purpose whatsoever without the prior written consent of the City, either during the term of the Agreement or after termination of the Agreement for any reasons whatsoever. The Subrecipient agrees to abide City of Fayetteville, AR and Watershed Conservation Resource Center City of Fayetteville Subrecipient Agreementig ARPA-0004 Page 6 of 17 CITY OF FAYETTEVILLE ARKANS ARKANSAS by applicable federal regulations regarding confidential information and research standards, as appropriate, for federally supported projects. x. Conflicts of Interest. The Subrecipient understands and agrees it must maintain a conflict of interest policy consistent with 2 C.F.R. 4 200.318(c) and that such conflict of interest policy is applicable to each activity funded under this award. Subrecipients must disclose in writing to the City, as appropriate, any potential conflict of interest affecting the awarded funds in accordance with 2 C.F.R. 5 200.112. b. City and Other City Requirements(see 4200.332(a)(3)j: I. Reporting: Subrecipient agrees to comply with any reporting obligations established by the City as it relates to this award. Subrecipient shall submit a Monthly Grant Report by the 15th of the month to the Contact for the City. ii. Maintenanceof and Access to Rewrds: a. The Subrecipient shall maintain records and financial documents sufficient to evidence compliance with section 603(c) of the Act, Treasurys regulations implementing that section, and guidance issued by Treasury regarding the foregoing. b. The US Treasury Office of Inspector General and the Government Accountability Office, the City, or their authorized representatives, shall have the right of access to records (electronic and otherwise) of the Subrecipient in order to conduct audits or other investigations. c. Records shall be maintained by Subrecipient for a period of five(5)years after all funds have been audited, the audit resolved, and all funds expended or returned to Treasury, whichever is later. Ill. Administrative Consideration. Where policies of the Subrecipient differ from those of, such as travel reimbursement, fringe benefits, indirect costs, etc., the policies of the Subrecipient shall be applicable to cost incurrences under the Agreement provided such policies comply with awarding agency regulations. iv. Responsibilities. The Subrecipient agrees to furnish the necessary resources, materials, services, and otherwise to do all things necessary for the performance of the work described in Scope of Work, which is incorporated into the Agreement as Attachment, along with the Budget required for that performance, which is incorporated into the Agreement as Attachment B and C respectively. (see Attachment B: Scope of Work and Attachment C Budget). Subrecipient shall provide Monthly Reports as provided above. v. Relationship of Parties. The parties are independent, and neither party is the agent, joint venturer, partner, or employer of the other. City of Fayetteville, AR and Watershed Conservation Resource Center City of Fayetteville Subrecipient Agreement# ARPA-0004 Page 7 of 17 CITY OF FAYETTEVILLE ARKANS ARKANSAS vi. Rebudgeting and Prior Approvals. Subrecipient is permitted to rebudget direct costs, if necessary, as described in the uniform guidance (§200.308) to better reflect spending requirements, subject to the Citys written approval, and subject to the federal awarding agency's policy and UGG's that would define requirements for prior written approval (§200.407) before implementation. vii. Monitoring Plan and Reporting. The City will monitor the Subrecipient to ensure that the subaward is used for authorized purposes, in compliance with federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved, as required by §200.332(d). The City will monitor the Subrecipient and identify any failures in the administration and performance of the award. The monitoring plan will also serve to identify whether the Subrecipient needs technical assistance. In addition to program performance, The City will monitor financial performance as required by §200.332(d)(1)). Monitoring will be used to document allowable and unallowable costs, time and effort reporting and travel. Monitoring also will be used to follow up on findings identified in an earlier monitoring visit, from document reviews or after an audit to ensure the Subrecipient took corrective action (§200.332(d)(2)). As appropriate, the cooperative audit resolution process may be applied. The monitoring plan may include on -site visits, follow-up, document and/or desk reviews, third -parry evaluations, virtual monitoring, technical assistance and informal monitoring such as email and telephone interviews. The City will also issue management decisions for applicable audit findings as required by §200.521(§200.332(d)(3)). For reporting, UGG requires that the City and the Subrecipient use OMB approved government -wide standard information collections when providing performance information and data in reports. The books and records of the Subrecipient shall be made available, if needed and upon request, at subrecipient's regular place of business, for audit by personnel authorized by the City or federal government. The Subrecipient books and records must be retained for a period of five (5) years following receipt of final report, understanding no other actions require an extension of the record retention period, such as open audit findings, committed program income, or other reasons, as applicable. viii. Risk Assessments, Specific Conditions and Remedies. The City has conducted a risk assessment as required by §200.332(b) and determined the subrecipient's level of risk as low. Risk assessments may be repeated throughout the project period after scheduled reports, audits, unanticipated issues or other adverse circumstances that may arise. In the event of noncompliance or failure to perform, the City has the authority to apply remedies, as defined in the uniform guidance (§200.339), including but not limited to: temporarily withholding payments, disallowances, suspension or termination of the federal award, suspension of other federal awards received by the subrecipient, debarment or other remedies including civil and/or criminal penalties, as appropriate (§200.332(h). The City will also consider whether the City of Fayetteville, AR and Watershed Conservation Resource Center City of Fayetteville Subrecipient Agreement# ARPA-0004 Page 8 of 17 CITY OF FAYETTEVILLE ARKANS ARKANSAS monitoring results of the Subrecipient necessitate adjustments to the its own record (see §200.332(9)). Copyright/Intellectual Property. The federal government will possess the entire copyright, title, and interest in all materials, inventions or deliverables produced as a result of this subaward, including use of logos, as appropriate. As a general principle, subject to the rights of the federal government and with respect to any subject, invention, material, or deliverable in which the City [and subrecipientl retain title resulting from this subaward, thefederal government shall ha.ve a nonexclusive, nontransferable, irrevocable paid -up license to practice or have practiced for or on behalf of the United States the subject invention, material or deliverable throughout the world. The City and Subrecipient will credit the federal award agency on any materials, inventions or deliverables produced under the federal award and subaward. c. Suspension and Debarment. Subrecipient represents that neither it nor any of its principals has been debarred, suspended or determined ineligible to participate in federal assistance awards or contracts as defined in regulations implementing Office of Management and Budget Guidelines on Governmentwide Debarment and Suspension (Non -procurement) in Executive Order 12549. Subrecipient further agrees that it will notify the City immediately if it or any of its principals is placed on the list of parties excluded from federal procurement or non -procurement programs available at www.sam.gov.; d. DUNS Number. Subrecipient agrees and acknowledges the City may not grant the Subaward and Subrecipient may not receive the Subaward unless Subrecipient has provided its Data Universal Numbering System ("DUNS") number to the City. The DUNS number is the nine -digit number established and assigned by Dun and Bradstreet, Inc. to uniquely identify business entities; e. Federal Funding Accountability and Transparency Act of 2006. Subrecipient agrees to providethe City with all information requested by the City to enable the City to comply with the reporting requirements of the Federal Funding Accountability and Transparency Act of 2006; f. Licenses Certifications, Permits, Accreditation. Subrecipient shall procure and keep current any license, certification, permit or accreditation required by federal, state or local law and shall submit to the City proof of any licensure, certification, permit or accreditation upon request; and g. Other City Agreements. Subrecipient shall fulfill all other agreements with the City and shall comply with all federal, state and local laws applicable to programs funded by such agreements. S. LIMITATION OF FUNDING AND COMPENSATION: It is expressly agreed and understood that upon execution of the Agreement, the City agrees to allocate no more than the amount of 1,445,400.00 US DOLLARS for full and complete satisfactory performance of this Agreement. Drawdowns for the advance payment of eligible expenses shall be made against the line item budgets specified in AppendixA in accordance with the following procedures: a. Subrecipient shall submit a request to the City for the advance payment along with an invoice or other documentation establishing the cost of the item. b. The City will advance funds to Subrecipient for the item. City of Fayetteville, AR and Watershed Conservation Resource Center City of Fayetteville Subrecipient Agreement# ARPA-0004 Page 9 of 17 CITY OF FAYETTEVILLE ARKANS ARKANAS c. Following Subrecipient's payment for the item, Subrecipient shall provide a receipt or other proof of payment acceptable to the City within seven (7) days of payment. d. The City may withhold advance funds for items if any required documentation has not been provided for previous purchases within the time required by 8.c Alternatively, the Subrecipient may request reimbursement for expenses by submitting monthly invoices, itemized by budget category, along with copies of invoices, receipts, and other documentation acceptable to the City. The City will then remit reimbursement payments to Subrecipient within thirty (30) days of acceptance of the invoice. 9. SCOPE OF WORK: The Subrecipient shall perform all services according to the Scope of Work as indicated in Appendix A. Any deviation from the provisions detailed in the Scope of Work shall be prohibited unless prior approval is granted by formal change order to this Agreement. 10. PUBLICITY AND USE OF NAME: a. Any and all news releases, advertising, promotion, sales literature containing the City of Fayetteville logo or name shall be subject to prior written approval of the other parry, and subject to the prior written approval of the City, as appropriate. Any such publicity shall credit the contributions of each parry. b. Neither party shall use the name,insignia, or trademark of the other parry, nor any adaptation thereof, nor the names of any of its employees in any advertising, promotion or sales literature without the written consent of the other party. 11. FISCAL AND ADMINISTRATIVE RESPONSIBILITIES: The Subrecipient agrees to comply with the provisions of the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (2 CFR part 200) (the Uniform Guidance), including the cost principles and restrictions on general provisions for selected items of cost. as applicable, and all requirements and standards which shall include but are not limited to the following: a. Compliance with Federal Procurement Laws: The City hereby designates and the Subrecipient hereby agrees to receive funding through the City's ARPA funding and to administer such funding in accordance the United States Treasury Final Rule, 31 CFR Part 35, 87 FIR 4446, Coronavirus State and Local Fiscal Recovery Funds with this agreement. Compliance with procurement laws shall be inclusive of all appendices within this Agreement. All contracts for services and procurement for materials shall be carried out in compliance with 2 CFR Part 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. b. Compliance with Other Federal. State and Local Procurement: All contracts for services and procurement for materials shall be carried out in compliance with and all other applicable federal, state, and local rules and regulations, including regulations and policies from the Cites Purchasing City of Fayetteville, AR and Watershed Conservation Resource Center City of Fayetteville Subrecipient Agreement# ARPA-0004 Page 10 of 17 CITY CIF FAYETTEVILLE ARKANS ARKANSAS Division. City of Fayetteville Procurement Thresholds: a. SO- $999: No quotes required b. $1,000 - $2,499: minimum of3 verbal quotes required c. $2,500-$34,999: minimum of 3 written quotes required J. $35,000 and up: Formal sealed bid / solicitation process i.Refer to State of Arkansas Procurement laws, City of Fayetteville Purchasing Policies and Ordinances for requirements for formal solicitation processes. c. Records and Reports: The Subrecipient shall, at a minimum, submit the following reports to the City and report as required in Appendix C: i. Monthly reports shall be submitted to the City fifteen (15) calendar days after month end. Monthly reports will provide and outline funded activities undertaken during each month for the duration of the project as it relates to Appendix A— Scope of Work & Project Allocation. Failure to provide the required documentation and information will affect the funding in this agreement and future requests for funding. ii. A Final Summary Report due no later than thirty (30) calendar days after the end of the Agreement period shall include a summaryof all compiled information and activities related to this Agreement iii. The Subrecipient agrees to maintain records and reports related to the project for a period of no less than five years following the term of this Agreement. iv. Access to Records (See §200.332(a)(5)) a. The City, its auditors, and if necessary, the federal agency, will be provided access to the subrecipient's programmatic and financial records (§200.337(a)). b. The Subrecipient will maintain all programmatic and financial records, including but not limited to: i. records providing a full description of each activity undertaken; ii. records demonstrating that each activity undertaken meets the national objectives of the federally- connected program; in. records required to determine the eligibility of activities; City of Fayetteville, AR and Watershed Conservation Resource Center City of Fayetteville Subrecipient Agreementit ARPA-0004 Page 11 of 17 Aft CITY OF FAYETTEVILLE ARKANS ARKANSAS iv. records required to document the acquisition, improvement, use or disposition of real property acquired or improved with the subaward assistance; v. records documenting compliance with federal and local laws; and vi. financial records required by program regulations and the Office of Management and Budget. The Subrecipient shall retain all records pertinent to program activities and financial expenditures incurred under this Agreement for a period of three years after the date of submission of the final expenditure report under this award (§200.334). Notwithstanding the above, if there are litigation, claims, audits, negotiations, written notification from the federal program or cognizant agencies or the City, or otheractions that involve any of the records cited and that have started before the expiration of the three year period, then such records must be retained until completion of the actions and resolutions of all issues (§200.334(a)), or the expiration of the three-year period, whichever occurs later. d. Documentation of Costs: The Subrecipient shall maintain records on materials purchased, services performed, individuals and families served. All costs shall be supported by evidencing in proper detail the nature and propriety of charges. All checks, payrolls, invoices, contracts, vouchers, orders or other accounting documents pertaining in whole or in part to this Agreement shall be clearly identified and readily accessible. e. Limitations on Expenditures. Subrecipient shall not be reimbursed or otherwise compensated for any expenditures incurred or services provided prior to the Effective Date or following the earlier of the expiration or termination of this Agreement. The City shall only reimburse Subrecipient for documented expenditures incurred during the Agreement Term that are: (i) reasonable and necessary to carry out the Scope of Work; (ii) documented by contracts or other evidence of liability consistent with established federal, state and local procurement guidelines; and (iii) incurred in accordance with all applicable requirements for the expenditure of funds payable under this Agreement. Improper Payments. Any item of expenditure by Subrecipient under the terms of this Agreement which is found by auditors, investigators, and other authorized representatives of the City, the U.S. Government Accountability Office or the Comptroller General of the United States to be improper, unallowable, in violation of federal or state law or the terms of the Notice of Prime Award or this Agreement, or involving any fraudulent, deceptive, or misleading representations or activities of Subrecipient, shall become Subrecipient's liability, to be paid by Subrecipient from funds other than those provided by City under this Agreement or any other agreements between City and Subrecipient. This provision shall survive the expiration or termination of this Agreement. City of Fayetteville, AR and Watershed Conservation Resource Center City of Fayetteville Subrecipient Agreement# ARPA-0004 Page 12 of 17 Aft CITY OF FAYETTEVILLE ARKANS ARKANSAS Audited Financial Statements. In any fiscal year in which Subrecipient expends $750,000 or more in federal awards during such fiscal year, including awards received as a Subrecipient, Subrecipient must comply with the federal audit requirements contained in 2 CFR § 200, including the preparation of an audit by an independent Certified Public Accountant in accordance with the Single Audit Act Amendments of 1996, 31 U.S.C. 7501-7507, and with Generally Accepted Accounting Principles.' If Subrecipient expends less than $750,000 in federal awards in any fiscal year, it is exempt from federal audit requirements, but its records must be available for review by the City and appropriate officials of the U.S. Government Accountability Office and the Comptroller General of the United States, and it must still have a financial audit performed for that year by an independent Certified Public Accountant. Subrecipient shall provide the City with a copy of Subrecipient's most recent audited financial statements, federal Single Audit report, if applicable (including financial statements, schedule of expenditures of federal awards, schedule of findings and questioned costs, summary of prior audit findings, and corrective action plan, if applicable), and management letter within thirty (30) days after execution of this Agreement and thereafter within nine (9) months following the end of Subrecipient's most recently ended fiscal year. Closeout (see 200.332(al(6)LThe Citywill determine whether all applicable administrative actions and all required work have been completed by the Subrecipient at the end of the period of performance. If the Subrecipient fails to complete the requirements, the federal awarding agency or pass -through will proceed to closeout the award with the information available (§200.344). The pass through will note if closeout relates to the end of a 12-month period and termination of subaward, or if the closeout relates to the end of a 12-month period and preparation for an upcoming continuation period. I. The City must provide timelines for completion of tasks (see §200.344). ii. The City must identify submission dates of all performance and financial reports (no later than 90 calendar days after the period of performance) (§200.344(a}). iii. The City must describe requirements for liquidation of financial obligations if the award is ending, or identification of carry-over of funds, if needed, to the next award period (§200.344(b)) iv. The City must include completion of any other required closeout activities, such as submission of deliverables, payments, if any, due to the Subrecipient from the City, attribution to the federal agency and/or copyright or patent rights, and any accounting of real or personal property (§200.344(c) and (f)). v. The Subrecipient must permit the Cityand auditorsto have access to the subrecipient's records and financial statements as necessary for audits and monitoring during the record retention period of three years, or more as appropriate (§200.337(a)). vi. The federal agency and/or City has the right to return to audit the program after close-out at any time during the record retention period and as long as the records are retained, to conduct recovery audits including the recovery of funds, as appropriate (§200.337(c)}. City of Fayetteville, AR and Watershed Conservation Resource Center City of Fayetteville Subrecipient Agreement# ARPA-0004 Page 23 of 27 ,ft CITY OF FAYETTEVILLE ARKANS ARKANSAS 12. COOPERATION IN MONITORING AND EVALUATION: a. City Responsibilities. The City shall monitor, evaluate and provide guidance and direction to Subrecipient in the conduct of Approved Services performed under this Agreement. The City has the responsibility to determine whether Subrecipient has spent funds in accordance with applicable laws, regulations, including the federal audit requirements and agreements and shall monitor the activities of Subrecipient to ensure that Subrecipient has met such requirements. The City may require Subrecipient to take corrective action if deficiencies are found. b. Subrecipient Responsibilities: i. Subrecipient shall permit the City to carry out monitoring and evaluation activities, including any performance measurement system required by applicable law, regulation, funding sources guidelines or by the terms and conditions of the applicable Notice of Prime Award, and Subrecipient agrees to ensure, to the greatest extent possible, the cooperation of its agents, employees and board members in such monitoring and evaluation efforts. This provision shall survive the expiration or termination of this Agreement. ii. Subrecipient shall cooperate fully with any reviews or audits of the activities under this Agreement by authorized representatives of the City, the U.S. Government Accountability Office or the Comptroller General of the United States and Subrecipient agrees to ensure to the extent possible the cooperation of its agents, employees and board members in any such reviews and audits. This provision shall survive the expiration or termination of this Agreement. 13. PROGRAM INCOME: It is not the intent of this Agreement to produce income relating from the Scope of Work; however, income directly generated from the use funds associated with this Agreement by the Subrecipient shall be returned to the City of Fayetteville. 14. MONITORING AND AUDITS: The City is required to ensure that federal funding requirements are met, that the funds are used for the purpose of the program, and the Subrecipient complies with reporting and auditing requirements. The City will monitor and audit the Subrecipient to assure the compliance of project. 15. REMEDIES FOR NONCOMPLIANCE: If the Subrecipient fails to comply with any term in this Agreement, the City may take one or more of the actions indicated in 2 CFR Part 200.338 Remedies for noncompliance. 16. PERFORMANCE TERM EXTENSION: The City may consider an extension of the term of performance based on justifiable circumstances beyond the control of the Subrecipient. The Subrecipient shall make application and submit documentation to the City regarding such circumstances, and acceptance of a proposal for the new time frame constitutes an amendment to this Agreement. Any such request for extensions shall be subject to the written approval of the City. The decision of the City shall be final and conclusive. 17. TERMINATION OF AGREEMENT: This Agreement may be terminated at any time by either party, upon giving 30 calendar days written notice to the non -terminating party. This Agreement shall be automatically terminated in the event that funds under federal award are discontinued by the awarding agency for any reason. Such termination shall take effect upon receipt of written notice to Subrecipient from the City. If there is a need to City of Fayetteville, AR and Watershed Conservation Resource Center City of Fayetteville Subrecipient Agreement# ARPA-0004 Page 14 of 17 CITY OF FAYETTEVILLE ARKANS ARKANSAS settle on an early termination, partial payment up to the termination date would be determined by incurrence of allowable cost, by completion of task, by percent of time completed up to the settlement, or some other method as defined by the City upon review of the subrecipient's records. 18. CLAIMS AGAINST THE CITY: The Subrecipient agrees to defend, indemnify and save harmless the City from any and all claims of any nature whatsoever which may arise from the Subrecipients performance of this Agreement; provided, however, that nothing contained in this Agreement shall be construed as rendering the Subrecipient liable for acts of the City, its officers, agents or employees. 19. CONFLICTS OF INTEREST: The Subrecipient represents that none of its employees, officers, or directors presently have any interest, either directly or indirectly, which would conflict in any manner with the Subrecipient's performance or procurement under this Agreement, and that no person having such interest will be appointed or employed by the Subrecipient. 20. BINDING EFFECF: This Agreement shall be binding upon and shall ensure to the benefit of the parties hereto and their respective heirs and assigns; provided, however, that no assignment shall be effective to relieve a party of any liability under this Agreement unless the other party has consented in writing to the assignment and agreed to the release of such liability. The City and the Subrecipient hereby acknowledge receipt of a duly executed copy of this Agreement complete with all Appendices attached hereto. 21. PAYMENTS: Specific project completion dates may be negotiated during the contract term. Payment may be reduced, delayed, or denied until acceptable work products are produced. a. Costs shall be necessary, reasonable and directly related to the scope of the project in this agreement. All costs shall be legal and proper. The budget included in Appendix A shall control amounts of allowable expenditures within budget categories. b. The total amount invoiced to the City over the course of the contract period shall not exceed $1,445,400.00 US Dollars, the agreed upon contribution of the City pursuant to Appendix A. c. On or before the fifteenth (15th) day of each month and in any event no later than thirty (30) calendar days after the earlier of the expiration or termination of this Agreement, Subrecipient shall submit invoices for the most recent month ended, to the City, setting forth actual expenditures of Subrecipient in accordance with this Agreement The Subrecipient shall provide backup documentation with all invoices to show compliance with all federal, state and local laws. d. The City may disapprove the requested compensation. If the compensation is so disapproved, the City shall notify Subrecipient as to the disapproval. If payment is approved, no notice will be given. 22. INSURANCE: Subrecipient shall, at all times throughout the Agreement Term, carry insurance in such form and in such amounts as City may from time to time reasonably require against other insurable hazards and casualties that are commonly insured against in the performance of similar services as are to be provided under this Agreement. At a minimum, Subrecipient shall maintain during the Agreement Term at least the following types and limits of insurance coverage: City of Fayetteville, AR and Watershed Conservation Resource Center City of Fayetteville Subrecipient Agreement# ARPA-0004 Page 15 of 17 Aft CITY OF FAYETTEVILLE ARKANSAS a. Workers' compensation in amounts no less than required by law and statutory amount; b. Employer's Liability Insurance with a limit of no less than $1,000,000; c. Commercial general liability insurance, including personal injury, contractual liability and property damage, with limits of $1,000,000 per occurrence and $2,000,000 aggregate; d. Umbrella liability insurance with a limit of $1,000,000 per occurrence and in the aggregate. All policies (other than workers' compensation and employers liability insurance) providing such coverage shall name the City as an additional insured with respect to Subrecipient's performance of services under this Agreement. Subrecipient shall provide the City with certificates of insurance evidencing such coverage within thirty (30) calendar days after execution of this Agreement, which certificates shall provide that the City shall receive thirty (30) days' advance written notice of any pending cancellation or non -renewal of any of the coverages required by the City pursuant to this Agreement. Insurance coverages that expire before the expiration of the Agreement Term shall be promptly renewed by Subrecipient so that there is no gap in coverage and certificates of insurance evidencing such renewal coverage shall be provided to the City, by a copy provided to the City immediately upon renewal. Subrecipient's failure to maintain insurance in the form and/or amounts required by the Citypursuant to this Agreement shall be deemed a material breach of this Agreement and the City shall have the right thereupon to terminate this Agreement immediately in addition to any other remedy provided herein. 23. Changes in Scope or Price: Changes, modifications or amendments in scope, price or fees to this agreement shall not be allowed without a prior formal contract amendment approved by the City in advance of the change in scope, price or fees. 24. Freedom of Information Act: This Agreement is subject to the Arkansas Freedom of Information Act. If a Freedom of Information Act request is presented to the City of Fayetteville, the subrecipient shall do everything possible to provide the documents in a prompt and timely manner as prescribed in the Arkansas Freedom of Information Act (A.C.A. §25-19-101 et. seq.). Only legally authorized photocopying costs pursuant to the FOIA may be assessed for this compliance. 25. Jurisdiction: Venue to resolve any disputes shall be Washington County, Arkansas with Arkansas law applying to the case. This Agreement shall be governed by and construed in accordance with the laws of the State of Arkansas without regard to conflict of law principles. 26. Miscellaneous a. Notices: Any notice, request, consent or approval required or permitted to be given under this Agreement or pursuant to law shall be sufficient if in writing, and if and when sent by certified or registered mail, with postage prepaid, to City's address or to the NACs address as listed below. CITY OF FAYETTEVILLE. AR ATTN: Mayor Lioneld Jordan 113 W. Mountain Fayetteville, AR 72701 City of Fayetteville, AR and Watershed Conservation Resource Center City of Fayetteville Subrecipient Agreement# ARPA-0004 Page 16 of 17 SUBRECIPIENT Watershed Conservation Resource Center ATTN: Sandi Formica 380 West Rock Street Fayetteville, AR 72701 CITY OF FAYETTEVILLE ARKANS ARKANSAS b. Severability. If any term, provision, covenant or condition of this Agreement, or the application thereof to any person, place or circumstance, shall be held to be invalid, unenforceable or void, the remainder of this Agreement and such term, provision, covenant or condition as applied to other persons, places and circumstances shall remain in full force and effect. c. Construction. The headings and captions of this Agreement are provided for convenience only and are intended to have no effect in construing or interpreting this Agreement. The language in all parts of this Agreement shall be in all cases construed according to its fair meaning and not strictly for or against either party. d. Rights Cumulative. The rights and remedies provided by this Agreement are cumulative, and the exercise of any right or remedy by either party hereto (or by its successor), whether pursuant to this Agreement, to any other agreement, or to law, shall not preclude or waive its right to exercise any or all other rights and remedies. e. Assistance. The Subrecipient shall, during and after termination of services rendered, upon reasonable notice, furnish such information and proper assistance to the City as may reasonably be required by the City in connection with work performed by Subrecipient. f. Compliance with Law. The Parties mutually represent that throughout the term of this Agreement their respective performance under this Agreement shall be, and shall remain, in Compliance with all applicable federal, state and local laws and regulations. CITY OF FA VILLE, AR WATERSHED CONSERVATION RESOURCE CENTER Sandi 1 FormicaBy: BY: BY: 7o�;' oriel Jordan, May GSYG*, AttesSandi Formica, Executive Director By. ra Patton, City Cled Treasury •FAYETTEVILL ned: Noyember21 2022 o,gRKANSPJ= City of Fayetteville, AR and Watershed Conservation Resource Center City of Fayetteville Subrecipient Agreemenot ARPA-0004 Page 17 of 17 Appendix A: Scope of Work & Project Allocation CITY OF CITY OF FAYETTEVILLE FAYETTEVILLE ARKANS ARkANa AS AMERICAN RESCUE PLAN ACT 2022 SUBRECIPIENT GRANT APPLICATION NOTE: Submission of a Subrecipient Grant Application provides no guarantee that the applicant will receive funding. All organizations selected to receive funds will be subject to entering into a contract with the City of Fayetteville and subject to the rules and regulations pertaining to the American Rescue Plan Act. Please review the City of Fayetteville American Rescue Plan Act 2022 Subrecipienl Grant Application Guide for more information on the required hems listed in this application. PART 1 APPLICANT IDENTIFICATION Total Amount of Funding $1 445,400 Requested (whole dollar) Minimum $25,000 anUOrganization Name Name Watershed Conservation Resource Center Mailing Add res stre, ci, zi s et Rock 380 West Street, Fayetteville, AR 72701 Organization Webshe watershedconservation.org SAM Unique Entity ID XZILGWGULGJ6 Number Organization FEINISSN 81-0594071 PART 2 APPLICANT CONTACT INFORMATION Contact for Project (name &title) Sandi J Formica, Executive Director and Project Coordinator Contact Phone Number (479) 444-1916 Contact Email formica@watemhedmnservation.org Signature Authority Sandi J Formica, Executive Director (name, title & email address) formica@watershedconsemation.org PART 3 PROJECT INFORMATION Project Name Floodplain Conservation to Protect Water Quality Project Address (street, city, zip) Dead Horse Mountain Road, Fayetteville, AR 72701 American Rescue Plan Act PART 3 PROJECT INFORMATION continued Is anyone with control over the Organization (i.e. owner, manager, director, board member, or other) or any O Yes O No member of that person's immediate family, an employee or elected official of the City of Fayetteville If Yes, above, please identify NIA person and position with the City The Watershed Conservation Resource Center (WCRC), a 501 (c) (3) nonprofit organization, is proposing to purchase 223 +/- Project Summary ML acres of floodplain property along the West Fork of the White (brief synopsis of proposed River (WFWR) to protect water quality and restore riparian and project) wetland habitat. The property is located in the Fayetteville City limits and 2.5 miles of the WFWR flows along its west side, and there are at least 22 acres of wetlands. Protection of the WFWR floodplain is important to the City and to the Region to ensure we have clean drinking water from Beaver Lake now and for future generations. The Watershed Conservation Resource Center (WCRC) has restored over 20 sites in Northwest Arkansas that includes river Describe previous channel, riparian, and wetlands. The WCRC is committed to experience in providing every restoration site and finds funding to monitor and maintain similar services theses ecological systems for the benefit of the environment and the local communities. Currently, the WCRC is working towards restoring wetlands and prairie at the Dead Horse Mountain property owned by both the City and WCRC. Programs will typically be funded for a time period not erty The primary project objective is to purchase floodplain prop to exceed 12 months from along the West Fork White River off of Dead Horse Mountain the signed dale of the Road to protect water quality. The WCRC has an agreement subrecipient agreement, with the landowner, so if selected for funding the property Please describe your purchase will proceed to closing. The closing should take around organization's ability to plan 6 to 8 weeks. and utilized requested funds within that timeframe. American Rescue Plan Act PART 4 PROJECT BENEFICIARIES Projected number of g0,515 Fayetteville beneficiaries Because the federal rules vary depending on the type of project for which funds are being requested, the city has grouped project requests in 3 focus categories: Social Services, Economic, and Environmental. Please choose the corresponding category below that most closely identifies your project. PART 4A SOCIAL SERVICES APPLICATIONS ONLY Will ALL beneficiaries live, work and/or go to school in O Yes O No Fayetteville Will ALL beneficiaries meet US Treasury Low to O Yes O No Moderate Income (LMI) Guidelines (please see Application Guide, Exhibit A. Will ALL beneficiaries have been negatively impacted by O Yes O No COVID-19 Does this request respond to a negative COVID-19 O Yes O No Impact? If answering Yes to the question above, please describe the COVID-19 impact and how this proposal will aid in responding to the impact Please indicate how the proposed project meets eligibility standards and requirements described in the U.S. Department of the Treasury's Final Rule for Coronavirus State and Local Fiscal Recovery Funds Amenwn Rescue Plan Act PART 4B ENVIRONMENTAL APPLICATIONS ONLY Please describe the effect of the proposed environmental The "Floodplain Conservation to Protect Water Quality" project impact or benefit. Please meets the eligibility standards under the EPA's Clean Water indicate how the proposed State Revolving Fund for Section 603(c)(2) Eligibility: Section project meets eligibility 319. Publicly or privately owned projects that implement NPS standards under the EPA's management programs established under Section 319 of the Clean Water State Revolving Fund C( NSRF), CWA are eligible. This project is located in the West Fork White Drinking Water State River(WFWR)watershed. The WFWR is a major tributary of the Revolving Fund D( WSRF), White River which forms Beaver Lake, the primary drinking water or eligible projects as source for over 350,000 people in Northwest Arkansas. This described in the U.S. project satisfies Section 319 eligibility requirements and meets Department of the Arkansas's 2018-2023 Nonpoint Source (NIPS) Management Treasury's Final Rule for Plan objectives. The NPS Management Plan identifies the Upper White River and Kings River as a priority watershed for nonpoint Coronavirus State and Local Fiscal Recovery Funds. See Subrecipient Application source pollution reduction. Included in this is the West Fork White Guide for more information. ONLY PART 4C ECONOMIC APPLICATIONS Please describe the residents or industry sector this grant request is intended to serve or benefit. Please indicate how the proposed project meets eligibility standards and requirements described in the U.S. Department of the Treasury's Final Rule for Coronavirus State and Local Fiscal Recovery Funds. Does this request respond to O Yes O No a negative COVI D-19 impact If yes, please describe the COVID-19 impact and how this proposal will aid in the City's economic recovery American Rescue Plan Act PART 5 FAYETTEVILI EBUSINESS LICENSE City Code Chapter 118 Business Registry and Licenses delineates what businesses are required to have a Fayetteville Business License. Submission of this grant application indicates that, if required, a current business license is in place. PART 6 SIGNATURE OF SIGNATURE AUTHORITY AND DATE I am an authorized employee/agent of the applicant organization and I am authorized to submit this application. I have read and reviewed the American Rescue Plan Act documentation. I understand that as a subrecipient of the City of Fayetteville's American Rescue Plan Act funds, I will be responsible for maintaining records, complying with provisions of the subrecipient agreement, and providing any/all records and information necessary for the City of Fayetteville to report on this award. All applications and documentation are subject to disclosure pursuant to the Arkansas Freedom of Information Act. All documentation may be provided to Federal and/or State government agencies for accounting and auditing purposes. Sandi J. Formica/Executive Director/April 30, 2022 Namerrhle/Date American Rescue Plan Act PART 7 ORGANIZATION DESCRIPTION Provide a brief description of your organization and the services offered. Year of Incorporation 2003 The Watershed Conservation Resource Center is a non-profit organization that strives to protect, conserve, and restore natural resources by utilizing the watershed approach, environmental outreach, and providing planning and technical assistance to Philosophy, Purpose and/or landowners, communities, and government. Mission Statement Provide a brief description of your organization including information about programs and/or services other than the proposed project. Safeguarding our Nation's natural resources requires initiative from well organized individuals, strategic funding mechanisms, and broad community support. Scientific information and effective communication of environmental data are necessary for protection and conservation of our rivers, lakes, wetlands, forest, & drinking water. With this in mind, Sandi J. Formica and Matthew Van Eps, P.E. formed the WCRC to provide technical support to communities to address environmental problems. Now 18 years old, over 50-years of combined experience, and a staff of 11, the WCRC are experts in watershed management and stream and ecological restoration. Establishing strong partnerships, the WCRC has conducted a variety of watershed -based assessments focused on sediment and nutrients sources from river instability, off -road vehicles, urbanization, and agriculture. The WCRC develops solutions to identified environmental problems and are leaders in designing and implementing ecological -based river restorations. The WCRC has successfully completed projects ranging from small urban streams to large rivers throughout Northwest Arkansas (NWA). The WCRC most recently used their assessment techniques and successful partnership collaboration to create the first watershed plan authorized by the NRCS to utilize PL-566 funding to implement river restoration projects at priority sites in the West Fork White River (WFWR) watershed. The WFWR is a major tributary to Beaver Lake, NWA's drinking water source. A first in the Nation, the WFWR PL-566 program is funding restoration of highly unstable areas along the WFWR and has the potential for millions of federal dollars to be directed to this area. For the City of Fayetteville, this effort will have a huge positive impact, because 40% of Fayetteville drains to the WFWR, and the river runs through the East side of the City limits and planning area. American Rescue Plan Act PART 7 ORGANIZATION. DESCRIPTION continued The WFWR is an untapped natural resource for the City and as it is restored through the PL-566 program, the river can provide a water trail through the City, boating and fishing recreation, and natural area hiking to Fayetteville residents 20 minutes or less from their home. The WCRC has secured over $7 million in federal giants and has leveraged at least that amount in local funding and in -kind services, to conduct watershed and conservation initiatives mostly in NWA that result in ecological restoration, enhanced recreation, and cleaner water. The WCRC is recognized for its expertise in designing and implementing stream restoration plans which include the restoration of stream channel, wetlands, and riparian areas. Working with multiple landowners and partners, the WCRC has successfully implemented 21 stream restoration projects that includes over 30,450 feet of restoration and stabilization including projects on small urban streams and large rivers in rural settings. The WCRC provides project management and collects the field data, conducts the stream stability assessment, develops the restoration design along with construction drawings and specifications, obtains and coordinates construction materials, provides construction oversight, and develops and implements site native re -vegetation plans. The WCRC continues to monitor and maintain all of these sites to ensure their success. Implementation of these projects has resulted in the reduction of sediment and phosphorus loadings in the Beaver Lake and Illinois River watersheds. These projects have restored aquatic and wildlife habitat, while creating recreational opportunities for residents to enjoy these natural environments through boating, wading, fishing, and exploring. The stream restoration projects not only protect NWA's drinking water source, Beaver Lake, but also protect city parks, utility infrastructure, a historic cemetery, and private property from erosion, damage, and loss from major flood events. Implementing watershed -based actions and protecting water quality requires the support and cooperation of an array of local entities inducing landowners, government agencies, businesses, and the general public. A central component to all projects designed and conducted by the WCRC is the development of robust partnerships that encourage communication amongst stakeholders. The element of dynamic partnerships has allowed the WCRC to develop a solid technical basis to support proposed solutions to identified environmental problems. The WCRC has enjoyed working with many partners including: Cities of Fayetteville, Greenland, Rogers, Bentonville, Bella Vista, Eureka Springs, Fort Smith, and Little Rock; Beaver Water District; Walton Family Foundation, USDA Natural Resource Conservation Service; NWA Land Trust; Beaver Watershed Alliance; Illinois River Watershed Partnership; Arkansas Game and Fish Commission; USDA National Forest Service; Arkansas Department of Agriculture, Natural Resource Division (ANRD); U.S- Environmental Protection Agency; University of Arkansas; Audubon Arkansas; the Nature Conservancy; Winrock International; and many landowners. American Rescue Plan Act PART B PROJECT BUDGET Provide a descriptive line -item budget for the entire project including the American Rescue Plan Act (ARPA) funds being requested. Provide specific information on how American Rescue Plan Act funds will be used and include any necessary supporting documentation. Please indicate whether any American Rescue Plan Act funds have been requested or received from other sources, and if so, provide detailed information on the source and proposed use of those funds. Please indicate how you will spend all awarded ARPA funding by the project end date. Floodplain Conservation to Protect Water Quality Project Budget Land Acquisition: $2,185,400 Closing Costs: $10,000 Preliminary Site Management and Restoration Plan: $30,000 Year-1 Site Management: $25,000 Total Project Cost: $2,250,400 In -Kind Contributions Beaver Water District: $800,000 (see Additional Information, Attachment 2) Watershed Conservation Resource Center: $5,000 ARPA 2022 Grant Amount Requested $1,445,400 American Rescue Plan Act PART 9 PROJECT DESCRIPTION Describe the proposed project and provide the information requested under PART 9 of the American Rescue Plan Act 2022 Subrecipient Application Guide. Please provide any additional information that will assist in evaluating the nmie The Watershed Conservation Resource Center (WCRC), a 501(c) (3) nonprofit organization, is proposing to purchase 223 +/- ML acres of floodplain property along the West Fork of the White River (WFWR) to protect water quality and restore riparian and wetland habitat. The property is located in the Fayetteville City limits and 2.4 miles of the WFWR flows along its west side (see Additional Information, Attachment 1). Based on a cursory review, there are approximately 22 or more acres of wetlands. Cost of the property is $9,800 per acre. Beaver Water District (BWD) has committed $800,000 towards the property purchase price of $2,185,400. See Additional Information, Attachment 2 for BWD's letter of commitment. One of the fastest growing areas in the United States, Northwest Arkansas is expected to double its population by 2045. Beaver Lake is the primary drinking water source for this booming area. The WFWR is a major tributary of the White River, which forms Beaver Lake. 40% of the City of Fayetteville (City) drains to the WFWR and White River. Protection of the WFWR is important to the City and to the Region to ensure we have clean drinking water for future generations. The floodplain of the WFWR is uniquely wide at this location. From the headwaters, the river flaws from south to north and then takes a turn to the east on the proposed property resulting in an exceptionally wide floodway and 100-year floodplain. Also, there are a series of wetland complexes in which many are old channel scars. The expansive floodplain and wetlands are important natural features that serve to filter out sediment and nutrients from floodwaters, which in turn helps to protect Northwest Arkansas' drinking water source, Beaver Lake. In addition to water quality protection, the WFWR's floodplain provides benefits to the community: 1) Flood risk is reduced by a. Slowing and reducing velocities of flood waters as they travel over the floodplain. Restoration of the floodplain will improve this benefit once a healthy stand of native trees are established along the riparian and native grasses and shrubs in the open areas. b. Storing flood waters 2) The extensive wetlands within the WFWR flood plain improve the quality of the local environment by providing habitat for fish and other wildlife 3) Reduces stress on the river channel; therefore, reducing the potential for accelerated streambank erosion, which can contribute thousands tons of sediment and pounds of phosphorus to the watershed 4) Provides groundwater recharge which is important to water quantity and the local ecology American Rescue Plan Act PART 9 PROJECT DESCRIPTION continued Unfortunately, these benefits are often overlooked when local land -use decisions are made, which is why the property needs to be purchased for conservation and restoration purposes. There are mechanisms within the floodplain regulations that could allow for partial development of the property, which would threaten all of the beneficial uses stated above. Loss of those uses can result in water quality and wildlife habitat degradation. A recent survey conducted by the Northwest Arkansas Council saw that a majority of residents in this region feel clean water is a high priority. Secondary benefits to conserving this property is it is adjacent to the WCRC/City Dead Horse Mountain (DHM) Property. The property can provide secondary walking trails and support the native plant program the WCRC is providing to the local community. With 2.5 miles of river frontage, the property allows for additional boating opportunities for the community with canoe/kayak access at the DHM property. In addition, the property is located across from an area where the City's demographics show a substantially lower average income. The Beaver Water District and the WCRC will co-own the property, and the WCRC will manage the property. A portion of the property has an existing conservation easement, and it is expected that most of the remaining property will also be placed in a conservation easement. American Rescue Plan Act 10 PART 10 PROJECT TIMELINE Provide a complete and specific timeline for all activities related to proposed project. Following the grant award: First 60 days: Property will be purchased Remaining 10 months: Site management will be initiated and a conceptual restoration plan will be developed American Rescue Plan Act 11 PART 11 DATA COLLECTION, RECORD MAINTENANCE, AND REPORTING Describe how the organization will collect data and maintain records to track program activities and eligibility verification. Please also describe your organization's ability to produce required documentation including financial reports, performance reports, progress reports, expenditure information, etc. The WCRC is a non-profit organization that has been in operation for 18 years. The organization has a proven administrative track record built upon the completion of a multitude of donor and partner funded projects that required documentation of project progress and financial activities. Periodic and final reports are generated on a regular basis as prescribed by grant workplans and donor requirements. The WCRC maintains an accounting system that tracks accounts payable, accounts receivable, payroll, and procurement of goods and services that is audited by independent 3rd party entities and can produce verifiable financial reports as needed. Concerning project reporting, the WCRC has successfully completed a multitude of grants funded by local, state, and federal government agencies as well as foundations. The WCRC keeps records of data collected and report documentation as required by the funding entities in files and mostly on their local server with off -premise backup services. The WCRC provides progress reports that includes deliverables and other documentation that the work has been completed as required by the funding entity. American Rescue Plan Act 12 PART 12 PROJECT EVALUATION OBJECTIVES AND OUTCOMES Listihe objectives (not activities) of the proposed project. Describe how each objective will be measured to determine if it has been met. Use the following format Objective #: Outcome(s): Method of Measurement: The objectives of the Floodplain Conservation to Protect Water Quality Project is to 1) Purchase 225 acres of floodplain that includes wetlands along the West Fork White River to a. protect water quality of White River and Beaver Lake, the drinking water source of NWA b. initiate the restoration of the wetlands and floodplain to improve contaminant removal and restore aquatic and terrestrial habitat 2) Develop a conceptual restoration plan for the site The outcomes are 1) Floodplain and wetlands are protected, as well as water quality of our drinking water source 2) Conceptual restoration plan The method of measurement is a deed showing the joint ownership of the property between Beaver Water District and the Watershed Conservation Resource Center will be filed at the Washington County Court House. American Rescue Plan Act 13 PART 13 PARTIAL FUNDING Indicate whether: the project can proceed with partial funding.. If YES, indicate the minimum amount the applicant will accept with line items arranged from highest to lowest priority. Describe the impact that partial funding will have on the project. if. NO the project will not be considered for partial funding. It would be difficult to proceed with partial funding for this project, because of the limited time of 45 days to provide a commitment to the landowner for the stated purchase price. At this time the Beaver Water District has agreed to pay for $800,000 of the property purchase. There is not another funder at this time, so this grant would need to pay for the remaining cost. If the WCRC is awarded this grant, at that time, the WCRC will try to leverage the money to bring in additional funding to restore the property. American Rescue Plan Act 14 [Plan ADDITIONAL DOCUMENTATION CHECKLIST rovide these items with your application. See page 10 of the 2022 American Rescue Subrecipient Application Guide for more information 21 Accessibility Narrative ❑� Board of Directors 21 Bylaws ✓® Certificate of Good Standing IDFinancial Audit (see Application Guide for more information) 2✓ Intake Forms Non -Profit Status Verification [IRS 501(c)(3) letter, IRS form 990 or 990-F2, etc.] Resumes (Executive Director and Project Coordinator) System Award Management (SAM) UEI registration Status of Funding (if applicable) Additional Documentation Checklist (this page) a Additional Information American Rescue Plan Act 15 Appendix B: Department of the Treasury Final Rule a ywq 4338 Federal Register/Vol. 87, No. 18/Thursday, January 27, 2022/Rules and Regulations DEPARTMENT OF THE TREASURY 31 CFR Pad 35 SIN 1505-AC77 Coronavirus State and Local Fiscal Recovery Funds AGENOY: Department of the Treasury. ACTION: Final rule. BUMMARY: The Secretary of the Treasury (Tleesuryl is adopting as final the interim Rnal rule published on May 17, 2021. with amendments. This rule implements the Comforsim. State Fiscal Recovery Fund and the Coronavirus Local Fiscal Recovery Fund established under the American Rescue Plan Act. DATEe: The provisions in this final rule cos efective April 1, 2022, FOR FURTIER INFORMATION CONTACT: Katharine Richards, Director, Coronation; State and Local Fiscal Recovery Funds, Office of Recovery Programs, Department of the Treasury, (844)529-9527. SUPPLEMFMARY INFORMATION: I. Introduction 0,earvw. Since the first case of coronavirus disease 2019 (COVID-19) was discovered in the United Stales in January 2020. the pandemic has caused severe, intertwined public health and economic mines. In March 2021, as these crises continued, the American Rescue Plan Act of 2021 (ARPA) I established the Coronavirus Slate and Local Fiscal Recovery Funds (SLFRF) to provide state, land, ..it Tribal governments a with the resources needed to respond to the pandemic and its economic effects and to build a stronger, more equitable economy during the recovery. The U.S. Department of the Treasury (Treasury) issued an interim Intel rule implementing the SLFRF program on May 10, 2021• and has since disbursed over $240 billion to stele, local, and Tribal governments and received over 1,500 public comments on the Wait. final rule. Treasury is now issuing this final rule which responds to public comments, implements the ARPA statutory provisions on eligible and ineligible uses of SLFRF funds, and ' Lew w lIll. hnpl/www.sngress.gwl 11]/Wuws/pu bl21? AW-11 rpubu.Pdf t rnreugleen this S.Pple—oar,r ]of urmnti-, Toaster, usm "ones. local. and Total governments' or redpi®re" to mhr generally to govemmenls mewing SURF funds: this includes mans, wineries. mot govm everts. counties, metropolitan con, end nonentitlement unite of sea IwR Ft mme.l. °88 P282681MeY 12, 2a21f makes several changes to the provisions of the interim final role, summarized below in the section Executive Summary of Major Changes. Since Treasury issued the interim final mle in May 2021. both the public health and economic situations facing the country have evolved. On the public health front, the United States has made tremendous progress in the fight against COVM-19, including a historic vamination campaign that has reached over 80 percent of adults with at least one dose and is reaching millions of children as well." However, the disease continues to present an imminent threat to public health, especially among unvaccinated individuals. As the Delta variant spread across the country this summer and fall, the United States faced another severe wave of cases, deaths, end stein on the healthcare system, with the risk of hospitalization and mortality exponentially greater to unvaccinated Americana. GOVID-19 has now infected over 50 million and killed over 800,000 Americans since January 2020: tens of thousands of Americans continue to be infected each days Even as the nation recovers, new and emerging COVID-19 variants may continue to pose threats to both public health and the economy. Moving forward, state, local, and Tribal governments will continue to play a major role in responding through vaccination campaigns, tasting, and other services. The economic recovery similarly has made tremendous progress but faces continued risks from the disease and the disruptions it has caused. In the early months of the pandemic, the United Slates experienced the sharpest economic downturn on record. with unemployment spiking to 14.8 percent in April 2020.6 The economy has gradually added back jobs, with Smooth accelerating in the that half of 2021.7 However, as the Delta variant spread, the intensified health risks and renewed disruptions slowed growth, demonstrating the continued risks from the virus. By fall 2021, the economy had e Centera for Oweue Coestd and Pravmake, CGVN list¢ Timor. CGVm-19 timelmnane in tM United Snte., hap://eaNd.Megoweoviddofn- hadommeneenninn. a., odial December n. senou, °Center¢ for owes. Co...[ and Pmvdmlon, COVRI Onn Tracker, htfpJ/www.mvid.udcEav/ rovle dam.neckmbdo nnisker-home (Imt nelowl amambm z 2021). 1 Us. home e of tabor Stations. Ummpldymmt Rate IUNRATEI. manowd fiam Fl . Fedmat Rumve Solid St. Imsic hopal/fmd. Rhensfed.,ilmris/UNRATE Sao owned cement. 1, Wall, .Id. exceeded its pre -pandemic sires and unemployment had fallen below 5 percent," but despite this progress, too many Americans remain unemployed, out of the labor to... or unable to pay their bills, with this pain particularly acute among lower -income Americans and com ounides of color. Again, moving forward, state, local, and Tribal governments will remain on the frontlines of the economic response and rebuilding a stronger economy in the aftermath of the pandemic. However, as state, local, and Tribal governments continue to face substantial needs to respond to public health and economic conditions, they have also experienced severe impacts from the pandemic and resulting recession. State, local, and Tribal governments cut over 1.5 million jobs in the early months of the pandemic amid sharp declines in revenue and remain over 950,000 jobs below their pre - pandemic levels.'° As the Grant Recession demonstrated, austerity among state, local, and Tribal governments can hamper overall economic growth and severely curtail the ability of governments to serve their constituents. Recognizing these imperatives, the SLFRF program provides vital resources for state, Iocel, and Tribal governments to respond to the pandemic and its economic effects and to replace revenue lost due to the public health emergency, preventing cuts to government services. Specifically, the ARPA provides that SLFRF funds 11 may be used: (a) To respond to the public health emergency or its negative economic impacts, including assistance to households, small businesses, and nonprofits, or aid to impacted industries Such as tourism, [revel, and hospitality: (b) To respond to workers performing essential work during the COVID-19 1 U.S. Bureeo of Ronamie AnilyM. Rest Grow IMo.& F vduct R adell, le moved Goo FIRED. Federal Re ens Berk of St. mote, hapl/fred. Abufe/ d mglwnwAaSaCf peel v61ad wWmbm 7, 20211 stews. sure.. of Imov Shan nrn...npm note 6. „'US, Bnrn.n of false St.tufiu. All Nettleton. ,,do Government [CESM 2 IXM0 1) and All Employe... Iorai Commitment lCESINGNMI 1. reMrvM from FRBB, Rome Reserve Beek of St. Lmin, hnpdgmd,dennhd.o ownw Gicessa 99erm.m her,Wf nd..mm,/,d.W smi-cESssenheNoI flat v oriel lscamber r. ofin. n Me ARIA wads own— wo or the Sonal Recently Act, whiele ae .the St.. M-1 Recevary Fn d,wad—o..finsof IIw Sw.i.l Srcudty Act. whirl cedes the Intel Memo Reewmy Fond Itogethm. SLFAM. Sermons Oo2 and 6m canter. soon¢ ti.lo ontlnr eligible team; no primary dieemns between the two motion; is that .I. e02 mImI whew a Reed he sham, nmtorm. and Total p-mmenw and moron 603 mtabliahm abed fro mWmFelnw. ci'im' were flonent at. of 1-1 government, end to -efts. Federal Register/Vol. 87, No. 18/Thursday, January 27, 2022/Rules and Regulations 4339 public health emergency by providing Executive Summary of Major Changes significantly broadens eligible premium pay to eligible workers; and G'larifimtions broadband infrastructure investment. to (0) For the provision ofgavernment The final rate provides broader address challenges with broadband services to the extent of the reduction in Flexibility and greater simplicity in the access, affordability, and reliability, and coven.. due to the COV10.19 publ is program, in response to public adds additional eligible water and sewer health emergency relative to revenues comments. Among other the ificalions infrastructure investments, including collected in the most recent full fiscal and changes, the final role provides for broad range of lead ree edidion and year prior to the emergency; and the following; strannewer management projects. (d) To make necessary investments in • Pihho Healthand Negative Structure ofthe Supplementary water, sewer, or broadband Economic Impacts: In addition to Information infrastructure. In addition, Congress specified two programs and services, the final rule clarifies that recipients may use funds In addition to this Introduction, this types of ineligible uses of funds: funds for capital expenditures that support an Supplementary Information is organised into four sections: (1) Eligible Use. (2) may not be used for depositinto any eligible COVIO-19 public health or Restrictions on Use, (3) Program pension fund or, for states and lerritortes only, to directly or indirectly economic response. For example, recipients may build certain affordable Administration provisions, and (4) offset a reduction in net tax revenue housing, childcare facilities, schools, Regulatory Analyses. Th. Eligible Usea section describes resulting from a change in law, regulation, m administrative hospitals, end other projects consistent with the requirements in this final rule the standards to determine eligible uses interpretation. and the Supplementary Information. of fund. in each of the four eligible use Issued May 10, 2o21,'11'eeaury's In addition, the final role presumes that an expanded set of households and cat Dries: (Responding to the pub] is health interim final rule provided further delall on eligible uses of funds within the four communities are "impacted" or and negative economic impacts of the pandemic (which includes several sub - ineligible uses of statutory ad funds, and administration of the disproportionately impeded" by the pandemic, thereby allowing rateogg�ries) (2l providing premium pay b program. The interim final role provided state, local, end Tribal to provide responses to a brood set of ad ad of households and entities without essential workers governmentto governments substantial Flexibility s determine determine how best to use payments requiring additional analysis. Further, the final rate provides a broader set of the extent afrre lose due to Ilse pandemic, and from the SLFRF program meet the li enumerated eligibly spas available for (te Making necessary investments in es The interim needs oftheiraimed these communities and pact omic response, health and economic response. economic and broadband wfrastr. infrastructure. and final rule aimed to facilitate establishing establishing effective irk ipublicncluding mcludtng making affordable housing, ctur, Each eligible category for determining framework for determining the types childcare, and early teaming separate and standards standards for o that are unities eligible inall impeded communities ehedistinct easible. whether use elprogramsande ARPA eligibleunder ARPA along with dnd ng and ncommunity icfundsr eligprovision examples ligi eligible alga funds that development and neighborhood evelop ent in one eligible y on. eligible use category use category state, local, oval Tribal governments may 1, suit a n activities eligible for do not apply to the others. Therefore, do art apply consider. disproportionately diepropartionately impaled redp ants should first determine which State, local, and Tribal governments g communities. Further. the fusel Is allows far a eligible use category a potential use of funds fits within, then ..ease whether we already deploying SLFRF funds to make an impact in then communities, broader at of use. to restore and the potential use of funds ..to the The SI.FRF program ensures that slate, support government employment, including hiring above a recipient's pre- eligibility standard or criteria for that category. In the ..a of uses to reepond local, and Tribal governments have the resources needed to fight the pandemic, pandemic baseline, providing funds to to the public health and negative sustain and strengthen the economic employees that experienced pay cuts or furloughs, avoiding layoffs, and economic impacts of the pandemic, recipients should also determine which recovery, maintain vital public services, and make investments that support providing retention incentives. sub category the eligible use file within long-term growth, opportunity, and . premium Pay; The final rule often more streamlined options to provide (i.e., public health, assistance to households, assistance to small equity. Treasury looks forward to supporting and engaging with state, premium pay, by broadaving the share businesses, assistance to nonprofits, aid local, and Tribal governments as they of essential workers who can receive premium pay without a written to Impacted industries, or public sector capacity and workfmw), than assess use these fund. to make nandormative investments in their communities. justification while maintaining a focus on lawer-income and frontline essential whether the potential use of funds waste the eligibility standard far that Finally, with so many pressing and effective ways to use SLFRF funds, [hare workers. . Revenue L wu The final rule offers subcategary. Treasury does not pre, approve uses of funds; recipients are is no excuse for waste, fraud, or abuse of these funds. a standard allowance for revenue loss of advised to review the final rule end may up to $10 million, not to exceed a pursue eligible projects under it. Treasury received over 1,500 recipient's SLFRF award amount. In some sections of the role, Treasury comments apanning nearly all aspects of the interim final The final allowing recipients to select between a identifies specific uses of funds that are "enumerated rule. role standard amount of revenue lass or eligible, called eligible considers and responds to comments, complete a full revenue loss calculation. uses"; for example, Treasury provides provides clarification to many aspects of Recipients that select the standard many enumerated eligible uses of funds the interim final rule, and makes several allowance may use that amount for to respond to the public health and changes to eligible uses under the government services. negative economic impacts of the program, summarised immediately . Water, Sewer, and Broadband pandemic. Uses of funds that are not below. Infrosioucture: The final rule specifically named as eligible in this 4340 Federal Register/Vol. 87, No. IB/Thursday, January 27, 2022/Rules and Regulations final rule may still be eligible in two indirectly a reduction In net tax revenue summarizing opinions expressed in ways. First, under the revenue loss resulting from a change in stale or public comments. Statements using the eligible use category, recipients have broad latitude to use funds for territory law. a For all recipients except Tribal term"encourage"refer to recommendations, not requirements. government services up to their amount governments, funds may not be used for H. Eligible Uses of revenue loss due to the pandemic. A potential use of funds that does not fit deposits into a pension fund. For all recipients, funds may not be A. public Health and Negative within the other three eligible use used for debt service or replenishing Economic Impacts categories may be permissible as a government service, which recipients financial a All reserves. recipients must also comply Bac and kgro can fund up to their amount of revenue loss. For example, transportation infrastrucNre projects are generally ineligible as a response to the public health and negative economic impacts of the pandemic; however, a recipient could fund these projects As a government service up to its amount of revenue loss, provided that other restrictions on use do not apply. See sections Revenue Loss and Restrictions Val Use for further information. Second, the eligible ilea category for responding to the public health and negative economic impacts of the pandemic provides a mu"haustive list of ...fail eligible uses, which means that the listed eligible uses include some. but oat all, of the uses of Ends il,ae .�„IA Fo ol:dFlo TFo m:eiFlc Item section beyond those specifically enumerated, are eligible. If A recipient would like to U. to assess whether the use of funds is eligible. Next, the Restrictions on Use section describes limitations on how funds may be used. Treasury hes divided the Restriction on Use section into (A) statutory rea rktions under the ARPA, which include (1) offsetting a reduction in net tax revenue, and (2) deposits into pension funds, and (B) other restrictions on use, which include (1) debt service and replenishing reserves, (2) settlements and judgments, and (3) general restrictions. These restrictions apply to all eligible use categories; however, same restrictions apply only to certain types of recipient govermnents, and recipients are advised to review the final rule to determine which restrictions apply to their type of government (e g., state, territory, Tribal government, county, metropolitan city, or none ntit emenl unit of government). To reiterate, for recipient governments covered by a specific restriction, that restriction applies to all eligible use • Vol shales son lemmnea omy. n may not be used to offset directly or with three general restrictions. First, a recipient may not use SLFRF funds for a program, service, or capital expenditure that conflicts with or contravenes the statutory purpose of ARPA, including a program, service, or capital expenditure that includes a term or condition that undermines efforts to stop the spread of COVJD) I9. Second, recipients may not use SLFRF funds in violation of the conflict -of -interest requirements contained in the Award Terms and Conditions, including any self -dealing or violation of ethics rules. Lastly, recipients should be aware that federal, state, and ]cal laws and regulations, outside of SLFRF program requirements, also apply, including for example, environmental laws and federal civil rights and nondiscrimination requirements, which on Me bests of r ss, color, nmmnal origin, sex (including sexual orientation and gender identity), religion, disability, see. or familial status (having children Provisions section describes the processes and requirements for administering the pregmm on an ongoing basis, specifically as relates to the following: Distribution offends, timeline for using funds, transfer of funds from a recipient to different organizations, use of funds for progren administration, reporting on use of funds, end remediathm and recommus note, SURF hands may only be used for ..is incurred within a specific time period, beginning March 3, 2021, with all funds obligated by December 31, 2024 and all funds spent by December 31, 2026. Recipients am advised to also consult Treasury's Reporting and Compliance Guidance for additional information on program administration processes and requirements, including appplicability of the IJeff.. Guidance. Ftiredly, the section Regulatory Analyses provides Treasury's analysis of the impacts of this rulemaking, as required by several laws, regulations, and Executive Orders. Throughout this Supplementary Information, statements using the terms "should" or "must" refer to requirements, except when used in Since the first case of COVID-19 was d ismvered in the United States in January 2020, the disease has infected over 50 million and killed over 800,000 Americans.ls The disease and necessary measures to respond —have had an immense public health and economic impact on millions of Americans across many areas little, as detailed below in the respective sections on Public Health and Negative Economic Impacts. Since the release of the interim final rule in May 2021, the country has made major progress in fighting the disease and rebuilding the economy but faces continued risks, as illustrated by the spread of the Delta variant and the resulting slowdown in the economic recovery. The SLFRF program, and Treasury's interim final rule, provide substantial flexibility to recipients to respond to pandemic impacts in their local community; this flexibility is designed to help state, [oral, and Tribal governments adapt to the evolving public health emergency end tailor their response as needs evolve end to the particular local needs of their communities. indeed, state, local, and Tribal governments face continued needs to respond at scale to the public health emergency. This includes continued public health efforts to slow the spread of the disease, to increase vemin it on rates and provide vaccinations to new populations as they become eligible, to protect individuals living in congregate facilities, and to address the broader impacts of the ppandemic an public health. Similarly, while a strong economic recovery is underway, the economy remains 3.9 million jobs below its pre -pandemic level, pointing to the continued need for response efforts, with low-income workers and communities of rater facing elevated muss of unemployment and eranoude hardships' Long-standing disparities in health and economic outcomes in I c,,.—for pilaw,C 1.1 and Pm_fi_. COVIo Din l-ckec nnp://^" Vodra<pv/ m ddata aockedidussesckervMly, pen vleeei D—arbor JL zm17. ` us. Be.a of labor Soma-. All Ens,ayms. Tdel Naus. IPAYBM51 hrrya://fred. sf1aaflk,1.0ix/ee PA YdMS Ilan visited .ambm r. R@n. Federal Register/Vol. 67. No. 18/Thursday, January 27, 2022/Rules and Regulations 4341 undeserved'^ communities, that amplified and exacerbatdethe impacts .it f the pandemic., also present continued barriers to full and equitable recovery. As state, local, and Tribal governments work to meet the public health and economic needs of their budget challenges during the pandemic, many sta[e, local, end Tribal governments have been forced to make cuts to services m their workforces, including cutting over 1.5 million jobs from February to May 2020. or delay critical investments. As of is]12021, state, local, and Tribal government employment remained over 950,000 jobs below pmpandemic levels.'s In the recovery from the Great Recession, cuts to slate, local, and Tribal governments became a meaningful drag on economic growth for several yeas, and the SLFRF progam provides the resources needed to re -invest in vital public services and workers to avoid this outcome.le 1. General provisions: Structure and Standards Background: Sections 602(c)(1)(A) and 603(c)(1)(A) of the Social Security Act establish that recipients may use funds "to respond to the public health emergency with respect to OOV0-19 or its negative economic impacts, including assistance to households, small businesses, suit non Profits, or aid health responses for those impacted by the pandemic, including the general public; (2) map onses to the negative economic impacts that were experienced by those impacted as a result of the pandemic; end (3) additional services, either as a public health response or a response to the negative economic impacts of the "Teey Gordon, slate and k .I nudges and the Gxi Rec-o—, amokin, h9ioetion (Dee 11, 3P1 Ahap ://xww.NroWnge.edolorfrcleYatele aM- 1m1L1dgetr-nnd-Nagmm.iws iv pandemic, for disproportionately impacted onso mities. The interim fical rule established the method to determine which specific programs or services may be eligible to mspond to the public health emergency or to respond to the negative economic impacts of the public health emergency within this framework. The interim final rule included multiple enumerated uses aim final designate impacted m disproportionately impacted. The .tendards for each of these criteria under the interim final '1'o assess whether a program or service would be eligible to respond to the public health emergency or its negative economic impacts, the inoutm final rule ataled the,. "the recipient [is required] to, first, identify a need or need or import I....I ]Elligible uses under this category must be in response to the disuase itself or the harmful consequences of the economic disruptions resulting from or exacerbated by the COVI0.I9 public health emergency." The enumerated eligible uses ware presumed to meet this criterion. With =pact to uses not specifically enumerated in the interim final rule as eligible public health responses, the interim final rule stated that, "It]o assess whether additional uses would be eligible under this category, recipients should identify an effect of COVID-19 on public health, including either or both of immediate effects or effects that may manifest over months or years, and assess how the use would respond to or address the identified need." With respect to uses not specifically enumerated in the interim final rule as eligible responses to a negative economic impact of the public health emergency, the interim final mle stated that "lolligible uses that respond to the negative economic impacts of the public health emergency must be designed to add=. en economic helm resulting from or exacerbated by the public health emergency. In considering whether a program or service would be eligible under this category, the recipient should assess whether, and the went to which. them has been so economic harm, such as loss of earnings or revenue, that resulted from the COVI0.19 public health emergency end whether, and the extent to which, the use would respond to or address this harni.+r A recipient should first consider whether an economic harm exists and whether this ham was caused or made worse by the COVO-19 public health emergency." The interim final rule went on to say that: "In addition, the eligible use must 'respond to' the identified negative economic impact. Responses must be related and reasonably proportional to the extent and type of harm experienced; usea that bear no relation or are grossly disproportionate to the type or extent of ham experienced would not be eligible uses." Throughout this final rule, Treasury .is. to households, communities, section in the interim final rule under this eligible use category included public health response. for these impacted classes. The second category in the interim final role under this eligible use category included responses to the negative economic impacts that were experienced by these imperial else.. as a result of the pandemic. The interim final rule further recognized that certain populations have experienred disproportionate health or negative economic impacts during the pandemic, as preexisting disparities in these communities amplified the impacts of the pandemic. For example, the interim final rule recognized that the negative economic effects of the pandemic were particularly pronounced among lower, income families, who were more likely to experience income loss and more likely to have a job that required in - person work. The interim final rule recognized the role of pre-existing social vulnerabilitles and disparities in driving the disparate health and economic outcomes and presumed that programs designed to address these health or economic disparities are responsive to the public health or negative economic impacts of the COVI0.19 public health emergency, when provided in disproportionately impacted communities. In addition to identifying certain populations and communities �rin e"me enxne,euse may be pe.mieetble undu fls,—vfs. me(.g, yefs ,iitfeln-d a thacmpeefaeniriyAct. ataaiion soz end boa of We Sector SecudtYkt. 4342 Federal Register/Vol. 87, No. 18/Thursday, January 27, 2022/Rules and Regulations presumed to be disproportionately impacted, it also empowered recipientx to identify other disproportionately impacted households, populations, communities, or small businesses. The interim final rule provided that, in identifying these disproimid comedy impacted communities, recipients should be able to support their determination that the pandemic resulted in disproportionate public health or economic outcomes to the specific populations, households, or geographic areas to be served. Throughout this final rule, Treasury raters to them households, communities, small businesses, and nonprofits that experienced disproportionate public health or negative economic impacts of the pandemic as "disproportionately impacted." The third category in the interim final mle under this eligible use included public health responses and responses to the negative economic impacts for them disproportionately impacted classes. The interim final rely provided significant flexibility for recipients to determine which households, populations, communities, or small businesses have been impacted and/or disproparthembly impacted by the pandemic and to identify appropriate reapoases. The interim final rule included several provisions to provide simple methods for recipients to identify impacts and design programs to address those impacts. Flow, the interim final rule allowed recipients to demonstrate one' tiveaconomic impact on a population or class and provide ambiance to households or ___�1..._:______ -s fall wll ' h' h t t set at in such cases, the demonstrate that an d or business is Treasury presumed that certain populations have base impacted or disproportionately impacted and are thus eligible for services that respond t these impacts or disproportionate impacts. Specifically, the interim final rule ppermitted recipients to presume that hmanholes that experienced unemployment, increased food or housing insecurity, or am low- or moderate -income experienced a negative economic impact from the pandemic. The interim final rule also permitted recipients to presume that certain services provided in Qualified Census Tracts (QCis), to individuals living in QC'I's, or by Tribal governments are responsive to disproportionate impacts of the pandenic. In addition to the populations presumed to be impacted or disproportionately impacted, under the interim final rule, recipients could identify other impacted households or classes, as described above, es well as other populations, households, or geographic areas that are disproportionately impacted by the pandemic. Third, m mentioned previously, the interim final mle included a nen- exhaustive list of uses of funds that Treasury identified as responsive to the impacts or disproportionate impacts of the pandemic. Treasury refers to them as "enumerated eligible uses." To summarize, the interim final rule identified certain populations that are presumed to be impacted by the pandemic (and specific enumerated uses of funds that are responsive to that impact) and gaawl at are prem sued to 6e disproportionately impacted by the pandemic (and specific enumerated use. of funds that are responsive to them disproportionate impacts). In addition, the interim final rule provided standards for recipients to assess whether additional uses of funds, beyond the enumerated eligible uses, are eligible for impacted end disproportionately impacted populations and permitted recipients to identify other households or classes that experienced impacts of the pandemic or disproportionate impacts of the pandemic. Rule Structure Public Comment Many commenters expressed concern regarding the structure of the eligible uses, indicating they found the structure of the public health and negative economic impacts section of the interim final mle to be confusing or difficult to navigate. Other commenters indicated that they understood the enumerated uses to be the only eligihle, uses and/or the presumed eligible populations to bit the only eligible populations. Several commenters expressed frustration about the number of eligible uses specifically enumerated to the Interim final role, which they considered too few, and comment.. proposed a wide range of additional enumerated eligible uses (for further discussion, see the section Public Health and section Negative Economic Imperial. Commentere expressed concern with pursuing uses of funds not explicitly enumerated in the eligible use section or micortainty, regarding the broad flexibility provided under the interim final role to pursue additional programs that respond to the public health or negative economic impacts of the pandemic or the process for doing so. TreasuryResponse: Treasury mcogriame that many commenters felt the structure of the interim final role could be clarified. These comments me consistent with many of the questions that Treasury has received from recipients, which requested clarification regarding the category their desired response fits into. Treasury observes that these comments and questions generally fall into four categories: (1) How to identify the correct public health or negative economic impact category for a particular response, (2) haw to identifywhether a particular on is eligible. (3) ow to identify an impacted or disproportionately impacted class, and (4) whether an enumerated use can be provided to a class other than them presumed impacted or disproportionately impacted. In response to comments, Treasury is adjusting the structure of the public health and negative economic impacts eligible use section of the final role to improve clarity and make it easier for recipients to interpret and apply the final rule. Specifically, Treasury is restructuring the role to aid recipients in determining whether a particular response is eligible and how the particular response might be eligible under a particular category. This restructuring reinforces the fundamental criteria that a use of funds is eligible based on its responsiveness to a public health or negative economic This make the on particular uses of funds, to clarify the enumerated eligible uses described to the interim final Is. The reorganization itself is not intended to change the scope of the enumerated uses that were included in the interim final Is or that were allowable under the interim final min. In some cases, specific enumerated uses are being altered, and those changes are discussed is Nom sent smell business®. nonpmfis, and Iodinates may also function ex subrimipiems so,. additional information on me» disnnaima ex ,am$ —Dam aguialin, aubncipienb--is aenaridmi.s. Federal Register/Vol. 87. No. 18/Thursday, January 27, 2022/Rules and Regulations 4343 as changes within the section on that enumerated use. The final rule streamlines and aligns services and standards that ere generally applicable or are provided for public health purposes. Under this approach, eligible uses to respond to the public health emergency are organized based on the type of public health problem: (1) COVW-19 mitigation and prevention, (2) medical expands.,(3) behavioral heehh care, and (4) preventing and responding to violence. Under this approach, eligible uses to respond to the negative economic impacts of the public health emergency are organized based on the type of beneficiary: (1) Assistance to households, (2) assistance to small businesses and (3) assistance to nonprefits, alongside a fourth standalone eligibility category for aid to travel, tourism, hospitality, and what impacted industries. The first three categories, assistance to households, small businesses, end nonprofits, include enumerated eligible uses for impacted and disproportionately impacted beneficiaries. This change in structure is intended to provide a framework that clearly identifies the intended beneficiaries of uses of Ponds and provides clarity about what types of assistance are "responsive to the pandemic or its negative economic impacts" for these beneficiaries. a. Standards for Identifying a Public Health or Negative Economic Impact Standards: Designating a Public Health Impact Public Comment: Many commenters expressed uncertainty about how to determine whether. use of funds, beyond those specifically enumerated as eligible, might he an eligible public health response. For example, many commenters submitted questions asking whether specific uses of funds would be eligible. Others described whet they considered to be impacts of the pandemic and argued that uses of funds to respond to these issues should be eligible. Some commenters requested that Treasury provide additional detail to guide their assessments of eligible uses of funds. For example a requested more clarification around exactly what and whose medical expenaes can be covered. These comments ranged in their specificity and covered the full range of the enumerated eligible uses. Treasury Response: Treasury is clarifying that when assessing whether a proram gor service is an eligible use to respond to the public health impacts of the COVID-19 public health emergency, the Department will consider the Iwo eligibility requirements discussed below. These standards apply to all proposed public health use. First, there must be a negative public health impact or harm experienced by an individual or a class. Tar ease of a leamishalion, the interim final rule allowed, and the final rule maintains the ability for, recipients to identify a public health impact on is population or group of individuals, referred to as a "class," and to provide assistance to that class. In determining whether an individual is eligible for a program designed to address a harm experienced by a class, the recipient need only document that the individual is within the class that experienced a public health impact, see section Standards: Designating Other Impacted Classes. In the case of some impacts, for example impacts of COVID-19 itself that ere addressed by providing prevention and mitigation services, such a class could reasonably include die general public. Second, the program, service car other intervention must address or respond to the identified impact or harm. The final rule maintains the interim final rule requirement that eligible uses under this category must be in response to the disease itself or other public health he. that it caused. - Responses must be reasonably designed to benefit the individual or class that experienced the public health Impact or harm. Uses of funds should be assessed based on their responsiveness to their intended beneficiaries and the ability of the response to address the impact or harm experienced by those beneficiaries. Responses most also be related and reasonably proportional to the extent and type of public health impact or harm experienced. Uses that bear no relation or are grossly disproportionate to the type or extent of harm experienced would not be eligible uses. Reasonahly propMI ..I refers to the scale of the response compared to the scale of the Bann. b aiso refers he the targeting of the response to beneficiaries compared to the amount of harm they experienced. In evaluating whether a min detlgniry an lnrumuHon to micas. COV10.te. the redound should consider guida m pnce Sam health authomrm, pmi-Iiii, the Contra for Do—. eontml and Proceed— (low. m asseedea appropnmo C0V0-19 miegadim and prevenilu reateglw(,'en Centre for Dwasse Com coined end Provnan, wwo-i9, bit, I/ www.aHe.gael� navmarzoranwvlmdea.nemn. n pragmm er—ira deed Impwn caadiuone on pmlcdpunot in or emeptmlce of the service din would eaderutoe of vas to amp she aimed of COVI0.19 or discourage complm lw with produce in If.. with CDC gusi taive for institute the spread .f WVIo-1a is tnd a permlaallds uao of hush, use is reasonably proportional, recipients should consider relevant factors about the harm identified and the response. For example, recipients may consider the size of the population impacted and the severity, type, and duration of the impact. Recipients may also consider the efficacy, at, coal- .1f nsiveness, and time to delivery of the res nose I a recipient intends to fund capital expenditures in response to the public health impacts of the pandemic, recipients should refer to the section Capital Expenditures for details about the eligibility of capital expenditures. Standards: Desfgnffiing a Negative Economic Impact Public Comment: Many commenters expressed uncertainty about how to determine whether, uses of funds, beyond thoss.specifrcally enumerated as eligible, might be eligible responses to negative economic impacts. For example, many commenters submitted questions asking whether specific uses of foods would be eligible. Others described what they considered to be impacts of the pandemic and argued that uses of funds to respond to these issues should be eligible. Some commenters requested that Treasury provide additional detail to guide their assessments of eligible uses of funds. These comments ranged in their specificity and covered the full range of eligible uses to respond to negative economic impacts. Several commissions asked for clarification about what types of (nod assistance would be considered eligible. Another commenter requested that the establishment of outdoor dining be eligible. Many commentem inquired about hemeless shelters as an eligible use of SLFRF funds. Commenter also expressed uncertainty about the ability to establish classes, including geographic areas, that experienced a negative economic impart or disagreed with the requirement that an individual entity be impacted by the pandemic in order to receive assistance. For example, a commander argued that Interventions should not be limited to individuals or businesses that all capenonce a murecomichmpactand should instead be used broadly to support economic growth. These commenters argued that an expenditure that supports a more robust economy may help combat the pandemic's negative economic impacts, and it can do so even if funding is provided to individuals or entities that did not themselves experience a negative economic ireppeect during the pandemic. Tusesury Response: The final rule maintains the standard articulated in 4344 Federal Register/Vol. 87, No. 18/Thursday, January 27, 2022/Rules and Regulations the interim final role, For clarity, the final rule re-mtimdates that when assessing whether a program or service is an eligible use to respond to the negative economic impacts of the COVM-19 public health emergency, Treasury will consider the two eligibility requirements discussed below. First, there .at be a negative economic impact, or an economic harm, experienced by an individual or a class. The recipient should assess whether, and the extent to which, there he. been an economic harm, such as lose of eamiogs or revenue, that resulted from the COVID-19 public health emergency. A recipient should first consider whether an economic harm exists and than whether this harm was used or made wets. by the COVID-19 public health emergent ry This approacIt' s consistent with the text of the statute, which provides that funds in this category mustbe used to "respond to the public health emergency with respect to ... its negative economic impacts." While economic impacts may either be immediate or delayed, individuals or classes that did not experience a negative economic impact from the public health emergency would not be eligible beneficiaries under this category. As noted above, the interim final rule permitted recipients to presume that households that experienced unemployment, increased food or housing insecurity, or are low - or moderate -income experienced a negative economic impact from the pandemic. For discussion of the final rule's approach to this presumption, see section Populations Presumed Eligible. The final rule also maintains several provisions included in the interim final role and subsequent guidance that are intended to ease administration of identifying that the beneficiary experienced a negative economic impact or Kann. For example, the interim final rule allowed, and the final rule maintains the ability for, recipients to demonstrate a negative economic impact on a population or group, referred to as a "class," and to provide assistance to householdssm , ell businesses, or nonprofits that fall within that class. In such cases, the recipient need only demonstrate that the household, small business. or nonprofit I. within the class that experienced a negative economic impact, see section Standards: Designating Other Impacted Cie... This would allow, for example, an internal access assistance program for all households with children to support those households ability to participate in healthrom, work, and educational activities like extending learning opportunities, among other critical activities. In that an, the recipient would only ..it to identify a negative economic impart to the class of "households with children" and would .or need to document or otherwise demonstrate that each individual household served experienced a negative economic impact Second, the nepores at be designed to address the identified economic harm or impact resulting from or exacerbated by the public health emergency. In selecting responses, the recipient must assess whether, and the extant to which, the use would respond to or address this harm or impact. This approach is consistent with the text of the statute, which provides that funds may be used to "respond to" the "negative economic impacts" of the public health emergency "including assistance to households. small businesses, and nonprofits, or aid to impacted industries such as tourism, travel, and hospitality. " The list of potential responses ("assistance" or "aid") suggests that responses should address the "negative economic impacts" of particular types of beneficiaries [e.g., households or small businesses). Responses must be reasonably designed to benefit the individual or class that experienced the negative economic impact or harm. Uses of funds should be assessed based on their responsiveness to their intended beneficiary and the ability of the response to address the impact or harm experienced by that beneficiary?^ Responses most also be related and reasonably proportional to the extent and type of harm experienced; uses that bear no relation or are grossly disproportionate to the type or extent of harm experienced would not be eligible uses.zl Reasonably proportional refers to the scale of the response compared to the scale of the harm. It also refers to the targeting of the respome to beneficiaries compared to the amount of harm they experienced: for example, it may not be reasonably proportional for a cash assistance program to provide assistance in a very small amount to a group that "Fat nemplc. erymaw cinch ae ancswive wmpmuallon b employ" or cspmsce which In -already hem reimbmcod fl rough.naf it, f nhinl progmm. no not remnnably dmiped to .dare..neg. economicimpnneta bana9dmy. "Fat exunpl, a pmgr.m or i—inidnf imposes conditions on prticipmion in or ecmplanm of us wn,tv that would undermine orlons to too,, the spread of COvlp-19 ordiwourage camphanm wnh Pmnma to It.. wsh coc xidurt. tar unppma the apraad ofccun,te k nota prmi.ibm use of mod.. experienced severe harm and in a much larger amount in a group that experienced relatively little harm. In evaluating whether a use is reasonably proportional, recipients should consider relevant factors about the her. identified and the response. For example, recipients may consider the size of the population impacted and the severity, type, and duration of the impact. Recipients may also consider the efficacy, cost, cost-effectiveness, and time to delivery of the msgri Finally, recipients should be aware of the distinction between beneficiaries of funds and subrampients; a recipient may provide services to beneficiaries through subrecipients that did not experience a negative economic impact, see section Distinguishing Subrecipiente versus 8eneficianes. That is, a recipient may award SURF funds to an entity that did not experience a negative economic impact in order to implement a program or provide a service to beneficiaries on its behalf. Such transfers, when implementing a public health or negative economic impact response, should be responsive to and designed to benefit individuals, households, email businesses, nonprofits, or impacted industries that did experience a public health or negative economic impact. Determining the Appropriate Eligible Use Category Public Comment: Some commenters expressed uncertainty about how to analyze negative economic impacts to different entities (e.g., households, small businesses, nonprofits). For example, commenters asked whether a nonprofit, which did not experience a negative economic impact itself, could be granted funds to provide services to individuals experiencing homelessness, who did experience negative economic impacts. Other commenters proposed providing assistance to support the expansion of small businesses, under the theory that this would create more job opportunities for unemployed workers who experienced negative economic in p Cie. Treasury Response In the final rule, Treasury is clarifying that recipients should aseese a potential use of funds based on which beneficiary experienced the negative economic impact, in other words, the households, small businesses, nonprofits, or impacted industries that experienced the negative economic impact. Treasury notes that recipients may .it SLFRF foods to many different types of organisations to carry out eligible uses of funds and serve beneficiaries on behalf of a recipient. Federal Register/Vol, 87. No. 18/Thursday, January 27, 2022/Rules and Regulations 4345 When a recipient provides funds to another entity to carry out eligible uses of funds and serve beneficiaries the entity becomes A subrecipient (see section Distinguishing a Subeectplent versus a Beneficiaryj. For example, a recipient may grant funds to a nonprofit organization to provide food assistance we eligible use) to low-income households (the beneficiaries). Recipients only need to assess whether the beneficiaries experienced a negative economic impact and whether the eligible use responds to that impact, consistent with the two-part framework described above; the organization carrying out the eligible use does not need to have experienced a negative economic impact if it is serving as the vehicle for reaching the banefirimies. When making determinations about how to implement a program, recipients should consider whetherthat method of program implementation is an affective and efficient method to implement the program and do sa in accordance with the Uniform Guidance provisions that govern procurements end sub-grmtfng of federal funds, as applicable. As noted above, recipients should Analyze eligible uses based on the beneficiary of the assistance or the entity that experienced a negative economic impact. Assistance W a small business or to an impacted industry moat respond to a negative economic impact experienced by that small business or industry. Recipients may not provide assistance to small businesses M impacted industries that did not experience a negative economic impact, although recipients can identify negative economic impacts for classes, rather than individual businesses, and may also presume that small businesses in certain areas experienced impacts; see section General Provisions: Structure and Standards And section Assistance to Small Businesses for details. Several examples illustrate the application of these concepts. For example, a recipient could provide assistance to households via a contract with a business to create subsidized join For the leng-term unemployed; in this case the business is a subrecipient and need not have experienced a negative economic impact, but the recipient would need to identify a specific connection between the assistance provided and addressing the Uagalive economic Impact experienced by the unemployed households. The recipient could, for instance, document the subsidized jobs created under the contract and their reservation for long- term unemployed individuals. Similarly, a recipient might provide assistance to a small business that experienced a pandemic -related loss of revenue. This small business is a beneficiary and may use those funds in many ways, potentially including hiring ar romming staff, However, general assistance to a business that did not experience a negative economic impact under the theory that this assistance generally grows the economy and therefore enhances opportunities for Unemployed workers world not be an eligible use, because such assistance is not reasonably designed to impact the individuals or classes that experienced a negative economic impact. In other words, there is not a reasonable connection between the assistance provided and an impact on the beneficiaries. Such an activity would be attenuated from and thus not reasonably designed to benefit the households that experienced the negative economic impact presumed to be impacted by the pandemic. Treasury Response: The final role maintains the presumptions identified in the interim f sal rule and defines low- and moderate- income for the purposes of determining which households and populations recipients may presume to have been impacted. To simplify the administration of this presumption, the final role adopts a definition of low- and moderate -income based on thresholds established and used in other federal programs. Definitions. The final rule defines a household as lowf scome if it has (i) income at or below 185 percent of the Federal Poverty Guidelines (FPG) for the .we of its household based on the most recently published patent y guidelines by the Department of Health and Human Services (HITS) or (it) I... at or below 40 percent of the Area Median Income (AMII for its county and sire of household household based on the most recently b. Populations Presumed Eligible data by the Department of Presumed Eligibility: Impacted and Housing and Urban Development Disproportionately Impacted Households and Communities (HUD). -- The final rele defines a household as moderate income if it has Ul income at Background: As noted above, the interim fine) rule allowed recipients to presume that certain households were impacted or disproportionately impacted by the pandemic and thus eligible for responsive programs or services. Specifically, under the interim final rule, recipients could presume that a household or population that experienced unemployment, experienced increased food or housing insecurity, or is low- or moderate. income experienced negative economic impacts resulting from the pandemic, and recipients may provide services that respond to these impacts. The interim final rele also recognized that pre-existing health, economic, and social disparities contributed to disproportionate pandemic impacts in certain mmreuntil. and allowed for a broader list of enumerated eligible uses to respond to the pandemic in disproportionately impacted communities. Under the interim final role, recipients were allowed to presume that families msiding in QCTs or receiving services provided by Tribal govenramenis were disproportionately impacted by the pandemic. Definition of Low- and Modard. Income Public Comment: As rated earlier, many commenters sought a definition for'9ow- and moderate -income' to provide recipients greater clarity on which specific households could be or below 300 percent of the FPG for the size of its household based on the most morndy published poverty guidelines by HHS or (it) income at m below 65 percent of the AMI for its county And at= of household based on the most recently published data by HUD.23 Recipients may determine whether to measure income levels for specific households or for a geographic area based on the type of service to be provided. For example, recipients developing a program that serves specific households (e.g., a subsidy for internet access, a childcare program) may measure income at the household level. Recipients providing a service that reaches a general geographic area le.g., a park) may measure median menew of that area. Further, recipients should generally use the income threshold for the size of the household to be served (e.g., when providing childcare to a household of five, recipients should reference the income threshold for a household of five); however, recipients may use the income threshold for a default household size of three if providing "AW ie alw oa®referzed to as modien femlly Iswme fm Ina uea. Slnce AMI is ryuonymaw eah rhie term and eead more gnarelry. the Ural auto .is. tD AMI. m Fm the six New Isivand states ofCanaxatticu6 MUM, Maeeeahueess. New Hampehim, Rhode Island, and Vent HUD provides AN for trams refer tn. cDumles. ReUpram, m news grass Should uea the AN cortsslwndingtD their bra when deteemmme fmsMMs in, l,of law red .admaf Income. 4346 Federal Register/Vol. 87, No. 18/Thursday, January 27, 2022/Rules and Regulations services that reach a general geographic area or if thing so would Simplify administration of the program to be provided (e.g., when developing a park, recipients should use the income threshold for a household size of three and compare it to median income of the geographic area to be served). Note that recipients can also identify and serve other classes of households tirm experienced negative economic impacts or disproportionate impacts from the pandemic; recipients can identify these classes based on their income levels, including above the levels defined as low- and modemte- income in the firm) rule. For example, a recipient may identify that households in their community with incomes above the final rule threshold for low-income nevertheless experienced disproportionate Impacts from the pandemic and provide responsive services. San section General Provisions Standards for Identifying Other Eligible Populations for details on applicable standards. Applicable levels. For reference, the FPG is commonly referred to as the federal poverty level (FPL) and is related to —although distinct hoer —the U.S. Census Bureau's poverty threshold The fiml .Is uses the FPG when referring specifically to the HHS guidelines, as these are the quantitative mantra used for determining low -and moderate -income households. The FPG by household size for 2021 is included in the table below. Recipients should refer to HHS Poverty 2021 FEDERAL POVERTY GUIDELINES Guidelines for this information, which is updated annually and available on the HHS websdo.24 For calculating the ihreaholds of 40 percent and 65 percent of AMI, recipients should infer to the annual HUD Section 8 50 percent income limits by county and household at= published by HUD and available on the HUD webs!¢; in particular, recipients should calculate the 40 percent threshold as 0.8 times the 50 percent income limit, and recipients should calculate the 65 percent threshold as 1.3 times the 50 percent income ❑mit.ae Finally, for median income of Census Trects and other geographic areas, recipients should refer to the most recent American Community Survey 5-year estimates available through the Census website.26 House1p10 size ae contlgum — states ant Memade District colnmhai Hawatl t................................................................................................................................................... E1z,Be0 $18.080 $14'Wo 2..................... --- ............................... _................. ............................. ..................................... .... 17,a2o z1.770 zo.oao 3................................................................................................................................................... 21,960 27.050 25,280 4................................................................................................................................................... 26,500 30,137 30,480 5......................................................................................................... 31,040 38,810 35,700 6........................................................................................--..............................,...,.................... 35,580 4aAaff a0.Wo 7................................................................................................................................................... 40,120 50,170 46,140 8............................ .......................... .......................... ...........-..................... ................................ 44,660 55,850 511360 For famibmArc useholds with more Nan 8 pelmns, add the falluwing amounts for each add8imlal person Guidelines for 2021;' avatmole at ht�s://asps.ohs.gevA phvertyecammic-mobiN"y/pwertyguidelmes. Rationale. In defining low income, the final rule uses both the FPG and AMI to account for national trends and regional differences. The metric of 165 percent of FPG aligns with some other programs; for butteries, order the National School Lunch Program, students with household incomes under 185 percent of FPG qualify for free or reduced -price lunch, and schools often use eligibility for free or reduced -price lunch as an indicator of low-income status under Title 1-A of the Elementary and Secondary Education Act. Eligibility for other programs, such as the Federal Communications Commission's a -Rate =r U.S. rspamrwm of HedN and Herren Service, HHS Poverty Guideline far mu, awilobleat hi.Ilaspa.hbagov/topinlpoveny-emrmmro mohiGry/p ence"t idelince "U.S. Depunmm of housing and Urban Development. FT 2021 SaYion B Ina —Limas. wlloble at help.:/lwnw.han-gav/pintail deeocem1hI2llaeatiana'Mi..lea. aaeiptenta mry infer to the lief ofmwtles(and Nov England means) Leavened by state and motropeman area for identifying the appropriate east. U.S. Depenment or Dean g and UAm Developme t, pY 2m1 list of counties land New England Towns)Identifed It, program and the Special Supplemental Nutrition Program for Women, Infants and Children employ this metric as well. In addition, 185 percent of the FPG for a family of four is $49,025. which is approximately the wage earnings for a two -earner household in which both earners receive the median wage in occupations, such as waiters and waitresses and hotel clerks, that were heavily impacted by COVID-19. r' This museum is targeted toward those at the bottom of the bums distribution and thus helps to promote use of SLFRF funds towards populations with the greatest needs. At the same time, with Slate and Mdmpalilnn Asas awilable at hto a:// —Seduaw.gwlporWl/dnla.1.01102llarm. defieiuca.-MI of =^Tbe U.S, Germ Be— p oo des en ante onve map: U.S. cannot Bureau Median Houaahold Nmme Soon Saltation Mep. awilable or her.// data.wneuagavlcedxi/moPr4=M e- %2uadd %y1dm Sss&AGW`c5Y cox us S...j0 -no,,s xavc -yms. o US cananat a1r 1 an. proud.an int 0rli no U.S. Cm.am Bmmu lhap. Median. -chew h,coublU.S. fznns Bureau Median Hov=nhold Income In The seat 12 Mpnlha hn Zal9lnnellnn-Adjusted Gallant, approximately one -quarter of Americans below 185 percent of the poverty threshold, this approach is broad enough to facilitate use of SLFRF funds across any juriadictions.re Because upward adjustment based on AMI for those regions where 40 percent of AMI exceeds 185 percent of FPG. The metric the midpoint of the 30 percent income limit and the 50 percent income limit awiable oI hate I/dnce—sue VvIcadml/tabler4= buce3and-ArS(rl'SYamailevel9a'lideflevies-- 11 a=Sae U.S, ga _ fe la amveaclMae,,E in he" :o-lecic,aumn/cee-fhue0. udder. 0eeb[ r, 2m11 _U.S. Gnsm seven. P-ay states by Slane , imps :l/vwvxns spel a b Iaseie/ demaimpvHYIppwlP^4&)mrF flag vBIM ovembe[ 7. mall, Federal Register/Val. 67, No. 18/Thursday, January 27, 2022/Rules and Regulations 4347 used in programs such as the Community Development Block Grant ICDBGI Program. In defining moderate income, the final rule uses both the FPG and AMI to account for national trends and regional differences. While there are different definitions of moderate income, 300 percent of FPG falls within the range commonly used by researchers.'" Analysis of median wages among a sample of occupations likely impacted by the pandemic also suggests that an income cutoff of 300 percent of FPG would include many households with workers in such occupalione.so Moreover, the metric of 300 percent of FPG covers households that, while above the poverty line, often lack economic security."' Treasury determined the AMI threshold for moderate income by maintaining the same ratio of FPG multiplier to AMI multiplier as in the definition of low income. This anchors the threshold to the existing definitions of moderate income hum the literature while taking into account geographical variation in income and expanses in the same manner as the definition allow income. Eligibility Presumptions Public Comment. Many commenters believed that a broader range of groups should be considered presumptively impacted and diapropmusi itely impacted, arguing that many households had been affected by the pandemic and that broader presumed eligibility would help recipients provide assistance quickly and effectively. Treasury also received many comments on the presumption that tamilms living in WI'a or receiving services from Tribal governments were disproportionately impacted by the pandemic. While many commenters supported the interim final rate's recognition of disproportionate impacts of the pandemic an low-income communities, many commenters disagreed with treating QCTs as the only presumed eligible group of disproportionately impacted households, apart from households served by Tribal governments. While acknowledging a potential increase in administrative burden, commenters recommended that Treasury presume other households or geographic amaa, lu addition to QCTs, were areas with or use Community Reinvestment Act. One commenterrmically recommended that a clearer definition of "diapmpartianately impacted" should be provided and that any definition should include communities of color and people of limited means. Another recommended specific eligibility for people that had recently interacted with the criminal justice system. Many commenters representing Tribal governments and growpa recommended a presumption of eligibility for all Tribal uses of funds, clarification that off reservation members remained eligible, and broad flexibility on use of funds. Additionally, commenters noted that some areas are technically eligible to be QCTs but fell shunt because of the aggregate populaton of eligible tracts. One commenter noted that these areas should he considered the same as QCTs for the purpose of SLFRF funds. Some commenters argued that rural counties typically have few QCTs despite high levels of poverty and disruption caused by the 00V111-19 pandemic. Other rural commenters recommended that the designation be by county rather than at a more granular level, arguing that the QCT designation is biased towards urban areas and understates the harm done to rural America. Many commenters representing Tribal governments supported the presumption that services provided by Tribal governments respond to disproportionate impacts. Treasury Response Summary: While households residing I. QCTa ar served by Tribal presume that low-income households were disproportionately impacted, and as discussed above, defines law. and moderate -income. Finally, under the final role recipients may also presume that households residing in the U.S. territories or receiving services from territorial governments were disproportionately imparted. Households presumed to be impacted: Impacted households are those that experienced a public health or negative economic impact from the pandemic. With regard to public health impacts, roo Tents may presume that the general public experminaid public health impacts from the pandemic fun the purposes of providing services for 00V(0.19 mitigation and behavioral health. In other words, recipients may provide a wide range of enumerated eligible uses in these categories to the general public without further analysis. As discussed in the fntmductian. CDVM-19 as a disease has directly affected the health of tens of millions of Americana, and efforts to prevent and mitigate the spread of the disease ere needed and in use across the country. Further, the stress of the pandemic and resulting recession have affected nearly all Americans. Accordingly, the final rate presumes that the general public are impacted by and eligible for services to respond to COVID-19 mitigation and prevention needs, as well as behavioral health needs. With regard to negative economic Impacts, as with the interim final rule, under the final role recipients may presume that a household or population that experienced unemployment, experienced increased food arhousing insecurity, or is low- or mademte income experienced negative economic impacts resulting tram the pandemic The final rule a definition of low- and moderate -income, by providing standard manias based on widely available data, is intended to simplify administration for recipients. Households presumed to be disproportionately impacted: Disproportionately impacted households are those that expedmmed a 4348 Federal Register/Vol. 87, No. 18/Thursday, January 27, 2022/Rules and Regulations disproportionate, or meaningfully more severe, impact from the pandemic. As discussed in the interim final role, pre- existing disparities in health and economic outcomes magnified the impact of the COVID-19 public health emergency on certain households and communities. As with the interim final .Is, under the final rule recipients may presume that households residing in QCrs or receiving services provided by Tribal governments were were recipients may impacts but Many different geographic, income - hand, or poverty -based presumptions could be used to designate disproportionately impacted populations. The combination of permitting recipients to use QCTs, low- income households, and services provided by Tribal or territorial governments as presumptions balances than varying methods. Specifically, QCTs am a commonly used designation of geographic areas based on low incomes in high poverty rates of households in the community; for recipients providing geographically targeted services. QCTs may provide a simple metric with readily available maps for use. However, Treasury recognizes that QCTs do not capture all communities disproportionately imppacted by the pandemic, in addition to thane presumed to be disproportionately Impacted. Additionally, Tribal and territorial governments may face both disproportionate impacts of the pandemic and edministrability challenges with operationalizing the income based standard; therefore, Treasury has presumed that services provided by these governments respond to disproportionate pandemic impacts. Given a lack of regularly published data on household incomes in net territories,-' as well as a lack of poverty guidelines developed for these jurieffidiolls,en it may be highly challenging to assess disproportionate impact in than communities according to an income- or poverty -based standard. Similarly, data on incomes in Tribal communities are not readily available.'' Finally, as described in the sections on Public Health and Negative Economic Impacts, Tribal communities have faced particularly severe health and economic impmi acts of the pandec. Similarly, available research suggests that preexisting health and economic disparities in the territories amplified the impact of the pandemic on these communities." Categorical Eligibility Public C...L Several commenters suggested that the final role permit recto ants to rely on a beneficiary's eligibility for other federal benefits programs as an easily administrable proxy for identifying a group or population that experienced a negative economic impact as a result of the COVID-19 public health emergency (i.e., categorical eligibility). In other words, a recipient would determine that individuals or households are eligible for an SLFRF-funded program based on the individual or household's eligibility in another program, typically another federal benefit program. Commenters noted that categorical eligibility is a common policy in program undersearead populations, including for masons noted by commenters. By v For wmnce. the amnriwn Community Sowey allowing recipients to also presume that does not include all mrmo ies. us. cmm,v mna,n, low-income household. were arena Published, Appel/emsenmxsaw disproportionately impacted, the final yhhmahmd had uvisited rvohombew,zazu. rule provides greater flexibility to serve »IT S. bpenment of l4nhM1 and gum- unddevarvedhouseholds or S.— ...... n nma za. communities. Data on household •r For indmn:e, din. trine the Amede.n incomes is also readily available at commnmry sonny ianaandmr gonge.plded varying level. of geographic granularity Iocnumt fmhnr wan Tnhalmembmdo, tlS covet. a.re-:, yTdba nma, n"I., (e.g., Census Tracts. counties), again cenznagorlllianlrzdbnl{lormypnp. permitting flexibility to adapt to local ra Linn Smyl.rot. al, Chalmgce In the US circumstances and needs. Finally Terrimrin: COV10.19 and the Medicaid FNnntlng Treasury notes that, as discussed further Cliff. Kenn Fam9y Fomtdadmt Nay 18, zazi). below, rani nets may also identify pp Y fi' nap.-/iwww.k&orghntonwws.mdaas/iaann. brief/anolkngm�-in- Me— ftcdhotln-oeasdmmd- olhar households, populations, and enented ev,d fnvnnngeigi administration that can significantly ease administrative burden on both program administrators and beneficiaries. Treasury Response: Treasury agrees that allowing recipients to identify impacted and disproportionately impacted beneficiaries based on their eligibility for other programs with similar income tests would ease administrative burden. To the extent that the other program's eligibility criteria align with a population or class that experienced a negative economic impact of die pandemic, this approach is also consistent with the process allowed under the final Is for recipients to determine that a class has experienced a negative economic impact, and then document that an individual receiving services is a member of the class. For these reasons, the final rule recognizes categorical eligibility for the following programs and populations: a Impuceddhouseholds. Treasury will recognizes household as impacted if it otherwise qualifies for any of the fallowing programs: o Children's Health Insurance Program (CHIP) e Childcare Subsidies through the Child Care and Development Fund (CCDF) Program o Medicaid o National Housing Trust Fund (HTFL for affordable housing programs only O Home Investment Partnerships Program (HOME), for affordable housing prngrema only • Olaproportionotely impacted households. Treasury will mcognize a household as disproportionately impacted if it otherwise qualifies for any of the following programs: o Temporary Assistance for Needy Families (TANF) o Supplemental Nutrition Assistance Program (SNAP) o Free and Reduced -Price Lunch (NSLP)and/or School Breakfast(SBP) programs o Medicare Part D Low-income Subsidies e Supplemental Security Income (SSI) o Head Start and/or Early Head Start o Spaniel Supplemental Nutrition Program for Women, Infants, and Children (WIC) o Section g Vouchers o Low -Income Home Energy Assistance Program (LIHEAP) O Pall Grants o Far services to address educational disparities, Treasury will recognize Title Federal Register/Vol. 87, No. 18/Thursday, January 27, 2022/Rules and Regulations 4349 I eligible schools sec as disproportionately impacted and responsive services that support the school generally or support the whole school es eligible c. Standards for Identifying Other Eligible Populations Standards: Designating Other Impacted Classes Public Comment: Treasury received multiple comments requesting additional clarification about how classes of impacted individuals maybe designated, as well as questions asking whether recipients must demonstrate a specific public health or negative economic impact to each entity served (e.g., each household receiving resistance under a program). There were several comments requesting that specific geographic designations, like a county or Impact Zane, be eligible to use as a determining boundary. Treasury Responm:The interim final rule .])owed, and the final ode maintains, the ability for recipients to demonstrate a public health or negative economic impact on a class and to provide assistance to beneficiaries that fall within that class. Consistent with the scope of beneficiertes included in sections 602(dfl)(A) and 663(c)(1)(A) of the Social Security Act, Treasury is clarifying that a recipient may identify such impacts for a class of households, small businesses, or nonprofits. In such mesa, the recipient need only demonstrate that the household, small business, or nonprofit is within the relevant class. For example, a recipient could determine that restaurants in the used to it ... what. that the small businesses receiving assistance were restaurants in the downtown area. The recipient would not need to demonstrate that each restaurant served experienced its awn negative economic impact. In identifying an impacted class and responsive program, service, or capital expenditure, recipients should consider the relationship between the definition of the class and proposed response. Larger end less -specific classes are less likely to have experienced similar harms and thus the responses are less soidk f elullAs wheals manna cM1oo1a eH,14, to receive servicza under section 1113 or Title 1. Pad A of niv MemeNary aM sewndary adurroz. Act of 1995, as nmund,d (M U.SC.6313), inetudias aclw.], served uMu smtion 11131LIIr]ICJ of d,at A. likely to be responsive to the berms identified. That tr, as the group of entities being served by a program has wider at affect patterns, or the type of entities, their circumstances. or their pandemic experiences differ more s d stantial)y, it may be more difficult to determine that the class has actually experienced the same or similar negative economic impact and that the response is appropriately tailored to address that impact. Standard: Designating Other Disproportionately Impacted Classes Summary af/nterim Final Rule: As noted above, the interim final role provided a broad at of enumerated eligible uses of funds in disproportionately impacted communities, including to address pre- existing disparities that contributed to more severe pandemic impacts in these communities. The interim final vale presumed that these services are eligible uses when provided in a QCT, to families and individuals living in QCTs, or when these andolem are provided by Tribal governments. Recipients may also provide these services to "other communities, should be able to support their determination that the pandemic resulted in disproportionate public health or economic oulcomea to the growp identified. Public Comment: A significant number of commenters expressed uncertainty regarding the process for determining eligibility for disproportionately impacted communities beyond QCTs. A commenter ruled that a dearer definition of"disproportionately impeded" should be delireeted and that any definition should include communities of ralor and people of limited means. Some commenters suggested a template or checklist to see if an area meets the standard for disproportionately impacted communities outside of QCTs. Some conwsation stated that OCT and non- QCT beneficiaries should be treated the same. Treasury Response: Under the interim Real rule, presuming eligibility for services in QCTs, far populations living in QCTs, and for Tribal governments was intended to ease administrative burden. providing a simple path for recipients to offer services in undreamed communities, and is not an exhaustive list of disproportionately impacted communflfes. To further clarify. the final rate codifies the framework discussed above, ,"held., or geographies as disproportionately nthe interim final rule, able to support their determination that the pandemic resulted in disproportionate public health or economic outcomes to the specific populations, households, or geographic areas to be served. For example, the interim final rule considered data regarding the rate of COVID-19 infections and deaths fn low-income and socially vulnerable communities, noting that these communities have experienced the most severe health impacts, compared to national averages. Similarly, the interim final In considered the high concentration of low-income workers performing essential work, the reduced ability to socially distance, and other preexisting public health challenges, aU of which correlate with mare severe COVIo-19 outcomes. The interim final rule also considered the disproportionate economic impacts of the pandemic, citing, for example, the rate of job lasses among low-inmme persons as compared /o the general population. The interim final Is then identified QCTs, a common, readily sea ... thin. and geographically granular method of identifying communities with a large proportion of low-income residents, m presumed to be disproportionately impacted by the pandemic. In other words, the interim final rule identified disproportionately impacted populations by assessing the impacts of the pandemic and finding that some populations experienced meaningfully more severe impacts Ulan the general public. Similarly, to identify disproportionately impacted classes, recipients should compare the impacts experienced by that class to the typical or average impacts of ilm pandemic in their local aloe, state, or nationally. Recipients may identify classes of household., communities, ..It businesses, nonprofits, or populations that have experienced a disproportionate impact based on academic research or government research publication., through analysis of their own data, or through analysis of other existing data sources. To augment their analysis, or when quantitative data is not readily available, recipients may also consider qualitative research and sources like resident interviews or 4350 Federal Register/Vol. 87, No. I8/Thursday, January 27, 2022/Rules and Regulations feedback from relevant stale end local agencies, such as public health departments or social services departments. In both cases, reefppients should consider the quality of 8ei research, data, and applicability of analysis to their determination. In designing a program or service that responds to a disproportionately impacted class, a recipient must first identify the impact and than identify an appropriate response. To assess disproportionate impact, recipients should rely on data or research that measures the public health or negative economic impact. An assessment of the effects of a response (e.g., survey data on levels of resident support for various Or responses) is not a substitute for me assessment oldie impact experienced by a particular class. Data about the appropriateness or desirability of a response may be used to assess the reasonableness of a response, once an impact or disproportionate impact has been identified but should not be the basis for assessing impact. 2. Public Health Background On January 21, 2020, the Centers for Disease Control and Prevention (CDC) identified the first case of novel camnavirus in the United States." Since that time, and through present day, the United States has faced numerous waves of the virus that have brought acute strain on health care and public health systems. At various points in the pandemic, hospitals and emergency medical service, have aeon significant Influxes of patients; response personnel have faced shortages of personal protective equipment; testing for the virus has been scarce; and congregate living facilities like nursing homes have seen rapid spread. Since the initial wave of the COVID- 19 pandemic, the United States his faced several additional major waves that continued to impact communities and stretch public health services. The summer 2020 wave impacted communities in the south and southwest. As the weather turned colder and people spent more time indoors, a In December 2020, the Food and Drug Administration (F'DAJ authorized COVI0.19 vaccines for emergency use, and soon thereafter, mass vaccination be the United States began. At the time of the interim final rule publication in May 2021, the number of daily new infections was steeply declining as rapid vaccination campaigns progressed across the comet By summer 2021. COVID-19 cases had fallen to their lowest level since early months of the pandemic, when testing was scarce. However, throughout late summer and early fall, the Delta variant, a more infectious and transmittable variant of the SARS-COV-2 virus, sparked yet another surge. From June to early September, the seven-day moving average of reported cases rose from 12,000 to 165,000.1n As of December 2021, COVID-19 in total has infected over 50 million and killed over 800,000 Americares.an preventing and mitigating the spread of COVID-19 continues to require a major public health response from federal, state, local, and Tribal governments. First, state, local, and Tribal governments across the country have mobilized to support the national vaccination campaign. As of December 2021, more than 80 percent of adults have received at least one dose, with more than 470 million total dose. administered.°' Additionally, mare than 15 million children over the age of 12 have received at least one dose of the vaccine and over 47 million people have received a bawler dose.+2 Vaccines for younger children, ages 5 through 11, have been approved and are reaching communities and families across the country. As new variants continue to emerge globally, the national effort to administer vaccinations and other COVID-19 mitigation strategies will be a critical component of the public health response. In early reporting on uses of SLFRF funds, recipients have Indicated that they plan to put funds to immediate use to support continued vaccination campaigns. For example, one recipient has indicated that it plans to use SLFRF wave throughout fall and winter 2020 Impacted a mmunfties I. almost every region of the country as the virus reached a paint of uncontrolled spread and over 3,000 people died par day due to COVID-19.aa •'Press Rotes, Canteen fienlneon Control end Pnveneon. Firo travel-mleted Cazo if 2019 Noval Cori na nnlentnd ha United Surca flan. 21, 2020)Bhosena//www.cdcgov/wediahelmaml2ad0/ Pm2r.nnwl-oaon aftea-lmve)-orneLunl 'ecmtme far Disease Comeel and Panne let. COVIn nW bathes trench N NnnbavfCOVl 19 Crane and UemAa m the US Reponnd to CDC. by stnnlremaoU,ntlydlmviaMcgvekoviednm- aickar/allende dailomaide. mast salted Derivative r, 2a.1). avfd. ,^Comma for Diwee Cunnvl .,it Prnavva", Conan Data Track, mly:l/aow.cwid eic'el nivldda1a-Inokm/xdavwao4mnowa (ha vl.ited Dacmnbm31.2021) .n Cameo air Dise l.G at.[ and Prevnntlan, COVED Data'rnckvrCOVID-19 Viarvie nna In the mcnn.15' tu,hrrPealcuviJ.cdcynv/mviddaN- kx9wm,mtiiae Dem vi®ud oxmAir r. ,aaty ca, funds to support a vaccine incentive program, providing $100 gift cards to residents at community vaccination clinics. The program aimed to target communities with high public health scads.¢^ Another recipient reported that it is partnering with multiple agencies, organizations, and providers to distribute COVID-19 vaccinations to homebound residents in assisted living facilities.'" State, local, end Tribal governments have also continued to execate other aspects of a wide-ranging public health response, including increasing access to COVID-19 testing end rapid at-home tests, contact tracing, support for individuals I. isolation or quarantine, enforcement of public health orders, new public communication efforts, public health surveillance (e.g.. monitoring case trends and generate sequencing for variants), enhancement tc health care capacity through alternative core facilities, end enhancement of public health date systems to meet new demands or scaling needs. State, local, end Tribal governments have also supported major efforts to prevent COVID-19 spread through safety measures at key settings like nursing homes, schools, congregate living settings, dense worksites, incarceration settings, and I. other public facilities. This has included, for example, implementing infection prevention measures or making ventilation improvements. In particular, state, lord, suit Tribal governments have mounted significant efforts to safely reopen schools. A key factor in school reopening is the ability to implement COVID-19 mitigation soodegire such as providing masks and other hygiene resources, improving at, quality and ventilation, increasing outdoor learning and eating spaces, lasting and contact tracing protocols, and a number of other measures ss For example, one recipient described plans to use SLFRF funds to further invest in school health resources that were critical components of school reopening and reducing the spread of COVID-19 in schools. These investments include the increasing school nurses and social ,e Cdweent, Ohio Rxowry Pine. hope:// ww.mlembau,pa/roarov y/ 16meane County. Pennsylvania Ravvery Plan, Vise//aeay.luvemecoonry.mr/Qscunanlfirw/ Perfor ance spent 8312.Aarovery.Pbn- PenJwn nafldparhaJl2r. .^this Includes in with 8nitlair Di slotagiaa d Pentmt with the Canna ter Disease Controland Pw+mtion-aonin KC Z thand, for CO.a'). Pnwmi, inndb Schio6Mivemhar 5.2e2r1. iwilinre ar hiookinvowww.ad hoo,h �rmdaolo-,rcwhmnmannrhnanax- h,le anon-ragmea,enmml. Federal Register/Vol. 87, No. 18/Thursday, January 27, 2022/Rules and Regulations 4351 workers, improved ventilation systems, substance use to cope with stress related libraries, and other public spaces.57 and other health and safety measures. to COVID-19 and 26 percent reported Similarly, Los Angeles County will The need for public health measures having symptoms of Vauma-and further invest in its"Care First. Jails to respond to COVID-19 will continue slressor-related disorder (TRSD) related Last" program which seeks to replace moving forward. This includes the to the pandee ic.se "arrest and incarceration" responses continuation of vaccination campaigns for the general public, booster doses, Another public health challenge withhealthinterventions.'- While the pandeadc affected and children. This also includes 1 19 monitors the spread of COV0. exacerbated by the pandemic was violent crime and gun violence, which communities across th e country, it disproportionately impacted some variants, understands the impact of p increased during the pandemic and has die ro ortiona[el Ira acted low- P P Y P demographic groups sort .,.listed these variants, developing approaches to respond, and monitoring global COV10. income corllmunities.S+According to health inequities along racial, ethnic, and socioeconomic hnes.5-The CDC 19 trends. Finally, Use long-term health impacts of COVII)-19 will continue to the Federal Bureau of investigation (FBI), although the property crime rate has found that racial and ethnic require a public health response, fell a percent in 2020, the violent crime minorities ea at increased risk for infection, h mat increased and death includingmedical services for individuals with "long COVID;' and rate increased 6 percent in 2020 compared to 2019 data?In particular, from COVID-19. with Hispanic ora research to understand how COVID-19 impacts future health the estimated number of aggravated assault offenses rose 12 while Latino and Native American or Alaska Native patients et highest risk." needs and raises risks for the tens of millions of percent, murder and manslaughter increased 30 Similarly, low-income and socially American- who have been infected. percent from 201910 2020?3 The vulnerable communities have earn the most severe health impacts. For The COVID-19 pandemic also proportion of homicides committed example, counties with high poverty negatively impacted thin areas of with firearms rose from 73 percent in Fame also have the highest rates of public health, particularly mental health and substance use. in January 2021, over 2019 to 76 percent in 2020.54 Exposure to violence can create serious short-term infection. and deaths, with 308 deaths 40 percent of American adults reported and long-term harmful effects to health per lix 000 compered to the U.S. average of 238 deaths per 100,000, As of symptoms of depression or aruciety, up from 11 percent in the first half of end development, and repeated exposure to volence may be connected 'December 2021.61 Counties with high social vulnerability, as measured by 2019.4- The mental health impacts of the pandemic have been particularly to negative health outcomes.re Addressing commlmity violence as a factors such as poverty and educational acute for adults ages 18 to 24, racial and public health issue may help prevent attainment, have also fared more poorly than the national average, with 325 ethnic minorities, caregivers for adults, and even reduce additional harm to dealt per l00.000 as of Uecembm and essential workers, with all reparting significantly higher rates of considering individuals, households, and communities.sa 2021-- Over the course of the suicide.47 The proportion of children'. emergency department visits related to Many communities are using SLFRF funds to invest to holistic approaches in •r St. turd.. MO arrows, Plan, hepa:// "'"""'ores.-rt°.grwiprwarnsanumorey/error-re/ mental health has also risen noticeably.e- Similarly, mt., of violence provention that are rooted in targeted outreach and addressing root r °�.�, Loo aaeelaf Canary. CA Recrwsy Plan, h W substance use and overdose deaths have spiked: preliminary data from the CDC ceases. For exam In., the of gt P City fib.lncm n rW3eLpdfy�/SDSmtmllwJtrpolaeV show a near) 30 percent increase in y P Laura u plawing to invest in expanding aa0mro taro. wmre xan:. n.noml so-. r Sorest, s t� COVII-lo to drug ty, P overdose mortals homA n12D2o a"commons ee ender"mode' tyr P snzeanj Aepd::iie to April 2021. bringing the estimated designed to provide clinical help and to divert non-violent from .whihelwuaegrw/wpmnranr/nyma/zsTr/ov/ Nnnwwiswrpyirr-rhPcov,Rrsnaprn.eand- overdose death toll for a 12-month cells away the period over 100,000 for the first time police department Additionally, the Pe¢ded-Paepmendere.pd). wl„ evel'.4e The CDC.I.. found that l3 citywill expand access to mental l health a Andy a 13 Ashes for O°witerw nesmM, 2020, the CDC Sound Hispanic percent Of adults Started or ins-a..d servr,xs, allowing residents to seek that or Lminn and Native American at Alaska Had. support at city recreation Canter., I°dtWduals ores l., amp mOty likoh,. wa .-Norah. Mnehel at aL, Us wPlidations of COVIn-39 fin MmtW Health and suhnence Abuse (Feb.l.. seat). httpe/lwaw.kf(,rrg/mmn°cow 'd-r9//fauebri)/thwimpl ovio.e..1— id-fe- for-mental-heakh,od-auGMnmure/a-+M= Older%ZOndv1b%2here%ma1ro%TO more, pder%2IX°%20Me%2Lturrenr%2hrdala: Mark E. Cmider A at., Mmn°I Beirut, Sea.Abuw. and 5°(ddat Instant Dudng COVro-19 Pandard— Found sure;June �02020, Maud Mmt°I. WHY Rep.W132): 104art1(An,. 14, mZ0), httpe:// .,dog ro n s—rhot r serM.Arei/ mmerstal hand. •rid, ".at— 1, Lu°b den L. Wood Hrahh Rdurel Eastman, ..'rearm virus A... children Read e16,W. oums, the (AVID Condemn, United Soned lorry 1-0nober 17. 2020. Morn. Mm1eL Wkly. Rep, AR45j:1675-0-INde. 13. 20a0), httpe.Ilww ..c v4wlmmm/wlumes/69/w l rand.1a3.1prm. "Cenlars for Disease Prevmtlon add Con dal. Neamnl Corp. fur Hoold. Slatted., RO W its W But Dverdwo Death C te, heps:o/ xde,aw/ nddrMvsa/vmldmg-oveNwedaw.Mm and visited Met' 6 credit 6. 2021). •r Pwchal, sups, note M: Muk E CUYIn N al., arpw not,45, rd The Whits Hooee.FACTSH1nT Mora Oetaus °n the Did.. Hmis AdminisueHon a hrvaetmenb in Cormorant, Violas Intervrntioas IAPA r, men, htrpsY/ww hershoofe Gov16defingawm/ flaaommtr doaerMs6l/,famfhreielaA.'.doe0mohumlldiIsFn11d0.n>mH/JnoicalmshHeoanr •ZFelval pound ofFreemasons, FBIRaden o- nser 2020 Crhits (Seta.ha27. 1021) Anpn:/ —flavev/o—/ptef.dnup.+lnm.rybi aleuses21ITh2imcebffi6 ==1d ,•1d. n The Fitt' Gunnel Fund Ice Stopefi oWan herom Curacao, Cnnutelo-ce,rnuft, zo-Fradg/)mm/ voted Nowardlenae/mmmunilygun-violence/(last visited NOde In lCona, ). Violin Lifestiutptoid the Cu Violrnmoolonnt[20e5),hap& °m'f copderpb-IN12B/hVHmfni, G...oth.-irrLYadBF . I ..ord 4352 Federal Register/Vol. 87, No. 18/Thursday, January 27, 2022/Rules and Regulations pandemic, Native Americans have experienced more than one and a half times the rate of COVID-19 infections, care than triple the rate of hospitaliretions, and more than double the death rate compared to While Americans.^' Low-income and minority communities also exhibit higher rates of pre-oxisting conditions that may contribute to an increased risk of COVID-19 mortality.- In addition, individuals living in low-income communities may he. had mare limited ability to socially distance or to self -isolate when ill, resulting in faster spread of the virus, and were over- represented among essential workers, who fete greater risk of exposum.ss Social distancing measures in response to the pandemic may have also exacerbated pre-existing public health challenges. For example, for children living in homes with lead paint, spending substantially more time at home raises the risk of developing elevated blood lead levels, while screenings for elevated blood lead levels declined during the pandemic.°^ The combination of these underlying social end health vulnerabilities may have contributed to more severe public health outcomes of the pandemic within these communities, resulting in an exacerbation of pre-existing disparities in health outcomes "7 vmnereLNty Index. lans 11nrid. mogn./eowd- dow-mxk. Apo,-f...JomldemM pert rlslM1d De iinten7,2921). eiCoa. err causes W 11,il and Pmvennon, Posk on coN0.191nfmuioq Hoepimlimse n, end Deem By aecelEniuicay, mrpollwww Mcgov/ d;wind:aran..v7/enme.dmm�asx, s tooerynwsp;mu7n nDe anibnr.a elMiwry Mml lhw: sued Davmbv; 2mp. °•See. ea. e.mce. m. Diereeeomrol end Pre7ent m In— olaeve0) nlnweor0e Mc,s coven-m tote. m, vv1x u axt www.cec.gov/ rvs/�msnc,rv/rommuniry/Aenlrhayuiry/ m alaltei Brouster 7,2 puriaerillrwssArml lien vieitN Onmrnber r.2ov1. Summaryy of the Interim Final Rule Approach to Public Iiealth Summary: As discussed above, the interim final rule provided flexibility for recipients to pursue a wide range of eligible uses to "respond to" the COVM-19 public health emergency. Uses of funds to "respond to" the public health emergency address the SARS- CoV-2 virus itself, support efforts to prevent or decrease spread of the virus, and address that impacts of the pandemic on public health. The interim final role implemented these provisions by identifying a non -exhaustive list of programs or services that may be funded as responding to COV10.19 ("enumerated eligible uses'), along with considerations for evaluating other potential new of funds not explicitly listed. Enumerated eligible uses are discussed below. For guidance on how to determine whether a particular use is allowable, beyond those enumerated, sea section Standards: Identifying a Public Health Impact. Enumerated eligible uses under this section built and expanded upon permissible expenditures under the Coronavirus Relief Fund; for clarity, the interim final role expressly listed as eligible uses the uses permissible under the Coronavirus Relief Fund, with minor exceptions.°° The interim final rule also recognized that the nature of the COVE?-19 public health emergency, and responsive policy measures, programs, and services, had changed over time and is expected to continue evolving. The interim final role categorized numerated eligible uses to respond to the public health emergency into several categories: (11 COVID-19 mitigation and prevention,(2) medical expenses,(3) behavioral health care. (4) public health Brad safety staff, (6) expenses to improve the design and execution of health and public health programs, and (6) eligible uses to address disparities in public health outcomes. For each category in turn, this section describes public camments received and Treasury's responses, a. wall as comments received proposing additional enumerated eliggibis now Reorganizations and Crew References: In some cases, enumerated eligihis uses included in the interim final .Is under responding to the public health emergency have been re- categor1red in [be organization ofthe final rule to enhance clarity. For discussion of eligible uses for public health and safety staff and to improve the design and execution of public health programs. please see section Public Sector Capacity and Workforce in General Provisions: Other. For discussion of eligible uses to address disparities in public health outcomes, please see section Assistance to Households in Negative Economic Imppacts. Cotance t y, discussion ss el and Ia assistance to small businesses and nonprofits to responded public health Assists has been moved from Assistance to SmalNonprofits 0fits in es and Economic to Nonprofits in Negative Economic Impacts to this section. This change lconsistent with We interim final rule, which provides that appropriate responses to address the Cblic health impacts of C 9 may provided to any type Blandly. a. COVID-19 Mitigation and Prevention COVO-19 public health response and mitigation metres. Recognizing the broad range of services and programming needed to contain COVIO-19, the interim final rule provided an extensive list of enumerated eligible uses to prevent and mitigate COVID-19 and made clear that the public health response to the virus is expected to continua to evolve over time, necessitating different uses of funds. Enumerated eligible uses of funds in this category included: Vaccination programs; medical care; (eating; contact tracing; support for isolation or quarantine; supports for vulnerable populations to access medical or public health services; public health surveillance (e.g., monitoring case trends, generate sequencing for variants); enforcement of public health orders; public communication efforts; enhancement to health care capacity. including through alternative ems facilities; purchases of personal protective equipment; support for prevention, mitigation, or other services in congregate living facilities (e.g., nursing homes, incarceration settings, homeless shelters, group living facilities) and other key settings like schools; ventilation improvements in congregate settings, health care settings, or other key locations; enhancement of Federal Register/Vol. 87, No. 18/Thursday, January 27, 2022/Rules and Regulations 4353 public health data systems; other public health responses; and capital investments in public facilities to meet pandemic itim atiord needs, such as physical plant improvements to public hospitals and health clinics or adaptations to public buildings to implement COVIO-19 mitigation tactics. These enumerated uses are consistent with guidance from public health authorities, including the CDC. Public Comment: Many commenters were supportive of expansive enumerated eligible uses for mitigating and preventing COV1 19, noting the wide range of activities that governments may undertake and the continued changing landscape of pandemic response. Some commenters requested that Treasury engage in ongoing consideration of and consultation on evolving public health needs and resulting eligible expenses. Some commenters noted that their jurisdiction does not have an official public health program, for example smaller jurisdictions in those that do not have a health department, and rayuested clarification on whether their public health expenses would still be eligible in compliance with program rules. Treasury Response: In the final rule, Treasury is maintainingg an sxpansive list of enumerated eligible uses to mitigate and prevent COVID-15, given the wide-ranging activities that goverwrentz may take to further these goals. including "other public health responses." Note that We final rule discusses several of these enumerated uses in are detail below. Treasury is further chnifyine that programs and Services, includi MVW-19 mitigation and prey programs and services, and at identified unless a response is disproportionate to the type or harm experienced. Note that ca expenditures me not considers "programs and services" and a presumed to be reasonably pro Other. In other words, recipients can provide any COVID-19 prevention or mitigation service to members of the general public without any further analysis of impacts of the pandemic on thew individuals and whether the service Ira emponalvs. This approach gives incipient governments an extensive set of eligible uses that can adapt to local needs, as well as evolving response needs and developments in understanding of transmission of COVI➢-19. Treasury emphasizes how the immurement eligible uses can adapt to charging circumstances. For example, when the interim final rule was released, national daily COVID-19 cases were at relatively low levels end declining; sa as the Delta variant spread and cases peaked in many areas of the country, particularly those with low vaccination rates, government response needs it tactics evolved, and the SURF funds provided the ability to quickly and nimbly adapt to new public health needs. Treasury also notes that funds may be used to support compliance with and implementation of COVID-19 safety requirements, including vaccination requirements, testing programs, or other so ',ad practices. Recipient governments do not need to have an official health or public health Program in order to utilize these eligible uses; any recipient can pursue these eligible uses, though Treasury recommends consulting with health and public health professionals to support effective irepl.sommulion. The CDC has provided recommendations and guidelines to help mitigate and prevent COVID-19. The interim final rule and final rule help support recipients in stopping the spread of COVID-19 through these recommendations and guidalmes.ro The final rule reflects changing circumstances of COVM-19 and provides a broad range of permissible uses for mitigating and preventing the spread of the disease, in a manner consistent with CDC guidelines and recommendations. The purpose of the SI.FRF funds is to mitigate the fiscal effects stemming from the COVID-19 public health emergency, including by supporting efforts to stop the spread of the virus. The interim final rule and final rule implement this objective by, in part, providing that recipients may use SI.F'RF funds for COVID-19 mitigation and preventem.71 A program or service that imposes conditions on participation in or acceptance of the service that would undermine efforts to slop the spread of COV70.19 or discourage compliance with recommendations and guidelines w See Canine for niaesae Contra and restated , COVIO mate Tracker, hipel/ewidiek,a ceead. dmalettivrNsn eds_dolly.. otioviand lkmmberr,said, m Sea Corm'. for Dieu. feet, .1 and P.v.tim, covID- e, haratwe w.adcawereado deedons, ncw/indexdaml poet tided Nations., e, 2m1a. 11 Se. fi 26.fi(hll CnraMvame safe am Used f5.el Recovery Ford, Bfi FA as 261m. in CDC guidance for stopping the spread of COVM-19 is not a permissible use of funds. In other words, recipients may not use funds for a program that undermines practices Included in the CDC's guidelines and recommendations for stopping the spread of COVID-19. This includes programs that impose a condition to discourage compliance with practices in line with CDC guidance (e.g., paying off fines to businesses incurred for violation of COVID-19 vaccination or safety requirements), as well as programs that require households, businesses, nonprofits, or.her entities not to use practices in line with CDC guidance as a condition of receiving funds (e.g., requiring that businesses abstain from requiring mask use or employee vaccination as a condition of receiving SLFRF funds). Vaccination programs and vaccine incentives. At the time of the interim final role mime, many vaccination programs were using mass vaccination tactics to rapidly reach Americans an mass. far first vaccine doses.'' Since that time, the FDA has authorized booster vaccine doses for certain groups and certain vaccines and has also authorized vaccines for youths ra rf The inclusion of"vaccination programs" as an eligible use allows for adaptation as the needs of programs change or new groups become eligible for different types of vaccination.. Public L'ammenC Since the release of the interim final rule, many recipient governments have else, requested clarification on whether vaccine incentives are a permissible use of funds. Treasury Response: Treasury issued guidance clarifying that "Ideaccinel programs that provide incentives reasonably expected to increase the number of people who choose to of vaccinated. or that motivate people to gel vaccinated snorer than they otherwise would have, are an allowable i(x.l— re,, Quiet canted and sr — re, mod. ore ma xen covert. v.covai ed, is Ina United Stelae, helped/eaved.edegov/exalt-dam- rmekaletoo masses Iles eafud October if. and -U.S. Food and Doug Adroinistriefon, fexxxvime FXrU0. gUpdate: FUA]'ckea Attenuated Anion, ..be Uaa of a arose, dear for COVID-19 yaacmm, hrtpe/1..fdo.goWt ewn venal'ase—u t—seam/da-doinsee,fiaer blmkoh add-l9-reaine�e e,ency—chlldre,r s dnough-u yvier 0.1 tamed Novembers, Polk '.U.S. Food and nets Adulte ation, FUA Aef uerua, Fnxr-sioNTxh Wvfo-m ye¢ma for Free tpracy Uin Chlldmt 5lhta ign 11 Ye ix of Age I.1"W=fth gov/ne—eadu/preea- IuiY/(dse,sedriaes—la eae.,ch- Nmughl ty.rsnge (Wt vi,Ifea Naunminr B. 2aR1) 4354 Federal Register/Vol. 87, No. III/Thursday, January 27, 2022/Rules and Regulations use of funds so long as such costs are equipment (e.g., emergency response Totaled Response: These ere reasonably p portions] to the expected radio systems); permissible uses of funds under the public health benefit"'e This use of • Installation and improvements of interim final rule and remain eligible funds remains permissible under the ventilation systems; under the final rule. Capital Expenditures Public Comment: Many commenters requested clarification around the types and scope of permissible capital investments in public facilities to meet pandemic operational needs; ventilation improvements in congregate settings, health care settings, or other key location.; and whether support for prevention and mitigation in congregate facilities could include facilities renovations, improvements, or construction of new facilities, or if the facilities must solely be used for COVED-19 response. Treasury Response: For clarity, Treasury bee addressed the eligibility standard for capital expenditures, or investments in property, facilities, or equipment, in one section of this Supplementary Information; see section Capital Expenditures in General Provisions: Other. in recognition of the importance of capital expenditures in ties COVI1J-19 public health response, Treasury enumerates that the following probed. are examples of eligible capita as e l expenditures, as long thy meet the standards for capital expenditures in section Ceplial ExpendI since mal Provisions: Other: • Improvements or mnstuctfon of COVID-19 testing after and laboratories, and acquisition of related equipment; • Improvements or construction of OOVID-19 vaccination sites; • Improvements or construction of medical facilities generally dedicated to COVIO-19 treatment and mitigation (e.g., emergency rooms, intensive core units, telemedicfne capabilities for COV10.19 related treatment); • Elcpenw of establishing temporary medical fact] ices and other measures to Increase GOYI10-19 treatment capacity, including related construction costs; • Acquisition cfequipment for COVID-I' prevention and treatment, inducting wo blidere, amb didence, and other medical or emergency services rein entp • mprovements to or construction of emergency operation craters and acquisition of emergency respone 'sconsnarsess slate and local Fiscal Recovery Po,Ms, Frequently Asked! Qumtiona, as of July is, scar: nxprl/home.nensnygovhyaemyplrG as/ S,,,, AQ.pal NWe nsat answers mny Inside centime to individuals cam hove already received he inmeson ode incentive le..a—bly mopeelad crease the nendar of peop4 who choose to yet eveineted m motivate people Is get veaimaod ,occourand the coats reasonamy pwpoetional to the — ore ,.,ad public health tenons. • Costs edabhshmgpuldmhealth data systems, Including technology infrastructure; • Adaptation to congregate living facilities, including skilled numing facilities, other long-term care facilities, incarceration selfinge, homeless shelters. residential faster care facilities, residential behavioral health treatment, and other group living facilities, as well as public facilities and schools (excluding construction of new facilities for the purpose of mitigating spread of COVm-19 in the facility); and • Mitigation measures in smell businesses, nonproffts, and impacted industries (e.g., developing outdoor spaces). Other clarifications on GOVI0.19 mitigation: Medical care, supports for vulnerable populations, data systems, cnrceml settings. Based on public comments and questions received from recipients following the interim final mis, Treasury is making several further clarifications on enumerated eligible was in this category. Public Comment: Several commenters ^eq Bated clarification on eligible uses of funds for medieal care; Treasury addresses those comments in the section Medical Expenses below. Public Comment Readpfent posed questions on the type and scope of activities eligible as "supports for vulnerable populations to access medical or public health services." Treasury Response: Enumerated eligible uses should be considered in the context of the eligible use category or section where they appear: in this case, "supports for vulnerable populations to access medical or public health services" appears in the section COVW-19 Mitigation and Prevention. As such, these eligible uses should help vulnerable or high -risk populations access services that mitigate COVI0.19, for example, transportation assistance to reach vaccination sites, mobile vaccination or testing programs, or on site vaccination or testing services for homebound individuals, those in group homes, or similar settings. Public Comment: Some commenters asked whether "enhancement of public health del. Vale.." could include investments in software, databases, and other information technology resources that support responses to the COV10.19 public health emergency but also provide benefits for other use cases and Iong4erm capacity of public health departments and systems. Assistance to Businesses and Nonprofits To Implement COVIE-19 Mitigation Strategies Background: As detailed above, Treasury received many public comments describing uncertainty about which eligible use category should be used to assess different potential uses of funds. As a result, Treasury has re - categorized some was of funds in the final rule to provide greater clarity, consistent with the principle that uses of funds should be assessed based on their intended beneficiary. For example, COVI0.19 mitigation and prevention serves the general public or specific populations within the public. However, in the interim final rule, assistance to small businesses, nonprofits, and impacted industries to implement OOVW-19 mitigation and prevention strategies was categorized in the respective sections within Negative Economic Impacts. The final role consolidates all COVI0.19 mitigation and pprevention within Public Health. Pug Comment: Treasury her received multiple comments and questions about which eligible use permits the recipient to provide assistance to businesses and nonprofits to address the public health impacts of COVI0.19. Treasury Response: In the final role, these services have been ry catsgo.. ad under COVI0.19 mitigation and prevention to reflect the fact that this nonprofit, or impacted When providing COVII-19 i and prevention services, can identify the impacted :mall businesses, nonprofits, or general. As with all enumerated eligible uses, recipients may presume that all COVID-19 mitigation and prevention programs and services are reasonably proportional responses to the harm identified unless a response is grossly disproportionate to the type or extent of harm experienced. Note that npilot expenditures are not considered "programs and services" and are not presumed to be renonbly proportional responses to an identified harm except as provided in section Capital Expenditures in General Provisions: Other. In other words, recipients can provide any COVID-19 prevention or mitigation service to small businesses, nonprofits, and businesses in impacted Federal Register/Vol, 87, No. 18/Thursday, January 27, 2022/Rules and Regulations 4355 industries without any further analysis eligible for services that mitigate or category of eligible uses they should of impacts of the pandemic on those prevent COVID-19 spread. As such, s review to assess a potential use of funds. entities and whether the servir. is small business, nonprofit, or impacted For discussion of eligibility for responsive. industry receiving assistance to programs to expand health insurance In some rase., this ..as that an implement COVID-19 mitigation coverage, we section Assistance to entity not otherwise eligible to receive measures is. beneficiary ofassistance Households. assistance to res admit alive i in d 116 Po of economic impacts of the pandemic, for ample an entity that did not experience a negative economic impact, ma still be eligible to receive assistance under this category for COVI0.19 mitigation and prevention services. Uses of funds can include loans, grants, or M-kind assistance to small businesses, nonprofits, or other entities to implement COVID-19 prevention or mitigation tactics, such as erambetion; testing; contact tracing programs; physical plant changes to enable greater use of outdoor spaces or ventilation improvements; enhanced cleaning to a restaurant to establish an outdoor Patria, given evidence showing much ower risk of OOVID-19 transmission outdoors.- Uses of funds can also include aid to travel, tourism, hospitality, and other impeded industries to implement COVID-19 mitigation and prevention measures to enable safe reopening, for example. vaccination or Westin, nro,rems. masks or con safe Recipients providing assistance to small businesses, nonprofits, or Other, which describes eligibility standards for these expenditures. Recpients pmvidirrg assistenca in the torte of loans should review the section assistance and subrecipients when wonting with small businesses, nonprofits, or impacted industries. As noted above, Treasury presumes that the general public, as well as small businesses, nonprofits, and impacted industries in general, has been impeded by the COVID-19 disease itself and is 'a See Conn. for Mn—Cvrrd end Prevention, pe impate in Outdoor and Indoor Activities, mtw:iln'�^'.cdn.govioxnraomsrema-naovldany 1i10—P.W—ndmnattivitioxhnnl past visited N—bar s. aazrl. (e.g., grant rag n s to a sera wanes to develop an outdoor patio to reduce transmission). In contrast, if a recipient contracts with, or grants funds to, a small business, nonprofit, or impacted industry to carry out an eligible use for COVID-19 mitigation on behalf of the recipient, the entity is a subrecipient (e.g., contracting with a small business to operate COVID-19 vaccination sites) For further information on distiaTishing between beneficiaries and an Mcipi ants, as well as the impacts of the distinction on reporting and other requirements, see section Distin,uishine Subreciuimmi vireos b. Medical Expenses Background: The interim final rule sloe included as an enumerated eligible use medical expenses, including medical care and services to address the near- res and potential longer -term impacts of the disease on individuals infected. Public Comment: Some commentem sought clarification on the typos of medical expenses eligible and for whom, including whether funds could be used under this category for expanding health insurance coverage (e.g., subsidies for premiums, expanding a group health plan), improvements to healthcare facilities or establishment of new medical facilities, direct costs of medical services, end costs to a self - funded health insurance plan (e.g., a county government health plan) for COVID-19 medical care. Treasury Response: In the final rule, Treasury is maintaining this enumerated eligible use category and clarifying that it covers costs related to medical care provided directly to an individual due to COVID-19 infection beg., treatment) or a potential infection (e.g., testing). This can include medical casts to uninsured Individuals; deductibles, co, pays, or other arts not covered by insurance; costs for uncompensated care at a health provider; emergency medial response costs; and, for recipients with a self -funded health insurance plan, excess health insurance costs due to COVID-19 medial care. These are medial expenses due to COVID-19 and distinguish this category of eligible uses from other related eligible uses, like COVM-19 mitigation and prevention and health insurance expenses to households, to provide greater clarity for recipients in determining which c. Behavioral Health Care Background: Recognizing that the public health emergency, necessary mitigation measures like social distancing, and the economic downturn have exacerbated mental health end substance use challenges for many Americans, the interim final rule included an enumerated eligible use for mental health treatment, substance use treatment, and other behavioral health services, including a rem -exhaustive list of specific services that would be eligible under this category. Public Comment: Many commenters expreared support for the interim final rulers recognition of behavioral health impacts of the pandemic and eligible uses under this category. Several remainders requested clarification on the types of eligible services under this category, specifically whether both acute end chronic care are included as well as services that often do not directly accept insurance payments, like pear subpart groups. Some commenters highlighted the importance of cultural competence in providing effective behavioral health services. Some commenters suggggested that funding should be available broadly and quickly for this purpose, recommending that funding available for behavioral health no/ be tied to the amount of.ven.a Treasury Response: In the final .le, Treasury is maintaining this enumerated eligible use alegory and clarifying that it covers an expensive army of services for prevention, treatment, recovery, and by the public health emergency. The Treasury is further denying that when providing behavior health services, recipients an identify the impacted population as the general public and, as with all enumerated eligible uses, presume that all programs and services are reasonably proportional responses to the harm identified unless a response is grossly disproportionate to the type or extent of harm experienced. In contrast, capital expenditures are not »xmhow or--H., resI. nac—Imo, —move prevenhm, In mru— de —prevention, and.es ..n.a cap —Or ...wro physiml car inhaviorel hmah ?o—y —s dud prevmtativ. mamdn.. 4356 Federal Register/Vol. 87, No. 18/Thursday, January 27, 2022/Rules and Regulations considered "programs and services" and are not presumed to be reasonably proportional responses to an identified harm except as provided in section Capital Expenditures in General Provisions: Other. In other wards, recipients can provide behavioral health services 1. ...ham of the general public without any further analysis of impacts of the pandemic on those individuals and whether the service is responsive. Recipients may also use this eligible use category to respond to increased rates of behavioral health challenges at a population level or, at an individual level, new behavioral health challenges or exacerbation of pnsexisting challenges. including new barriers to accessing treatment. Services that respond to these impacts of the public health emergency may include services across the continuum of care, including both acute and chronic care, such as prevention, outpatient treatment, inpatient treatment, crisis care, diversion programs (e.g., from emergency departments or criminal justice syystem involvement), outreach to individuals not yet engaged in treatment, harm reduction, and supports for long-term recovery (e.g., peer support or recovery coaching, housing, transportation, employment services). Recipients may also provide services for special populations, for example, enhanced services in schools to address increased miss of behavioral health challenges for youths, mental health first responder or law enforcement. mental health co -responder programs to divert individuals experiencing menial illness from the criminal justice system, or services for regnant women with substance use Sitea dens or infants born with neonatal abstinence syndrome. Finally, recipients may use funds for programs or services to support equitable access to services and seduce racial, ethnic, or socioeconomic disparities in access to high -quality treatment. Eligible use. of funds may include services typically billable to insurance ee or services not typically billable to insurance, such as peer support groups, costs for residence in supportive housing or recovery, housing, and the 988 National Suicide Prevention Wfeline or other hot] ine services. Recipients may also use funds in conjunction with that federal grants or programs (see section Program Administration Provisions). though "However. eLM fends may not be mead tv reimhutu a rsrvice that wee ens billed to mammov. eligible services under SI.FRF are not limited to those eligible under existing federal programs. Given the public health emergency's exacerbation of the ongoing oploid and overdose crisis, Treasury highlights several ways that funds may be used to respond to aided use disorder and prevent overdose mortalfly.'e Specifically, eligible uses of funds include programs to expend access to evidence -based treatment like medications to treat opted use disorder (e.g., direct costs or incentives for emergency departments, prisons, jails, and outpatient providers to offer medications and low -barrier treatment), naloxone distribution, syringe service programs, outreach to individuals in active use, post -overdose follow up programs, programs for diversion from the criminal justice system. and contingency management interventions. Finally, for clarity, Treasury has addressed the eligibility standard for capital expenditures, or investments in property, facilities, or equipment, in one section of this Supplementary Information; see section Capital agrooditures in General Previsions: Other. Examples of capital expenditures related to behavioral health that Treasury recognizes as eligible include behavioral health facilities and equipment (e.g., inpatient or outpatient mental health or substance use treatment facilities, crisis cantors, diversion centers), as long as they adhere to the standards detailed in the Capital Expenditures section. d. Preventing and Responding to Violence Ba round: The interim final rule big hlig led that some types of violence had increased during the pandemic and that the ability of victims to access services had decreased, noting as an example the challenges that individuals affected by domestic violence face in accessing services. Accordingly, the interim final rule enumerated as an eligible use, in disproportionately impacted communities, evidence�lxmad community violence intervention programs. Following the release of the Interim final Is, Treasury received several recipient questions regarding whether and how funds may be used to matured b an increase in crime se In line with the Department of Health end Human Services. Oeerom, Promotion Streeter. hupc//waw.hhs gruloverdoae-prevention/. and the M. of thni... I De, Comml Pull,. Adminlnreuon's metemnm m, Duet Pnacy Primitis an Year nn. (APu 1, stc 1). hasped/ www.whitahoueago.1wi,-mmm,v,pinums/m lros/ BidanHarme-SudemenM1a7'LT+t'prelicNPrin,ities ibun! Lima, violence, or gun violence in some communities during the pandemic. Treasury released further guidance identifying how enumerated eligible uses and eligible use categories under the interim final rule could supped violence reduction efforts, including rehiring public sector staff, behavioral health services, and services to address negative economic impacts of the pandemic that may aid victims of crime. The guidance also identified an expanded set of enumerated eligible uses to address increased gun violence. Public Comment: Several commenters y Re ex ressed.7part far this use of funds. Treasursponse: In the final rule, Treasury is maintaining enumerated eligible uses in this area and clarifying how to apply eligibility standards. Throughout the final role. enumerated eligible uses should respond to an identified impact of the COVID-19 public health emergency in a reasonably proportional manner to the extent and type of harm experienced. Many of the enumerated eligible tum,like behavioral health services, services to Improve employment opportunities, and services to address educational disparities I. disproportionately impacted communities —that respond to the public health and negative economic impacts of the pandemic may also have benefits for reducing crime or aiding victims of crime. For example, the pandemic exacerbated the impact of domestic violence, sexual assault, and human trafficking; enumerated eligible uses like emergency housing assistance, cash assistance, or assistance with food, childcare, and other needs could be used to support survivors of domestic violence, sexual assault, or human trafficking who experienced public health or economic impacts due to the pandemic. Public Cerement: Several commenters, expressed support for community on intervention programs or argued that traditional public safety approaches had negatively impacted the social determinants of health in their communities. Several commenters recommeoded inclusion of approaches like mental health or substance use diversion programs. Treasury Response: Treasury recognises the importance of comprehensive approaches to challenges like violence. The final rule includes an enumerated eligible use for community violence intervention programs in all communities, not just the disproportionately impacted communities eligible under the interim final ale. Given the increased to of violence during the pandemic, Treasury has determined that this enumerated Federal Register/Val. 87, No. 18/Thursday, January 27, 2022/Rules and Regulations 4357 eligible use is responsive to the impacts of the pandemic in all communities, The final rule incorporates guidance issued after the interim final rule on specifically types of services eligible, including: • Evidence -based practices like focused deterrence, street outreach, violence interrupters, and hospital- hased violence intervention modals, complete with wraparound services such as behavioral therapy, trauma recovery, job training, education, housing and relocation services, and financial assistance; and • Capacity -building efforts at community violence intervention programs like funding more intervention workers, increasing their Pay, providing training and professional development for intervention learksm, Add htring and training workers to administer the programs. Public Comment: Some commenters sought further clarification on whether some of the enumerated eligible uses me considered responsive to all crime, violent crime, or gun violence. Treasury Baspoese: Enumerated eligible uses that respond to an increase in gain violence may be pursued in communities experiencing an increase in gun violence associated with the pandemic, specifically: Of Hiring law enforcement officials —even above pre- pandemie levels —or ppaying overtime where the funds are directly focused on gun violence exacerbated try the pandemic, including prosecuting gun traffickers, dealers, and other parties canirihuting tc the supply of crime guns, as well es collaborelive federal, state, and local efforts to identify and address gun trafficking channels, and (3) investing in technology and equipment to allow law enforcement to mom efficiently and effectively respond to the rise in gun violence resulting from the pandemic, for example technology to assist in the identification affiliate whose aerial numbers have been damaged. 3. Negative Economic Impacts S. Assistance to Households Background While the U S. economy is now on the path to a strong recovery, ilia publir. health emergency, including the necessary measures taken to protect public health, _suited in signifrcent economic and financial hardship for many Americans. As businesses closed, consumers stayed home, schools shifted to remote education, and travel declined precipitously, over 22 million jobs were lost in March end April 2020.-- One You later, in April 2021, the remned comr.my .fill aiever 8 million jobs below its pm -pandemic peek,-1 and the unemployment rate hovered around 6 parcent-2 In the months since Treasury issued the interim final rule in May 2021, the economy has made large strides in its mcurmy. The economy gained over 4 million jobs in the seven months from May to November 2021; 63 the unemployment rate fell mare than 3.5 percentage points to 4,2 percent, which is the lowest rate since February 2020;-e and the size of the nation's economy surpassed the pre -pandemic peak in the second quarter of 2021ps While the economy has made immense progress in its recovery since May 2021, the economy has also faced setbacks that illustrate the continued risks to the recovery. As the Delta variant spread across the country this summer and fall, the United States faced another assume wave of cases, deaths, and stain on the healthcare system, which contributed to a slowdown in the pace of recovery in the third quarter.•^ Supply chain disruptions have also demonstrated the difficulties of restarting a glabel economy.-- Moreover, although many Americana have returned to work as of November 2021, the economy remains 3.9 million jobs below its pre -pandemic peak,-- and 2.4 milli.. workers have dropped out of the labor mark.[ altogether relative to February 2020P9 That, despite much .ou.&B'seau of Leber Stifu el, All Employees, T. Nanfmm IPAVBMSI, maiesed Imm NED, Eem1 mve Beek of St aos. Lnl aa: hrrys// .xlaoi-jml.osg/xriWPA11145(lea'Aacted embm r, xaitj. as U.S. as U1Bureau of Lelea,ome fun, iRE ,real —I Beie a Bank EI,of mefwed fimn Vlfmd Fetler.l Bamrve Bank af5t. Wuie: http ut vi DamireS7,S/xticc-/UNSATe Ilan visitM Ogambp Zdm l), ^ U.S. aurae. of Leber StaEnter., aaven'. note W. as O.S. Bweau a LetterEnter.,Aral supra Res G ea. es O.S. BurreauProd. of Do 11. r sieved been ED,a learand Resume Icnrcll mo-leved fi 11 reef redami d-ewe maa/ arse teals, hulDem Demo 7.2datvdory/ee,ie✓fnYCl 9nn vuBed Oammbor mzll. as U.S. Department en,erAeons Economy SeasoSeasonalumt by GthmineW olhem. Amlw Asiatent Sevelery Ficuroany Poiloy. for no : otesory Suavest., Advisory C... it.S,us,Mwr1. 2021). available ehttpellh..ne.haasurygav/crews/ pmyous O.,gyaas a v.ka uld Su, Imp h,ta©iru crow, Fosemin Amid Suns Wait is -journal( Pandemic fractionsWaitholes Same a, ey l (Heber rr,rasp,available aehttpm:/ffe-fi wj.mnd mPrAy-eimhceu-glnhaLp-awN-Jame ation - aupplycheimdia,upaonneo,auafytlanonriekn "Us. Bnreee oflabor Statistics, s.p,a note rate, .oe S.Le Boma.of IsborSuBnl¢essn Labor Forte Level ICLF16OV1, minwed hum FASp, progress, their is a continued need to respond to the pandemic's economic effects to ensure a full, broad -based, and equitable recovery. Indeed, the pandemic's economic impacts continue to affect some demographic groups more than others. Rates of unemployment remain particularly severe among workers of color and workers with lower levels of educational attainment; fro example, the overall unemployment rate in the United States was 4.2 percent in November 2021. but certain groups saw much higher rues: 6.7 percent for Black workers, 5.2 percent for Hispanic or Latina workers, and 5.7 percent for workers without a high school diploma.-- Jab lasses have also been particularly steep among low -wage workers, with these workers remaining furthest from recovery as of the end of 2020.-1 A severe recession, and its concentrated impact among low-income workers, has amplified food and housing insecurity, with an estimated nearly 20 million adults living in households where there is sometimes or often not enough food to eat and an estimated 12 million adults living in households that ware not current on rent .. While economic effects have been seen across many cummunities, there are additional disparities by race and income. For example, approximately 4358 Federal Register/Vol. 87, No. 18/Thursday, January 27, 2022/Rules and Regulations half of low-income, Black, and Hispanic parents reported difficulty covering costs related to food, housing, utility, or medical caress Over the course of the pandemic, inequities also manifested along gender lines. as schools closed to in -person activities, leaving may working families without childcare during the day.-' Women of color have been hit especially hard: The labor force participation rate for Black warren has fallen by 3.6 percentage points 95 during. the pandemic as compered to 1.3 percentage points for Black manse and 1.7 percentage points for White woman. -- As the economy recovers, the effects of the pandemic -related recession may continue to impact households, including a risk of longer -term effects on earnings and economic potential. For example, unemployed workers, especially those who have experienced longer periods of unemployment, earn lower wages over the long term once through, among other factors, damaged consumer credit scores sa and reduced familial and childhood wellbeing,'"° These potential long-term economic consequences underscore the cautioned mead for robust policy support. Law -and moderate -income households, those with income levels at or below 300 percent of the federal poverty level (FPLI, face particular hardships and challenges. These households report much higher rates of food insecurity and housing hardships than households with higher incomes. For example. households with incomes at or below 300 percent FPL are several times more likely to have reported struggling with food insecurity compered to households with income above 300 percent FPV 01 Similarly, low -and modest. income households reported being housing insecure'02 at rates more than twice as high as higher - income households, end low- and moderate -income households reported rehired.-" In addition to the labor housing qquality hardship 103 at rates market consequences for unemployed slatisticelly significantly greater than workers, recessions can also cause the rate for higher -income longer -term economic challenges houisholds.on The economic crisis caused by the pandemic worsened -Michael" asers,Wla Gonzalez,Geomaeve M. loray. Pmmts Are Sere ilbag to Provide for Their Familiar w during the eanda[, Urhan Inentuu(May arne), hnpedhwrw.uderano / h/ppublimAon/pmenlamreaWggl(ng provide-IAeinfomiliesdusngyandvmrchnr� mem=uwunJeades-creulm_ e; roman-nan(n mmpnign=[arid_ pm,Wwrionhe.. rearm ^•women have carmen: urger sere Mchildcear reeas Sea than man during the GOVPordw u. See, eg. Coma Tamavo b Mafa 1. oPredae, Gonda,n,—it an in mupl ho dirisi dudes of childc .f workans marhold.l iti-aulth raw), UW0. rs.Rev.Enah,HphsanddrsursomAnesc nevusWeor sesse/Irnk.cts-7, hem Ai a0a ,np=his nalosoffcovmH 1-0"CandTitan Alan f d., The Impel of CUV10.re on Gender orris P Ntlioal Buzau oge, "comic Rmeemh Working Paper Re90 IApsilmml,ovaiM6lem https://m°nv.nber.mg/ prpmWr. °v U.S.. flumseem From 'armpmen U"Ism. .Ova, mark or All. Anderer wm.Lsslsareved fuser FRED. FMeni Aewrva &n, of St. Louie; Partiitg/aMW(NSIIJCW]1 ums 1cat stir md Oomust7.se US. amount of la ear Ube, prowtinton ai Y.,. Oses. ele[k or ghi®n 11 U.S. eureau of labor sted9an. lame Fame mesas: A look at economic outcomes for workers in many low- and coma dtaincome households. Industries that employed low -wage workers experienced a disproportionate level of job lass. For example, from February 2020 to February 2021, the hospitality and leisure industry lost nearly 3.5 million jobs.+0s While the atria CAi you, solving the Crdu Conundrum: Helping Comments' Credit Rewrds loop ured by the Faadomre Crisis and Grant Reunbn, Noland Cmmamm raw Gender War. no ). h.,Jl —ach,aeg/imogoe/pdfloodul,dws,,el cmdnaenundmma013.pdf 'whwln croaked. Sara Mc4neWm Christopher wh eat. Ada., Children aMe Fund Rawwas,I Russell Sale Foundation (Aug. 2016), werilaNe of Aopal/meadeusxllsage.mg/puWiooh'ms/children- u. gre-1Also 1. Ca ^'Kyle I.nd,le land Sleyyhen Zudivere Cord Iaewdw. Uauaing Hams. a end Medial Cate Umirarion, urban Inmatom gee sore), hudlehleee Asp+://www.urbon.org/itw/del ph/ ntd'twohnn"madrlskar.eeJadjon- riy_ hods-odpofhiyJnMiwlwreutilimlion_ ff malloupd/. aofiell — y immunity is attend u not utility me NIIvaunt ofmmn ) aragegearmIunllty 'billsroo (ga, oil, m damciryl maretime in the p no corms, 12 nwnths. err Live rgpasieto oneoipiereehadum .letaut probeerse roonnmmma edean^na mlaetl m Posts ea with lesson mapondmira phyaial dwelling: pate mdlw mhod a orca mat or aping; wmdaxre that era brokan recover ehw: rophot wed situation when; broken plumbing ille.r(flows, butvertu,rimer):Mlwin or ow): and nor: o epphmcm laefigeamr or novel: and no phmie (trady k witwdl. old an. wow Could add it mored in heCOVIa,low- -.workers wareMom hit harm in the Amount 2020 9 an: Thu Seta of omortlng AmMw 3'.. a,mPloymentrryort, economic P011rylnatitum QAeY entire industry was impacted, 72 percent of the job losses occurred in the lowest wage service occupations compared to only a 6 percent rate of job loss in the highest wage management and finance jobs?a Similar trends exist in other heavily impacted industries. In public education, the lowest wage occupations, service and transportation jobs, saw a job loss rate of 20 and 26 percent, respectivoly.'res During that same time period, the highest wage occupations in public education, management, actually saw jobs increase by 7 percent.tsa While many households suffered negative economic outcomes as a result of the COVID-19 pandemic and economic recession, households with low incomes were impacted in disproportionate and exceptional ways. From January 2020 h, March 2021, low - wage workers experienced job loss at a rate five times higher than middle -wage workers, and high -wage workers Annually experienced an increase in job opportunities.'e" Because workers in low-income households were more likely to lose their job or experience reductions in pay, those same households were also more likely to experience economic hardships like trouble paying utility bills, affording rent car mortgage payments, purchasing food, and paying for medical expenses 110 The disproportionate negative impacts the pandemic has had on low-income families extend beyond financial insecurity. For example, low- income families have reported higher levels .f social Isolation, stress, and other negative mental health outcomes during the pandemic. While over half of all U.S, adults report that their mental health was negatively affected by the pandemic, adults with low incomes reported major negative mental health impacts at a rate nearly twice that of adults with high incomes.l's zoan. avdlrhle a be, JlwwmepasUWbnmuon/ ee Anar arlaymem-in woo. , molhi on '. use S. away, I. Fornmem, N. Nicer®. M. Scope, 6 Tcem, T. U. L. The gmnmdd Impends ofCUVlo-re; Evidence from a Nov pudic Wteha m Built Using Pdvere Seam D. (Ne. w21,1a1; p. w27431) case), Neuwd Bueaed ofF[vnomm itmev,fi. hnpe://der.^rg1l OSrgn1w17131. `r^ M. Depend. Mice) Gdnaem Wiles, Yung Men, and Stephen Roll, CAYlo-re fob and income bass leading M mane hunger and thermal hardship. Bourke, institute Ouly 13, 2mo1, https:l/ coend1opkrngs''.eda/blog/upw kindsa/or/n3/ husuppajoband ualAnointed. mding ro-mom nd11 KPnched. manmade C.M d N. armlet. R KwshroMuiaeuv a P. sue ded H moo, The Substrate o. Kwass F a (w Mmultion(Famils anddary U. at).h Rrlaw Fear FopMNion (February U. m2rL httyel/ Federal Register/Vol. 87, No. 18/Thursday, January 27, 2022/Rules and Regulations 4359 Summary of Interim Final Rule and Final Rule Structure Summary: The interim final Is provided a non -exhaustive list of enumerated eligible uses to respond to the negative economic impacts of the pandemic through assistance to households, as well es a standard for assessing whether uses of funds beyond those enumerated are eligible. The interim final role described enumerated eligible uses for assistance to households in several categories: (1) Assistance to unemployed workers, (2) stale Unemployment Insurance Trust Funds, (3) assistance to households, and (4) expenses to Improve the efficacy of economic relief Note that the interim final role posed several questions to the public on enumerated eligible uses for assistance to households; comments on these questions era addressed in the relevant subject matter section below. existing health, economic, and social disparities contributed to disproportionate pandemic impacts in contain communities, the interim fins) rule also provided a broader list of enumerated eligible uses to respond to the pandemic in disproportionately impacted communities, specifically: (1) Building stronger communities through Investments in housing and nefghbothoods,(2) addressing educational disparities, and (3) promoiing healthy childhood environments. In the interim final role, under the Public Health section, recipients could also provide servicse to address health disparities and increase access to health and social services; these eligible uses have been re- organized into the Assistance to Households section to consolidate responses in disproportionately impacted communities and enhance clarity. This section addresses enumerated eligible uses in the final role to respond to negative economic impacts to households As a reminder, recipients may presume that a household or population that experienced unemployment, experienced increased food or housing insecurity, or is low or moderate income experienced negative economic impacts resulting from the pandemic, and recipients may provide services to them that respond to these impacts, including these enumerated .1 this uses. For guidance on how to determine whether a particular use. beyond those enumoralod, is eligible; further detail on which households and communities am presumed eligible for services: and haw to identify eligible household. and communities beyond those presumed eligible, we section General Provisions: Stmcnom and Standards. Reorganization, and Cross. References: The final role reorganizes all enumerated eligible uses for impacted and disproportionately imparted heuseholds into the section Assistance to Households, with the exception than expenses to improve the efficacy of economic relief has been re- cstogorized Into a different section of the final rule for increased clarity; for discussion of that use category, see section General Provisions: Other. Note that in conducting this reorganization, and based on further analysis and in response to comments. Treasury has determined that several enumerated uses included in the interim final role for disproportionately impacted communities are directly responsive to negative economic pacts experienced by impacted households. In the final .Is, these uses have been moved from making these services available to both disproportionately impacted and trope bed households. These uses include assistance applying for public benefits or services; programs or services that address or mitigate the impacts of the COVID-19 public health emergency on childhood health or welfare, including childcare, early learning services, programs to provide home visits, and services for families involved in the child welfare system and foster youth; programs to address the impacts of lost instructional time to students; 112 and programs or services that address housing insecurity, lack of affordable housing, or homelessness. The following activities remain households: Remediation of lead paint or other lead hazards; housing vouchers and assistance relocating to neighborhoods with higher levels of economic opportunity; and programs or services that address educational disparities, Including assistance to high - poverty school districts to advance equitable funding across districts and geographies and evidence -based services to address the academic, social, emotional, and mental health needs of students. Enumerated Eligible Uses for Impacted Household. The interim final role included several enumerated eligible uses to provide assistance to households or populations facing negative economic impacts due to COVID-19. Enumerated eligible uses included: Food assistance; rent, mortgage, or utility assistance; counseling and legal aid to prevent eviction or homelessness; emergency assistance for burials, home repairs, weatherizathm, or other needs; Internet access or digital literacy assistance; cash assistance; or job training to address negative economic or public health impacts experienced due to a worker's occupation or level of training, It also posed a question as to what other types of services or costs Treasury should consider as eligible uses to respond to This section addresses each ofthem enumerated eligible uses in turn, with the exception of job training, which has been re -categorized for increased clarity to the eligible use for "assistance to supported inclusion of these enumerated eligible uses to address key economic needs among households due to the pandemic, and Treasury is maintaining these eligible ease in the final role, in line with commenters' recommendations. 1. Food assistance. The interim final rule included an enumerated eligible use for food assistance. Some commenters expressed support for this eligible use and emphasized the Importance of aid to address food insecurity. Some commenters raised questions as to whether food assistance funds could be used to augment services provided through organizations like food banks, churches, and other food delivery services, or generally be sub - awarded to these organizations. Treasury Response: Treasury is maintaining this enumerated eligible use wilhaor change. Recipients may, as we. the case under the interim final rule, administer programs through a wide range of entities, including nonprofit and far -profit entities, to carry out eligible uses on behalf of the recipient government (see when Distinguishing Subrecipients versus facilities at food •.,r1. dh reripienra may pre.mnemmany Backing to use funds for coital tmloons -of whus "local-hmhh and- arudnor.Iw did nut A..a.,:u.. to in -person ng P p4'mnonso) iaae-)Mmenml-AmhA nnd- mnrvabn for a m,.f rmurc ufrime was expenditures should mist to the section enMmnccn.e/. lwperred by rho pandoinm. Capital Expenditures in General 4360 Federal Register/Val. 87, No. 18/Thursday, January 27, 2022/Rules and Regulations provisions: Oils. for additional eligibility standards that apply to uses nonrexhaustive list ofelig(ble services. For example, eligible services tinder this housing and homeavmership over the lung term, we the eligible use far of funds for capital expenditures. 1. Emergency housing assistance. The use category include: Rent, metal arrears, utility costs or arrears (e.g,, "promoting long -farm housinngg security: Affordable housing and homelessness." interim final rule included an electricity, gas, water and aewer, trash 3. Emergency assistance for pressing enumerated eligible use for rent, mortgage, or utility assistance and removal, and energy casts, such as fuel oil), reasonable accmed late face(ifnot needs: Burials, home repairs, weuthertrothm, or other needs. The counseling and legal aid to prevent included in rental or utility arrears), interim final rule included an eviction Public or homelessness. Comment Severel commenters mortgage payment eslast ... a, financial assistance to allow a homeowner to enumerated eligible use for emergency assistance for burials, home repairs, supported the inclusion of eviction reinstate a mortgage or to pay other weatherization, and other needs: these prevention activities as an eligible use given the high number of households housing -related costs related to a period of forbearance, delinquency, or default, types of programs may provide emergency assistance for pressing and behind on rent and potentially at risk of mortgage principal reduction, unavoidable household needs. Treasury eviction. Following release of the facilitating mortgage interest rate did not receive comments on this interim Peal rule, Treasury had also reductions, counseling to prevent eligible use and is maintaining It in the received requests for elaboration on the imminence mince or displacement. relocation final rule. types of eligible services in this expenses following eviction or Background on Home Reputes and category. Some commentary also foreclosure (e.g., rental security Weatherizat ion: The economic recommended including assistance to deposits, application or screening fees). downturn has meant fewer households households for delinquent property Treasury is clarifying that assistance to had the resources needed to make taxes, for example to prevent tax households for delinquent property necessary home repairs and foreclosures on homes, as an taxes, for example to prevent tax improvements. In May 2021, 28 percent enumerated eligible use, foreclosures on homes, was permissible of landlords reported deferring Treasury Response: In responses to under the interim final rule and maintenance and 27 percent of tenants requests for elaboration on the types of continues to be so under the final rule. reported maintenance requests going eligible services for eviction prevention, In addition, Treasury is also clarifying unanswered.'1n While am[] and Treasury has provided further guidance that recipients maymbeinister utility coannetic repairs can often wait. that these services include "housing assistancere or add. arars on behalf defaming major repairs, such as stability services that enable eligible of households through direct or bulk plumbing needs, can result in unsafe households to maintain or obtain payments to utility providers to and unhealthy living environments and, housing, such as housing counseling, facilitate utility assistance to multiple eventually, the need for more expensive fair housing counseling, case consumers at once, so long as the re❑airs and fixe S. management related to housing stability, payments offset customer balances and In addition to repairs, many homes outreach to households at risk of therefore provide assistance to am in Hoed of weetherization. eviction or promotion of housing households. Weatherization assistance helps low - support programs, housing related This eligible use category also and modereta-income Americans save services for survivors of domestic abuse includes emergency assistance for energy, reduce their utility bills, and or human trafficking, and specialized individuals experiencing homelessness, keeps them and their homes safe. One services for Individuals with disabilities or seniors that support their ability to either individual -level assistance (e.g., rapid rehousing services) or assistance in three households is energy insecure,"s meaning they do not have excess or maintain housing;' as well as for groups of individuals (e.g., meater the ability to meet their energy medal== "legal aid such as legal servicea or Ioeses of hate]., metal,, cr similar Weathe ization efforts are particularly attorney's fees related to evicdon proceedings and maintaining housing facilities to expand available shelter). Further, Treasury is clarifying that important for low- and moderate - income households. Households of stability, court based eviction prevention or eviction diversion transitional shaltere (e.g., temporary residences for people expperiencing color, meters, and households with low or moderate income. are all more likely ho area, and other legal services that homelessness) me eligihla cappital expenditures. Recipients sacking to F Ry y.r,> tare art energy msecurit These elp households maintain or obtain housing." 113 use funds for capital expenditures should ..=Joel Treasury also emphasized that recipients may work wife court refer to the section Capital Expenditures rya. find, Learn, Goadmw, wA Maoist ties. Te➢andermm.M,kiMa,vacuafor mmn- systema, nonprofits, and a wide range of g other organizations to implement I. General Previsions: Other far additional eligibility standards that cod Pop randlarde 1. Moira d. net, Patents., amen lnettaue Only zs, 202p, hap dl .ndwn.019larhomrnalpandeab makhoft- Strategies to su rt housin stabilit ppo 8 y apply to uses of fund. for capital expenditures. mrynulsmoa.ned.➢liecallwde-ahno.ihwe earths. and prevent evictions. In the final col a, Treasury is Note that this enumerated eligible use pe ,n, US, &army Interaction ediesomin maintaining these enumerated eligible uses, includingthose described in the describes "emergency housing assistance." or assistance for ma apses lowidennal lowsm crionsubon Sam,y(2017), Iwal v d[ tie,, hf,rdeseweeb.gawmruaapada/ interim final rule and later guidance, in line with conunenterS' the immediate or near -term negative e economic economic impacts of the pandemic.The D.marnodab/thistar4➢dra,'e w,,S o. by itedee,m to hea s. S • g ,aeo wsairy• and whyumnieremhsew, 5o,i.lsaeaea recommendations. s. To recommendations. To enhance clan[ fins) rule also clarifies and expands the ability of excipieuts to use SLFRF funds Medici.., 1.1, i-in (sale), htendlefororg/ re.re26/j..v.re=iaedmlAo.z2a. 1. also on comity, Treasury g types of services Included under this to address the farmed lack of affordable N®"b'de'•,.(seal. tlndaretandina •e.a,y raw=t ns and why it coven to heath. aad.l eligible use category: thin ...me a housingand housingnectilengea underscored by the panddemic. For wanes M.mdne. 167, 1-IS hnpdidW.oer 10.101 saymwaxd.201e.0s.02e. ­Sw PAQx.2r. coono.iassmwandr.ad rival Renew, made, Frequently Asked discussion ofaffordable housing eligible uses, including services that primarily "'Qs. laeasylefesumenddannaaan. Randentaiswergy Consumption Survey (ftvars hvwy/"•"nm.govmonaumpnon/msidaubudaw/ Questiww in ogdy 19. 2021; hap"I hmie.G / mYd,v eyuon/Pie✓cos/aLmnPPnQ.ydJ increase access to affordable, high. g quality and support stable sans/hd/pAp/Aerr.r.php. Dow visited Ndveaber 9, 2021) Federal Register/Vol. 87, No. 18/Thursday, January 27, 2022/Rules and Regulations 4361 of sable access to Musing with oulation, up to date heating, and ventilation systems, and ing and up to date lighting and address the effects of energy hardships, like the Law -Income Home Energy Assistance Program (IJHEAF'], are critical, weatherization attempts to address at causes by addressing issues that lead to energy insecurities. 4. Internet amess or digital literacy assistance. The interim rival rule included an enumerated eligible use for assistance to households for interest access or digital literacy assistance. This enumerated eligible use, which responds to the negative economic impacts of the pandemic on a household by providing assistance that helps them secure Internet access or increase their ability to use computers and the interne, is separate from the eligible use category for investments in broadband infrastructure, under Sections 602(c3(1)(Dl and 603(c)(1)(D), which is used to build new broadband networks through infrastructure construction or modernization. For discussion of broadband infrastructure investment in the final role, see section Broadband Infrastructure in Infrastructure. Background: The COVID-19 public health emergency has underscored the Importance of universally available, high -.peed, mliable, end affordable broadband coverage as millions of Americans rely on the interne to participate in, among other critical activities, school, healthcare, and work. Recognizing the card for such connectivity. SLFRF funds can be used to make necessary investments in broadband infrastructure that increase access over the long term, as wall as the necessary supports to purchase internal access or gain digital literacy skills needed to complete activities of daily living during the pandemic. The National Telecommunications and Infmmaton Administration (NTIA) highlighted the growing necessity of broadband in daily lives through its analysis of NTIA internat Use Survey data, noting that Americans turn to broadband internal service for every Neat of daily life including work, study, and healthcare lei With increased use of ^^A. Doehobl, & L Ross. Lihingthe high mmgy bmdmn in Ammi a's team sties: Haw on", a2eianey rm unpins.low inwmo and .ad m..... d non --hies. Amin —Council for en Eni Means Emnomy (zms). MIp J/ ceee.oeg/sites/default/film/publfmuons/ sv,chsepamlul. ,af '"See. e.g.. Notion na nnianeuuriaw snit Infommton Adminisuetion. Man than Half of technology for daily activities and the movement by many businesses and schools to operating remotely during the pandemic, broadband has become even more critcal for people across the country to carry out than daily lives. However, even in areas where broadband infrastructure exists, broadband access may be out of reach for millions of Americans because it is unaffordable, as the United States has some of the highest broadband prices in the Organisation for Economic Co- operation and Development (OECD).au According to a 2021 Pew Research Center study, 20 percent of non - broadband users say that the monthly cost of home broadband is the primary mason they do not have broadband at home, and 40 percent say that cost is one mason far their lack of home broadband."' Further, according to another survey, 22 percent of parents with homebound schoolchildren during the COVID-19 pandemic say that it is very or somewhat likely that Weir chi dren will heve to rely on public wi- lt to finish that, schoolwork because there is no mliable internal connection at home; this percentage nearly doubles for lower -income famous, 40 percent of whom noted that their children will have to rely on public wi-fi.+ar The same survey showed the 36 percent of lower -income parents with homebound children say their child will not be able to complete their schoolwork because they do not have access to a computer athome.ta' Public Comment: Many commenters highlighted the importance of broadband access during the pandemic, including for remote work and Ammiwn B.—hallo Used on howns, for Health Related Amid. in Nii, NTIA Oats Show lOooemhee J, NU), hops://www.neo.g efik / awe/—re-haljamedcon-honseholde-omd- show;Nn Teleiarsdanameons andnmdnan Adva.etien Talsmm, a"and f and Isdmmeuan Exapio sesworss, worked was]TINorgmW1cN Employees Wmked R020) h In tote. N'M 1 snow Iseptemhm a, 2o2a1 Lnps//www.miogw/ bloglza2o/irevly-rNsd-omeimn-oelployees- warked-nnmmlyTaranrio-domsAow: and education, and argued that affordability presents a major barrier to broadband adoption by households; in other words, many households live in areas that have broadband infrastructure and service available but are unable to purchase service for their household due to the high cost These commentary argued that broadband must be affordable to be accessible. Commenters proposed several potential responses to affordability concerns. Same commenters recommended that building "gap networks;' or broadband networks built at low cost to provide affordable service in areas where it is lacking, be eligible as assistance to households to respond to the negative economic impacts of the pandemic, even if they do not meet the technical standards for eligibility under the eligible use category of broadband infrastructure Investment, especially the required speed standards for new service. These commenters argued that the networks have shown promise as a timely means to expand access to affordable broadband Internet during the pandemic, even if they may not provide service speeds needed for mom intensive internet uses. Another commenter requested eligible uses include funding eel hdar towers to decrease cogs. One commenter .commended that affordability should be addressed through other programs but not SLFRF given that affordability and availability may require nuanced solutions that would be complex to combine. Tmesury Response: The interpretive freamov,a and enumerated eligible uses allow recipients Flexibility to address identified pandemic impacts, including through solutions that take into account the particularized issues in their community. Given extensive wmmenter feedback on the importance of affordability to achieving broadband access, and the centrality of broadband to participating in work, education, laaltlecam, and other activities during the pandemic, affordability programs are an appropriate eligible use to respond to the negative economic impacts of the pandemic and Treasury is maintaining the enumerated eligible use for assistance to households for internet access and digital literacy programs in the final role. Building or constructing new broadband networks Is an infrastructure investment and is governed by a separate clause in the statute. Treasury has addressed comments on "gap networks" that require infrastructure buildout in the section Broadband Infrastructure in Infrastructure. 4362 Federal Register/Vol. 87, No. I8/7hursday, January 27, 2022/Rules and Regulations Public Comment: Some commenters also use the term "gap networks" to refer to equipment installed as pert of wi-fi systems, such as routers, repeaters, and access paints; this equipment pprovides cc nsumer access to an existing broadband network and time not require new network build -out or construction. These commenters recommended that Treasury permit, as assistance to households for internet access, investments in public wi-fr networks, free wi-fr in public housing communities, and other equipment that offers Internet access to end more by utilizing existing broadband networks. Other commentere recommended that eligible uses in this category include providing devices and equipment necessary to access the Internet, like computers and routers, directly to low- income households. Treasury Response: Treasury has determined that these services, which expand Internet access without constructing new networks, are an appropriate enumerated eligible use as assistance to households to respond to a negative economic impact, and they are permitted under the final rule. Treasury is clarifying that eligible uses under this category ran also include a wide range of programs and services to expand interne[ access and digital literacy, such as subsidies for the cost of interneI service, other programs that support adoption of interior service where available, digital literacy programs, or programs that provide devices and equipment to access the Internet (e.g., programs that provide equipment like tablets, computers. or routers) to households. Recipients seeking to use funds for equipment should refer to the section Capital Expenditures in General Provisions: Other for additional eligibility standards that apply to uses of funds for capital expenditures (e.g., equipment, property, and facilities). 5. Cash assistance. The interim Real rule included as an enumerated eligible use cash assistance and provided that cash transfers must be "reasoeably proportional" to the negative economic Impact they address and may not be "grossly in excess of the amount needed to address" the impact. In maessing whether a tram far is reasonably proportional, recipients may "consider and take guidance from the per parson amounts previously provided by the Federal Government in response to the COVM-19 crisis:' and transfers "grossly in excess of such amounts" are not eligible. Public Comment: Several commentere expressed support for this eligible net, noting that this is a common policy tool for some governments to support the well-being of households and individuals in their communities. Same commenters requested that Treasury set a specific dollar amount far permissible cash targets, and Treasury has also received recipient questions on whether specific types of transfers, such as thus. to a auhstanlial share of the population in the jurisdiction, would be a permissible use of funds. Treasury Response: Treasury is maintaining this enumerated eligible use in the final rule, in line with commentere recommendations. Because the final rule is intended to provide Flexibility to recipients to respond to the particularized pandemic impacts in their communities, which may very in type and intensity, setting. specific dollar threshold for eligible cash transfers would fail to recognize the particularized needs of communities and limit recipients' flexibility to tailor their response to those needs. To provide greater clarity, Treasury is elaborating on the analysis that recipients may undertake to assess the eligibility of specific cash assistance programs or transfers. Cash transfers, like all eligible uses in this category. must respond to the negative economic impacts of the pandemic on a household or class of households. For the reasons discussed above, recipients may presume that low- dud umdurala--inwms households (as defined in the final rule), as well as households that experienced unemployment, food insecurity, or housing insecurity, experienced a negative economic impact due to the pandemic. Recipients may else identify other households or classes of households that experienced a negative mouomic ireppaa of the pandemic and provide cash assistance that is reasonably proportional to, and not grossly to teas of, the amount needed to address the negative economic impact. For example, in the ARPA, Congress authorized Economic Impact Payments to households at certain income levels, identifying and responding to a negative economic impact of the pandemic an these households. Finally, Treasury has reiterated in the final role that map.... to negative economic impacts should he reasonably proportional to the impact that they are intended to address. [Ices that hear no relation or are grossly disproportionate to the type or extent of harm asperienced would not be eligible uses. Reasonably proportional refers to the scale of the response compered to the scale of the harm. It also refers to the targeting of the response to beneficiaries compared to the amount of harm they experienced; for example, it may not he reasonably proportional for a cash assistance program to provide assistance in a very small amount to a group that experienced severe harm and in a much larger amount to a group that experienced relatively little harm. 6. Survivor's benefits. The interim Real rule included an enumerated eligible use for survivor's benefits to surviving family members of individuals who have died from COVIIYI9. including cash assistance to widows, widowers, or dependents. Public. Comment: Treasury did not receive any comments on the inclusion of survivor's benefits as an enumerated use for impacted households in the interim final rule. Treasury Response: This use of foods remains eligible under the final rule. Consistent with the general reorganization noted above, the final rule organiue survivor's benefits under assistance to households to clarify that households are the intended beneficiaries of survivor's benefits. 7. Assistance accessing or applying for public benefits or services. Recognizing that eligible households ohen face barriers to accessing public benefits or services that improve health and economic outcomes, the interim final rule included as an enumerated eligible use in disproportionately impacted communities, public benefits navigators to assist community members with navigating and applying for available federal, state, and local public benefits or services. Treasury also clarified in subsequent guidance alter the interim final rule that this eligible use category would include outreach efforts to increase uptake of the Child Tax Credit. Background: The undrrenrollment of eligible households in social assistance programs is a well -recognized and persistent challenge. Them are many reasons why a household may not be receiving a particular benefit even though they are eligible. For many federal programs, enrollment peeresses vary from slale-to-slate. Sometimes. households are simply unaware that they are eligible for a particular benefit.'" For example. despite having one of the highest raise of participation of any benefits program, nearly 20 percent of eligible individuals do not participate in the Supplementary Nutritional Assistance Program ,vgmy Finkelabin a Wuhnw ] Nmowidigda, TakaUp and Tergenng: 8xpnrimnnrnl aid - arse, SNAP, The QuMwly J.w wl N &onomiu, vol 1341e]. pngne lses-rasa 12019). http$Yl www.nlv.org/payuLwI4652. Federal Register/Val. 87, No. 18/Thursday, January 27, 2022/Rules and Regulations 4363 (SNAP).'ss tin other cases, policies like education on child development, Low-income households are also more public charge and asset testing can positive parenting, coping skills, car likely to lose access to quality dismumge otherwise eligible re ovary for mental health and childcare.'°' The widespread closure Of households.'°° While the gap between substance use. The interim final rule Childcare centers combined with R lack households that need assistance and the also included an enumeratedeligible ofaccess to paid family leave means number oflUmselmd. participating in use for early learning services in parents in law -income households are public benefit programs has always disproportionately impacted more likely to experience a reduction Of existed, narrowing that gap and communities, to address disparities in income or leave their jobs due to a lack ensuring households receive the support education ofeluldceor.ptions.'az they need is critical in mitigating the Public Comment: Childcare and Early Additionally, ebildcere providers negative economic impacts of the Learning: Treasury received multiple serving primarily low-income families pandemic. comments that were supportive Ofthe were less likely to remain open drain, Public Comment Treasury has also provision of childcare. Treasury has also the paudemic because of tighter profit received feedback from recipients and received multiple comments and margins and general community stakeholders noting the used to increase questions indicating that recipients have financial insecurity, compared to awareness and Uptake of assistance identified a need for childcare for a childcare providers serving primarily programs, including gaps that remain in brander range ofhouseholds and high -income families.1-1 ". enrollment of eligible households in communifies, for example those that in addition to disruptions to programs to address the negative may need childcare in order to return to childcare, early learning services were economic impacts of the pendemic.127 work, in addition to households and also significantly impacted by the Treasury Response: Treasury has communities disproportionately pandemic, and the disruption Of these determined that this impact of the imparted by the pandemic. Several services had widespread ramifications pandemic is widely experienced across commenters expressed uncertainty about how facilities for learning loss, parental suppoft, end many imisdictions and programs or childcare should equity. Early learning centers have seen services to increase awarone.. and Internet with the boundaries of a QLT. declined enrollment across the board, uptake of Resistance programs would Finally, one commenter recommended though there was a larger dip in respond to the pandemic's negative that pre-K or earl learning services enrollment far low -Income economic impact in all communities. As encompass care for infants and toddlers, households)°' This lower enrollment such, in the final rule, this use is eligible arguing that these types of care we often coincides with a diminishing workforce, for any impacted household or class of more expensive or challenging to access for families. as similarly to childcare, early households, not only in disproportionately impacted Background: Childcare and Early childhood educators have base leaving the profession due to long boom, low m comunities. B. Promotinghealth childhood y Learning. As daymees and schools closed in -person activities during the pay,+sa and health and safety children's environments. prog. The interim final rule i, included programs and services that endemic. men working families were p yy r2g led without d "andduringthe ° whml eeadnwaahas suffered, leading to potential impacts on lte f. remote health childhood P y ydere Although daycare centers end schmla schools have since reopened in many .138longThe i Outcomes."° The impart also extended environments asdisproportionately an enumerated eligible use fin communities, there remains a persiatmt +_� Cumin Boman. PLen a.2 ne, eenold od..Theinterimimpacted finalrule listed houeeprogra The services three programs or services included childcare shortage as childcare employment levels have not fully Su Pe Lot y. 'fin e.ildnnChildcare Under 5Yon Olin the k weeks car chudm( under s van Oid, under this use: Childcare; Programs to provide home visitsbyeducation, health rebounded since the sharp decline in P of thepaIdeare employment. thebeginning ele by sd.ded aaremmmme. Iwn.nmgta.: 20az), eeil°Dlndnttye://www.armn.9.gn./program. eurveyYDomeDom-pal:e professionals, parent of lees AS a oar.eyienm.neml. nqd_ social service nalstoend cresult,ssworking in country in communities across the •�• N. R.uvel,a. a A.cold Ora with d individuals with yamgchildren to young children country, and more specifically woman, mSelly.P la A B Unri.g m.como-ls Pr,derl�Ae.dslmmion provide education and assistance for may face challenges entering or sued°Ware.. P.dieniu(S021). hupe://em.wg/ ra.'se2/pwde2a2naa'ase. economic support, health needs, or reentering the labor fome.'sa —Nefinel Associated ter we (Jdurmen of child development: and services for child families and . warn. Imrecnded a lagerdmre Of .Dildeue reep.nnbivaea thin during th. Yong Meaner, Am I lead'.a .lead'snnm,g to Stay n, Chad CMe PMVW.m rare s oleek Future without foster youth to provide support and youthandfrto provide men mvlo-m end.. a.,.".,c .z.ne. a men. RelW(I)MMIe 2o20L Ided/ ^•Uoitnstdlo LIP Cade: Number daddeea under Age 2a wen a Serial Security Number Who Am Not Foundue ale— Ymr 2019or 2020 Tex RWwn Dul wFo Appmr on a To Y. 20m Form tau easel weeeiand NamLn of Policy Hddres (June 2.21), hupg://ho nahernury go./rysmm/Idw,IaI/ an;mar.a.cowanFcnnd gas-wrftwwd.,f =. by 27P-Fnde 2ma.pdf ''-)aeon Fermnn, Whoa Set eniM Kearney. end Wilson Powell The R.I. drLildrae Mullnngn in the Us lobs ranked Rune, Outing the COvm_ m Pandurne, NOW Wmking Peper No, 2e93. On.. 2m1), h.'YA—n, bN.'1)'OAe x". 4364 Federal Register/Vol. 87, No. III/Thursday, January 27, 2022/Rules and Regulations to parents. Parents, especially mothers, may face challenges reentering or remaining in the workforce if early learning services we unavailable. Treasury Response: Childcare and Early Learning Services: Treasury agrees with commenters' analysis that challenges accessing or affording childcare have been widespread during the pandemic, affecting many jurisdictions and populations across the country. Disruptions to early care and learning services similarly have had broad impact and likely result in negative impacts for young children and their parents. As such, these enumerated eligible uses am generally responsive to the negative economic impacts of the pandemic in all communities, not just in disproportionately impacted communities. Under the final rule, childcare ..it early learning services me available to impacted households or classes of households, not just those disproportionately impacted. These eligible uses can include new or expanded services, increasing awes to services, efforts to bolster, support, or preserve existing providers and services, and similar activities. Further, Treasury is clarifying that improvermant, to or new construction of childcare, daycare, and early learning facilities are eligible capital expenditures. Recipients seeking to use funds for capital expenditures should afar to the section Capitol Expenditures in General Provisions: Other for additional eligibility standards that apply to uses of funds for capital expenditures. Public Cammi Home Visiting: Treasury has alao received questions about whether the provision of home visiting services would be resporriver to the health and mental health needs of impacted new mothers, citing the positive mental health impacts shown on the mother as web as improved outwore. for children. Background: Home Visiting: Pregnant and recently pregnant individuals are at an increased Ask for serious illness from COVM-19.1sa Furthermore, pregnant individuals with COVI0.19 are more likely to experience preterm birth (delivering the baby earlier than 37 rearm, mlyarnda pouf, adrool aomium , amokingv lmmullon (Fulamr, 22, not). Atendl —hourrkinga.edu/Llu'arvi mcenoraholkbomd/ 10 HAUca/undrunanemeamvld-a9cm- nmlen EropaamongeaNygpdapuMhxhoah oudee I -Commis -it Pmvten.11 Pre,nent end sour-idmmullyniveall no-hu.Mlpa re cave.rdc8av/anmrm✓irue/2m 9-ndHast indieelm- pmnnber..pregnant peayle.AfM(laet invited Novembm e. 2a11). weaks).140 In addition to heightened health risks from COVI0.19, pregnant individuals may have experienced significant changes to their pmnatal can during the pandemic 14, or may also have ex fenced increased mental health challenges, including high levels of depression, anxiety, loneliness, and posttraumaticstress during the pandemic.'°' Home visiting services provided to families, particularly new mothers and newborns, feature regular home visits from trained nurses, social works., and/or counselors who provide health care, mental health resources, positive parenting support, support in making personal health decisions, and awareness of other potentially helpful services. These functions have become even mare essential at mitigating negative factors associated with the pandemic. Home visits give professionals a chance to Flag potential domestic violence, which has risen worldwide over the course of the pandemic.res Racial health disparities coo else be driven down by home visits. For example, Black women are mare likely to avoid hospitals during the pandemic, and home visitors can help either assuage concerns around hospitals or give effective advice for alternative methods of childbirth.144 Given the disproportionate effect of the pandemic on people of color, home visits arean essential eg�Ay tool that tackle major negative effects of the pandemic. These are just a few selections from the evidence that suggests many home visiting models can have a positive effect on metemal physical end mental hmdth.'4s Treasury Response: Home Visiting: Given the widespread impact of ale. "`sash Imordid,ivalet Simismh lar, firar,Wria sashD Cone,ton, Mrs, no firhxrellaz, Merle on w©aryl ,.Moyer, United Su or Nvlo-teenp,eneml ourn m er united Srlm: emmon, M analysis from rey of 2ct 9 021, IN981t women, Midwifery, volume 8a.2o21.1 V1Hal.I55N p2aa-613e, Attpv:// do"IA Beer. a/I.mid, R Mndane,K "'fl Beer. NH co—RaeWdmdy Lboi,L Chalon, o adA Irma a poml nndy of lams raMaledwhirwommrs COem-19 mental health and wr9belna during 97 COvm-r9 Hpsdld c, PIA^ONafeel:ner. p.t2av). LHPeJlda.o g/ r0.'Amandanub, ApPhoucr "'Amanda An or us /, New Cwlo,N [Hats: Ceramic % 0Lur airs woddwidn Now Yolk Tlmr lapel % 2020), heyel/www.nyrl1eemm/eo2o/a4/ pa/ii Xmia hoh Ham-0omas to Rai Black '"xemrahillion,.lamm In, M meet Marmot Momley Gartland n ADVlApril 20, 2 C p"Iwnlfiromer lioallh Coe Fomemo- dua-laa, m2a1, Anpa:/on-rohcje,g/L'hist d—vol.'ev, k- maammbmoNrommit opHonda and 45 U.S. Dommtmml of Honda ®d seaman $mviw, Home Viailirg Svidonm of EReRivaner. hoahhlb%209rmf. egnv/ouanmeNmalmml%2o AnahAM%2oBrbj. COVID-19 on pregnant and recently pregnantindividuals,Treasuryisre- categorizing home visiting services as an eligible use for impacted communities, not just disproportionately impacted communities. Under the final rule, these eligible uses are available to impacted households or classes of households. Public Comment: Child Welfare: While the interim final rule noted that certain types of assistance, particularly around child development and parenting, were eligible for child welfare -involved families, Treasury has received some recipient questions asking whether financial, educational, housing, or other supports and services are eligible roes for foster youth, including those aging out of the system, and child welfare -involved families. Other commenters asked about whether funding far kinship care would be eligible. Background: Child Welfare: The COVID-19 pandemic placed meaningful strain on the child welfare and foster cam system. Court hearings were delayed,146 essential mental health cam was shifted to a virtual environment, and attendance and performance in school among foster children dropped sharply.'-' Additionally, there waa a nationwide rise of new children entering the foster rare system and many states placed temporary moratoria on children aging out of the foster care system.148 As these temporary moratoria expire, additional support will be needed to assist children exiting the system. Additionally, financial and material hardship are causal facto. in the inoease of new children entering the faster cam system, whether through loss of a caregiver, domestic violanm,l4° or other associated costs of the pandemic. Theref rm, support to decrease these hardships will Support families end increase positive announce for youth '+Nmionl Cumbeanw mauve "Uhrumi. Criminal hafirs Synam Response an WV@ -la (November or. man. hogs"lov..mr.1-1/ osearch/dwA nd-mininal-/anire/criminal-jussre, Mrovid lauapx. Federal Register/Vol. 87, No. 18/Thursday, January 27, 2022/Rules and Regulations 4365 and families that may otherwise became involved in the child welfare system. Treasury Response: In the final rule, Trasury is clarifying that services to fosleryouth, including those aging out of the system, and child welfare - involved families may encompass a wide array of financial, educational, child development, or health supports, or other supports necessary, including supports for kinship care. 9. Addressing the impacts of lost instructional time. Public Comment: The interim final rule included an enumerated eligible use to address educational disparities in disproportionately impacted communities, recognizing that underserved students have been more severely impacted by the pandemie end including responsive services for early learning, enhance funding to high - poverty districts, and providing evidence -based services to address the academic, social, emotional, and mental health needs of students. Some commenters expressed concerns that learning loss or the negative impacts of Lost insmoodonal dice due to school closures or remote education during the Interventions or services that address the impact oflost instructional time may include offering high -quality tutoring and other extended learning opportunities, providing differentiated Instruction, implementing activities to meet the comprehensive needs of students, expanding and improving language access for parents and families providing information and assistance to parents and families on how they can effectively support students, including in a distance learning environment, improving student engagement in distance education, and administering and using high -quality assessments to assess students' academic progress, among others. In designing services under this eligible use, recipients may wish to reference guidance from the Department of Edu ation on strategies for addressing lost instructional timer 11 The final rule also maintains a separate enumerated eligible use for addressing educational disparities in disproportionately impacted communities. This eligible use includes services to address disparities in educational outcomes that predate the pandemic and amplified its impact on :fed .significant underserved etudenls; these include, for i grades kindergarten example, enhanced funding to high- 12),including poverty districts and providing not fall within a evidence -based services to address the mpacted group, academic, social, emotional, and mental 1 COV1D-'18 health needs of students, in the widespread Finally, as described in the section reopened to in -person instruction or implemented remote learning, the shift was not immediate or without consequence. Children who received virtual only or combined remote and in - person instruction were more likely to report experiencing negative mental - and physical health outcomes than children who received in -parson inslruclimcce Tlansury Response: Under the final rule, addressing the impact of lost instructional time and/or learning loss is an enumerated eligible use for impacted households. When providing services to address lost instructional time, racipients my presume that any K-12 student who lost access to I. - person instruction for a significant period offices has been impacted by the pandemic and is thus eligible for responsive services. no Vetlenden IV, Pemparl S. a std-y CN, N al. weassa n of Gain's Modsof Schnot hmaucao t with Child end Rrenl Expeowdes and W ell -Being During the CO Vm-ta 1mndomlc— COVE) Espedmas Smroy.Wilts] Slater, epoher ii-November 13, 2020, MMwa Mob Masi Addy nee 2a2tpo369 m. Wf: blip:/M.A.ton, lai5sughourlw.mmmllofexlemdicon. services, including services for children and youth in schools, to respond to the impacts of the pandemic on mental health and other behavioral health issues. When providing behaviorel health services, recip ants may pmsume that the general public was impacted by the pandemic and provide behavioral health services to members of the general public, including children and youth in schools, without any further analysis of impacts of the pandemic on those individuals and whether the service is responsive. 10. Promoting long-term housing security: offmckible housing and homelessness. Under the interim final role, recipients may use SLFRF funds to provide a set of housing services to m comunities that have been disproportionately impacted by the pandemic. Specifically, the Interim trial rule provided that programs or services that address housing insecurity, lack of affordable housing, or homelessness, "'U.S. nepenmenl of Bdumliw. smas'lae for ueon/orwncros Rasa wan Fond, I. Add— IhelmlIDq ofLotl Wlmmio�ul Time. auguer 20M. a fmm h-pt://envwr.ed.gowdmumenov ad N sllmeinmactiondo—pdJ were responsive to the negative economic impacts of the pandemic when provided to disproportionately impacted households and communities. The enumerated uses included supportive housing or other prug ems or services to improve access to stable, affordable housing among individuals who are homeless and development of affordable housing tu increase supply of affordable and high -quality living units. Many recipients have already announced plans to use SLFRF funds for affordable housing interventions in all of these categories. Treasury received many comments asking for additional clarity or flexibility in these uses. As detailed below, based On multiple public comments and questions and Treasury's subsequent analysis, Treasury has determined that supportive housing or other programs or services to improve access to stable, affordable housing among individuals who are homeless, and the development of affordable housing to increase supply of affordable and high -quality living units we responsive t0 the needs of impacted populations, not only is. This tined rule reflects this at and builds on the stated in the interim final rule r....a to stable, affordable mluding through ins that increase the supply of and high -quality living units, Finally, nose that "emergency housing gesistance," or assistance far responses to the immediate negative economic impacts of the pandemic through services like financial assistance for rental arrears or mortgage payments, is also an eligible use category for assistance to households under the final rule; see the eligible use for "emergency housing assistance" above. The provision of housing vouchers and assistance relocating to neighborhoods with higher levels of economic opportunity remains an eligible use under assistance to disproportionately imported households; far discussion, see the eligible use for "housing ouchers and assistance mloceting" below. Background: Affordable Housing: It is ..leer that the ongoing pandemic and resulting economic crisis are having a profound, long-term negative effect on the pre-existing affordable housing crisis facing low-income households.152 "Consumer Pinannal P... Mloe Buman, Housing weaurdy and the coVrc-t0 pandumie r none d 4366 Federal Register/Vol. 87, No. 18/Thursday, January 27, 2022/Rules and Regulations The combination of a large number of in higher -income neighborhoods that Treasury Response: Eligible Activities: higher -income households who have would allow residents to live closer to The final Is clarifies eligibility of weathered the pandemic without jobs and well-resomced schools. affordable housing development for significant income losses, law interest Additionally, as noted above, recipients; these uses were eligible rates, and housing supply constraints Treasury is finalizing the rule with some under the interim final role, but exacerbated by the pandemic, have changes to the treatment of affordable Treasury is providing further guidance driven a sharp increase in the sale price of harnesses Meanwhile, many low- income renters and homeowners are struggling with lost employment and income and are behind on their housing paymenu?s4 public Comment: Affordable Housing Outside of Low -Income Geographies: A major theme in comments was that affordable housing interventions, especially development of affordable housing, should be allowed outside of QCI's, as concentrating the supply of affordable housing in low-income geographies can have the effect of increasing both concentrated poverty and racial and economic segregation, while locking lower -income households in need of housing support out of high - opportunity neighborhoods with access to employment and amenities. interim final rule. A. discussed elsewhere, the interim fine) role Presumed that OCT, as well as communities served by Tribal governments, were disproportionately impacted for administrative convenience, but rompienls may identify other populations, households, or geographic areas with disparate impacts of COVID-19 and provide affordable housing services to them. For example, under the interim final role, a city could determine that its low- income residents faced disproportionate impacts of COVID-19 and develop affordable housing targeted to these household.. Such a sramum could include, for example, affordable projects housing development designed to clarify that permanent supportive housing or other programs or services to improve access to stable, affordable housing among individuals who are homeless, and the development of affordable housing to increase supply of affordable and high -quality living units, are responsive to individuals and households that were impacted by the pandemic in addition to those that were disproportionately impacted. This shift is in line with commenters' recommendations and consistent with the facts described above, which demonstrate that lack of supply of affordable housing units contributed to the pandemic a impact on housing insecurity and unsustainable housing .at burden. end that these impacts wem experienced broadly across the count Pubic Comment: Eligible Activities: Many commenters asked for clarity on what types of activities (e.g., land acquisition, construction, pre- coustmction costs, operating costs, etc,) are eligible uses of SURF, and what affordability criteria must be applied to affordable housing development. Commenters encouraged Treasury to allow the full array of affordable housing activities, including particular requests for broad flexibility for Tribal communities, and to specify that "development" should include construction, preservation, mhabilitation, and operation. Other commenters requested clarification about permissible program administration approaches for affordable housing, such as contracting methods and distribution of funds. Some commenters asked that 'treasury req ire SURF funds to be focused on the lowest -income households, who suffer the most sevme rent burdens and risks of housing Instability, and whose housing situation has left them particularly vuhrrmble to COVIO-19. For example, one commenter argued that SURF Ponds should only be used to support a ardahla housing for household. making 50 percent of AMI or less end that recipients should he required to set aside significant portions of any developments for renters making 30 percent of AMI or less and persons with physical and sensory disabilities. Other commenters requested a more flexible approach to affordable housing definitions. As with all interventions to address the negative economic impacts of the pandemic, affordable housing projects must be responsive and proportional to the harm identified. This lest may be and by affordable housing development project,which may involve large of long-term affordable housing far low- income households While there may be less costly (or non -capital) alternatives to affordable housing development, a comprehensive response to the widespread housing challenges underscored by the pandemic will require the production of additional affordable home, and targeted affordable housing development is a coat -effective and proportional response to this need. For purposes of this test. Treasury will presume that any projects that would be eligible for funding under either the National Housing Trust Fund la uses of SLF programs use than the defi housing shortage, and the ways in which the pandemic has meacerhated the need far affordable, high -quality dwelling units, Treasury has determined that the households served by these federal housing programs have been impacted by the pandemic and its negative economic impacts and that development of affordable housing consistent with these programs is a related and reasonably proportional response to those impacts. Additionally, affordable housing projects provided by a Tribal government are eligible uses of SLFRF if they would be eligible for funding under the Indian Housing Block Grant program, the Indian Community Development Block Grant program, or the Bureau of Indian Affairs Housing Improvement Program Alignment with these programs, which define "affordable housing" in a manner consistent with a proportionate response to the affordable housing challenges faced by low- and moderate - !...a households es a me.h of the negative economic impacts of the pandemic, is intended to give recipients comfort and clarity as they design a Federal Register/Vol. 87, No. 18/Thursday, January 27, 2022/Rules and Regulations 4367 wide variety of i fordable housing maturities beyond the period of assistance to households and continue interventions, including production, performance or revolving loan funds to be so under the final role, as outlined rehabilitation, and preservation of affordable rental housing and. in some cases, affordable homeownership units. These programs allow the financing of A widening. of affordable housing activities and set clear eligibility criteria that many recipients are already familiar with. Finally, to further support sustainable and durable homeownership, recipients may consider offering down payment assistance, such as through contributions to a homeowner's equity at origination or that establish a post - closing, mortgage reserve account on behalf of the borrower that may be utilized to make a missed or partial mortgage payment at any point during the life of the loan (e.g., if the borrower faces financial worse). Homeownership assistance that would be eligible under the Community Development Black an received comments encouraging the use of SURF funds for permanent supportive housing. This is an eligible use under the interim final rule: Both the development of affordable housing (including operating subsidies) and wraparound services such as behavioral health services, employment services, and other supportive services, are eligible responses to the public health crisis or its negative economic impacts. Treasury Response: The final role maintains the eligibility of permanent supportive housing as an enumerated vas. Treasury is also clarifying that other affordable housing developments targeted to epecitili.ed populations am also eligible, fro example recovery housing for individuals in recovery from substance use. Public Comment: Opemtfng Expenses: Commenters specifically asked that Treasury allow the use of SURF funds for operating expenses of affordable housing units, as operating subsidies are typically required to reach extremely low-income households, whose affordable rents may be lower than the ongoing cost of operating their unit. Treasury Response: Operating expenses for eligible affordable housing were an eligible use of funds under the interim final In and the Mal Is maintains this treatment. This may include capitaliced operating reserves. Rehabilitation and repair of public housing will also be considered an ellgrble use of SLFRF funds. Public Comment: Affordable Housing Loans and Revolving Loon Funds: Same commenters requested that loans with Some commenters pointed out of grants to far -profit entities in the calculation of eligible basis for the LIHTC. TreasuryResponse: The final rule does not change the treabnont of loans from the interim final rule. For mom. details see awm n Testament of Loans in Program Administration Provisions. Similarly, the final role does not clmnge the treatment of grants to support affordable housing development, including developments supported by the LIHTC: such grants are an eligible use of funds. Additional enumerated eligible uses for assistance to impacted households. As noted above, the interim final rule posed a question on what other types of services or costs Treasury should consider as eligible uses to respond to the negative economic impacts of COV10.19. In response, commenters proposed a wide variety of additional to assist geamal and see country (a g., access to and ly of health insurance) to at are most applicable to the zed needs of certain Is or geographic areas of the tea (e.g., senior citizens, plants, immigrants, formerly - A individuals, responding to cited issues in certain generally requested a high degree of flexibility to respond M the particular aced. of their cammu dines. Treasury Response: Given the large number and diversity of SLFRF recipients. Treasury's approach to assistance to households in the Mal role aims to clarify additional remunerated eligible uses that respond to negative economic impacts of the pandemic experienced widely in many jurisdictions across the country, making it clear and simple far recipients to pursue these enumerated eligible uses under the final rule. In the final role, eligible under the interim final rule as below. 11. Paid sick, medical, or family leave. Public Comment: Some commenters argued that the pandemic increased the need for paid sick or medical leave, as staying home when ill is recommended by the CDC /o prevent spread of the virus but lack of access to paid sick leave often prevents workers frow staying home. Other commenters recommended paid family leave as an eligible use, arguing few shortages i ealn access to childcare or home hth assistance, as well as school closures, may increase the need for family members to serve as caretakers. Background: The COVIQI9 pandemic highlighted the importance of paid leave as well as the number of workers who do not have access to paid sick and/or family leave. When workers have access to paid leave, they are less likely to repot to work sick, and therefore less likely to spread illnesses in the workplace: One study demonstrates that the emergenvy sick leave provision of the Families First Cornnavielrs Response Act (FFCRA) reduced the spread of COV70.19.11s The lack of paid leave exacerbates financial hardships experienced as a that experienced financial bar Furthermore, because the Medical Leave Act IFML/ workers who have been with their employer for leas than a year, 44 percent of workers do not have ....a to even unpaid leave.157 Workers of color and workers with lower incomes are less likely to have access to paid lines. I'll Iw ,m SY,dan Pkmm. l(nheriru Von. si d Nicola R. Meleade mvro-195mequey sick Cases Has Helped Fiance Tle, Chive In Tha Un red most: sway a.ammn the imPem of amereeroY Ilia leave on He Owed of CO... Walth Meba 39, nu 12 burm): xr...a.. http 1/eivehorn, ag uev,1da 1Ir.Is1,A1u.y1orr. W863. &.11 amwn of at. sensitive, and WnrMite Fvspeciives of he Henry end Medial love Act: Resues ham We 2e18 fees a, Aft AsaMates Holy 2oxrl. Attrylhvw.daryw/ntv/dolgar/plea/ Austria, dnotian/Pd//Ws0".PdAYrreSlrvey Naratta.Yawmepan�augram.Pd). •a at ` Art. P.Bartel el in Reuel and a1Mic diatiparlties in .wide 10 and .f of peld fairly and madkelleave: datitt , howfewre ofCallonregefles HI dam,, US, unthere Snlietv1 2Wa1oa.W coral.x1p ic,vw.blsgov/ opuWmfr/rwacciidlovied —rf oniin dahred—l-ho—amor d-umof-poidfaniily- otidredial-bare.hnn. uinmoee 4368 Federal Register/Vol. 87, No. 38/Thursday, January 27, 2022/Rules and Regulations For workers that we also caregivers for children, seniors, or other family members, them may he a similar need for —and benefits of —paid family leave. For example, some workers may have struggled during the pandemic to balance caring for children, as schools and daymoss closed, and working. For new parents, paid parental leave results in fewer infant hospitalizations, lowering parental stress, increasing parental involvement, and improvin the overall health of parent and chilba COVID-19 has also increased the levels of "caregiving intensity' 1-1 and "caregiving burden" 102 for those providing care to seniors or older family members. ''''^' When surveyed, more than half of caregivers reported that COVID-19 increased both the amount of caregiving responsibilities they had es well as the negative physical and mental Laets their cacegiving responsibilities on themselves.'es Treasury Response: Treasury agrees that than constitute impacts of the pandemic, and accordingly, under the final rule, creating, expanding, or financially supporting paid sick, medical, cr family leave programs is an enumerated eligible use of funds to respond to the 1egative economic impacts of the pandemic. 12. Health insurance. Public Comment: Several mmmeraw, recommended that uses of funds to expend access to health insurance be enumerated eligible uses; commenters believed that the heightened risk of "'US. aaneu of tabor woulks, dmploxx ones in the Untied sleow(foods 20re). hsndl nsw..bla.you/nd/iMdss`,I W2029/0enenhip/ tlNolatt'blae.—Sh ^'Mrya9mai and youth et st Ideal sand school n, of do mdyomh Amdepraaeat u e,es Proceeding. ofthe stational A®decoyof atlencn, e t,nxu,, polo M484-hua1II7138123489 20201, helps:// wld and Gmohonknr/r]id Californiaga1:Anil Manck runt Pihlend nalet deco,Did cilFoli Pemily Leese is and Weis man.Hoold, loured of of lry Analysis and d.buoo 1.21isnpa://oNinelibmry editor. J.C, /lots. A. o.lee2/pas. Van ,m 6GIambs. itsPongrdnVan Ilnt naus in Coyle.Gsgie rlfinenderend ,no..1stewsm Celbde.5ide15oam¢ k M¢dfcfnq 1a2, 7q12 and hae1M- illness or hospitalization due to COVID- 191ad Increased the negative economic irepacts of lacking health insurance. Background: In 2019. prior to the pendemic, it was estimated that 11 percent of ..elderly adults lacked health insurance 2aa By mid-2020, job loss had resulted in an estimated 3.3 million people lasing their employer sponsored insurance, resulting in an additional 2 million uninsured adults.'°' Participation in Medicaid, the Children a Health Insurance Program (CHIP), and the Affordable Care Act (ACA) marketplace played an important role in minimizing the number of people who completely lost health insurance during the early phases of the pandemic; Medicaid and CHIP enrollment increased by 9 percent from February to September 20201e8 and 8.3 million people enrolled In insurance through the ACA marketpplace. tev Although the ACA, CHIP, and Medicaid have significantly reduced the number of uninsured Americans through the pandemic and the economic downturn, adequate coverage and affordability still remains an issue for many. In 2020. 21 percent of working - age adults were inadequately insured, meaning even if they had insurance, they incurred a significant amount of out -of -packet exxv,17" Additionally, 37 percent of adults reported struggling with medical bills or medical debt and 71 percent of adults who did not purchase insurance cited affordability as the main factor.''' uere. „1 Treasury Response: Treasury agrees that loss of health insurance, increased financial risk from lacking health insurance, or excessive oulof-packet healthcare costs constitute negative economic impacts of the pandemic. Under the final rule, programs or services to expand access to health insurance coverage are an enumerated eligible use as assistance to households, for example, subsidies fee health Insurance premiums or expansion of a recipient's health insumnce plan to cover additional employees who currently lack coverage. 13. Services for the unbanked and uadwivatked. Public Comment: One commenter expressed support forthe inclusion of services to increase banking access as en allowable expense under SLFRF. The mmmenter recommended that states be encouraged to offer opportunities for consumers to open safe and affordable accounts capable of receiving direct payments. The commenter emphasized that allowing unbar and and mo a llo nked households in receive funds securely through no -fee, direct deposit will help connect or reconnect consumers to the mainstream financial system. Background: Banking inequities can make it difficult for unbanked or underbanked households to access housing, jobs, and other important economic opportunities. Being unbanked or underbanked can also make it challenging for bousebolde to g g apply for and receive financial assistance, including services like pandemic emergency housing eaafence. Safe, affordable, and accessible financial services playa critical role in States in households in the United and a in flow Managing income volatility and cash Dow affamilsPrs Currently,7 renin over 5 percent of families,," 7 million households are a banked" meaning they do not have a bank meunV r2 Low-income households,,non-white households, and households with individuals with Debarked. were even more likely to be American In 2m8,16 percent nt of Native American households, 14 pedant of Black households, and 12 percent of Hispanic households were unbanked, comperad to 2.5 percent of white households. Additionally, "a Pederel Cepoea Imwevee Cdryounon,MIC National aurvry m todenked end Undenavked nouaeholds (2015). hspa.//rem'/dmgov/homeMa nay/gals1MIStomanmm.vdf, "a Fedinl nepnalt houranm Con,und n,How nnont-loNa:nnneahold Use at aenL'ng and trnumiol Sardus 2019 Pole survey, hero R nww.f"Vvlwalp ie/household suty yl 2029npo.Gpdf Federal Register/Vol. 87, No. 18/Thursday, January 27. 2022/Rules and Regulations 4369 undertee eked households —those that have a bank account but rely on alternative financial services, such as money orders, payday loans, and check coshing services— account for 16 percent of all households in the United Stateol74 As a result of the COVID-19 pandemic, new social distancing protocols have, in some inatances, made it mere difficult to perform financial transactions with paper instruments, like banknotes, coinage, paper checks, or money orders. Households constrained to these payment methods may face challenges receiving government assistance. Additionally, businesses have tmusitinned to cashless payments systems to promote contactless psyrnenisP7e As a result, embanked individuals may face additional challenges conducting financial transactions. Treasury Response: Recognizing these challenges, Treasury is clarifying that recipients may use SLFRF funds to the delivery of federal, state, or local benefits (a.g., Child Tax Credit, Earned Income Tax Credit, tax refunds, or emergency housing or food assistance funds). The following includes a non - exhaustive list of uses to provide financial services to unlocked and undwimnked households: e Provide low or no now Financial services. including in conjunction with administration of benefits, such as pre- paid debit cards, a.g., via Economic Impact Payment or General Purpose Reloadable pre -paid cards or for the development of public banking infrastructure that can support benefit delivery. e Provide transitional services to facilitate long-term access to banking and financial services. a Provide financial literacy programs and conduct community outreach and deploy engagement resources to increase awareness about low-cost, on. .sorroon, love prior new strategies and approaches that help overcame barriers to banking access and support the gathering and sharing of information in ways that improve equity, such as community meetings, parmarehips with community -based orgumeatior s, online surveys, focus Senegal human -centered design " Bond of @e Covemme of We reeled R¢emve Synem. Rape se the EmnorNc Well -Being of O.S. Households is 7018-May 2019. bnpvlixwir/ederal rva.gov/PublicwionJmf aemnon,icwell-hung ofueuredll htm. "s Dd ear Anew, The FamNl Reevaluation of Cuh-0ened Tranaxtione by COVf0.19 end It. o'evem de. on nan.aion to caves® srseens in Oi®t,l rrrMn Netwm6. snrveyh,y Ne Covid-19 Pandemicandits Implkehe s12am1: 197-19. do :lo.lela/Bsra-0-12-dN3l3 decom-a. activities. and other community engagement activities. Assistance to Unemployed and Underemployed Workers The interim final rule included assistance to unemployed workers as an enumerated eligible use, including "aervlces like job training to accelerate rehiring of unemployed workers." Treasury provided further guidance, based on recipient questions after the interim final rule, that eligible uses under this section also include "other efforts to accelerate rehiring and thus reduce unemployment, such as clltldcere assistance, aaeiMence with transportation to and from a johsite or interview, and incentives for newly employed workwa[A" as well as assistance to unemployed workers seeking to start small businesses. Finally, further guidance also provided that "public jabs programs, subsidiard employment, combined education and occupation or level oftmining" are all enumerated eligible uses de assistance n unemployed or underemployed workers. The interim final role defined eligible beneficiaries of assistance as "individuals who want and are available for work, including those who have looked for work sometime in the past 12 months or who are employed part time but who want and are available for full-time work." This definition is based on definitions used by the Bureau of Labor Statistics to define individuals currently unemployed, se well eb Famous marginally attached m the labor farce and working part-time for economic reasons.r7s The latter two classifications are twos of labor underutiliratinnor the interim final rule specified that assistance to unemployed workers included both workers who lost that, job during the pandemic and resulting recession and workers unemployed when the pandemic began who saw further dot dierefion of their economic prosppects due to the pandemic. Pobifc Comment: Commenters generally supported the inclusion of this enumerated eligible use. Ono commenter recommended including assistance for underemployed workers who took jobs due to the pandemic that ^ammo of labor Sousse, Labor Fees sudid. suer the Gluiest Position. Smvoy: Concepnand oefiliniona, hop Jlw b4gov/upy definnraes.han use visited November 9, mil nnm. did not fully utilize their skillen or did not provide the hours. wages, mr job quality desired. Treasury has also received recipient questions on whether job fairs or grants to Flow ..saes to hire undemerved workers are eligible uses under this category. Another commenter recommended flexibility in eligible workfome development programs, arguing that rural areas may face particular challenges. Treasury Response: Treasury is maintaining this eligible use in the final rule, including the enumerated eligible services in the interim feel role and subsequent guidance. Treasury is also confirming that job fairs or grants to businesses /o hire undmserved workers are eligible uses under this section. Treasury is also enumerating that job and workforce training centers are eligible capital expenditures. so long as they adhere to the standards and presumptions detailed in the section Capital Expenditures in General Provisions: Other. The final rule maintains the definition dirigible beneficiaries, which is aligned with the Bureau of Labor Statistics' definitions of unemployed workers and other labor dug that the workmem disruption, in the final rule. Treasury is making clear that recipient individuals that are currently employed but are seeking to move to a job that provides better opportunities for economic advancement, such as higher wages or more opportunities for career advancement. Recipient Unemployment insurance Trust Funds and Related Expenses Under the interim final rule, a recipient may use funds to make deposits into Its account of the Unemployment Triad Fund established under section 904 of the Social Security Act (42 U.S.C. 11041 up to the level needed to restore the pre -pandemic balance of such account as of January 27. 2020 or m pay back advances received under Title RII of the Social Security Act (42 U.S.C. 1321) far the Payment of benefits between January 27, 2020 and May 17, 2021. These costs support the solvency of the unemployment insurance sysem and, ultimately, unemployment insurance benefits provided to unemployed 4370 Federal Register/Vol. 87, No. 18/Thursday, January 27, 2022/Rules and Regulations workem during the pendemic.l'a The interim final role also posed the question of what, if any, conditions should be considered to ensure that funds used under this eligible use category repair economic impacts of the poodemic and strengthen unemployment insurance systems. Public Comment: inclusion as an Eligible Use and Conditions: Commenters expressed mixed perspectives on this eligible use category. Some commenters supported its inclusion, arguing that unemployment insurance systems have faced significant costs to support unemployed workers during the pandemic and that this constitutes a negative economic impact that SURF funds should be able to address. Other commenters opposed this eligible use category, arguing that hinds used under this category may not ultimately support unemployed worked. Some commenters noted that unemployment insurance taxes on businesses automatically increase when trust fund balances ere few and suggested that permitting the deposit of funds into unemployment insurance trust funds prevents a tax increase on businesses, Seems of which may not have faced negative economic impacts firm the pandemic, rather than providing assistance to unemployed workers. Other comments suggested that deposits are better thought of as savings for leers in the near term. the interim final role's commenters suggested naintains this eligible should require z on funds used under this workers. For fund,humid be barred from cutting unemployment insurance benefits fir' workers during the period of performance or from erecting now barriers to accessing benefits (e.g.. through the application process and ongoing requirements to receive benefits). One commenter, noting that employment insurance benefits often provide low rates of wage replacement and do not cover some types of unemployed workers, argued that recipients should not be permitted to deposit funds into the trust fund unless ,,. Nora U. vMI. ate ecomme Mir. Lnmg eddmemd..rued lease Mmeh s, rev, Ib. mac rr.d m ' dd-.. SN berm mafl-M.Ub 1, m2r end pwvidm aaimum W nmmpinyvd wmkma an eligible sae dSURF fun& the recipient concurrently expands benefits. Finally, one commenter suggested a cap on the amount of funds that cen be used for this purpose. Treasury Response: Inclusion as an Eligible Use and Conditions: In the final rule, Treasury is maintaining the inclusion of this eligible use category. Because unemployment insurance trust funds directly fund bandits to unemployed workers, maintaining the solvency of the trust fund is critical to the continued provision of assistance to unemployed workers. Further, funds deposited into the trust fund must be used as assistance to unemployed workers, are eligible use of SURF funds. Finally, while, in the absence of the SLFRF, trust fund deposits would likely be funded through increases on employer payroll taxes, the eligibility of uses of SLFRF funds does not depend on how obligations would otherwise be satisfied if the SLFRF were not available for this use, While deposits to unemployment insurance trust funds generally serve ss assistance to unemployed workers, recipients that make deposits but also cut unemployment insurance benefits to workers substantially decrease the likelihood that the deposited funds will workers. As such, through December 31, 2024, recipients that deposit SURF funds into an unemployment insurance trust fund or use SLFRF foods to repay principal on Title XII advances, may not take action to reduce benefits available to unemployed workers by changing the computation method governing regular unemployment compensation in a way that results in a reduction of average weekly benefit amounts or the number of weeks of benefits payable (i.e., the maximum benefit entitlement). Finally, until the final rule becomes effective on April 1, 2022. the interim Rest rule remains binding and effective.+rs These requirements were not in effect under the interim final rule and do not apply to funds used (i.e., obligated or expended) under the interim final rule while it is in effect. In addition, recognizing that some recipients have taken significant steps sfi—TMSee.aranion nnnamFu^ncmunmlnoftbaoInlnvenvrw 'lin C—aUieinl fFxcotauoann CoUnevius SUNand ILul Fiscal Rxovry Fun ds. Expel@nme zmmnranvvyn.mifm:naenrn- axpmm...pdli toward making a but fund deposit or repaying principal on Title XII advances under the interim final rule, such as the legislative appropriation of funds for this purpose. even if a formal obligation has not occurred, Treasury will exercise enforcement dismeticn to not pursue violations of this final rule provision (i.e., the requirement not to reduce benefits) for recipients Ural have appropriated funds for this purpose prior to the data of adoption of the final rule consistent with the laws and procedures in their jurisdiction. Recipients should refer to Treasury's Statement Regarding Compliance with the Coronavirus State and Local Fiscal Recovery Funds Interim Final Rule and Final Rule, which provides additional detail on these issues. Public Comment and Treasury Response: Technical Corrections and Amendmen is: Following the interim final rule, Treasury received recipient questions on whether paying interest on advances received under Title XII of the Social Security Act (42 U.S.C. 1321) is an eligible use of SLFRF funds; Treasury Is clarifying that such use is permissible, consistent with Treasury's treatment of the eligibility of interest an Title XII advances under the Coromvirus Relief Fund. Treasury is further clarifying that recipients may only use SURF funds for contributions to unemployment insurance trust funds and repayment of the principal amount due on advances received under Title XII of the Social Security Act up to an amount equal to (1) the difference between the balance in the recipient's unemployment insurance (real food as of January 27, 2020 and the balance of such account as of May 17, 2021, plus fil the principal amount outstanding as of May 17, 2021 on any advances received under Title XII of the Social Security Act between January 27, 2020 and May 17. 2021. Further, recipients may use SLFRF funds for the payment of any interest due on such Title XII advances. In other words, excluding interest due on Title XII advances, the magnitude of the decrease of the balance in the unemployment insurance trust fund plus the principal outstanding on any Title XII borrowings made from the beginning of the public health emergency to the date of publication of the SURF interim final role sets a cap on the amount of SLFRF funds a recipient may use for trust fund cmitrihutiuns and repayment of principal on Title XII advances. Further, a recipient that deposits SURF funds into its unemployment insurance trust food to fully restore the pre -pandemic balance may not draw dawn that Federal Register/Vol. 87, No. 18/Thursday, January 27, 2022/Rules and Reguladons 4371 balance and deposit more SI FRF funds, back up to the pre -pandemic halmes. Enumerated Eligible Uses for Disproportionately Impacted Households Background The COV10.19 pandemic has had disproportioonadly negative impacts on many households and communities that were already experiencing inequality related to race, gender, age, or income before the pandemic. People of color, low-income workers, and women disproportionately lost their jobs during the COVID-19 pandemic and experienced disproportionate rates of negative health outcomes. 180 iai These disproportionate negative impacts experienced by systemically undemerved communities are not novel to the COVID-19 pandemic and the economic downturn. Research shows that historically underserved communities that are experiencing economic and social disparities typically experience disproportionate impacts of economic downturns and natural d onme wo This pattern held true for the effects of COVID-19 and the economic downturn: Historically undeserved groups experienced amplified negative impacts, further widening inequality.taa Many communities facing systemic barriers had not yet recovered from the impact of the Grant Recession before experiencing the impacts of COVID-19 Rod the economic downturn. For example, in 2009, at the end of the Great Recession, household. without a high school diploma had an average annual income of $32,301(meaa nod in 2018 dollars). By 2018, nine years into the economic recovery, those mine households saw their average income increase by $600. During that same time period, households with a bachelor's degree saw me increase in their average household income of $6,100 (measured in 2016 dallam).rsa The impact pre-existing inequalities have on a household or community's ability to recover is intersectional. Research shows that pre-existing ra©al and gender disparities exacerbated the disproportionate economic and health impact COVID-19 and the economic downturn had on workers of color. and specifically, women of coloreds Another study found that during the that six months of the pandemic counties that were bath highpovertyand majority non -white experienced COVID-19 infection come eight times higher than high -poverty, majority white counties.t se Many residents in these communities are still coping with the negative health and economic impacts. Summary of the Interim Final Rule and Fine] Rule Structure As described previously, the interim final rule provided a broader list of emr... ted eligible uses to respond to the pandemic in disproportionately impacted communities, in recognition that pre-existing health, economic, and soda] disparities contributed to disproportionate pandem[c impacts in certain communities and that addressing the root reuses of those disparities constitutes responding to the public health and negative economic Impacts of 010 pmrdemic. Tim interim final .Is described eligible uses in disproportionately impacted communities in four categories, spread across public health, and negative economic impacts: (1) Addressing disparities in public health outcomes, (2) building stronger communities (Mauph investments in hauling and neigh orhoods,(3) addressing educational disparities, and (4) promotlog healthy childhood environments. As described above, Treasury has moved eligible uses related to community violence intervention, assistance accessing or applying to public benefits and services, affordable housing development, healthy childhood environments, and addressing lost instructional time in K- Im now around k Rakish Kach1w,'two eamnuna. Two Rewards, par Research canter Naembm 13,2019), bnpsdoesev.pvwonamr.'/ ranownsocial-trends/lore/11/rahwo-raeeeivlutw- as-v. hHaelEquta bI nle R-.,:Te rollof saw. Lbor wrornand Edna)on.Te NevSchn'sses)on Raw and pellucidoreary021. —adhhad S. Pa.].. NP. ManW. Opd.&a 0.op.4 Ttoxed A., A.eeonoenor Copenewi .u-1Mapedlm Curon 4e2m19(COVIPt)aaw and becipen Lane, Us MeanflesIAANvlw Open. elperig.0.100V per -ronfle.pna2oupiod. 12 schools into the category "assistance to impacted households," recognizing that these pandemic impacts were widely shared across the country. This section discusses enumerated eligible uses to address health disparities, to build stronger communities through investments in neighborhoods, to address educational disparities, to provide rental assistance vouchers or assistance relocating to areas of greater economic opportunity, and additional eligible uses to respond to negative economic impacts in disproportionately impacted communities. While many of these services impact both health and economic outcomes, Treasury has consolidated them into a single section for simplicity and clarity and to ran am the intertwined nature of these issues. As a reminder, recipients can presume these usea are eligible when provided in a QCT, to families and individuals living in QCTs, by Tribal or territorial governments, or to low- income households or communities. As provided in section Standards: Designating Other Disproportionately Impacted Classes, recipients can also provide these services to other populations, households, or geographic areas disproportionately Impacted by the pandemicRecipients may also identify additional disproportionate Impacts of the pandemic and design an appropriate response to address that harm. For details on eligibility standards and presumed eligible populations, see section Generel Provisions: Structure and Standards. Enumerated Eligible Uses for Disproportionately Impacted Households 1. Addressing health disparities. Public Comment: Gammon: In general, commenters supported eligible uses to address health disparities and support health equity; several cemmentem highlighted the disparities faced by communities of color end low-income populations, as well as the importance of community engagement in developing effective programs to serve disproportionately impacted communities. Many commenters recommended additional enumerated eligible uses to address health disparities: thine are discussed Further below in this section. Treneury Response: In line with commenters' recommendations, the final role maintains several enumerated eligible uses to address health disparities, specifically: a. Community health workers. Treasury received few comments community health workers, though one 4372 Federal Register/Vol, 87, No. 18/Thursday, January 27, 2022/Rules and Regulations requested further clarification on their role?az Treasury is maintaining this eligible use in the final rule. h. Remadiation of lead paint or other lead hazards. The interim final rele included remediation of lead paint or other lead hazards as an enumerated eligible use to address health disparities. public Comment: Treasury received several comments asking for clarification on the eligibility of a particular use that would indirectly address lead pollution. For example, a commenter requested the ability to fund remedial auto.., such as filtration and plumbing procedures to help address lead pollution. One commenter requested that private wells be eligible for funding to address contamination with sribeti nces such as lead. Other commenters requested that Treasury allow replacement of lead pipes as an eliggible use of funds. 7 msury Response: Recipients may make a broad range of water infrastructure investments under section 602(c)(i)(d) and 603(c)(1)(d), which ran include lead service line replacement and other activities to identify and remediate lead in watm. These uses are discussed in greater detail in section Water and Sewer Infrastructure of this Supplemental Information. Treasury has further determined that several of the services identified by commentem are appropriate responses to address health disparities in disproportionately, impacted household.. These services were eligible under the interim final rule and continue to be so under the final rule. These services include remediation to address lead -based public health risk factors, outside of lead in water, including evaluation and fomentation of lead paint, dust, or soil hazards; testing for blood lead levels; public outreach and education; and emergency protection measures, like bottled water and water filters, in areas with an action level exceedance for lead in water in accordance with the Environmental Protection Agency's Load and Copper Rubunts Further, Treasury had determined that certain capital expenditures, including improvements be existing facilities to remediate lead containment. (e.g., removal of lead paint), am eligible responses, although this does not include construction of new facilities for the purpose of lead intercalation. Recipients should make sure that all capital expenditures adhere to the standards and incarnations detailed in section Capital Expenditures in General Provisions: Other. c Medical facilities. Treasury, received a few comments from recipients seeking to use SLFRF funds to build new medical facilities, each as hospitals or public health clinics, to serve disproportionately impacted communities. Given the cents] role of access to high -quality medical care in redo ang health disparities and addressing the root causes that led to disproportionate impact COVI31-19 health impacts in certain communities, the final rule recognizes that medical equipment and facilities designed to address disparities in public health continues are eligible capital expenditures. This includes primary care clinics, hospitals, or integrations of health services late other settings. Recipients should make sure that all capital expenditures adhere to the standards and presumptions detailed in section Capital Expenditures in General Provisions: Other. 2. Housing vouches and assistance relocating. In addition to other housing Services, the interim final rule permitted a variety of rental assistance approaches to Support low-income households in securing stable, long-term housing, including housing vouchers, residential counseling, or housing navigation assistance to facilitate household saves to neighborhoods with high levels of economic opportunity and mobility fen low-income residents. Examples could include SLFBF-funded analogue. to Section 6 Housing Choice vouchers; other kinds of rent subsidies, including shallow Subsidies; and programs to help residents move to areas with higher levels of economic mobility.— Treasury did not receive public comments on these enumerated eligible use.. Treasury Response: Treasury maintains the eligibility of vouchers and relocation assistance in the final rule. 3. Building strong, healthy communities through investments in neighborhoods. While the interim final .Is included a category of enumerated eligible uses for "building stronger communities through investments in housing and neighborhoods," the examples of services provided generally ^t Sce, e.g., racers for music Consul out focused on housing was. In meponseby Poevoince. cnmmnWly mill, worter(CRwl questions following release ofthe Tmnit, hops/1r oaecgov/dhdsp/pubs,.vu b/ cht.mNkehtm 0at visited November v, ours. interim final rule, Treasury issued ire Occur—.nte) Protection Agency. 40 r$R r9Le00a10). httye://xw.ec)rgav/curtenf/IinNe/ "'oSa. ex, opportunity lnuesm, treating West chapter-I/subchaprer-Dlison-fU/wbpart-l/section- To opponwily(steams seta). hmsY/ ,aIh . opsawmarecmgt...'ouili coed. further guidance clarifying that "investments in parks, public plazas, and other public outdoor recreation spaces may be responsive to the needs of disproportionately impacted communities by promoting healthier livingg environments." Public Comment: General. A significant theme across many public comments was the importance of neighborhood envirenment to health and economic outcomes and the impacts from the pandemic. Many outcomes, mats research linking health outcomes in nave a major impact on tear meals and well-being."tw As such, CDC Identifies "neighborhoods and built environment' as one of five key social determinants of health tot and includes "cmatlingl neighborhoods and environments that promote health and safety" as one of the agency's goals for social determinants of health outcomes. a. Neighborhood features that promote improved health and safety outcome$. public Comment: Commenters argued that usighbudimulb impact phy.had health outcomee in several ways. First, some commenters reasoned that the physical environment and Smenities in a community tot influence a person's level of physical activity, with features like parks, recreation facilities, and safe sidewalks promoting increased physical activity that improves health outcomes. Conversely, commenters argued that a lack of these features in a neighborhood could dampen physical activity and contribute to health conditions like obesity that am risk factors for mare severe 0OVIO-19 health outcomes. Second, some commenters also Suggested that access W healthy food in a neighborhood impacts health outcome.. These commenters reasoned I" U.S. Department oflisalm and xuman Smlcau, Nalghbmhood and Built hlwwommt, Asp dlhmah.gov/heaMh ople/obµe iv and- dmoPoroass"jecrivWrsoigAborhors and boil) covicsouscuffisdo Ilan visited November a. Ro211. — Soda] determl usia of hmlth are'Yhe conk, and layt atecptherepeople Bve,seam. work,andplaythat effect a wide ones of.col oat: ana wloss, Al "emmre tot niaaeCoof and d, (Sueon, Afoul Sodel petermWuta of Heeah(Sets).cars o0col(1 MCBov/sotlol M211 onWabouthtmlIlxvt vidtN Novmnpa 9, c—I ,mu public heaor the core-Ve meeradphy is as "built ment"orthu man. made physical aspects of unity (ey. home. huhdinBs, eneeta, open api and intnnmcture). Federal Register/Vol. 87, No. 18/Thursday, January 27, 2022/Rules and Regulations 4373 that lacking adegtt�le access to affordable, healthy food or living to a "food desert" may contribute to disparities in that that mile... health outcomes, including contributing to pre- existing conditions that increased risk for severe COV10.19 outcomes. Th... commenters cited public health research finding "clear evidence for disparities in food access in the United States by income and race."la Some commenters also suggested that neighborhood envi onment is connected to other public health outcomes, like mental health and public safety. For example, some research suggests that living in neighborhoods with green space and tree cover, correlates with improved mental health outcomes "'a Finally, some comment. argued that activities like initialling streetlights, greening cr cleanup of public spaces or land, and other efforts to revitalize public spaces would support improved public Safety.195 Ira These commenters recommended that Treasury include as an enumerated on Sea. ego. Yenning Re, Cmg Fu, Fmgore Kennedy. Shand. Borg, a.mual Owueu-Agyemeog, Toeiomet Wnrret ligMe me epmial-tempeM pottems of trim, to eotmit. Michigan. ali.. Volume 79, Palms 45—si2. WN o2W-2751(2918). hapea//doi.mVIlAi leautRe 201&02,Ml. 'A. C.IMGn, R Hmaen.l. Iwmeret ul.. ambition crime Tbtugh mn,imnmental Design. Didena ft.. a Rendm izoal Rape iment of street Lighting in New York any, honest ofQomtiYtie, ComNology (2021). hepa://da.oWift 1MV/rtoa9a mortality and illness and increased well-being.197 Urban park use during the COVID-19 pandemic may have declined among lower -income indlviduaka lm Encouraging physical activity can also play a role in health outcomes, as a sedentary lifestyle is a risk factor for chronic diseases and more severe COVI0.19 outcomes.199 Parks. recreation facilities, and sidewalks can promote healthier living environments by allowing for safe and socially distanced recreation during the COVID- 19 pandemic. Additionally, food insecurity cattle, which we higher among lower -income households Bud households of color, doubled among all households and tripled among households with children during the onset of COVID-19 from Febmary 2020 to May 2020.200 Icap oving healthy food access supports public health, particularly among lower - income households and households of color that face disproportionate outcomes. Treasury Response: Treasury recognizes the connection between neighborhood built environment and physical health outcomes as discussed in the research and analysis provided by commenters, including risk fear. that may have contributed to disproportionate COVID-19 health impacts in low-income communities. The final rule also recognizes that the public health impacts of the pandemic are broader than just the COVID-19 disease itself and include substantial impacts on mental health and public safety chellengee like cales of violent crime, which ere correlated with a neighborhood's built environment and features. As such, neighborhood features that promote improved health and safety outcomes respond to the pre, SanIding disparities that contributed to COVID-19's disproportionate impacts on low-income communities. +corm, eg. AmmrIm public Health A...memo. Ica,—, Halm and Waunme fhrwpp Ammo 1n EnNm 04-amber 5..01u. he,w ,d1v mho.mg/ ,ad1mwanvombod1,ml,fic Ateam oht, &alem ed-ho l b nand-bow/ear Ih./Oaroa/la/ impmvmg-haXhanbxcllnessthmugh-acmes 1a- nhtm. Ins bmaon or el.. Urban pink use Ourible WV10.19ps Disproportionately Vulimpinerable Communities Oomels. Qtea Oie10243 i2021), bMZAfiuopV 10.338.G51ia 2L2202 (10211.Lttpp://doi.arg/ foaaa0/freeDespite, SaversC 43, +e of hyseal Severe COV10.f9nutmnua—thn cola dphyual activity. Nat Rev Rndavinnl V, .l-dan 12o211. hf(pt//d,i.arg/10.IWa/a91519- 0211Wamin 'do.': Cmrgeand aAdb.—.,,rI name, Beyond '!cooldecoctsd Mviamoodsanew (AumatLto 17. cool.hapeJ%n lo—knpaah,lnlearrehlbeyond- Jrappio eeeleumesioura edit-, ne�naPWwcA-b m.PPinB� .d-ina¢aritY/ Ulie final rule includes enumerated eligible uses in disproportionately impacted communities for developing neighborhood features that promote improved health and safely outcomes, such as parks, green spaces, recreational facilities, sidewalks, pedestrian safety features like crosswalks,-, projects that increase ... to healthy foods, streetlights, neighborhood cleanup, and other projects to revitalize public spaces. Recipients seeking to use funds for capital expenditures should refer to the..than Capitol Expenditures in General Provisions: Other, which describes additional eligibility standards that apply to uses of funds for capyital expenditures. b. Vacant or abandoned properties. As discussed above, the interim final rule included enumerated eligible uses for building stronger communities through invaslman, in housing and neighborhoods to dtspmportioni tely imparted communities. The interim final rule also posed a question of whether other potential uses it, Wis category, specifically "rehabilitation of blighted properties or demolition of abandoned or vacant properties," address the public health or economic impacts of the pandemic. Public Comment: Several commenters argued that programs or services to address vacant or abandoned property would respond to the public health and negative economic impacts of the pandemic in disproportionately impacted communities. Some commenters cited research suggesting that living now such property is correlated with worse physical health and mutual health outcomes, noted that such properties pose an environmental hazard, or argued that such properties present a b scrim to economic recovery. These commenters suggested that renovation or demolition of vammt,or abandoned property could benefit community health and raise properly recommended Wet Treasury include an enumerated eligible use for the operation of land banks that redevelop or renew vacant properties and land. Treasury Response: As noted throughout the final role, the pandemic underscored the Importance of safe, affordable housing and healthy -1 HowweL n ousmY mutim+e racquium tIW surnam odhaver-rure development, including nicer madennnruetm,m sine...... ally mengtble morfunde under the final rule. Sidewalks and paleemm+ safety should be the promotional ,mpm eat a uses of funds in thin canymy. When ete may monde euillary mn.tmcd.. m.dnd to moa,un the predominant component, a wee t thm pred—onan dy involves stood momentum or .,at, to mane(:, vehicul.r leak would he +mligthla. 4374 Federal Register/Vol. 87, No. 18/Thursday, January 27, 2022/Rules and Regulations netpJtborhood environments to public health and economic outames. Treasury agrees with commenters that high rates of vacant or abandoned properties in a neighborhood may exacerbate public health disparities, for example through environmental contaminants that contribute to poor health outcomes or by contributing to higher rates of crime. As such, certain services for vacant or abandoned properties are eligible to address the public health and negative economic impacts of the pandemic on disproportionately impacted households or communities. Eligible activities include: e Rehabilitation, renovation, maintenance, or costs to secure vacant or abandoned properties to reduce their negative impact Costs associated with acquiring and securing legal title of vacant or abandoned properties and other costs to position the property for current or future productive Dan e Removal and remediation of environmental contaminants or hazards from vacant or abandoned properties, when conducted I. compliance with applicable environmental laws or regulations Demolition or deconstruction of vernal or abandoned buildings (including residential, commercial, or industrial buildings) paired with greening or other Ian improvement as part Of a strategy for neighborhood revitalisation e Greening or cleanup of vacant lots. as well as other efforts to make vacent lots safer for the surrounding community v Conversion of vacant or abandoned 1 properties to effordab a housing e Inspection fees and other administrative costs incurred to ensure compliance with applicable environmental laws and regulations for demolition, greening, or other remediation activities Vacant or abandoned properties are generally those that have been unoccupied for an extended period of time or have no active owner.2oa Such am Aspen., Insular may we its exlsnng memacadoos of what is considered vaunt or abandoned mildery antler state law and local ordinances, es well as any ca'esspon llay p...a for damolidait, for chase chilible wads. A complain without a definition of secant or abandpned pemeary may refer to dneitions used I. the Department a Honing ad Urban Donald I. NeigblmrMW Smbilisstimt PmBrmn IsveiluNa ate the oft, ons below): however, recipients should be saced that nehm indent, Bate, or India capacitance may apply sods ea cmvplianu with the Under — Relocation Am P*s U.S. oriented., a Iaooeing and Urban Devoutness, Reel Dmete Aaluieiti® and RelrceHon (because m HUD Prcgmme, baps:// www.hutlesaitonge.info/PmBnms/mlocotian/ properties may be in significant disrepair (a.g., major structural defects; lack of weather light conditions; or lack of useable plumbing, kitchen facilities, electricity, or heating infrastructure (not to include utilities currently out of service or disconnected but able to be reconnected ad ..ad)). or maybe declared unfit for inhabitants by a government authority. As noted above, demolition and greening (or other structure or lot remedialion) of vacant or abandoned properties, including residential, commercial, or industrial buildings, is an eligible use of funds. Treasury encourages recipients to undertake these activities as part of a strategy for neighborhood revitalization and to consider how the cleared property will be used to benefit the disproportionately impacted community. Activities under this at igible use should benefit current residents and businesses, who experienced the pandemic's impact on the community. Treasury encourages recipients to be aware of potential impacts of demolition of vacant or abandoned residential properties. Demolition activities that exacerbate the pandemic's impact on housing insecurityty or lack of affordable housing are not eligible uses of funds. This risk is generally more acute in jurisdictions with low or reasonable vacancy rates and less acute in jurisdictions with high or hyper- wered,y.ova add Homeownership a. .,is dam sun— m coma renry rate. See hap Werdov.eanaue.goefideo ing/ hesordenbtml. other data sources include the American Criminal, Survey Hvs year ntimetm. an smeller g-fieldic enm, mtebnlanens by the represent of Hearst y and Urtan Deselopmmt Treasury presumes that demolition of vacant or abandoned residential properties that results in a net reduction in occupiable housing units for low- and moderate -income individuals in an area where the availability of such housing is lower than the need for such housing would exacerbate the impacts of the pandemic on disproportionately impacted communities and that use of SLFRF funds for such activities would therefore be ineligible. This includes activities than convert occupiable housing units for low- and moderate - income individuals into housing units unaffordable to cnacent residents in the community. Recipients may assess whether units are "occupiable" and what the housing need is for a given area taking into amount vacancy rates (as described above), local housing market conditions (including conditions for different types of housing like multi- family or single-family), and applicable law and housing codes as to what units are occupiable. Recipients should also take all reasonable steps to minimise the displacement of persons due to activities under this eligible use category, especially the displacement of low-income households or longtime residents. Recipients engaging in these activities and other construction activities with SLFRF funds should be mindful of the provisions of the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970, as emended, 42 D.S.C. 4601. and the Department of'henaportation's implementing regulations, 49 CFR part 24, that apply to project, funded with federal financial assistance, such a, SLFRF funds. Recipients should also be to this with conflicts s in their comply with all federal, state, and local public health and environmental laws or regulations that apply to activities under this eligible use category?n• for example, requirement around the bored we United Shan Postal Service Vernon, Dam Saw. m ,dolleely. bHPe9/dola.eene—,orldnetrci/ to k7�DN4a id AGSDP5Y201a.DPa46 bitlePreviewtrue or b n ruclAre w.huduserew/ poredlaameeb/usiorheml. wo.5ee U.S. F]Immummml Peoter ion Agency. I.,.Smle Remdenti.l Deadline., hapd/ ca viinegnu/M18.dlvol,.2021) f roc puballcenn heatvreeed November apply, raPrimarait regpiremevte.ut maY aPWY Federal Register/Vol. 87, No. le/Thursday, January 27, 2022/Rules and Regulations 4375 handling and disposal of asbestos- behavioral health in a school setting or disproportionate public health or containing materials, lead paint, and cultural language classes. negative economic impacts of COViO— other harmful materials may applyy, as Treasury Response: Treasury is 19 on low-income populations and well as environmental standards (many maintaining these enumerated eligible communities. backfill materiels used at demolition sites. Treasury mcoumges recipients to consult and apply best practices from the Environmental Protection Agency as Well. Recipients must evaluate each subeecipienl's risk of noncompliance with federal statutes, regulations, and the terns and conditions of the subaward related to safely and properly conducting ectivides under this eligible use. This may include checking for any past violations recorded by state or local environmental, workplace safety, licensing, and procuramenl agemies, as well as regular reviews for suspensions, debarments, or stop work orders. Recipients must establish rigorous ovarsight and internal controls processes to monitor compliance with any applice6Is reqquirements, including compliance by subree bon s. 4. Addressing educoHono di.sporities. The Interim final mle included an enumerated eligible use for addressing educational disparities to disproportionately impacted co mmunifiea and outlined some enumerated eligible services under this use. These enumerated uses included early learning aervicas, assistance to high -poverty school districts to advance equitable funding across districts and geographies. end educational and evidence -based services to address the acedemic, social, emotional, and mental health needs of Students. Addressing the many dimensions of resource equity — including equitable and adequate school funding; amass to a well-rounded education; well -prepared, effective, and diverse educators and Staff; and integrated support services ­can also begin to mitigate the impact of COVI0. 19 on schools and students and can close long-standing gaps in educational opportunity. As discussed above, to the final rule, early learning services and addressing the impacts of lost instructional time for K—I2 students am enumerated eligible uses for impacted communities, not just disproportionately impacted communities. Public Comment: Treasury received some comments in this category. Generally, commenters expressed agreement with the elements of the interim final rule regarding use of funds far addressing educational disparities. Some commenters had questions about whether a few specific uses of funds qualified under this category. Far example, comenemare inquired about whether the funds could he used for was in the final mle, which ere recommended enumerated eligible uses that to assist diemmitnitinnefoh, imnnm,d increasing immense for high -poverty school theories, educational services like tutoring or afterachool programs, summer education and enrichment programs, and supports for students' social, emotional, and mental health needs. This also includes responses aimed at addressing the many dimensions of resource equity — including equitable and adequate school funding; access to a well-rounded education; well -prepared, effective, and diverse educators and staff; and integrated support services —in order to close long-standing gaps in educational opt yy yyh , treasury is clarifying that improvements or new construction of schools and other educational facilities or equipment are eligible capital expenditures for disproportionately impacted communities. Recipients Suaking to use funds for capital expenditures should refer to the section Capital Ezpnndilures in Game.] Provisions: Other for additional eligibility standards that apply to uses of funds for capital expenditures. Treasury notes that services to promote healthy childhood environments, including ebildeare, early learning services, and home visiting programs that serve infants and toddlers, is a separate category of enumerated eligible uses for households impacted by the pandemic (see eligible uses for "promoting healthy childhood environments"). Similarly, education services to address the impact of lost instructional time during the pandemic are a separate eligible use category for households impacted by the pandemic; when providing these services, re©pienis may presume [ha[ any K-12 student who last access to in -person instruction far a significant period of time has been impacted by the pandemic and is thus eligible for responsive services (see eligible uses for "addressing the impact of lost instructional time"). Proposed Additional Enumerated Eligible Uses Not Incorporated The interim final rule posed a question on what other types of services w costs Treasury should consider as eligible was to respond to the fic exempire type of discussed in the fine[ rule in response approach to assistance to households in disproportionately impacted communities in the final rate aims to provide enumerated eligible uses that respond to disproportionate impacts of the pandemic experienced widely in d are intended to simplify and clarify these enumerated eligible uses. At the an. time, Treasury recognizes that the impacts of the pandemic vary over time, households or classes of households and pursue programs and services that respond to those disproportionate 7acts. the final rule, Treasury has not chosen to include as enumerated uaea all uaea proposed by commenters; given the significant range, and in some cases highly sludge nature, of the proposed uses Treasury was net able to Sums that the proposed was would respond to disproportionate impacts experienced in many jurisdictions amass the country, supporting an enumerated eligible use available to all recipients presumptively. However, the Oral rule continues to provide a framework to allow recipients to identify and respond to additional disproportionate impacts (for details, see section General Provisions: Structure and Standards). Some types of proposed additional enumerated eligible uses for assistance to households in disproportionately impacted communities were recommended by several commenters: • Capital expenditures. Many commenters recommended Net capital expenditures on many different types of public and private facilities be enumerated eligible uses. For clarity, Treasury has addressed all comments on the eligibility of capital expenditures on property, facilities, or equipment in one 4376 Federal Register/Vol. 87, No. 18/Thursday, January 27, 2022/Rules and Regulations eedian (sae section Capital employment 20° The negative outlook the pandemic are rooted in systemic Expenditures in General Provisions: for small businesses has continued: As issues present even before the Other). of November 2021, approximately fill pandemic. For example, before the a Equity funds. Several commenters parent of small businesses reported economic downturn, only 12 percent of recommended that Treasury permit that the pandemic has had a moderate Black -owned businesses and 19 percent SURE funds to be deposited into an or large negative effect on their of Hispabic-ownerd businesses had equity fund to support long-term racial business, and over a third expect that it annual earnings of over $1 million and economic equity investments. The will take over 6 months for that, compared to 31 percent of white -owned eligibility of such use would depend on business to return to their normal level bvsinesees.216 M rsority-awned the specific structure and uses of funds. oppeations.'°° ofMicro businesses were also overrepresented in Under the statute, SLFRF funds can This negative outlook is likely the industries hit hardest by the economic only support casts incurred until result of many small businesses having downturn (e.g., services, transportation December 31, 2024; sea section faced periods of closure and having seen and warehousing, healthcare and social Timeline for Use of SLFRF Funds in declining revenues as customers stayed assistance, administrative and support Program Administration Provisions. home.210 In general, small businesses and waste management, and Further, recipients may calculate the use face greater hurdles in accessing accommodation and food services),IIr cost incurred with respect to credit,''' and many small businesses Approximately 22 percent of all investments in revolving loan funds were already financially fragile at the minority -owned business fell into the based on the methodology described in outset of the pandemic.212 hardest hit industries compared to 13 section Treatment of Loans in Program While businesses everywhere faced percent of nonminorlly-owned Administration Provisions. Projects significant challenges during the businesses. -le funded by a revolving loan fiend using pandemic, minority -owned and very Although disparities in annual SLEEP funds would also need to be small businesses have faced additional revenue are not a direct indication of a eligible uses of SLPRF funds. obstacles. Between February and April business's ability to weather an a Environmental quality and climate 2020, the number of actively Self- economic downturn, they do highlight resilience. Several commenters employed Black business owners other disparities that make it more recommended eligible uses to enhance decreased by 41 percent 21s During that challenging for these businesses to environmental quality, remedfate same time period, Asian and Latino survive the effects of the pandemic. pollution, promote recycling or business owners decreased by 26 and 32 Black -owned startups, for example, face composting, or increase energy percent, respectively, compared to a 17 larger challenges in raising capital, efficiency or electrical grid resilience. percent decrease in white business including securing business Imns.214 Whether, these projects respond to the disproportionate imports of the owners.''' Female business owner also sew a; ificentimpads, with businesses Summary of the Interim Final Rule and on certain communities oxmeo oy women Falling by 26 Final Rule Structure would depend on the specific issue they Percentsls Summary o)fnterim Final Rule: As address and its nexus to the public Many of the disparities in haw discussed above, small businesses faced health and economic impacts of the minority business owners experienced significant challenges in covering pandemic payroll, mortgages or rent, and other b. Assistance to Small Businesses 'Daniel wxmnlh. U.S. small Hoderve A^'throaarabrDell. aMadany, no a&. of operating costs as a result of the public health emergency and measures taken to Background he COVio-re possession on Strait Bad"- muss adef Nvvrfiy m20.aw➢able otFttpe// contain then read of the virus. Under P The endemic has severe! imported P Y "In°dv°mcy'.A°'g°o/wpmnrmUuplwdmzozU at/anvers j, rSectionsrecipients recipients may s may "resp sed to the ondtothe public many businesses, with small businesses in ea/COVIo-IPlmpod-onsnon- Bast health emergencyor its negative or Small businesses make, near) make mealyty rd.half U.S. ovate- p y P US. Cords ns,hprolltaenmnn.srwlenvnadwl o survey,hrrpe://ponolanane.gw/ylse/d6fo/pm economic impacts," b amen other Pa Y' B weir ent are the and y a keyeconomic visited Demmbmr.2n211 small.provtding"Accordin to. he ceeallowedrecipi Supportingoverall economic role in supporting the responsible recovery they amrerespaSincehe two- .CdernODrias.aim S-11 Do.!. freassse+and ere commnpnith LOAD maim. Ownnre s. ern Early slasaadmneovro-rape„demieirvo.. Snarl Brad interim final rule allowed re usiness to recipients provide assistance to smell businesses s nas et the of net new ande0°c, zonal.ee fag/peen.of thefaced negative economic beginthird ho beginning a the pa ...a, h. however, closed, a,., Efored the Fedto Reverse sess, e.a., awN nrG,rerom. of n a nodard to Con®esi an, impactsaddress impacts faced 6y those businesses. A with many moreatnesae07 Sece. with many more at s $erter8 with Avaamss litysavaresse,oEnron Availability asetyole athuoSmall Businesses (Sept. es dull), tioibble or httped/ev •anew Cre aeemve Desk of AUen dole asset al ll business ere of.ahave arentalah".e o e, ponnmiaonon:/zoo-frown. -n onobitiry.oJ ,.d:e o Credit zmea°pononnrverW loyange employment Have been among those benamng realam. Owned puma. December. de IILuaNea�.o.g/ with the most drastic drops in — Alexander Barmost al.,]Termpacr of "eD-10 aorvey/Pm a/repart-omminor(rywrud fi e onmw. 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Federal Register/Vol. 87, No. 18/Thursday, January 27, 2022/Rules and Regulations 4377 "small business" is defined as a business concem or other organiaaiion that: (1) Has no mare than 590 employees or, if applicable, the size standard in number of employees established by the Administrator of the Small Business Administration for the industry in which the bustness concem or organization opemles; and 12) Is a smolt business concem es defined in section 3 of the Small a Loans or grants to mitigate financial hardship such as declines in revenues or impacts of periods of business closure; e Loans, grams, or in -kind assistance to implement COVID-19 prevention or mitiganon tactics; and e Technical assistance, counseling, or other services to assist with business planning needs. Th. interim final ml. further provided that recipients may consider additional criteria to target assistance to businesses in need, including small businesses. Such criteria may include businesses facing financial insecurity, substantial declines in gross receipts (e.g., comparable to measures used to assess eligibility for the Paycheck Protection Program), or other economic harm due to the pandemic, as well as businesses with less capacity to weather financial hardship. such as the smallest businesses, those with less access to credit, or those serving underserved communities. The interim final In also indicated that recipients should consider local economic conditions and business data when establishing such criteria. Finally, the interim final rule posed a question on whether there are other services or casts that Treasury should consider as eligible uses to respond to the disproportionate impacts of COVID-19 on low-income populations and communities. Final Rule Structure: Consistent with the interim final mle approach, the final role provides a non -exhaustive list of enumerated eligible uses far assistance to small businesses that are impacted or disproportionately impacted by the pandemic. Further, within Assistance to Small Business, a recipient may also identify a negative economic impact expert enced by small businesses and design and implement a response to that negative economic impact, beyond the was specifically enumerated in the final role. according to the standard described in the section Standards: Identifying a Negative Economic Impact. A recipient may also identify small businesses that have been dispmporiionately impacted by the public health emergency and design and implement a program that responds to the source of that disproportionate mpaa Consistent with other eligible use categories to respond to the public health and economic impacts of the pandemic, recipients may identify and serve small businesses that experienced a negative economic impact or disproportionate impact due to the pandemic, ea described in the section Standards for Identifying Other Eligible Populations. For example, to identify faced to ..an .In pr governments or on small businesses S. territories ware r impacted by the References: As detailed above, Treasury has re -categorized some uses of funds in the final role to provide greater clarity. For discussion of assistance to small businesses and impacted industries to implement COVID-19 mitigation and prevention strategies, see section COVID-19 Mitigation and Prevention in Public Health. Small Businesses Eligible for Assistance Public Comment: Treasury received many comments about the general benefits or drawbacks of use of SLFRF funds to provide assistance to small businesses. Some commenters suggested that SLFRF funds should be available to assist ell small hostesses, other than only businesses that experienced direct negative economic impacts due to the public health emergency. Other commenters argued that aid to small businesses should be narrowed in the final rule, asserting that SLFRF funds should instead focus on.a.imcm to households or building public sector apeaty. Treasury also received comments requesting clarification of the types of small businesses eligible for assistance. For exempla, some commenlem requested clarification about whether mimobush asses were included in the definition of small business. Comments also suggested that self-employed individuals and Tribal enterprises be classified as small businesses, respectively. Commenters argued that these types of small businesses are more common among low-income and minority businessowners and some as important institutions in undersomed communities. Finally, some commenters suggested that Treasury permit broader enumerated eligible uses to assist small businesses in disproportionately imperial communities and generally strengthen economic growth in these communities. These commenters recommended that Treasury presume small businesses operating in QCTs ere disproportionately impacted and a] his for broader enumerated uses. Treasury Response: A. discussed in the section Designating a Negative Economic Impact, in the final rate, recipients must identify an economic harm Bused or exacerbated by the pandemic on a small fusions. or class of small businesses to provide services that respond. As discussed above, programs or services in this category must respond to a harm experienced by a small bustness or class of small businesses as a result of the public health emergency. To identify impacted small businesses and necessary respunse invasions, recipients may consider impacts such as lost revenue or increased costs, challenges covering payroll, rent or mortgage, or other operating costs, the capacity of a all business to weather financial hardships, and general financial insecurity resulting from the public health emergency. Recognizing the difficulties faced by small businesses in certain communities, the final rule presumaz that small businesses operating in QLTs, small businesses operated by Tribal governments or on Tribal Lands, and small businesses operating to the U.S. territories were disproportionately impacted by the pandemic. This Prescription parallels the real role's approach to assistance to households, reflecting the more severe pandemic impacts in undemerved communities end creating a parallel stmetme across different categories of eligible uses to make the swarm. simplar for bum .... a that experienced a negative economic impact or disproportionate negative economic impact (e.g., microbusineeee., smell businesses in certain economic sectors), design an intervention to fit the impact, and 4378 Federal Register/Vol. 87, No. 18/Thursday, January 27. 2022/Rules and Regulations document that the individual entity is a member of the class. Additional information about this framework is Included in the section General Provisions: Structure and Standards. Further, Treasury is maintaining the interim final .Is definition of "small business," which used the Small Business Administration's (SBA) definition of fewer than 500 employees, or par the standard for that industry, as defined by SBA. This definition includes businesses with very few employees, self-employed individuals, and Tribally owned businesses.''" Finally, Treasury notes that recipients may award SLFRF fund. to many different types of organizations. including small businesses, to function as a subrecipient in carrying out eligible uses of funds on behalf of is recipient government. In this case, a small business need not have experienced a negative economic impact in order to serve as a subrecipient. See section Distinguishing Subreciptents versus Beneficiaries for more detailed discussion of interaction with eubrecipienta, in contrast to beneficiaries of assistance. Enumerated Eligible Uses for Assistance to Smell Businesses Public Comment: Treasury received comments requesting clarification of the types of assistance available to small businesses. For example, one commenter suggested that outdoor dining be an eligible use for SLFRF funds as assistance to small businesses. Other commenters asked for chnificaBon about have SLFRF funds could be used to support new businesses evil start-upa. Several commenters requested clarification of whether and how recipients may provide services to business districts of downtown areas, particularly those that exist in whole or in pert within a OCT, and requested reduced documentation of the specific negative economic impact for the businesses operating within those areas. These commenters argued in favor of allowing redevelopment or other support, including capital investments, in business districts that ware sin In regard to wonting emplo aw. bueionsa weed and eo..lv.11ed by. Tribal govm in no not .-,Ic rod and, a,-.1 be Tdb.I g—n—on, and are not considered atsoon of other businesses weed by the Tobel g.vanmem became of their menhi, by the Treat government m anagement. as described in Is CPR 12l.matbl121. This definition is wnsiNent with one Smell Business Administration ISBAI IRMZ-a definition of a "atoll bu•i.ees wmmn-Mitiong to Tribal g strum to ae wail as how Tribal enterpriser ere defined for the Sete Smell Business aadnuntauv.0seml. negatively impacted by COVID-19. Several commentere also argued that funds should be available to support and grow microbusinesses, or businesses with five ar fewer employees, which are more likely to be owned by women and ppeople of color. Treasury Response: In the Mel rule, Treasury is maintaining and clarifying the enumerated eligible uses of funds for assistance to small businesses that are impacted or disproportionately I ce acledby the pen demic. Pm pactel'emaR basin esses. Specifically, Treasury is maintaining enumerated eligible uses from the interim final rate far assistance to icepacted smell businesses. These include but am not limited to: • Loans or grants to mitigate financial hardship such as declines in revenues, or impacts of periods of business closure, for example by supporting payroll and benefits costs, costs to retain employees, mortgage, rent, or utilities costs, and other operating costs; • Loans, grants, or in -kind mainfance to implement COVID-19 prevention or mitigation tactics lase section Public Health for details on these eligible uses); and • Technical assistance, counseling, or other services to assist with business planning needs. Treasury acknowledges a range of potential circumstances in which resisting smell businesses couldbe responsive to the negative economic impacts of eases start including for small businesses and rods and making t messes and individuals seeking si start smell or tic As note above. Far example: • t noted above, a recipient could assist ..It business startups a msociat d with with additional costs associated with CAVI0.19 mitigation tactics; see section Public Health for details ec these eligible uses. • A recipient could identify and respond to a negative economic impact of COVIfo—] 9 on new small business st startups or microbu sieses: far example, if smell business ts or microbusinessey in a localityyfaced greeter difficulty accessing credit than prior to the pandemic or faced increased costs to starting the business due to the pandemic or if particular small businesses or p capital duets had lost expected startup capital due to the pandemic. • The intuit final rule also discussed, and the final rule maintains, I I'rgible uses that provide support for ndividuals who have experienced a negative economic impact from the COVID-19 public health emergency, including uses that provide job training for unemployed individuals. These initiatives also may support small business start-ups, miuobusinessea, ..it individuals seeking to alert small or microbusinesses. Disproportionately impacted small businesses. Additionally, Treasury agrees with commenters that disproportionately impacted smell businesses may benefit from additional assistance to address the sources of that disparate impact. As such, the final rule provides a broader set of enumerated eligible uses for disproportionately impacted small businesses and/or small businesses in disproportionately impacted business districts. Recipients may use SLFRF funds to assist these businesses with certain capital investments, such as rehabilitation of commercial properties, storefront improvements, and fagade improvements. Recipients may also provide disproportionately impacted misombehanesses additional support to operate the business, including Financial, childcare, and transportation supports. Recipients could also provide technical assistance, business incubators, and grants for start-ups or expansion coats for disproportionately impacted small businesses. Note that some of these types of assistance are similar to the. eligible to respond to .mall businesses tint experienced a negative economic impact ("impacted" small businesses). However, because the final rule presumes that some small buaire dam were disproportionately impacted, the. enumerated eligible uses can be provided to those businesses without any specific investment of whether they individually experienced negative economic impacts or disproportionate impacts due to the pandemic. Gross -References: Recipients providing assistance to small businesses for capital expenditures (La., expenditures on property, facilities, or me equipnt) should also review the section Capital Expenditures in General Provisions: Other, which describes eligibility standards that apply to capital expenditures. Recipients should also note that services to address vacant car abandoned commercial or industrial properties am addressed In section Vacant or Abandoned Properties in Assistance to Households. Loans to Small Businesses Public Comment Treasury received many comments requesting clarification on using SLFRF funds to establish funds that provide loans to small businesses. For example, commenters sought clarification of how eligible use Federal Register/Vol, 87, No. la/Thursday, January 27, 2022/Rules and Regulations 4379 requirements and applicable dates for SLFRF funds would apply to third party organizations (like economic development organizations) who receive SLFRF funds in order to establish a loan fund. In addition, commenters requested clarification on what requirements apply to loan programs with available funds remaining after December 31, 2024. Treasury Response: SLFRF funds may he used to make loans, including to small businesses, provided that the loan is an eligible use, and the coat of the loon is tracked and reported in accordance with Treasury's Compliance and Reporting Guidance. Funds Nat are unobligated after December 31, 2024 must be returned to Treasury. Sae section Treatment of Loans for more information about using SLFRF funds for loan programs. a. Assistance to Nonprofits Background: Nonprofits have faced significant challenges because of the Pandemic, including increased demand for services and changing operational needs.22 Prior to the pandemic, the mature, U.S. nonprofit reported that it had six months of cash on hand.-u This varied by sector, however, with some sectors like disaster relief organizations reporting a median of 17 months cash on hand, and others, like mental health and crisis intervention organizations reporting only three manths.223 Evidence suggests that the pandemic has damaged the financial health of nonprofits, with small nonprofits, which tend to rely mom heavily on donations than large nonprofits, reporting relatively larger declines in donations — 42 percent versus 29 percent, respectively,2z Among nonprofits that collect fees for servlose, the median revenue amount collected from such fees fell by 30 percent from 2019 to 2020, with arts organization experimemi; a 50 percent decline. -an Nonprofits also experienced significant job losses. While employment in the nonprofit sector has recovered from its low point in 2020, as of November 2021, ev SM. e.g. Federal aamme. ends a5m Frmmism, ImpacU a COVI0.re on Nonprofits in the We. weed Sete, Reny 2020). hops:// naves.fibsderyromer-ot-devalopme affideal impeee- f-ced. sea pbuenthmpy ead (Own-r9: Mae -mug on, rear afgh in,, c ndid and roe Ceuta fen nisaner PMlanlhmpy. (2021), hap JI—iasuelab.., 11da29/3eache'df aft. •u EWebmh T. Bois of M., Nonprofit Trends end Impetus 2021, Urban homute fomuben, xoat). M(peJAlveretban.ormruses 411/mmtion/ "and. a*nde-one-/myamsaeL/Wm/f,11_ prat. surd. the sector remained 485,000 jobs below its pm -pandemic hool.226 In addition, some nonprofits may have experienced declines in volunteer staffing during the pancharm2a> At the same time, nonprofits provide a host of services for their communities, including helping Americans weather the multitude of challenges presented by the pandemic. The ARPA and the interim final role recognized this dichotomy —nonprofits as entities that have themselves bean negatively impacted by the pandemic and as entities that provide services that respond to the public health and negative economic impacts of the pandemic on households and others —by creating two roles for nonprofits. First, under Sections 602(c)(1)(A) and 603(c)(1)(A), recipients may "respond to the public health emergency or its negative economic impacts;' by, among other activities. providing "assistance to .. nonpofts." The interim final role defined assistance to nonprofits to include "Isere, grants, I.kind assistance, tecbniml assistance or other services, that materials to the negative economic impacts of the COVID-10 public health emergency," and "nonprofit" to mean a tax-exempt organization order Section 501(c)(3) of the U.S. Internal Revenue Codmam Second, as discussed above, ARPA and the interim final rule provided that nonprofit organizations may also receive funds as subrecipients of a recipient government (i.e., a government that received SLPRF funds); subrecipients carry out an eligible use of SLFRF funds on behalf of a recipient government (e.g., a recipient government that would lIke to provide food assistance to maternal households may grant funds to a nonprofit organization to carry out that eligible use). Recipients generally have wide latitude to award funds to many types of organizations. including nonprofit or far -profit organizations, as subrecipients to carry out eligible uses of funds on their behalf. For further Fmention on distinguishing between beneficiaries and subrecipients, as well as the impacts of the distinction on reporting and other requirements, see section Transfers of Funds and section Distinguishing Suboveipientes versus Beneficiaries under the Public Health maChu Wa NaWhoue. OJVID-Irt BS ur. n. NMWBM 2021: Nonprofits add join 5.r00 ioho in November, Carter fro civil Settee StudiosM Johns HuuYlns U% demairy (DPonm b10. 2021). hop Vl a /hu.edo/novembee,sa1 isbJ -Ede deal T. Byte al J. supra nmo 224 an p. 3a. '-5 M3 "our.-. and Negative Economic Impacts eligible use surgery.za Reorganization and Cross -References: Under the interim final rule, assistance to disproportionately impacted communities was a separate, stand- alone category. The final rule reorganizes the disproportionate impact analysis within the sections Assistance to Households. Assistance to Small B mirm a, and Assistance to Nonprofits to better articulate how recipients can serve disproportionately impacted beneficiaries in each of those categories. As detailed above in the Public Health subsection, in response to public comments describing uncertainty on which eligible use category should be used to assess different potential uses of funds. Treasury has oncalegorized some uses of funds in the final rule to provide greater clarity. For discussion of assistance to nonprofits to implement COVRI-19 mitigation and prevention strategies, see section COVID-19 Mitigation and Prevention in Public Health. Recipients providing assistance via nonprofits involving capital expenditures (i.e.. expenditures on property, facilities, or equipment) should also of. the auction Capital Expenditures in General Provisions: Other, which describes eligibility standards for these expenditures. Recipients providing lances in the farm of liana should ens, the section Treatment of Loans. Public Comment: Eligible Assfemias to Impooded and Disproportionately Impacted Nanpmfits: A few commenters asked Treasury to be more explicit fin the final rule that recipients may use funds to provide relief directly to nonprofit organizations and to explain how nonprofits might qualify themselves for assistance and what expenses SLFRF funds may be used to cover.230 Connotations requested that Treasury note that the pandemic is •sons ARPflals nessondo "Transfer AuWmay'Y nt a Fro'pimRmay messm Nnde to I pdnre wnpmfit anranieatrmt sort, as them ddmJ In Pon,"h (11) of moron air mien McKinneyVerso homeless As'ocance Acr (42 U.5 G 1136017). see 602 a e03(c)13) ofthe soda) Saomy A., Sea eecoi. Tuned- of Punds rm ead;annel mFerso.mn on an. "oferuuo. Ind sting other (rams of nonpmma. IM may rewraeo-wmn. •swop. oar sated spaciously In 0a Interim Mtm .I Into, the Deparent does me requhe or have e prekrtnw as to the payment mince Jar reopiems Ihot emumn heads m mhmdpten a le, sdvmm p. umme, mrmburemem James, etc). Ultlowrely, rociprenrs must crmply with the shiest, ass "W ran nms and any other applicable I.- orreIn, .maaa art rtsl� aiaisfmlM xaam of Wdr subrechumme or hevelcim ac. 4380 Federal Register/Val. 87, No. IB/Thureday, January 27, 2022/Rules and Regulations leading to a changing financial Imdscape for nonprofits. Treasury Response: Eligible Assistance to Impacted and Disproportionately Impacted Nonprofits: The interim final rele provided for, and the final .1. maintains, the ability for recipients to provide direct assistance to nonprofits that experienced public health or negative economic impacts of the pandemic. Specifically, recipients may provide direct assistance to nonprofits if the nonprofit has experienced a public health or negative economic impact as a result of the pandemic. For example, if a nonprofit organization experienced impacts like decreased revenues or increased costs (e.g., through reduced contributions nor uncompensated increases to service need), and a recipient provides funds to address that impact, then it is providing direct assistance to the nonprofit as a beneficiary under Subsection (c)(1) of Sections 602 and 603. Direct assistance may take the form of loans, grants, in - kind assistance, technical assistance, or other services that respond to the negative economic impacts of the COVID-19 public health emergency. A recipient may identify a negative economic impact experienced by nonprofit, or class of nonprofits, and design and implement a response to that negative economic impact, see auction Standards: Designating a Negative Economic Impact. The final rule provides a non -exhaustive list of enumerated eligible uses for assistance to nonprofits that are impacted or disproportionately impacted by the pandemic. A recipient may also identify a class of nonprofits that have been disproportionately impacted W the public health emergency and design and implement a program that responds to the source of that disproportionate Import. For example, a recipprenl may determine that nonprofits 0Rsring after - school programs within its jurisdiction were dispruportionstely impacted by the pandemic due to the previous m- persan, indoors nature of the work and the remprofits' ealiance on fees received for services (e.g., attendance fees). The recipient might than design an intervention to assist those nonprofits in adapting their programming (e.g., to outdoor or online venues), their revenue structure (e.g., adapting the fee for service structure or developing expertise in digital donation campaigns), or both. Additional information about this framework is included in General Provisions: Structure and Standards. In order to ease administrative burden, the final rule presumes that nonprofits aperntmi, in Q(Ts, operated by Tribal governments or on Tribal Lands, or painting in the U.S. territories were disproportionately impacted by the pandemic. To summarize, a recipient may determine that certain nonprofits were impacted by the pandemic or ware disproportionately impacted by the pandemic and provide map ... ive services. Public Comment: Beneficiaries and Subrecipients: As noted elsewhere in this final role, Treasury received multiple comments expressing uncertainty on how to categorize a particular activity in the eligible use categories. For instance, mine commenters requested that recipients be able to use SLFRF foods for certain expenses incurred by nonprofits (e.g., unemployment charges) as a response to a public health or negative economic impact to that nonprofit: others asked if nonprofits providing certain services (e.g., social services) made them eligible fin direct assistance. Commenters also requested that Treasury acknowledge that engagement directly with nonprofit organizations in low-income communities and communities of color may allow the recipient to better staves economic herons in these areas. Treasury Response: Beneficiaries and Subrecipients: Treasury recognizes that ninny nunprefrl> play important calm in their communities, and some may have experienced public health or negative economic impacts during the pandemic. As such, trader the interim final rate and the final rule, nonprofits may he impacted by the pandemic and receive assistance as a beneficiary, as described above, and/or he a ind reciplent providing services an behalf of a re©pfent. ar Specifically, the interim final rule also allowed for, and the final rule maintains, the ability for the recipient to transfer, e.g.. via grant or contract, funds to nmperfit entities to carry out an eligible use on behalf of the recipient. Treasury note. that recipients may award SLFRF funds to many different types of organizations to carry out eligible uses of funds and serve beneficiaries on behalf of a recipient government (v.g., assisting in a vaccination campaign, operating a job training program, developing affordable housing). When a recipient provides funds to an organization to carry out eligible uses of fund. and serve —No., tbie rwPonw b mown to clarify no diff—bare...... oKn eebaneficierixe and o.proRu re n submcipsen It is no mnt to limit do, typos drnlnionebipe flat a emipient may mono into wish a nm,prom ea pnmmM uM., the 1J.H.Guidenre. beneficiaries, the organization becomes a suhrscip)ent. In this ones, a nonprofit need not have experienced a negative economic impact in order to serve as a submcipionl. In the context of SLFRF, nenpmfits of all types may be subrecipients. Treasury is not restricting the types of nenpmfits that can operate as su recipients, rather allowing recipients to decide what form best meets the needs of their community. Therefore, a "nonprofit" that is acting as subrecipient could include, but is not limited to, a nonprofit as that term is defined in paragraph (17) of section 401 of the McKinney-Vento Homeless A iaistance.rar See auction Distinguishing Subrecipients versus Beneficiaries for further information. Additional guidance on determining subrecipient status may be found in the Uniform Guidance sss Recipients may transfer funds to subreeipients in several way., including advance payments and on a reimbursement basis. Ultimately, recipients most comply with the eligible use requirements and any other applicable laws or requirements and are responsible for the actions of their subrecipients or beneficiaries. As part of accepting the Award Terms .ad Conditions for SLFRF, each recipient agreed to maintain a con0icl- of-interest policy consistent with 2 CFR 200.3Isla) that is applicable to all activities funded with the SLFRF award. Pursuant to this requirement, decisions concerning SLFRF funds must be free of undisclosed personal or organizational conflicts of interest, both in fact and in appearance. Recipients may avoid conflicts of interest in providing assistance to nonprofits or making subrecipient awards by. inter mile, making aid available to nonprofits on generally applicable terms or utilizing a competitive grant process, respectively. A recipient may rat use central over SIM funds for their own private gain. Furthermore, no employee, officer, ar agent may participate in the selection, award, or administration of a contract supported by a federal award if he ar she has a real or apparent conflict of interest. Public Comment Definition of Nonprofit Treasury also received ameand requests to expand the definition of nonprofits so that other tax-exempt entities(eg., 501(c)(71s, 501(c)(9)s, 501(c)(1979, nonprofit. with "historical .., s"sacken aM(c)(a) and a0a(cNal or We SocW Seoudty Ad See olio Sinn.. sot or it. Wt inreyVenla H... I— Aminonw An Ia2 Ita e. Il saap8, which defines. "pdvne n oproal o,geniution." Federal Register/Vol. 87, No. 18/Thursday, January 27, 2022/Rules and Regulations 4381 significance") could be eligible far direct Assistance As benefhcteries. Treasury Response: llefi ition of Nonprofit: The final rule expands the definition of nonprofits to mean 501(c)(3) organizations and 501(c)(19) organizations.=`^ The 501(c)(3) classification includes a wide range of organizations with varying charitable or public service -oriented goals (e.g., housing, food assistance, job training). As discussed above, these nonprofit organizations often experienced hardship due to increased needs for services combined with decreased donations end other sources of funding. In response to comments, Treasury has expanded the definition of nonprofit to include 501(c)(19) organizations, which includes veterans' organizations, to previde recipients more Flexibility and in alignment with the definition of nonprofit adopted by the CARES Act. wherein 501(c)(3)s and 501(c)(19b, were eligible far eAshrtan e.iax Public Comment: Reporting Requirements: One commenter asked Treasury to clarify if nonprofits that receive dhact assistance he beneficiaries are required to comply with guidelines and reporting requirements. Treasury Response: Reporting Requirements: Nonprofits that receive direct Assistance as beneficiaries are not subrecipients under SLFRF and are therefore not required to comply with SLFRF reporting requirements. However, the recipient must comply with SLFRF reporting requirements, which would require reporting obligations and expenditures for assistance to nonprofits. The recipient may also choose to establish other farms of reporting or accountability as a part of the recipient's direct assistance program. A nonprofit entity that receives a transfer from a recipient is a subrecipiom. Per the Uniform Guidance, subrecipients must adhere to the same requirements as recipients. Therefore, a nonprofit subrecipienl may only receive funds to carry out an eligible use of SURF funds and ..At comply with any reporting and compliance requirements. Note that recipients are ultimately responsible for reporting information to Treasury and ..at collect any necessary aniarasts.fh iione. aaaTmcury mvldertd ezpendo, do. donate. of nonprofit to Include sencl(6) oxidation, as Cora later did w the (omruvine aesponae end Consolidated Appm,natiom Act of 2021, hot ultivian y dxlded ra adein as couinel CARES Act definition. To the sound hapicted by the pandomh:, stories) organicatkea mqM eligible m n can. hunch to su,sm eagmk was that align with th,ir overall Purpose eg, ancient promotion m am of en,mpece ry. information from their subreripients to complete required reporting. d. Aid to Impacted Industries The interim final nde.]].ad for "aid to tourism, travel, and hospitality, and other impacted industrfes" that responds to the negative economic impacts of the COVIO-19 public health emergency. In designating other impacted industries. Treasury specified that recipients should consider the "extent of the economic impact as compared to tourism, travel, and hospitality" and "whether impacts were due to the COVID-19 pandemic, as opposed to longer -term economic or industrial trends unrelated to the pandemic."236 Treasury identified declines in employment and revenue as possible metrics to compare the economic impact on a particular industry relative to the tourism, travel, and hospitality industries. Treasury further provided that aid should be limited to businesses, attractions, business districts, and Tribal development districts 237 that were operating prior to the pandemic and affected by required closures and other efforts to contain the pandemic. Examples of eligible aid include assistance to implement COVID-19 mitigation and infection prevention measures, aid to support is reopening of businesses In these industries, es well As aid for a planned expansion or upgrade of tourism, travel, and hospitality facilities delayed due to the pandemic. The interim final rule and Treasury's subsequent Compliance and Reporting Guidance also required governments to publicly report assistance provided to prf to -Factor businesses under this eligible use and maintain records of their assessments to facilitate transparency end accountability. Reorganization and Cross -References: A. detailed above, Treasury has on categorized some uses of funds in the final rule to provide greater clarity. In the interim final rate, aid to impacted industries to implement COVI0.19 mitigation and pprevention strategies was calegmiznd ondar Aid to Impacted Industries; the final rule addresses these items under the section COVID-19 Mitigation and Prevention in Public Health. Recipients should also be Aware of the difference between beneficiaries sa"Ceravoims state anal Lain Fiscal Recown, Funds, ea FR at 2619s. sal For a duration of"TdI al dealcpra m districts." doe was FAQ se su1Ra fichusiny: famnacirm stare and Local Fiscal Runway Funds, la.,,1/Aorrichmdal Questions, ar f ie i'i./.zr: 5LF7WwAQ.pdir of assistance and submcipients when working with impacted industries; for Further information, see section Distinguishing Subrecipients versus Beneficiaries. Designating an Impacted Industry Public Comment: Many commentere requested greater clarity on how to designate "other impacted industries" within their jurisdiction. Commenters requested greater specificity as to the metrics used to measure impact, with some suggesting metrics such as the change in the size of an industry's workforce due to the pandemic, as well se consideration of whether and why employees are choosing to return he work at slower rates in certain industries. One commenter asked if this meant nearly every industry was "disproportionately irepaced." Some commenters encourage Treasury to faces on industries ..at negatively impacted by the pandemic, including disallowing across-the-board business subsidies to businesses that were not negatively impacted by the pandemic and saw revenue in profit growth. Other commenters asked for flexibility for recipients to determine impacted industries based on their local knowledge of the economic landscape. Treasury Response: The final rule maintains the interim final mists approach of allowing recipients to designate impacted industries outside the travel, tourism, and hospitality industries, and, in response to comments, providesrater clarity as to how rempi¢Ms may designate each impacted industries. Sections 602(c)(1)(A) end 6o3(c)(1)(A) recognize that the tourism, travel, and hospitality industries are severely negatively impacted by the pandemic. Under the Real rule, recipients may provide eligible aid (described in further detail herein) to the tourism, travel, and hospitality industries. Treasury considers Tribal development districts, which Are commercial centers for Tribal hospitality, gaming, tourism, and entertainment and ran include Tribal enterprises, as part of the tourism, travel, and hospitality industries that have been severely hit by the pandemic. Therefore. Treasury reaffirms that Tribal development districts are considered impacted industries and recipients may provide eligible aid to them. To identify other industries remparably impacted to the tourism, travel, and hospitality industries, recipients should undertake a two-step process: Identifying an industry and determining whether that industry is comparably impacted. 4382 Federal Register/Vol. 87, No. 18/Thursday, January 27, 2022/Rules and Regulations First, recipients should identify an Industry to be assessed. in identifying this industry, the final role provides recipients the flexibility to define its substantive or geographic scope.sss Recipients may identify a broad sector that encompasses a number of sub- industries, or they may identify a specific sub -industry to be assessed. For example, a recipient may identify "personal care services" as an industry, or they may identify a more specific category within the "personal rare services" industry (e.g., barber shops) as an industry. In defining the industry, Treasury encourages recipients to define narrow and discrete industries eligible for aid. Recipients are not required to follow, but may consider following, industry clagsifraaliang under the North American Industry Classification System (NAICS). Treasury notes that the larger and more diverse the sector, the more difficult it may be to demonstrate that the larger and lesa specific sector is .,en „olv:mnennA in the romn wnv given the scale and diversity of businesses within it. Stale or territory recipients in define a constituent industry wi stale Asia may infantry a particular inaustry in a certain region of the state that was negatively impacted by the pandemic, even if the same industry in the at of the state did not see a meaningful negative economic Impact from the pandemic. State recipients oversee large and diverse industries, sometimes with differences in economic activity between geographic regions. Allowing greater geographic precision allows recipients to target aid to those that need it most, ensuring that state averaging do not conceal hard-hit areas in their state. Second, to determine whether the industry is "impacted," recipients should compare the negative economic impacts of the public health emergency on the identified industry to the impacts observed on the must, tourism, and hospitality Indust.`_. 1. Simplified teat. An industry is presumed to be impacted lithe industry experienced employment loss of at least 8 pecent. Specifically, a recipient should compare the percent change in the we Orrcean industry is &Qmted as captured, aid should be generally broadly avelleble to businesses in the industry that qualify.Recipients should documvm how than defieed*a scope of Hour answer and b they dmmminnd Net the hu aan, was impacted. Far.Ye. and weanowa, this includes docnmantbra tMr IuaNcnllan hu defining a mannered industry with greeter ,mr.pme precision Nan were ar tmrimry.wida. number of employees of the recipient's identified industry and the national Leisure & Hospitality Sector in the three months before the pandemic's most severe impacts began (a straight three- month average of seasonally -adjusted employment date from December 2019, January 2020, and Febnrary 2020) with the latest data as of the final tole release (a straight three-month average of seasonally -adjusted employment data from September 2021, October 2021, and November 2021J.sse The nall onal Leisure as Hospitality sector largely represents the national travel, tourism, and hospitality industries enumerated in the statute. According to the Bureau of Labor Statistics, employment has fallen by approximately 8 percent for the national Leisure 8 Hospitality, sector when comparing the most recent three- month period available as of the date of adoption of the final rule to the three- month pedod immediately before the public health emergency. Therefore, if the identified industry has suffered an smaller on may use data available for a mit of government for this an (e.g., a county may use data Ship in which it I. learned; a use data for the county, if , or state to which it is located) a particular industry is an 2. If simplified test is not met. if an industry does not satisfy the test above or data are unavailable, the recipient a. The recipient can show that the totality of relevant major economic indicators demonstrate that the industry is experiencing comparable or worse economic impacts as the national tourism, travel, and hospitality industries at the time of [ha publication of the final rule, soil that the impacts were generally due to the COVID-19 output, GDP, net profits, employment levels, and projected time to restore employment back to pre -pandemic levels. Recipients may rely on available economic data, government research erathereof Lnuore k Hospitality intensities employment data can M found on the U.S. aumeu of labor Statistics —bairn'. US aumau of reMr Stmistlrs. Leisure and Hospitality. hosed/ —his .gashourlush.gle ow Ilan Zted DammWr],la ri publications, research from academic sources, and other quantitative sources for this determination. . If quantitative data is unavailable, the recipient can rely on qualitative date to show that the industry is experiencing comparable or wores economic impacts as the national tourism, travel, and hospitality industries, and the impacts were generally due to the COVI0.19 public health emergency. Recipients may rely on sesames like community interviews, surveys, and research from relevant state and local government agencies. As the public health emergency and economic recovery evolves, recipients should assess how industry impacts shift over time. Impacted industries may recover in a short period of time and no longer face a negative economic impact; in those circumstances, the recipient should ensure that the extent and length of aid is reasonably proportional to the negative economic impact that is experienced. as detailed further below and in section General Provisions: Structure and Standards. Recipients mayy add to their list of impacted indmtrfes by showing that the negative economic impacts to the industry at the time often designation are comparable to the negative economic impacts to the national tourism, travel, and hospitality sectors es of the date of the final role adoption, as detailed herein. Eligible Aid Public Comment: Commenters asked far further idea ficatiom as to the definition of eligible aid to an impacted industry, with many requesting that a broad range of aid be eligible. Examples of aid that recipients asked to be considered eligible include aid to businesses to cover CDVID-19 mitigation costs and planned renovations or improvements to tourism, travel, and hospitality facilities, as well as marketing and in kindincentives to attract visitors. Commenters also asked about the eligibility of aid to broadly cover losses incurred by facilities such as convention centers and hotels data to the pandemic's economic impact. Commenters also asked for further clarification about the requirements related to private -sector reporting. Further, some communes asked for clarification about eligible aid to impacted industries owned and operated Tribal governments, including or Tribal construction projects that have been delayed due to the pandemic's economic impacts, and for deference to Tribal determinations of negative economic impacts. Federal Register/Val. 87, No. 18/Thursday, January 27, 2022/Rules and Regulations 4383 Treasury Response: In response to conflicts of interest.240 Treasury Loans in Program Administration commenters' requests for clarification encourages reciptenls to design aid Provisions. on eligible aid, the final rule requires that aid to impacted industries, including to Tribal development districts, be designed to address the harm experienced by the impacted industry. First, recipients should identify a negative economic impact, i.e., an economic harm, that is experienced by businesses in the impacted industry. Second, recipients should select a response that is designed to address the identified economic harm resulting from or exacerbated by the public health emergency. Responses must also be related and reasonably proportional to the extent and type of form experienced; uses that fission relefton or ere grossly disproportionate to the type or extent of harm experienced would no/ be eligible uses. Recipients should consider the further discussion ofthis standard provided in the sections Standards: Designating a Public Health Import and Standards: Designating a Negative Economic Impact. These responses may take the form of direct spending by recipients to promote an industry or support for businesses within an "impacted" industry that experienced a negative economic impact (e.g., through a grant program). Examples of eligible responses include: • Aid to mitigate financial hardship due to declines he revenue or profits by supporting payroll costs and compensation of returning employees for lust pay and benefits during the COVID-19 pandemic, es well as support of operations and maintenance of existing equipment and facilities, such as rant leases, and utilities; • Aid for technical assistance, counseling, and other services to assist with business planning needs; and • Aid to implement GOVID-19 mitigation and infection prevention measures, such as vaccination or testing programs, is broadly eligible for many types of entities, including travel, tourism, hospitality, and other impacted industries. Recipients providing aid to impacted industries for OOVID-19 public health measures should review the section Assistance to Businesses to Implement COVID-19 Strategies in Public Health, which describes types of eligible uses of funds in this category. To address the identified harms. meponces (e.g., aid through a grant program) should be generally broadly available to all businesses within the impacted industry to avoid the risk of self -dealing, preferea0al treatment, and programs such that funds are first used for operational expenses that are generally recognized as ordinary and necessary for the recipient's operation, such as payroll, before being used on other types of costs. As noted In the section General Standards: Structure and Standards, uses of funds that do not respond to the negative economic impacts of the pandemic, such as excessive compensation to employees, final rule's requirement that aid may only be considered responsive to the negative economic impacts of the pandemic if it supports businesses, attractions, sort Tribal development districts operating prior to the panden and affected by required closures and other efforts to contain the pandemic. 4. General Provisions: Other As noted above, the final rule consolidates into a General Provisions ction several types of uses of funds; in the interim final rate, the eligibility of these uses of funds was discussed within specific categories of eligible uses for public health and negative economic impacts. Treasury anticipates that this re organization will enhance recipient clarity in assessing eligible uses of funds, Thane General Provisions appply amass all uses of funds under public health and negative economic impacts. Specifically, this section considers eligible uses for. • Pu6lic Sector Capecityand Workforce, which includes several separate and non -mutually exclusive categories articulated in the interim final note: public health and safety staff, __....r .................."..........", rehiring the interim final ride's monument that underthis impacted industries, and its connection to negative economic impacts of the public health emergency. Recipients also should maintain records to support their assessment of how businesses receiving assistance were affected by the negative economic impacts of the public health emergency and how the aid provided msponds to these impacts. Recipients providing aid mimes industries kr capital expenditures (i.e., expenditures on property, faclilies, or equipment), including Tribal governments providing aid to Tribal development districts, should also review the section Capital Expenditures in General Provisions: Other, which describes eligibility standards that are applicable to these expenditures, depending on the type of aid. goaipTents providing assistance in the form Yonne should review the section Treatment of coop• pat nf.—Mins u. Awud Teems and smi s Cis onnieRns inaren..v. may nun one in saw. men cry bvn federal efficacy of public health or economic relief ferogrems; and administrative expenses caused or exacerbated by the pandemic. Treasury recognizes that these are closely related and frequently overlapping categories. The final rule treats them as a single purpose, supporting public sector capacity, and provides coordinated guidance on the standards and presumptions that apply to them. • Capital Expenditures, which was addressed only under Public Health in the interim final role. The final .In moves this expense to General Provisions and ro pvides more clarity on the eligibility of capital expenditures across all aspects ofthe public health and negative economic impacts eligible use category. • Matingufahmil Snbrecip'cats versus Beneficiaries, which describes the differences between these two categories. Recipient governments responding to the public health and negative economic impacts of the pandemic may provide assistance to beneficiaries or execute an eligible use of funds through a subrecipien4 some types of entities (e.g., nonprofits) could fit into either category depending on the specific purpose of the use of funds. • Uses Outside the Scope of ulds Category, which addresses uses of funds that are ineligible or generally ineligible under this eligible use category in the interim final rule. These uses of funds remain ineligible under the final rule, but Tressury has or categorized whew they are addressed, as described below. 4384 Federal Register/Vol, 87, No. 18/Thursday, January 27, 2022/Rules and Regulations This section also addresses enumerated correspondence; recipients need not response, given the disproportionate eligible uses proposed by commenters track staff hours. The interim final rule impacts of the pandemic in those that Treasury has not incorpareted into also posed a question on how long communities. Similarly, Tribal the final rule. recipients should he able to use funds communities recommended that their Recipients should also note that the for staff responding to COVID-19 and public health staff be presumed eligible Office of Management and Budget's what other measures or presumptions due to the disproportionate impact of (OMB) Uniform Administrative might Treasury consider to assess the the pandemic on their communities. Requirements, Cost Principles, and extent to which public sector staff am Some commenters proposed that they he Audit Requirements for Federal Awards engaged in COVID-19 response in an able to use the administrative (commonly called the "Uniform easily administrable manner. convenience for staff outside of public Guidance") generally applies to SLFRF. Treasury also provided further health and safety that are responding to a. Public Sector Capacity and Workforce guidance on the types of employeee Covered byy this category of eligible use, COVI0.19 (i.e., to be able to pay the full payroll and covered benefits for any Public Safely, Public Health, and spseifrcally: "Public safety employees staff"primarily dedicated" to OOVID- Human Services Staff would include police officers (including 19 response). Summary offedurim Final Rule: state police ofcere), sheriffs and de uty firefighters, Treasury Response: In the final rule, Treasury is maintaining the approach in Under the interim final rule, funds may be used for payroll and covered sheriffs, emergency medical responders, correctional and detention the interim final rule, including benefits 241 for public safety, public officers, end those who directly support elaborations issued in further guidance, health, health cam, human services, and such employees such as dispatchers end but providing additional clarification on Similar employeee242 of a recipient supervisory personnel. Public health its application, including methods to government, for the portion of the employees 243 would include employees apply the approach to minimize employee's time that is spent involved in providing medical and other administrative burden. Treasury notes responding to COVID 19. Far health services to patients and that recipients may assess the extent to administrative mnvenimce, the supervisory personnel, including which staff em its to responding recipient may consider public health medical staff assigned to schools, to COVI0.19 through a variety of and safety employees to be entirely devoted to responding to COVID -19, prisons, and other such institutions, and other support services essential for means, including establishing presumptions or assessing public health end therefore their full payroll and patient care berg., laboratory technicians, and safety staff at the division in covered benefits eligible to he covered, if the employee, or his or her operating medical examiner. or morgue staff) as well as employees of public health operating unit level. For example. a recipient could consider the amount of unit or division, is "primarily departments directly engaged in matters time spent by employees in its public dedicated" to responding to COVI0.19, related to public health and related health department's epidemiology meaning that more then half of the employee, unit, or division a time is supervisory premium]. Human services staff include employees providing or division in responding to COVI0.19 and, if a majority of its employees are dedicated to responding to COV10.19. administering social services; public dedicated to responding to COVIo-19, Recipients may consider other presumptions for assessing the extent to benefits; child welfare services; and child, elder, or family care, as well as dmandine that the ..it. division is primarily dedicated to responding to which an employee, division, or others." COV10.19. Treasury also clarifies that operating unit is responding to COVID- Public Comment: Measuring note recipients may use reasonable estimates 19. Recipients most periodically massees their determination and Spent on COWD-19 Response: Treasury received public comments on several to establish administrable presumptions; for example, a recipient maintain records to support their components of this eligible use category. could estimate, based on discussions assessment, such as payroll records, Many comments. argued [hat it poses with staff, the general share of time that attestations from supervisors or staff, or an administrative burden to identify the employees in a specific role or type of regular work product or indent to which staff am responding to Position spend on COVI0.19 related To turned, ifee ampioyaes universal salaries COVM-19 and to maintain records to support that assessment, largely citing tasks and apply that share of time to all employees in that position. ]tecipients be -eligible in Ma.mir inside, recipients may e®I weemlit ado cwared feanafim as met blo p r igi de.her Far funds, types administrative harden in assessing ral are generally required to able to support uses of SLFRF funds as coe^edIFRFits o counted benefits lecmde coin of on typo of leave costssurpriseof on (.annim.ia ran.immenthe resrlommadmisev recommended revisionsto eligible, including, g rig,inthis instance, assissmence tit national, dur ay. bamrvunmLrth, life d jury vish emptoy® core thank), 6fe,dmidmrbannehamum sethe administrative convenience that the hall andcoveredff"prisfor public of assessment sit that ppublic health and safety flofrecords health I e, aorpp, addres ymmrbmefit pima health and safetystaffto health staffers primazily dedicated to responding to COVID-19, As noted Itiaml shelled eLeemtnmmmpeuamb nderal MCA) and Pmaml mmmam ContributionsActeasy COV dedicated" to responding to COVII!-19 he paid with SLFRF funds. Same have,recipientsmay use reasonable and mCai teas (whim mcmate soars r house e ere mveg. As idea mnnm m As commenters recomth proafety estimates to implement this provision. s on shoulddevelop Deposes clop Fu on Can t frwoemtim moosmkaanmipesio u.., that forest. mpu^d^^ MITaing that all public heahhandsafety staff are and s primarily dedicated to COVE-19 hecipbay how the developed these estimates and Y P d thesmaintain timat auibue-roe are loan of trader sue a u.. ear io era wbme w a y ages m .,,.r response. while others proposed that need not track staff hours. Treasury notes that records retained can include a moat. mledea are m el s ig�e,ns public health and safely workers who payroll records (ergo, the number and fi rule may dos umat f^nr ideaaa thatthed )aatlm a,ml cola adapted f .. tuidaunc itanea primarily serve QQe or low- and areas be presumed to type of star to various positions),srstaff l-le" do tceuvoorempmyaat:ho..a.ae.vbyormci gmh apedficemeener.ter rypdscorempapeas cinch be primarily dine tad he primarily dedicated eltestettorha from supervisors or star P (ergn self-aOVIDHonofshareoftime gmamtm cunep:aabeanh ofreand spentonCOVresponor regular work pregutlee.me m ampablmhea¢h into one magory talk Teeivm.No presumption bit.ovan holes this retain, cour, mpuss ban pub)c Mekheohealth ore mnpl aM1 am product or correspondence (erg., daalbaalth—ubnc heath umployoea elro dencouchearound vaned fin the 6a the yuepavea mums neeltn cee emplayeea. liibb)cneak)employvea of this eligible use caregnry. other dOClnnBnta, and O[h¢r ¢1¢CiranlC documents, Federal Register/Vol. 87, No. 18/Thursday, January 27, 2022/Rules and Regulations 4385 records). Treasury anticipates that these types of records are generally retained in many government settings; recipients should also consult the Award Terms and Conditions for SURF funds for requirements on length of record retention. For example, a recipient could establish a reasonable presumption about the share of time that an employee, division, or operating unit is responding to COVID-19 and simply retain those employees' ale ironic records as a record to support theirassessment. Public Comment: Public Health and Safety Staff Primarily Wooled to COVIO-19 Response: Some commenters recommended expanding the administrative convenience for public health and safety staffprimarily dedicated to COVID-19 response to further types of staff, to all public health and safety staff, orto public health and safely staff serving undamerved areas. Treasury Response: The interim final rule recognized that COVID-19 response continues to receive snhstantial staff administrative convenience to make it relatively simpler to identify the eligibilityof the types of workers — public health and assay workers— genemlly most involved in COVID-19 res once. At the same time, many In blic health and safety workers perform roles unrelated to COVID-19; coverage of all roles would be overbroad compared to the workers responding to COVII -19 in actuality. For this reason, the final rule maintains the interim final role's appproach to permitting SURFfunds to 6e need for public health and safety staff primarily dedicated to responding to COVID-19. Finally, to the extent that a greater proportion of public health end safely staff time is needed to respond to COVID-19 in disproportionately impaled communities, the "primarily dedicated" approach mergence this increased need. Public Comment: Eligible Types of COVID-19 Response: Some public commenters also sought further clarifrcatfon on how w identify eligible types of "COVID-l9 response." For example, commenters requested clarification on delineating COVID-19 reeponse from general public health response and defining COVID-19 the public health or negative economic impacts of the pandemic, apart from the typical pre -pandemic job duties or workload of an employee in a comparable role, ifoue existed. For example, responding to COVID-19 for a public safety worker may entail working in an emergency operations center to coordinate pandemic -related supply distribution, responding to an increased volume of 91 t calls, or implementing COVID-19 prevention and mitigation protocols in a carescal eettin . Public Comment: Eligible Employees: Some commenters requested clarification on the types of eligible employees or expansion of eligible employees to include additional types of staff, including in behavioral health; administrative, management. or financial management positions; social services; morgue staff; and nonprofit staff supporting projects to undertake eliggible uses of funds under SLPRF. Treoamy Response: Treasury provided further guidance on eligible types of employees following the interim final rule, which e�ryonsly included social services and morgue staff, and me-pi retea that guidance into the final rule. In addition, Treasury ,s rlarifvino tbm ..nhl:. I,-1rh wall as costs of a Finally, Treasury is clarifying that indirect costs for administrative, management, and financial management personnel to support public health and safety staff responding to COVID-19 are not permissible under this provision, given the relatively greater challenge of differentiating the marginal increase in staff time and workload due to pandemic response for indirect versus direct coats. Publi Comment Time Period: Finally, some commenters made recommendations on the time period during which this eligible use should be available. Some commentera recommended eligibility begin before March 3, 2021, the period when Treasury's interim final rule permitted recipients to begin to incur costs using SLPRF funds; for discussion of this topic, see section Timeline for Use of SURF Funds in Program Administration Provisions. As noted above, Treasury also posed a question in the interim final rule asking for how long Treasury should maintain the administrative convenience that SLFRF funds maybe used for the full paymll and covered benefits of public health and safety staff primarily dedicated to COVID 19 response. Several commenters recommended that Treasury maintain this approach throughout the program or through December 31, 2024. Other commenters requested clarification on whether eligibility for this use of Funds was lied to the length of the state of emergency or whether a jurisdiction has an active slate of emewmicy. Treasury Response: In the final rule, Treasury is clarifying that recipients will be permitted to fund the Pohl payroll and covered benefits of public health and safety staff primarily dedicated to COVID-19 response throughout the period of performance for the SURF program, though recipients should periodically reassess their determination of primarily dedicated staff, including as the public health emergency and response evolves. Government Employment and Rehiring Public Sector Staff The interim final rule permitted use of funds for costs associated with rehiring stale, local, and Tribal government staff in order to bolster the government's ahi lily to effectively administer services. Specifically, recipients may pay for payroll, covered benefits, and other costs associated with the recipient increasing the number of its employees up to the pre -pandemic heselioe, or the number of employees that the recipient government employed on January 27, 2020. Public Command; Many commenters requested greater flexibility and additional clarification on the prevision's requirements, including the pre -pandemic baseline and rehiring process. Some commenters requested that the final rule allow for hiring above the pre -pandemic baseline given historic undminvesbnent in the public sector workforce. Commenters suggested a number of adjustments to the pre - pandemic baseline, including adjusting based on population or revenue growth, while some recommended allowing recipients to set their own hiring levels. Others requested clarification on the definition of the baseline and the re- hiring process, including whether the pre -pandemic baseline referred to budgeted or filled positions and whether new hires had to fill the same roles as the previous hires. Commenters also asked whether recipients need to show if the reduction in number of employees was due to the pandemic in order to qualify for funding and requested that workers dedicated to 4386 Federal Register/Vol. 87, No. 3g/Thursday, January 27, 2022/Rules and Regulations GOV11 -19 response be exempted from the calculation of number of employees. Many commenters also requested an expanded act oteligible uses beyond centering their workforce up to the pre - pandemic baseline. Commenters requested that funding be able to be used to avoid layoffs, provide back pay, retain employees through pay increases and other retention programs, or reimburse salaries and benefits already paid. Some commenters also requested clarification as to whether recipients can fund re -hired positions through the period of performance and on the definition of payroll and benefits. Other commenters requested preferential hiring for workers laid off, a strong commitment to equity, and a requirsomet that (ands would not be used to pay for contract or tompporery repla,.ment workers during a labor di?te. aosury Response: The final rule allows for an expanded set of eligible uses to restore and support public sector employment. Eligible uses include hiring up W a pre -pandemic baseline that is adjusted for historic undarinvestinent in the public sector, providing additional funds for employees who experienced pay cuts or were furloughed, avoiding layoffs, providing worker retention incentives, and paying for ancillary administrative costs related to hiring. Restating pre -pan moos. employment. In response to comments and recognizing underinvestment in public sector ereployment, the final rule expands the ability to use SURF funds to resters pre -pandemic employment. Treasury is also clarifying haw, and the extent to which, recipients may use SLFRF funds to rehire public ere looses. The final rule provides two options to restore pre -pandemic employmanp depending on recipients needs. Under the first and simpler option, recipients may use SLFRF funds to rehire staff for pre -pandemic positions that were unfilled or were eliminated due the pandemic without undergoing further analysis Under the second option, the final rule provides recipients an option to hire above the pre -pandemic baseline, by adjusting the pre -pandemic baseline for historical growth in public sector employment over it., es wall as Flexibility on mine for him, Recipients may choose between these options but cannot use both. To pursue the first option, recipients may use SLFRF funds to hire employees for the same positions that existed on Jenuery 27, 2020 but that were unfilled or eliminated as of March 3, 2021, without undergoing further analysis. For these employees, recipients may use SURF funds for payroll and covered benefit casts that are obligated by December 31, 20U and expended by December, 31, 2026, consistent with the Uniform Guidance's Cost principles at 2 CFR pert 200 Subpart E. This option provides administrative simplicity for recipients that would simply like to restore pre -pandemic positions and would not like to hire above the pre - pandemic baseline. To pursue the second option, recipients should undergo the analysis provided below. In short, this option allows recipients to pay for payroll and revered benefits associated with the recipient increasing its number of budgeted full-time equivalent employees (FTEs) up to 7.5 percent above its pre -pandemic employment baseline, which adjusts for the continued underimmoureent in state and local governments ainx the Great Recession. State and local government employment as a share of population in 2019 remained considerably below its share prior to the Great Recession m 2007, which presented major risks to recipients mounting a response to the COVID-19 public health emergency. The adjustment factor of 7.5 percent results from estimating how much larger 2019 state and local government employment would have needed to be for the share of state and local government employment to population in 2019 to have been back at its 2007 level and is intended to correct for this gap. Recipients should complete the steps described belov. Recipients may choose whether to conduct this analysis on a goveroment-wide basis ce for an individual department, agency, or budgeted ITS level on January 27, 2020 This includes all budgeted positions, filled and unfilled. This is called the pre-pandemie baseline. e Step Two: Multiply the pm - pandemic baseline by 1.075 (that is, I * adjustment factor). This is called the adjusted pre -pandemic baseline. e Step Three: Identify the incipient'. budgeted FTE level an March 3, 2021, which is the beginning oldie period of performance for SLFRF funds. Recipients may, but are not required to, exclude FTEs dedicated to responding to the COVI0.19 public health emergency.2" This is called the actual numberofFTEs. "'Rompim,ts may dmmnine tht a portion ofen F PEli a nine is dedimted to responding to th Co puGic heeler emorgmmy. Furtho[for adminienNivo mnvemenca the recipient may • Step Four. Subtract the actual number of FTEs from the adjusted pre, pandemic baseline to calculate the number of FTEs that can be hired sad covered by SLFRF funds. Recipients may use SURF funds to cover pa Il and covered benefit costs obligated by December 31, 2024, and expended by December 31, 2026, up to the number of FIE. calculated in Slop Four, consistent with the Uniform Guidance's Coat Principles at 2 CPR part 200 Subpart E. Recipients may only use SUIT funds for additional FM hired over the March 3, 2021 level of budgeted FTEs (i.e., the actual number ofFTEs); note again that recipients may choose whether to conduct the analysis of Ms that can be covered by SLFRF funds on a government -wide basis or for an individual department, agency, or authority. These FTFs most have begun their employment on or after March 3, 2021, which is the beginning of the period of performance. For administrative convenience, recipients do not need to demonstrate that the reduction in number of FTEs was due to the COVID- 19 pandemic, as Treasury assumes the vast majority of employment reductions during this time were due to pandemic fiscal pressures an state and local budgets. Recipients do not amid to him for the same roles that existed pre - pandemic. For illustration, consider a hypothetical recipient with 1,000 budgeted FTE; on January 27, 2020 (950 filled FTE positions and 50 unfilled FTE positions). The recipient's pre - pandemic baseline is 10M FTEs; its adjusted pre -pandemic baseline is 1,000 • 1.075 =1075 FTEs. Now, assume that on March 3, 2021. the recipient had SM In..1oWo.i r'r4'a in ,n,el !'r,14IM-1 G positions), would or 750 FI'Es as its actual number o, FTEs for the calculation; assuming chooses the lower number, it wool able to fund up to 325 FTEs with S funds (that is, 1,075-750 = 325 FT consider public hslth and vMv nE to b. mimerteepmmom Covlo-re mpnrse. Federal Register/Vol. 87, No. 18/Thursday, January 27, 2022/Rules and Regulations 4387 Specifically, the recipient would be able to use SLFRF to fund payroll and covered benefits for up to 325 F rEs that begin their employment an or after March 3. 2021, for costs obligated by December 31. 2024, and expended by December 31, 2026, consistent with the Uniform Guidance's Cost Principles, as I as SLFRF funds areused for additional FTEs hired over the recipient's 750 FTE level (which is its March 3, 2021 budgeted FPE level). In hiring now employees, the final role encourages recipients to ensure is diverse workforce. The final rule also prohibits recipients from using funds to temporarily fill positions during a labor dispute, as this would not constitute responding to the public health or negative economic impacts of the pandemic. Further, recipients must ensure that its hiring practices do not violate conflict -of -interest policies.nas Total compensation for a hired employee that is substantially in excess of typical compensation for employees of their experience and tenure within the recipient's government, without a corresponding business case, may indicate a potential conflict -of -interest in fad or appearance. Providing additional funding for employees 'he experienced pay cute and furloughs. In recognition of the economic hardship canard by pay cuts and furloughs, additional funds may be provided to employees who experienced pay cuts ar were Furloughed since the onset of the pandemic on January 27, 2020. Recipients must be able to substantiate that the pay cut or furlough was substantially due to the public health emergency or its negative economic impacts (e.g., Fiscal pressures on state and local budgets) and should document their assessment Asa reminder, this additional funding most be reasonably proportional to the negative economic impact of the pay cut or furlough on the employee, which would include taking into account unemployment insurance (UI) benefits that a furloughed employee may have received during the furloughed period. Treasury presumes that additional funds beyond the difference in pay had the —A. pen of —pan, the Awvd Teems and Cfndiavax far SLFRF, each d,i-t egIoM m maintain a fvasinbflntmaat Palley umsiitent will 2 CFR 200.3181c1112 Jet is eppiicehle m all adivaM ended with the SLtm award. l'ursunnl la tiro polity, cisfurone conmming SLFµt'..,n Sao dundisrhaed panouel n ngnai®uoa.i mu8icta of inters., hoe in fad and in appedene, Ancipan coy nor nee canul over SLFRF Wt than con private gain. Forth....uumployee om� or age. menees. f.—.,.. ealamian, ewer-, mearsi if mnvIsena nd auppwtd by e ahl ewartl If he mAtn Rae a rW or apparent mneiat almtatart. employee not received a pay cut or been furloughed would not be reasonably proportional. Recipients may also provide premium pay to certain employees, as detailed further in scale. Premium Pay. Avoiding layoffs. Funds may be used to maintain current compensation levels, with adjustments for inflation, in order to prevent layoffs that would otherwise be necessary. Recipients must be able to substantiate that layoffs were likely in the be.. of SLFRF funds and would be substantially due to the public health emergency or its negative economic impacts (e.g., fiscal pressures on state and local budgets) and should document their assessment. Retaining workers. Funds may be used to provide worker retention incentives, which are designed to persuade employees to remain with the employer as compared to other employment options. Recipients most be his to substantiate than the employees were likely to leave employment in the absence of the retention incentive and should document their assessment. For example, a recipient may determine that a retention bonus is necessary based on the presence of an alternative employment offer for an employee. All worker retention incentives must be narrowly tailored to need and should not exceed incentives traditionally offered by the recipient or compensation that alternative employers may offer to compete for the employees. Further, because retention incentives are intended to provide additional incentive to remain wilb the employer, they must he entirely additive to an employee's regular rate of wages and other remuneration and may not be used to reduce or substitute for an employee's normal earnings. Treasury will presume that retention incentives that are less then 25 percent of the rate of base pay for an individual employee or 10 Percent for a group or category of employees are reasonably proportional to the need to retain employees, as long as the other requirements ere and. Ancillary administrative coats. Fonds may be used to pay for ancillary administrative costs associated with administering SLFRF-funded hiring and retention programs detailed above, including costs to publish job postings, review applications, and onboard and train new hires. For additional information an administrative expenses, see section Administrative Expenses in Program Administration Provisions. Effective Service Delivery: Administrative Expenses The interim Final rule provided that funds could be used for. "Expenses to improve efficacy of public health or economic relief programs: Administrative costs associated with the recipient's COVID-19 public health emergency assistance programs, including services reas onding to the COVID-19 public health emergency or its negative economic impacts, that are not federally funded." In the final rule. Treasury is clarifying that there son several categories of eligible administrative expenses. First, recipients may use funds for administrative costs to improve the efficacy of public health or economic relief programs through recta like program evaluation, data analysis, and targeted consumer outreach (see section Effective Service Delivery: Program Evaluation, Data, and Outreach). Second, recipients may use funds for administrative costs associated with programs to respond to the public health amergency, and its negative economic impacts, including programs that are not funded by SLFRF or not Federally funded. In other words, Treasury recognizes that responding to the public health and economic impacts of the pandemic requires many programs and activities, some of which are not funded by SLFRF. Executing these programs effectively is a component of responding to the public health and negative economic impacts of the pandemic. Finally, recipients may use funds for direct and Indirect administrative costs for administering the SLFRF program and projects funded by the SLFRF program. See section Administrative Expenses in Program Administration Provisions for details on this eligible use category. Effective Service Delivery: Program Evaluation, Data, and Outreach The Supplementary Information of the interim final rule provided that state, local and Tribal governments may use SLFRF funds to improve the design and execution of programs responding to the FOVID-19 pandemic and to improve the efficacy of programs addressing negative economic impacts. The interim final rule included high- level guidance about how SLFRF funds could be used I. this eligible use category, including the use of targeted consumer outreach, improvements to data or technology infrastructure, impact evaluations, and data analysis. Since the publication of the interim final rule, Treasury has also released 4388 Federal Register/Val. 87, No. 18/Thursday, January 27, 2022/Rules and Regulations supplementary information on data analysis, evidence building, and program evaluation in the Compliance and Reporting Guidance. Public Comment: Treasury received positive comments about the opportunity to invest in data and technology upgrades with SLIME funds. For example, one commenter noted that investing in technology far better connectivity, coupled with software and hardware upgrades, will allow the workform to he more Productive. re Treasury also ceived commands seeking clarification on using funds for investments in data and technology, including whether upgrading government webstte t to improve community outreach and investing in technologies that support social distancing were eligible uses. Treasury Response: Governments with high capacity to use data and evidence to administer programs are more likely to be responsive to the needs of their community, more transparent about their community Impact, and more resilient to emergencies such as the pandemic and its economic impacm,aa' Treasury rec.gndzes that collecting high -quality data and developing community -driven, evidence -based programs requires resources to hie and build the capacity of staff, adopt new processes and systems, and use new technology and tools in order to effectively develop, execute, and evaluate programs. As such, Treasury fs cmrftyfng (het recipients may use SLFRF funds toward the following non -exhaustive list of uses to address the data, evidence, and program administration needs of recipients. Additional information may be provided in the Compliance and Reporting Guidance. e Program evaluation and evidence msou nas to support building and using evidence to improve outcomes, including development of Learning Agendas vac to support strategic evidence building, selection of evidence -based interventions, and program evaluations including impact evaluations (randomized control trials M]1S)pdf and quasi-experimental'bedies" as well re rapid -cycle evaluations, process or implementation evaluations, outcome evaluations, end coat -benefit analyses. Recipients an encouraged to undertake rigorous program evaluations when n.e.eeehle a.— he imnest nfth.il by designing evaluations to ensure that programmatic, cultural, linguistic, and historical nuances are accurately and roepectfully addressed. Recipients are also encouraged to uae relevant evidence Clearinghouses — among among other sources, to assess the level of evidence for then interventions and identify evidersombased models that could be applied in their juri adiction (meaning models with strong or moderate evidence; see Compliance and Reporting Guidance for details on these terms). • Oata analysis resources to gather, assess, end use data far, effective policy - making and real-time backing of program performance to support effective implementation of SLFRF- funded programs and programs that respond to the public health emergency and its negative economic impacts, or which households, small businesses, or impacted Industries am accessing during the pandemic that as funded by other... cars. Thane resources include but ern not limited to data gathering, data cleaning, data analysis, dam infrastructure, dam management, data sharing, data transparency, performance management, outcomes -based budgeting, outcomes -based procurement, and other dam needs. Treasury encourages the disaggregation elders to identify disparate program impacts and the use of cross - jurisdictional data sharing to better measure and implement government programs. .0 Evil— 0-ii,itsuu ear damb.oa of vch In psdaler pmgam are.. Frequently theeo ae.inghoueu identify evidence -based paoyame, the sourish of fee evidence for thorn reason,.rd provide cone at e] u supponma mlhrmati- a on, to,mdhvvaW fmmare. Mary federal&,forenla have aev.lop.i elµ ua act triple Cothe covers wide range of ties emted in this fine] '.rasa well u drhdr prearzmn ghat ray ba nurvno.. m pt bhc tenth eta ache e—tyruc ur,aaarea p..d.erk. eat in(emran ciauh ghon .,plea the Complivea and Raponing Guidance: US9es . Department of the Trove , Recipient Carp]Wre end Reporting Responaddlitien, as of Novmnber S. ID2L httpe l/home.aou."ovlPolicy honor )v✓vwamerfo,vur hoeaactedM!- ga mentdmmeand.lrelpaml.manveryfrnda/ radiated —tamrmand-repo.i, norponaibilfmoa. e Tachnologymfmstructursomurcoa to improve access to and the user - experience of government information technology systems, including upgrades to hardware and software as well as improvements to public -facing vadv ites or to data manavement asserted. to public Community outreach and engagement resources to support the gathering and sharing of information in ways that improve equity and effective implementation of SLFRF-funded programs and programs that respond to the public health emergency and its negative economic impacts, or which households, small businesses, or impacted industries are amassing during the pandemic that are funded by other scum... These methods include but are not limited to community meetings, online surveys, focus groups, human -centered design activities, behavioral science techniques, and other community engagement tools, a Capacity building resources to support using data and evidence in designing, executing, and evaluafing programs, including hiring public sector staff, eantractom, academics, consultants, sad others with expertise in evaluation, data, technology, and community engagement as well as technical assistance support for public sector staff, staff of..breclpiwt., and programs and programs that respond to the public health emergency and its negative economic impacts, or which households, small businesses, or impacted industries are smears ng during the pandemic that are funded by other sources. Administrative Needs Caused or Exacerbated by the Pandemic As described in guidance and the interim final rule, SLFRF funds may be aced to address administrative needs of recipient governments that were caused or exacerbated by the pandemic. Guidance following the interim final ale included several examples of this, for example, uses of funds to address backlogs resulting from pandemic - related shutdowns (e.g., backlogs in court systems).•as This also includes I- Sao FAQ 1.19, cuonavirua Stale and Local Fiscal aerovery Funds, resonantly Asked qumiwa, In of futy 19, mot. bops:// home.f. gloq..gov/ayNem/felesn3ulS(FA/PAQ.pdf. in the cue of sourn specifically, this includes implementing MVWYUr safety momury. to JeWhase wW disarmers, hiring additional court ..if or aemayu to I-... areas of cue Federal Register/Vol. 87, No. 18/Thursday, January 27, 2022/Rules and Regulations 4389 using funds for increased repair or maintenance needs to respond to significantly greater use of public facilities during the pandemic (e.g., increased use of parks resulting in damage or increased ..it for maintenance). Some commenters expressed support for the ability to use funds for these purposes. Treasury is maintaining these enumerated eligible uses in the Beal rule and clarifying that capital expenditures such as technology infrastructure to adapt government operations to the pandemic (e.g., video- conferencing sofiwam, improvements to case management systems or data sharing resources), reduce government backlogs, or meet increased maintenance needs are eligible. b. Capital Expenditures The interim final rule expressly permitted use of funds for a limited number of capital expenditures that mostly pertained to COVID-19 prevention and mitigation. These included capital investments in public facilities to meet pandemic operational needs. such as physical plant improvements to public hospitals and health clinics: adaptations to public buildings to implement COVID-19 mitigation tactics: ventilation improvements in con�eg to settings, health raresettings, are ther key locations: assistance to small businesses and nonprofits and aid to impacted industries to implement COVID-19 prevention or mitigation tactics, such as physical plant changes to enable social distancing. For disproportionately impacted populations and communities, the interim final into also expressly permitted development ofaffordable housing to increase the supply of affordable and high quality living units. Public Gamment Many commenters supported the interim final ride's allowance of capital expenditures in facilities to meet pandemic operational needs but requested that the fuel rote sxplicilly allow for a broader range of capital expenditures. Commenters benefits beyond the SLFRF period of performance. Some commenters stated that the approach in the interim final rate limited the vast majority of capital expenditures to governments that experienced revenue loss under Sections 602(c)(1)(C).nd 6e3(c)(1)(C) and that this approach may prevent some governments from fully meeting the needs of their residents. A few rolenon, sect ether -passe. to ex,dav ceee rewla,We an ell®Lie raw, commenters argued that Treasury should limit use of funds on capital expenditures not related to addressing a direct pandemic harm, such as general economic development or workforce development, and some expressed support for generally limiting capital expenditures to those that address the needs of low-income communities and communities of color. Many commenters requested that capital expenditures related to direct COVI0.19 public health response be included as enumerated eligible uses. The requested types of expenditures include improvements and construction of hospitals and health clinics (including behavioral health rimira), as well as other health -related infrastructure improvements, such as improvements to medical equipment or public health information technology. Thee. commenters slated that investments in health and public health systems are vital to ensuring critical infrastructure necessary to respond to continued impacts of COVID-19 or to address disparities in health, due to lack of access to health care, that contributed to disproportionate impacts of COVIo- 19 on some communities. Further, some commenters requested that construction or improvements of emergency management and public safety facilities be deemed eligible, citing that some of these sites serve as remote vaccination site. or are otherwise crucial to the pandemic public health response. Commenters also requested use of funds for capital expenditures that support community needs apart from health care, such as new construction or improvements to schools, affordable housing (beyond presumed disproportionately impacted communities), children. facilities, and community centers; some suggested that all type. of projects parronamble under the Community Development Block Grant Program should be eligible bath far policy and administrability reasons. Further, some commenters also asked for clarification as to whether parks and reoportionately impacted as public transportation such as public Others also asked about whether funds could be used to renovate vacant business district buildings or commercial spaces to spur economic recovery, Treasury Response: Capital expenditures, in certain cases, ran be appropriate responses to the public health and economic impacts of the pandemic, in addition to programs and services. Like other eligible uses of SLFRF funds in this category, capital expenditures should be a related and reasonably proportional response to a public health or negative economic impact of the pandemic. The final rule clarifies and expands how SLFRF funds may be used for certain capital expenditures, including criteria and documentation requirements specified in this section, as applicable. Treasury provides presumptions and guidelines for capital expenditures that are enumerated earlier in sections Public Health, Negative Economic Impacts, and General Provisions: Other under the Public Health and Negative Economic Impact eligible use category ("enumerated projects"), along with capital expenditures beyond those enumerated by Treasury. In addition to satisfying the two-part framework in Standards: Designating a Public Health Impact and Standards: Designating a Negative Economic Impact for identifying and designing a response to a pandemic harm, Treasury will require projects with total expected capital expenditure coats of $1 million or greater to undergo additional analysis to justify their capital expenditure. Increased reporting requirements will be required for projects that are larger in slim, as well as projects that ere not enumerated as eligible by Treasury, with certain exceptions for Tribal governments discussed below. Smaller projects with total expected capital expenditures below $1 million will not be required to undergo additional analysis to justify their capital expenditure, as such projects will be presumed to be reasonably proportional, Provided that they are responding to a harm caused or exacerbated by the public health emergency. These standards and documentation requirements ere designed to minimize administrative burden while also ensuring that projects are reasonably proportional and supporting Treasury's risk -based approach to overall program management and monitoring. This section provides (1) an overview of general standards governing capital expenditures; (2) presumptions on capital expenditures. which help guide recipients in determining whether the expenditure meets the standards and the associated documentation requirements; and (3) additional standards and requirements that may apply. 4390 Federal Register/Vol. 87, No. 18/Thursday, January 27. 2022/1bules and Regulations Overview of General Standards In considering whether. capital expenditure would be eligible under the public health and negative economic impacts eligible use category, recipients must satisfy the requirements for all uses under the public health and negative a ummic impacts eligible use category, including identifying an Impact or harm and designing a response that addresses or responds to the identified impact or harm. Responses must be reasonably designed to benefit the individual or class that experienced the impact or harm and must be related and reasonably proportional to the extent and type of impact or harm. Recipients should consult further details on this standard provided in the sections Standards: Designating a Public Health Impact and Standards: Designating a Negative Economic Impact under General Provisions: Structure and Standards. In addition to the framework described above, for projects with lost expected capital expenditures of $1 million or greater, recipients meet complete and meet the substantive requirements of a Written Justification for their capital expenditure, except for Tribal governments as discussed below. This Written Justification helps clarify the application of this interpretive framework to capital expenditures, while recognizing that the needs of communities differ. In particular. this justification reflects the fact that the time required for a large construction project may make capital expenditures less responsive to pandemir-relmad needs relative to other types of responses. In addition, as discussed in section Timeline for Use of SLFRF Funds of this Supplemental Information, SLFRF funds meal be obligated by December 31. zm and expended by December 31, 2026. Capital expenditures may involve long lead-times, and the Written Justification may support recipients in analyzing proposed capital expenditures to confirm that they conform to the obligation and expenditure timing requirements. Further, such huge anew, not be and resource intensive options that may be available and would be equally or more effective. Other solutions, such as improvements in ventilation. could be made more quickly and are typically more cost effective than construction of a new, larger facility. The needs of communities differ, and recipients are responsible for identifying uses of SLFRF funds that best respond to these needs. The Written Justification recognizes this while also establishing consistent documentation and reporting to support monitoring and compliance with the ARPA and final nrle. Finally, the Written Justification also reflects the fact that infrastructure projects are generally not within scope of this eligible use category. See Section Uses Outside the Scope of this Category in General Provisions: Other. As noted above, Tribal governments are not required to complete the Written Justification for projects with total capital expenditures of $1 million or grouter. Tribal governments generally have limited administrative capacity due to their small size and corresponding limited ability to supplement staffing for short-term programs. In addition, Tribal governments are already Subject to unique considerations that require additional administrative processes and administrative burden for Tribal government decision making, including capital expenditures. Tribal governments generally are subject to a jurisdictionally complex sets of rules and regulations in the case of i xments [o land for which the title ihld in trust by the United States for a Tribe (Tribal Trust Iands).-- This includes the requirement in certain circumstances to seek the input or approval of one or more federal agencies such the Department of the Interior, which holds fee title of Tribal Trust lands. As a result of their limited administrative capacity and unique and complex rules and regulations applicable to Tribal governments operating on Tribal Trust Lends, Tribal governments would experience significant and redundant administrative burden by also being required to complete a Written Justification for applicable capital expenditures. Wbile Tribal governments are not required to cam late the Written Justification for applicahle capital expenditures, the associated substantive requirements continue to apply, including the requirement that a capital expenditure must be reasonably designed to benefit the individual or class that experienced the identified impact or hum and must be related and reasonably proportional to the extent and type of impact or harm. Note that, as a general matter, Treasury may also -sw 25 U.S.C. 51e. request further information on SUMP expenditures and projects, including capital expenditures, as part of the regular SLFRF reporting and compliance process, includingg to assess their eliWbility under the final rule. The Written Justification should (1) describe the harm or need to be addressed; (2) explain why a capital expenditure is appropriate to address the harm or used; and (3) compare the proposed capital expenditure against alternative capital expenditures that mold be made. The information required for the Written Justification reflects the framework applicable to all uses under the public health and negative economic impacts eligible use category, providing justification for the reasonable design, relatedness, and reaeonabla proportionality of the capital expenditure in response to the harm or impact identified. 1. Description of harm or need to be addressed: Recipients should provide a description of the specific harm or used to be addressed, and why the harm was exacerbated or caused by the public health emergency. When appropriate, recipients may provide quantitative information on the extent and type of the harm, such in the number of individuals or entities affected. 2. Explanaffen of why. capital expenditure is oppropnate: Recipients should provide an independent assessment demonstrating why a capital expenditure is appropriate to address the specified harm or need. This should include an explanation of why existing capital equipment, property, or facilities would be inadequate to addressing the hum or need and why policy changes or additional funding w pertinent programs or services would be insufficient without the corresponding capital expenditures. Recipients are not required to demonstrate that the ham or need would be irremediable but for the additional capital expenditure; rather, they may show that other interventions would be inefficient, costly, or otherwise not reasonably designed to remedy the harm without additional capital expenditure. 3. Comearison of the emnosed coulml of the proposed ,at at least two diturce and reposed capital capital expenditures that could be made. Specifically, recipients should assess the Proposed capital expenditure against at least two alternative types or sizes of capital expenditures that are potentially effective and reasonably Federal Register/Vol. B], No. 18/Thursday, January 27, 2022/Rules and Regulations 4391 feasible. Where relevant, recipients availability an the spread of COVID-19. the disease.aaa These alternatives should compact the proposal against the Recipients may also consider other include personal protective equipment, alternative of improving existing capital public health impacts of the level of ventilation improvements, utilizing assets already owned or leasing other diagnostic testing capacity, for example excess capacity in other facilities or capital assets. Recipients should use if insufficient capacity has decreased wings, or temporary facility capacity quantitative data when available, testing for other health conditions. The expansions. although they are encouraged to recipient may consider alternatives such Large capital expenditures intended supplement with qualitative information and narrative description. Recipients that complete analyses with minimal or no quantitative data should provide an explanation for doing so. In determining whether their proposed capital expenditure is superior recipients should consider the following factor. against each selected xlterrative. a. A comparison of the effectiveness of the capital expenditures in addressing the harm identified. Recipients should generally consider the effectiveness of the capital expenditures in addressing the heirs aver the useful life of the capital asset and may consider metrics such es the number of impacted or disproportionately impacted individuals or entities saved, when such individuals or entities are estimated to be served, the relative time horizons of the project, and consideration of any uncertainties or fish involved with the capitcl expenditure. E. A comparison of the expected total cast of the capital expenditures. Recipients should consider the expected total cast of the capital expenditure required to construct, purchase, install, or Improve the capital assets intended to address the public health m negative economic impact of the public health emergency. Recipients should include pre -development costs in their calculation and may choose to include information on ongoing operational costs, although this information is not required. Recipients should balance the effectiveness and casts of the proposed capital expenditure against alternatives and demonstrate that their proposed capital expenditure is superior. Further, recipients should choose the most cost - affective option unless it substantively reduces the effectiveness of the capital investment in addressing the heirs identified. As en example, a recipient considering building a new diagnostic testing laboratory to enhance COVID-19 testing capacity may consider whether existing laboratories sufficiently meet demand for COVID-19 testing, considering the demand for test results (along with their turnaround time) as well as the impact of current testing In comparing the effactleenese of the capital expenditures, examples of factors that the recipient may consider include when it,. facilities will become operational and for haw long; the daily throughput of COVID-19 tests; and the effect on minimizing delays in lest results on the populations that such tests will some. In comparing costs, the recipient may campers the total expected cast of the new laboratory (including costs of acquisition of real property, construction of the laboratory, n the expected casts of existing laboratories y replacing content with higher throughout physical, expanding space .data additional capacity) or new laboratory of a different Ran by leasing proaerx. As Because, in all cases, argue of SURF funds to respond to public health and negative economic impacts of the pandemic must be related and reasonably proportional to a harm caused or exacerbated by the pandemic, some capital expenditures may not eligible. For example, constructing a now correctional facility would generally not be a proportional ruspmrse to an increase in the rate of certain crimes or overall crime as most correctional facilities have historically accommodated fluctuations in occupenry.251 In addition, construction of new congregate facilities, which would generally be expected to involve expenditures greater than $1 million, would generally not be a proportional response to mitigate or prevent COVID- 19, because such construction is generally expected to be more costly than alternative approaches or capital expenditures that may be equally or more effective in decreasing spread of rer See. e.g.. 'Ecrttamic Pmpshem on me.,eemeun and are Gmrmrd Justice Symmar;' Caused of Economic AdesewtApn12o161.pg.a6- 13. for general economic development an to aid ties travel, tannin. and hospitality industries--auch as convention ranters and stadiums —ere, on balance, generally not reasonably proportional to addressing the negative economic impacts of the pandemic, as the efficacy of a large capital expenditure Intended for general economic development in medytng pandemic herms may be very limited compared to its cast.253 Presumptions on Capital Expenditures For administrative convenience, the final role provides presumptions an whether a Written Justification is required -and required to be submitted to Treasury through reporting —based on the type and to. of the capital expenditure, as detailed in the table below. As discussed above, Tribal governments are not required to complete the Written Justification for applicable capital expenditures, but the associated substantive requirements continue to apply, including the requirement that a capital expenditure must be reasonably designed to benefit the individual or class that experienced the identified impact or harm and most be related and reasonably proportional to the extent and type of impact or harm. air Far movies, the CDC has prelob rd detailed acencremendations firs nursing homer. irrelevant cue hdlilica, and crsredtonal and delmnlan feoilitia. as mfecuon pmvemmn and conml Many.1these mccrinamadoirom ue mtativaiy low rat. each as prefer on of PPE. Iu addition, increeng su,atlm, mumm ae,g mummg home nag le ng Oe most Imprd.nt ways e. demem. tee spread of the dixvan Center far niaeeee Consul and F,eemem , menial wecaon rrevantis. and Cuntml Rocommrrobsone to Pment SARS V- 2 Spread in Nursing Homes (Sorenson 10. 2021), Am,.11 w cgov/comrwvim.l20m nmv/bcp/ I., aim an. hemleo.chm- omsmsson. —Fm instance, nxmehen have bond no carrusionct pmwve relationship hetwren bnildinp stores hadne a and tool econaMn doeelopme t. As Sleghfed and zlmLam (2000. 103) wdn in a review of Me literature. "mdependem Wuhan the impel ofemdmme and creme has uniformly found then nine is no natirescrHy significant positive mrmlanion bnween sports facility mnnmmion and economic davelopmers Jnha.Sironed and Andrew ZimMlia. The F<nmmiss of games resumes and Their Cummwitim. Jwmel of Economic FnnpMivas 1e. no. 3 (Summer 20fa0): 95-119, hurl, wee.awawaany/nmola.,;e=ro.r2sr/pn.2sa.9s. 4392 Federal Register/Vol. 87, No. IB/Thursday, January 27, 2022/Rules and Regulations B a protest bes Mal expected cap- I antl me use Is enumerated by Treasury as elgble, I ens me use Is toyond iMse enumerated by heas- iMexpeMlWresof mensal nryaseliglble, men= Lass man $1 million ........................ No Wdaen Just areswe required .............._............... NO W/dlen Juslifiwtion required. Greater than ar equal tip $t million, Wri n Jusvification renewal btu mozzaMa are rat Wrinen Jualicatbn required antl recipients mull but less than $10 million. required to submit ae, part of regular reporting to submit as pad of regular reporting to Treasury. Treasury. $10 million or more ......................... terms Jusfiboation required and recipients must submit w pan of regular reporting to Treasury. In selecting these thresholds, Treasury recognized that capital expenditures vary widely in size and therefore would benefit from tiered treatment to implement eligibility standards while minimizing administrative burden, especially for smaller projects. For example, Treasury selected $1 million as a threshold for whether a recipient needs to complete a Writmet Justification as well as a threshold under which capital expenditures would be presumed reasonably proportional. Treasury estimates that $1 million would encapsulate the costs of e significant portion of equipment or smalI renovations. These types of smaller projects are often a necessary end reasonably proportional part of a response to the public health emergency; therefore, the $1 million threshold provide. a omplifmi pathway m complete smaller projects more likely to meal the eligibility standard. At the some time, Treasury selected $10 million as the threshold for more intensive reporting requirements, estimating that projects letter than $10 million would likely constitute significant improvements or construction of mid- or large -sized facilities. As discussed above, given their scale and longer time to completion, these types of larger projects may be less likely io be reasonably proportional responses. The $10 million threshold also generally aligns with thresholds in other parts of the SLFRF program, such as for enhanced reporting on labor practices. Expenditures from closely related activities directed toward a common purpose are considered pert of the scope of one project These expenditures can include capital expenditures, as well w expenditures on related programs, services, or other interventions. A project includes expenditures that are interdependent (e.g., acquisition of land, cansurctian of the school on the land, and purchase of school equipment), or are of the same or similar typo and would be utilized far a common purpose (e.g., acquisition ofa Reel of ambulances that would be used for COVID-19 emergency response). Recipients must not segment a larger project into smaller projects in order to evade review. A recipient undertaking a set of identical or similar projects (e.g., development of a number of new affordable housing complexes, across the recipient jurisdiction) may complete one Written justification comprehensively addressing the entire set of projects. Projects Enumerated sir Eligible by Treasury Under the public health and negative economic impacts eligible use category. the final rele provides a nonexclusive list of eligible uses of funding for projects that respond to the public health emergency or its negative economic impacts. Treasury has determined that these enumerated projects are related to the public health emergency and its negative eeonomic Imports: however, recipients (other than Tribal governments) undmrtaking these projects with total expected capital expenditures of $1 million or ggreeter most still complete and meet the substantive requirements of a Written justification as part of their demonstration that the project is a related and reasonably proportional response to the harm identified. • Projects with total expected capital expenditures of under $1 million: Treasury provides a safe harbor for projects with total expected capital expenditures of less than $1 million and will not require recipients to complete, submit, or meet the substantive requirements ofa Written justification for the capital expenditure. In wsenm, recipients may pursue an enumerated project with total expected capital expenditures of under $1 million without having to undergo additional assessments to meet SURF re.uirements. Profs with total expected capital expendituma 0/at least $1 million but under $i0 million: Recipients should complete a Written Justification for the capitul expenditure and make an independent assessment of whether their proposed capital expenditure masts the substantive requirements of the Written Justification. Recipients will not be required to submit the Written Similar to the above, recipients should complete a Written jvstificaton of the capital expenditure and make an independent assessment of whether their proposed capital expenditure meets the substantive requirements of the Written Justification. Further, recipients will he asked to submit the Written Justification as part of regular reporting to Treasury. Similar to other parts of the SURF program, each as on reporting on labor practices, Treasury recognizes that projects with expected total capital expenditures of at least $10 million may be less likely to meet eligibility requirements end therefore requires recipients to provide an enhanced level of information to Treasury. Projects Beyond Those Enumerated as Eligible by Treasury As with all uses, recipients that undertake capital expenditures beyond those enumerated ea eligible by Treasury must meet the two-part framework under Standards: Designating a Public Health Impact and Standards: Designating a Negative Economic Impact under General Provisions: Structure and Standards, Federal Register/Val, 87, No. 18/Thursday, January 27, 2022/Rules and Regulations 4393 including the requirement that responses are related and reasonably proportional to the harm or impact identified. As part of that assessment, these recipients may also be asked to complete Written Justification. Recipients (other than Tribal governments) are subject to the following presumptions for die Written justification of the capital expenditure, based on the total expected capital expenditures of the project: • Projects with total expected copfml expenditures of under $1 million: Treasury provides a is harbor for um mumerated projects with total expected capital expenditures of under $t million and will not require recipients to complete, submit, or meet the substantive requirements of a Written Justification of the capital expenditure. Recipients should still make a determination as to whether the capital expenditure is part of a response that is related and reasonably proportional to the public health emergency or its negative economic Impacts. a Projects with total expected capital expenditures of $1 million or over: Recipients should complete a Written justification aide capital expenditure and make an independent e&aessmanl that their proposed capital expenditure meets the substantive requirements of the Written Justification. Further, recipients will be asked to submit the Written Justification as pan of regular reporting to Treasury. Treasury employs a rink -based approach to overall program management and monitoring, which may result I. heightened scrutiny an larger projects. Accordingly, recipients pursuing projects with larger capital expenditures should complete more detailed analyses for their Written Justification, commensurate with the scale of the project. Additional provisions, Standards, and Definitions Strang Labor Standards in Construction Treasury encourages recipients to Corry out projects in ways that produce high -quality work, avert disruptive and toady delays, and promote efficiency. Treasury encourages recipients to use strong labor standards, including project labor agreements (PLAs) and community benefits agreements that offer wages at or above the prevailing rate and include local him provisions. Treasury also recommends that recipients prioritize in their procurement decisions employers who can demonstrate that thew workforce meets high safety and training standards (e.g., professional certification, licensers, and/or robust imhouse training), that him local workers and/or workers from historically undersarved communities, and who directly employ their workforce or have policies and practices in place to ensure contractors and subcontractors meet high labor standards. Treasury further encourages recipients to prioritize employers (including contractors and subcontractors) without recent violations of federal and state labor and amploymem laws. Treasury believes that such practices will promote effective and efficient delivery of high -quality projects and support the economic recovery through strong employment opportunities for workers. Such practices will reduce likelihood of potential project challenges like work stoppages or safety accidents, while ensuring a reliable supply of skilled labor and minimizing diem bons, such as those associated with labor disputes or workplace . injuries. That will, in turn, promote on- ime and on -budget delivery. Furthermore, among other requirements contained in 2 CFR 200, Appendix 11, all contracts made by a recipient or subroodident in excess of $10Q000 with respect to a capital expenditure that Involve employment of mechanics or laborers must include a provision for compliance with certain provisions of the Contract Work Hours and Safety Standards Act, 40 U.S.C. 3702 and 3709, as supplemented by Department of Labor regulations (29 CFR part 5). Treasury will seek information from recipients on their workforce plans and practices related to capital en expditures undertaken under the public health and negative economic impacts eligible use category with SLFRF funds. This reporting will support transparency and competition by enhancing available information on the services being provided. Environmental. Uniform Guidance, and Other Generally Applicable Requirements Treasury cautions that, as is the case with all projects using SLFRF funds. all Frojects most comply with applicable edue[, state, and local law. In the rase of capital expenditures in particular, this includes environmental and permitting laws and regulations. Likewise, as with all capital expenditure projects using the SLFRF funds, projects meet be completed in a manner that is technically sound, meaning that it must meet design and construction methods and use materials that are approved, codified, mcognized, fall under standard or acceptable levels of practice, or otherwise are determined to be generally acceptable by the design and construction industry. Further, as with all other uses of funds under the SLFRF program, the Uniform Guidance at 2 CFR pen 200 applies to capital expenditures unless stated otherwise. hnportandy, this includes 2 CFR part 200 Subpart ➢ on i at -federal ...it requirements, including property standards pertaining to insurance coverage, real property, and equipment; procurement standards; sub recipient monitoring and management; and record retention and access. Definitions Treasury adapt& several definitions tram the Uniform Guidance at 2 CFR 200.1 under this section, including for capital expenditures, capital woos, equipment, and supplies. Per the Uniform Guidance, the term "capital expenditures" means "expenditures to acquire copital..act. or expenditures to make add, does, improvements, modifications, alterations to capital assets that materially increase their value or useful life."Tire term "capital assets" means "tangible or intangible assets used in operations having a useful life of mare than am year which are capitalized in accordance with [Generally Accepted Amounting Principled." Capital assets include lands, facilities, equipment, and intellectual property. Equipment means "tangible personal property (including information technology systems) having a useful life of more than one year and a per -unit acquisition cast which equals or exceed. the lesser of the capitalization level established by the man -Federal entity for financial statement purposes, or $5,000." Supplies, which means all tangible personal property other than those included as "equipment," are not considered capital expenditures. Recipients may also use SLFRF funds for pre -project development coats that am tied to or reasonably expected on lead to an eligible cevital exoandhem. engineering for an eligible project ere considered an eligible use offends. c. Distinguishing Subrecipients Versus Beneficiaries Under the interim final rule, state, local, and Tribal governments that receive a federal award directly from a federal awarding agency, such as Treasury, are designated as "recipients," 4394 Federal Register/Vol. 87, No. 18/Thursday, January 27, 2022/Rules and Regulations and state, local, and Tribal governments are authorized to transfer funds to other entities, including private entities like nonprofits. The interim Final role stated that,'9al transferee receiving a transfer Four a recipient under sections 602(c)(3) and 603(c)(3) will be a subreripient. Subrecipiants are entities that receive a subaward from a recipient to carry out a program or project on behalf of the recipient with the recipient's Federal award funding." For funds transferred to a subrecipienl, the interim final role noted that "Irlecipients continue to be responsible for monitoring and ovemeeing the subrecipients rise of SLFRF funds and other activities related to the award to ensure that the subrecipient complies with the statutory and regulatory requirements and the terms and conditions of the award. Recipients also remain responsible for reporting to Treasury on their subrecipients' use of payments from the SLFRF funds for the duration of the award." Public Comment: Treasury received any comments requesting clarification about which entities qualify as subrecipients and are, to turn, subject to subrecipienl monitoring and reporting requirements. For example, commenters sought clarification about whether a nonprofit that received a grant to provide services under a program to carry out an enumereted eligible use would qualify as a subrecipient and be subject to subrecipient monitoring and reporting requirements. Similarly, commenters also wandered if. nonprofit that received a grant in recognition of experiencing a negative economic impact of the public health emergency would also be a subrecipient and subject to subrecipient reporting requirement.. Treasury Response: Treasury is clarifying the distinction between a subm, quart and beneficiary in the final role. The Uniform Guidance definitions for subaward and .ubrecfpient inform Treasury's distinction between subrecipients and beneficiaries. First, per 2 CFR 200.1 of Uniform Guidance "lslubaward means an award provided by a pass -through entity sse to a subrecipient for the subrecipient to carry out part of a Federal award received by the pass -through entity. It does not include payments to a contractor or payments to an individual that is a beneficiary of a Federal program. A subaward may be provided through any form of legal agreement, —In nie error. a ry»-rWaugh sissy cams a .now.., SLFHY Nnda, including an agreement that the pess- through entityy considers a contracC' Further, 2 CFR 200.1 of the Uniform Guidance defines a subscription, in that "Islublecipienl means an entity, usually but not limited to non -Federal entities, that receives a subaward from a pass - through entity to carry out part of a Federal award; but does not include an individual that is a beneficiary of such award. A submciment may also be a directly from a Federal awarding agency." Treasury is aligning the definition of subrecipient in the feral role with the definition of subrecipienl in the Uniform Guidance. Treasury is maintaining the monitoring and subrecipient reporting requirements outlined in the final role. Par 2 CFR 200.101 (b)(2) of the Uniform Guidance, the terms and conditions of federal awards Row down to subaward. to submcipients. Therefore, non-federal entities, as defined in the Uniform tederal entity is a recipient or subrecipient of a federal award. This include. requirements.udi a. the treatment of eligible uses of funds, procurement, and reporting re Is. The Uniform Guidance definitions for both subaward and subrecipient specify that payments to individuals or entities that are direct beneficiaries of a federal award are not considered subrecipients. The final rule adopts this definition of a beneficiary and outlines that households, communities, small buainesses, nonprofits, and impacted industries are all potential beneficiaries of projects carried out with SLFRF funds. Beneficiaries am not subject to the requirements placed on subrecipients in the Uniform Guidance, including audit pursuant to the Single Audit Act and 2 CFR part 200, subpart F or subrecipient reporting fund. m the individual or entity for the purpose of carrying out a SLFRF program or project on behalf of the recipient, the individual or entity is acting as a subrecipient Acting as a subrecipient, the individual or entity is subject to subrecipient monitoring and reporting requirements. Conversely, if the recipient is providing fund. to the individual or entity for the purpose of directly benefiting die individual or entity as a result of experiencing a public health impact or negative economic impact of the pandemic, the individual or entity is acting as a beneficiary. Acting as a beneficiary, the individual or entity is not subject to subrecipient monitoring and reporting requirements d. Uses Outside the Scope of This Category Summary of the Interim Final Rule and Final Rule Structure In the interim Final role, Treasury noted that certain uses of funds are not permissible under the eligible use category of responding to the public health and negative economic impacts of the pandemic. In the final rule, these uses remain impermissible, but Treasury has recategorized where they are addressed to increase clarity. Specifically, the interim final rule provided that the following uses of funds are not eligible under this eligible use category; Contributions to rainy day funds, financial reserves, or similar funds; payment of tntemat or principal em outstanding debt instruments; fees or issuance mats associated with the issuance of new debt; and satisfaction of any obligation arising under or pursuant to a settlement agreement, judgment, consent decree, or judicially confirmed debt restructuring plan in a judicial, administrative, or regulatory proceeding, except to the extent the judgment or eeltlemenl requires the provision of services that would respond to the CWV 19 public health emergency. These uses of funds remain ineligible under the final rule; Treasury has re -categorized these issues to the section Restrictions on Use, which describes restrictions that apply to all eligible use categories, to clarify that these uses are not eligible under any eligible use category of SLFRF. Treasury responds to public comments on this issue in the section Restrictions on Use. As noted above, the interim final rule also posed several questions on what other types of services or costs Treasury should consider as eligible uses to respond to the public health and negative economic impacts of COVI0. 19, including in disproportionately impacted communities. In this section, Treasury addresses proposed uses of funds suggested by commenters that Treasury has not included as enumerated eligible uses of funds in this eligible use category. Caused Eligible Uses Public Comment: Commenters proposed a wide widely of additional recommended enumereted eligible uses Federal Register/Vol. 87, No, 18/Thursday, January 27, 2022/Rules and Regulations 4305 in all sections of the public health and recipients to identify other public health Treasury Response: In the final rule, negative economic impacts eligible use or negative accurate impacts to Treasury is maintaining the approach category, including in impacted and additional households, small undarthe interim final rule that general disproportionately impacted businesses, or nonprofits, including infrastructure projects, including roads, communities. The proposed additional classes of these entities, and pursue streets, and surface transportation uses included general categories of programs and services that respond to infrastructure, would generally not be services (e.g., legal and social services, those impacts. Treasury also notes that eligible, unless the project responded to long-term investments to remediate some po ulations are presumed to be a specific pandemic public health used long-term diepariliea, response to impacted or disproportionately or a specific negative economic impact. natural disasters). Other suggested uses impacted by the pandemic, and thus The ARPA expressly includes of funds respond to needs widely eligible for responsive services; these infrastructure if it is "necessary" and in experienced across the country (a.g., presumed eligible populations may water, sewer, or broadband, suggesting access to and affordability of health encompass many individuals in the that the statute contemplates only those insurance). Finally, other suggested uses specific populations for whom types of infrastructure. Further, of funds were highly specific (e.g., commenters recommended services. For responding to the public health and healthcare equipment for a specific details on these issues, see section negative economic impacts of the health condition, fire hydrants, weather General Provisions: Structure and pandemic requires identifying whether, alert eystems) or most applicable to the Standards. and the extent to which, there has been particularized needs to certain populations or geographic areas of the InfrasWclure, Community a harm that resulted from the COVI0. 19 public health emergency and United States (e.g., senior citizens, Development, and General Economic Development whetheq end the extent to which, the immigrants, formerly incarcerated use would respond or address this individuals, responding to Some potential additions to harm. Uses of funds intended to environmental issues in certain enumerated eligible uses ware she. generally grow the so .... yand geographic regions). Other commentere recommended by several commenters therefore enhance opportunities for generally requested a high degree of each but am not included as enumerated workers and businesses would not be an flexibility to respond to the particular eligible uses in the final Is. eligible use, because such assistance is needs of their communities. Public Comment: Infrastructure: In not reassembly designed to impact Treasury Response: Given the large the interim final rule, Treasury noted individuals or classes that have base number and diversity of SLFRF that a "ground tnfreetructure project, for identified as having experienced a recipients, Treasury has aimed to example, typically would not be negative economic impact. In other include as enumerated eligible ..as included tin this eligible use category] words, there is not a reasonable programs, services. end capital unless the project respm hat to a connection between the assistance sapien ttures that respond to public specific pandemic public health need." provided and an impact on the health and negative economic impacts Numerous commenters requested that beneficiaries. Such an activity would be of the pandemic experienced widely in many jurisdictions across the country, Treasury permit investments in infrastructure as a response to the attenuated from and thus not reasonably designed to benefit the households that making it clear and simple for recipients public health and negative economic experienced the negative economic to pursue these enumerated eligible uses der unthe final role. This provides Impacts of the pandemic. While these comments most commonly impact . Note, however, that Treasury has enumerated eligible uses that many recommended that constructing and clarified that capital expenditures that recipients may went to pursue. while maintaining made end surface are related end reason ly proportional including uses that are responsive to the transportation infrastructure be eligible, to responding to the public health and pandemii s impacts across the diverse the proposed uses far infrastructure economic impacts of the pandemic are mnge of SLFRF rociptents. in the final ranged widely and included parking eligible uses of funds, in addition to role, Treasury has clarified several lots, bridges, traffic management programs and services; for details on additional uses that generally respond infrastructure, wild waste disposal eligibility criteria for capital to pandemic impacts experienced facilities, and utility infrastructure expenditures, see section Capital broadly across jurisdictions and (outside of water, sewer, and Expenditures in General Provisions: populations, broadband). Other. Treasury has not chosen to include as Many commenters argued that Public Comment Community enumerated uses all uses proposed by infrastructure development and Development Block Good: Several commenters; given the significant range, maintenance is a pressing need in their commenters recommended that .it in same cases highly specific communities and that their Treasury enumerate as eligible uses nature, of the proposed uses Treasury communities had lase need for water, those eligible under the Department of was not able to assess that the proposed sewer, and broadband infrastructure or Housing and Urban Development's uses would respond to negative other eligible uses to respond to the Community Development Block Grant economic impacts experienced public health and negative economic (CDBG) or the Housing and Community generally across the country, supporting impacts of the pandemic. Other Development Act of 1974, which an enumerated eligible use available to commenters argued that these uses established the CDBG program. all recipients praeumpdvely. would stimulate the economy, attract Comments. requested that these uses However, l}easury emphasizes that businesses, or allow for tourist be eligible either to respond to the the enumerated eligible uses are nm- movement; these commenters argued negative economic impacts of the exhaustive and that other uses, beyond that, by generally supporting a stronger pandemic, or in the alternate the those enumerated. are eligible. Treasury economy or facilitating con ditionsthat disproportionate negative economic recognizes that the impact. of the ere ..in conducive to business activity impacts of the pandemic in certain pardemte very over, time, by and tourism, these uses respond to the communities. Under the CDBG program, jurisdiction, and by population; as such, negative economic impacts of the recipient governments may undertake a Be. final rule provides friability far pandemic. wide range of commentty and economic 4399 Federal Register/Vol. 87, No. 18/Thursday, January 27, 2022/Rules and Regulations development services and projects. Commenters reasoned that many state and local governments are familiar with this program, and that aligning to its eligible uses may help recipients easily understand and pursue eligible projects. Commenter also noted that Treasury had chosen to align with existing federal programs in other eligible use categories, namely water infrastructure, in the interim final rule. Treasury Response: In the final rule, Treasury is not including all categories of projects pormisslble under CDBG as enumerated eligible uses to respond to the public health and negative economic impacts of the pandemic. Because CDBG permits such a broad range of activities, including services to individual households, communities, small businesses, general economic development activities, and capital expenditures, Treasury determined that it was more appropriate to assess the underlying types of projects eligible within CDBG sort whether each type of project responds to the negative economic impacts of the pandemic. In other words, Treasury considered whether various types of community and economic development projects respond to the impacts of the pandemic in different communities and circumstances. In the final rule, Treasury addresses the elieibility of ,is use and m impacted small businesses, and capital expenditures. Public Comment: Genaml Economic Development- Treasury provided guidance following the interim final role that general economic development or workforce development would generally not be eligible as it does not respond to a negative economic impact of the COVID-19 public health emergency. Some commenters recommended that Treasury expend enumerated eligible uses to include general economic development activities, beyond those that respond to negative economic impacts of the pandemic, such as creating an economic development strategy for the jurisdiction's overall economic growth, creating a general workforce development strategy, or providing funds to businesses that did not experience negative economic impacts to carry out economic development activities or to incentivize the addition or retention of jobs. Commenters supportive of assistance to businesses for general economic development activities argued that subsidies to businesses increase job growth and that, in some cases, assistance to companies that excelled during the public health emergency would help create more job opportunities for workers or expand the jurisdiction's tax base and produce funds to support government services. In contrast, other commenters argued that academic research consistently finds Red economic development subsidies have a negligible, or even negative, economic effect, ©ling research findings to this affect'" Treasury Response: In the final rule. Treasury maintains the interim final rule's approach that general economic development or workforce development, meaning activities that do not respond to negative economic impacts of the pandemic and rather seek to more generally enhance the jurisdiction's business climate, would generally not be eligible under this eligible use category. As noted above, to identify an eligible use of funds under this category, a recipient must identify a beneficiary or class of beneficiaries that experienced a harm m impact due to the pandemic, and eligible uses of funds must be reasonably designed to respond to the harm, benefit the beneficiaries that experienced it, and be related end reasonably proportional to that harm or impact. Aa noted above, recipients should analyze eligible uses based on the beneficiary of the assistance, and recipients may not provide assistance to small businesses or impacted industries that did not experience a negative economic impact. Provision of assistance to a business that did not experience a negative economic impact, under the theory that such assistance would generally grow the economy and therefore enhance opportunities for workers, would not be an eligible use, because such assistance is not reasonably designed to impact individuals or classes that have been identified as having experienced a negative economic impact. In other words, there is not a reasonable connection between the assistance provided and an impact on the beneficiaries. Such an activity would be attenuated from and thus not reasonably designed to benefit the households that experienced the negative economic impact. Research cited by some commenter finding that business subsidies have limited or negative economic impact also suggests that such t be b] a response may no masona y designed to benefit households and other entities impacted by the pandemic. Similarly, planning activities for an economic development or workforce strategy regarding general future economic growth do not provide a program, service, or capital expenditure that responds to negative economic impacts of the pandemic. However, Treasury noise that the final role includes as enumerated eligible uses many types of assistance that respond to negative economic impacts of the pandemic and may produce economic development benefits. For example, see sections Assistance to Unemployed Workers, Assistance to Small Businesses, and Capital Expenditures. B. Premium Pay Background and Summary of the Interim Final Rule Sections 6132(c)(1)(B] and 603(c)(1)(B) of the Social Security Act, as added by the ARPA, provide that SURF funds may be used "to respond to workers performing essential work during the COVID-19 public health emergency by providing premium pay to eligible workers of the ... government that are performing such essential work, or by providing grants to eligible employers Federal Register/Vol. 87, No. 18/Thursday, January 27, 2022/Rules and Regulations 4397 that have eligible works. who perform essential work." Premium pay is designed to compensate workers that, by virtue of their employment, were forced to take an additional burdens and make great personal sacrifices as a result of the COVID-19 pandemic. Premium pay ran be thought of as hazard pay by another name.z5a During the public health emergency, employers' policies on COV10.19- releted premium pay or hazard pay have varied widely, with many essential msens not yet compensated for the heightened Oaks they have faced and continue to became Many of these workers earn lower wages on average and live in socioeconomically underserved communities as compared to the general population.260 A recent study found that 25 percent of essential workers were estimated to have low household income, with 13 percent in high -rusk householdese2 The low pay of many essential workers makes them Ices able to cape with the financial consequences of the pandemic or their work -related health risks. As Americans return to work and governments relax certain rules, essential workers will continue to bear the brunt of the risk of maintaining the ongoing operation of vital facilities and services. The added health risk to essential workers is one prominent way in which the pandemic has amplified pre-existing socioeconomic inequities. Premium pay is designed to address the disparity between the critical services provided by and the risks taken by essential workers and the relatively low compensation they tend to receive. The interim final rule established a three-part framework for recipients seeking to use SLFRF funds for premium pay. First. to receive premium pay one must be an eligible worker. Second, an eligible worker must also perform essential work. Finally, premium pay most respond to workers performing essential work during the COVID-19 public health emergency. Most of the comments received by Treasury pertaining to premium pay related to these three requirements. Comments also addressed the definition of premium pay generally and posed v See 11.5. repenmem of labor. Hew" Puy, hap¢://—dalgw1,w mWA.,mmvzd hninrdpay (lost visited Winner l S. zozll. zm Economic Policy Institute, only 3o%a those simin.y unlaide noi, home nm n—si uy hevrd PaY Ones is. mis.). hffp J/www.epi.,vglp,ya/only sea/those-ameking-income, Marc -hem¢-sons. mo im,,h vmvW,,hlnckaed-hispani—alvrt- mos1-.—d ahwr-0tn,m,.Mc meo.—homel. socMcCarmsck, Wpm note it. questions regarding premium pay program structuring. This section responds to the comments by addressing the three requirements in turn. then the overall definition ofpremium pay and, finally, program structure. Eligible Workers The ARPA defines "eligible workers" he "those workers needed to maintain continuity of operations of essential critical infrastructure sectors and additimill sectors as each.. . [government] may designate as critical to protect the health and wellbeing of [it.] residents." The interim final rule supplemented lilts definition by identifying a list of "essential critical infrastructure sectors" whose works. are eligible workers, based on ilia list of seders to the HEROES Act, a bill introduced in the Horse of Representatives in 2020 that would have provided premium pay to essential workers.2io In addition to the critical infrastructure sectors defined in the interim final rule, the chief executive (or equivals:1 of a recipient Environment may designate additional non-public 2e2 sectors as critical so long as doing so is necessary to protecting the health and wellbeing ofthe residents of such jm 0n. Vn.PuCnmment:'1'reasury received multiple comments on the definition of "eligible worker" included in the interim final rule. Many commenters agreed with the definition to] igible worker adapted by Treasury. Other commenle. sought clarification about or changes to the definition of eligible worker, including the definition of eligible sectms, ilia inclusion of government workers in the definition of eligible workers, and the process for designating additional non-public sectors air eligible. Some commenters asked Treasury to change how it identifies eligible sectors, including suggestions to add to or subtract from the list ofeligible sectors. For example, some commenters asked Treasury to consider using Bureau of labor Statistics (BLS) -Standard Occupational Classifications to identify specific swims or occupations, in contrast to the approach taken in the interim final Is, which included a mixture of economic sectors, industries, and occupations. Many commenters asked Treasury to explicitly clarify that a particular industry or occupation is covered by the definition of "Essential critical infrastructure sector." Some of see Son H.R. moe, Ilath Cwg. lao20). an Nate that me setters defined in the interim final ash, shoedy include it stets. local, and Teihdl gwemmml emplane. these commenters represented public employees, e.g., employees of facilities and public works; public utilities; courthouse empployees; police, for, and emergency medical services; and waste and wastewater services. Others were a mixture of public and private $actor employees, e.g., coreners mid medical examine.; transportation infastrudure Ispectfically electric vehicle infrastructure and supply equipment); electric utilities, natural ggas, and steam supply; and grocery amployee.. Other commenters requested that Treasury prohibit certain occupations currently included in the eligible workers definition (e.g., police and corrections officers) from receiving premium pay for performance of regular duties. Commenters also asked Treasury to clarify which government workers am included in the definition of eligible workers. The interim final role included the an essential critical infreetructure sector, "any work performed by an employee of a State, local, or Tribal government." Some commenters requested that Treasury, adopt a definition of eligible worker that includes all employees of the recipient government; however, all public employees of state, local, and Tribal governments am already included in the interim final rule definition of "eligible worker." Commitment asked whether this includes governments that did not receive SLFRF funds (La., "non recipient goveluunents").Many commenters from Tribal governments requested that the definition of eligible worker, which includes "any work performed by an employee of a .. . Tribal government," also include an employee of a "Tribal enterprise" to remove uncertainty regarding which employees are I. ,tied. Finally, commentma made suggestions for the process by which the chief executive (or equivalent) of a recipient government may designate additional non-public sectors as critical. Commenters asked that Treasury adopt a requirement that Treasury must approve or deny any additional cal public sector identified by the chief executive of a recipient government prior to implementation of the recipient's program. Same comment.. asked Treasury to clarify whether their chief executive (or equivalent) could designate particular, and in some cases all, employees of the recipient government as eligible for premium payy. Treoaury Respenes: In the final rule, Treasury will preserve the definition of "eligible worker" as it was defined in the interim feel rule with minor modifications to clarify that all public 4398 Federal Register/Vol. 87, No. 38/Thursday, January 27, 2022/Rules and Regulations employees of recipient governments are already included in the interim final rule definition of"eligible worker. "A mere specific eligibility system (e.g., linking eligibility to specific occupational or industry codes) would have provided more certainty but would have been much more rigid. In contrast, the current definition is flexible enough to give recipients the ability to tailor their premium pay programe to meet their needs while ensuring that programs focus on sectors where workers were forced to shoulder substantial risk as a result of the COVU)--19 pandemic. FurOrennore, the critical infrastructure secom defined to the interim final rule already include many of the occupations that commenters requested be added. For example, Treasury received many comments from public workers asking to be included in the definition of "eligible worker" even though these workers already fall within the scope of "any work performed by an employee of a State, local, m Tribal government." Treasury has clarified in the final rule that the chief executive's discretion to designate additional sectors as critical relates only to "non-public" sectors, since all public employees clear ipient re governments ealready included in the definition of"eligible worker." While all such public eraployeea ere "eligible workers" end the chief executive (or equivalent) of a recipient government may designate additional non-public sectors as critical, in order to receive premium pay, these workers must still erect the other premium pay requirements (s.g., performing ...it.] work). Treasury recognizes that the list of "essential critical infrastructure sectors" includes both occupations and sectors. Recipients. if uncertain which occupations are included in a critical infrastructure sector, may consult government occupational classifications if helpful but are not required to do so.rns Furthermore, a recipient government does not need to submit to Treasury for approval its designation of a sector as essential critical infrastructure; rather, Treasury will defer to the reasonable interpretation of the recipient government and the discretion of the recipient's chief executive in making such designations. If a recipient is unsure if a non-public sector is covered by the definition in the '^'.See, eg,a _such s Bain. nl labor Smrinim. Oaupali.nd Outlook Handbook. wbich per rid. inlemunan on which pmkesima re accupatioes a i rypiolly naluded m udirwrodimu o ..&A., h1eoJ1 _he,,a1wl,4 final rule,rns the chief executive (or equivalent) of a recipient government may also identify the non-public sector as critical so long as the chief executive deems the non-public sector necessary to protecting the health and wellbeingg of residents. Treasury has, where passible, clarified the definition of "essential critical infrastructure sectors." For instance, Treasury has clarified in the final rule that work performed by en employee of a Tribal government includes an employee his Tribal enterprise suit discussed in this Supplementary Information how a recipient may qualify other non-public sectors as essential critical infrastructure. Fseentlal Work The interim it..] rule defined "essential work" as work that (1) is not performed while teleworking from a metric. end (2) involves either (i) regular, in -person interactions with patients, the public, ce coworkers of the or performing the work. Treasury adopted this definition of essential work to ensure that premium pay is targeted to workers that faced or face heightened risk. due to the character of their work during a pandemic. Public Comment: Some commenters found the definition unclear and asked Treasury to clarify what constitutes "essential work." Others disagreed with the essential work test altogether, arguing that it forces recipients to distinguish between essential and non- essential employees, which may be difficult to do. Accordingly, these commenters asked Treasury to allow recipients to determine which workers qualify as essential. Treasury also received several requests that specific occupations be explicitly deemed essential, including all public employees, veterinarians, election administrators, detention staff and sheriffs deputies, and employees of utilities, such as electric power, natural gas, steam supply, water supply, and sewage removal. Several commenters requested that Treasury not distinguish between remote and inprunerwork or amend the standard so that employees providing essential services would still be eligible even if they worked remotely. Finally, a few commenters requested clarification as to the — Pubhc wens, eorken am"eligiblew kaa' under Me imvim final rut, and feel nit,. definition of"regular" interactions and wboth functions merit mare work" in the final rula without modification. The test adopted in the interim final Is was designed to compensate workers facing disproportionate risk due to the pandemic. COVID-19 is transmitted through person -to -person interactions, and therefore, workere with regular in - person interactions are the primary group facing increased health risks. Although COVID-10 is not transmitted primarily by people handling items, such work may present increased risk in certain cases, and the final rule maintains the interim final ride's inclusion of such work in order to give recipient governments the flexibility to include workers performing such work as they determine appropriate. Changing the test ser some commenters suggested, e.g., by eliminating the in -person work requirement or allowing recipients to designate which employees are essential, even if not working in person, would no longer focus the program on workers taking on additional health risks and instead allow premium pay to be awarded to individuals who experienced relatively little risk of exposure to COVID-19. To maintain flexibility, Treasury is not defining the term "regular" with regard to in -person interactions, allowing recipients to develop programs based on the specific workforce to be served and local circumstances. Generally speaking, however, recipients are encouraged to consider an eligible worker's risk of exposure in designing premium pay program. Respond To As required by the ARPA, the interim final rule required that premium pay programs "respond to" eligible workers performing essential work during the COVID-19 public health emergency. Premium pay responds to eligible workers performing essential work if it prioritizes low- and moderate -income persons, given the significant share of essential workers that are low- and moderate income and may be least able to bear added costs associated with illness. The level of the award limit —up to $13 per hour not to exceed $25,000 in aggregate —in the ARPA supports this ca-manR. Accordingly, the interim final rate required written purification for how premium pay to certain higher -income workers responds to eligible workers performing essential work: If a recipient Federal Register/Vol. 87, No. IS/Thursday, January 27, 2022/Rules and Regulations 4399 (or greater) uses SLFRF funds to provide premium pay to an employee and the pay or grant would increase a worker's total pay above 150 percent of their residing state or county's average annual wage for all occupations, as defined by the BLS Occupational Employment and Wage Statistics, whichever is higher, on an annual basis, then the incipient ..at provide, whether for themselves or on behalf of a grantee, written justification to 'treasury detailing how the award responds to eligible workers performing essential work. Public Comment Treasury received numerous comments on the wage threshold and the written justification requirement. Several commenters supported the threshold as a way to encourage recipients to target pmreturn pay to lower -income, eligible workers. Some commenters even asked Treasury to make the wage threshold a firm restriction. above which ...I Is worker could not receive premium pay. Others agreed with the threshold but also requested flexibility to use existing works, classifrcatlons as an administratively simple way to identify workers for whom premium pay would be responsive. For instance, a few commenters asked Treasury to allow recipients or grantees to presume that premium pay "msponds to" eligible workers performing essential work when it is provided to employees who are not exempt from the Fair Labor Standards Act (FLSA) overtime provisions —a test that employers am routinely required to apply.... In contrast, several commenters disagreed with the threshold and the requirement for written justification. A few commenters thought the threshold was too low to capture employees in certain critical infrastructure sectors beg., public safety waste collection) and that it did not sufficiently account fro the variance in economic need across different geographic areas and family structures. Some smaller communities argued that the threshold was difficult to calculate and apply. Other commenters proposed revisions for how the threshold is calculated. For Instance, a few commenters asked Treasury to consider using alternative earnings measures such as median income. Similarly, another commenter asked Treasury to consider the incomes of workers with different levels of seniority in developing any income —See Mandlyle U.S.C. 2071aI: U.S. Davaemmd aft.mr. ovanlme P.y iSsi—ama ar the FISA IPod Short N.. 2d1.Oapel/ww.ddgov/ aganGes/wbd/fi.i-ehaoWaafle, sea ima-puy. thresholds for permitting or reporting on premium pay. Finally, them was also same uncertainly as to the threshold and the requirement for written justification. Some commenters interpreted the threshold es a hard cap on who was eligible for premium pay, which is not the case, Relatedly, some commenters also requested further guidance on what recipients should include in the written justification submitted to the Secretary. Treasury Response: The final rule makes some modifications to the determination of when premium pay "responds to" eligible workers P-bumin essential work during the public health emergency. Under the interim final rule, premium pay was responsive if either the workers' pay was below a wage threshold or, if the pay was above a wage threshold, the recipient submitted written justification to Treasury explaining how the premium pay was responsive. The final rule retains these two means of establishing premium pay in response to workers oarforminR essential work and pay is not overtimes to receive premium pay'°° and does not require recipients to provide written justification to Treasury regarding the workers who are not exempt from the FLSA overtime provisions, making the program easier to administer for recipients, Incorporating this change further simplifies application of the "Iravonmenr or Ubor, o.mame Pay, hap,,W www.dmgoft-c;ee/whdlo rime; xv am 29 ua.c er, final rule for recipients because Treasury understands that most employers, public and private, am familiar with and are routinely required to apply the FLSA. With this addition, the final In provides that premium pay is respective to eligible workers performing essential work during the public health emergency if each eligible worker who receives premium pay falls into one of three categories: (1) The worker's pay is below the wage threshold f2) the worker is not exempt from the FLSA overtime provisions, or (3) the recipient has submitted a written justification to Treasury. The final role makes it clear that written justification to Treasury is not necessary with respect to eligible workers whose pay is less than the wage threshold. Nor is written justification necessary with respect to eligible workers who am not exempt from the FLSA overtime previsions. The written justificafion is only necessary if the worker's pay (with or without the premium) exceeds the threshold, and the worker is exempt from the FLSA overtime provisions. The final rule She clarifies that a worker's pay exceeds the threshold if either the premium pay increases the worker's fatal pay above the wage threshold or the worker's total pay was already above the threshold, before receiving premium pay. Treasury has also updated the final role to clarify that written justification means a brief. written narrative justification of how the premium pay or grant is responsive to workers preforming essential work during the public health emergency. This could include a description of the essential workersduties, health or financial risks faced due to COVl 19, and why the recipient determined that the premium Eay was responsive despite the workers' i m income. Recipients should refer to SLFRF proggram reporting guidance, user guides, and other documentation for further guidance on the form and content of the written justification. Treasury anticipates that recipients will easily be able to satisfy the justification requirement far front-line workers, like names and hospital staff. Definition of Premium Pay The statute defines premium pay as "an amount ofupt.$13 perhour.. , in addition to wages or remuneration the eligible worker othe ewiee receives, for ell work performed by the eligible worker during the COVID-19 public health emergency. Such amount may not exceed $25,000 with respect to any single eligible worker." The interim 4400 Federal Register/Vol. 87, No. 18/Thursday, January 27, 2022/Rules and Regulations final rule incorporated this definition and emphasized that premium pay should be in addition to compensation typically received. Public Comment: Several submitted comments related to the definition of "premium pay." Several commenters asked Treasury to clarify certain aspects of the interim final rule and statutory definition of premium pay. For instance, a few commenters asked whether the $25,000 limit applies to the Annual amount of premium pay received or the aggregate amount of premium pay received over the period of performance. A few commenters requested Flexibility as to how premium pay may be awarded, including flexibility to make monthly or quarterly payments or lump sum payments. Finally, commenters requested additional clarification as to haw president pay should be calculated. For instance, A commenter asked haw to calculate the amount trend account for overtime pay and other incenfive pay sas TressuryResponam Treasury has clarified some of these issues in the final rule. Fair example, Treasury has clarified in the final rule that the $25,000 per employee limit is for the entire period of performance, act an annual cap. Further, recipients have discretion with respect to the way in which premium pay is awarded to eligible workers (rig., monthly, quarterly, lump sum), provided that the total premium pay Awarded to arty eligible worker does not exceed $13 per hour or $25,000 over the period of performarce. Finally, a recipient may award premium pay to an eligible worker in addition in the wartime pay already earned by the eligible worker but in no instance may the portion of the compensation funded with SLFRF funds exceed $13 per hour, even if strict time -and -a -half calculation requires mare."° To the extent that an employer is required under the FLSA to make payments to an eligible worker in excess of $13 per hour or $25,000 in the aggregate over the period of performance, the employer must use a source of funding other than the SLFRF funds to satisfy those obligations. Program Structure Public Comment: Several commenters also requested elaboration on eligible u•sre 2s US.C. w1(.) ("IAa a ram net la.then and one -le f rMe. the Mice is.., witch be employed."1. nn All osipieun as revered to comply wnh oiherwlru applicable lions. Imludiry any were end hwr raqulmnums in thin Fair Low, 9mdazdi Act swgenernny. communize Mato. woret and the Foir'imndard. Act, hapidleatw.dol.gov/ agenne✓whugaa. types of employees and permissible structures for awarding premium pay. A few commenters asked if premium pay could be awarded to volunteers or those in irregular and non -hourly or salaried employment positions. Similarly, various commenters asked ifparl-time workers were eligible for premium pay. Some commenters asked Treasury to provide more detail on when premium pay may be paid retroactively or if a government could reimburse its general food for haewid pay already paid before the start of the period of performance. Treasury Response: Treasury has also made clear in the final rule that a time workers. Premium pay may never, be awarded to volunteers. plant is interested in (sating volumes. with SLFRF hen it must do so consistent a requirements set forth In other use categories; for example, sae Public Sector Capacity and rce in Public Health and however, SLFRF funds may not be used to reimburse a recipient or eligible employer grantee for premium pay or hazard pay already received by the employee. To make retroactive premium payments funded with SLFRF funds, a recipient or eligible employer grantee ..at took. a new cash outlay for the premium payments and the payments must be in addition to any wages or remuneration the eligible worker already received, subject to the other requirements end limitations set forth in the ARPA and this fiml rule. Finally, as part of accepting the Award Terms and Conditions for SLFRF, each recipient agreed to maintain a conflict -of -interest policy consistent with 2 CFR 200.318(c) that is applicable to all activities funded with the SLFRF award. This award term requires recipients and Attractpienta to report to Treasury or the pass -through agency, as appropriate, any potential conflict of interest related to the award funds per 2 CFR 200,112. Pursuant to this policy, decisions concerning SLFRF funds ..at be free of undisclosed personal or organisational conflicts of interest, bath in fact and in appearance. Consistent with this policy, elected officials we prohibited from using their official position and control over SLFRF funds for their own private gain. This policy also prohibits, among other things, elected officials from steering funds to projects in which they have a financial interest or using funds to pay themselves premium pay. C. Revenue teas Background Sections 602(c)(1)(C) and 603(c)(1)(C) of the Social Security Act provide that SLFRF funds may be used "for the prevision of government services to the extent of the reduction in revenue of such ... government due to the COVIII-19 public health emergency relative to revenues cellemed in the most recent full fiscal year of the . . government prior to the emergency." This provision allows recipients experiencing budget ahorifalls to use payments from the SLFRF funds to avoid cuts to government services and, thus, enables stale, local, and Tribal governments to continue to provide valuable services and ensures that fiscal austerity measures do not hamper the broader economic recovery. State and local government budgets experienced streas in fiscal year 2020 as delayed tax filings and pandemic - related business closures caused revenues to decline aharply.271 Twenty- two state governments took actions to close budget gaps in fiscal year 2020272 and nearly 80 percent of cities reported being leas Able to meet the fiscal needs of their communities relative to fiscal year 2019.273 Surveys of Tribal governments and What enterprises conducted in 2020 found majorities of respondents reporting substantial cost increases and revenue decreases, with Tribal governments reporting reductions in health care, housing, social services, and economic development activities as a result of reduced revera ess.2•e The economic recovery, aided by the broad distribution ofCOVID-19 vaccines and the deployment of federal stimulus, has led to a strong rebound in total state and local government revenue and is contributing to a brighter fiscal Federal Regiater/Vol. 87, No. 18/Thursday, January 27, 2022/Rules and Regulations 4401 outlook for most jurisdictions as compared to the earlier months of the public health emergency. Far the Racal year ending June 30, 2021, total slate and local government tax revenues increased 21 percent relative to the same period in 2020, reflecting the combined impact of the modified tax filing deadline in 2020 sad as improving econoni However, despite a stable budget situation overall, many governments face uncertainty as the COVID-19 pandemic runtioues to impact commuting patterns, has Justify and tourism, and other drivers of jurisdictions' economies. Thirty-five percent of cities still report being less able to meet financial needs than in fiscal year 2020.2r45 and our half of surveyed Tribal governments and Tribal enterprises reported losing at least 40 percent of their revenue since the start of the pandemic.227 Budget challenges persist as governments work to mitigate and contain COVID-19 and help citizens weather the economic down urn. State, local, and Tribal government budgets affect the broader economic recovery. During the period following the 2007-2009 recession, stele and local government budget pressures led to fiscal austerity that was a significant drag on the overall economic recovery.228 Inflation -adjusted stale and local government revenue did not return to the previous peek until 2013 279 while employment in the sector returned to the previous peak in August 2019, nearly a decade later.-- just months after recouping losses from the previous downturn, the COVID-19 pandemic caused stale and local government employment to contract again, but this time more sharply: By May 2020, state and local government payrolls fell 7 7 pa"U nt compared to February 2920. Despite improvement, non-federal public sector job growth continues to leg behind the rest of the U.S. labor market recovery.> ' Summary of Interim Final Rule As stated above, the Social Security Act provides that SLFRF funds may be used "for the provision of government services to the extent of the reduction in revenue of such ... government due to the COVID-19 public health emergency relative to revenues collected in the most recent full fiscal year of the. . government prior to the emergency." The interim final rule provided a formula for calculating revenue loss throw afour-step process: • tap f: Identify revenues collected In the most recent full fiscal year prior to the public health emergency (La., last full fiscal year before January 27, 2020), celled the base yearrevenue. • Step 2: Estimate counterfactual revenue, which is the amount of revenue the recipient would have expected in the absence of the downturn caused by the pandemic. The caunterfeclual revenue is equal to base year revenue a Ili ♦ growth adjustment) n Jell 211. whom n is the number of months elapsed since the end of the base year to the calculation date, and growth adjustment is the greater of the average annual growth rate across all State and Local Government "General Revenue from Own Seances" in the most meant three years prior to the emergency, 5.2 percent, or the recipient's average annual revenue growth in the three full fiscal years prior to the COVID-19 public health emergency.zez This Approach to the growth rate provides recipients with the option to use a standardized growth adjustment when calculating the counterfactual revenue trend and thus minimizes administrative burden, while not disadvantaging recipients with revenue growth that exceeded the national average prior to the COV10.19 public health emergency by permitting these recipients to use their own revenue growth one over the preceding three years. • Step 3: Identify actual revenue,•"' which equals revenues collected over the twelve months immediately preceding the calculation date. • Step 4: The extent of the reduction in revenue is equal to counterfactual revenue less actual revenue. If actual revenue exceeds counterfactual revenue, the extent of the reduction in revenue is set to zero for that calculation data. Far illustration, consider a hypothetical recipient with base year revenue equal to 100 (Step 1) that ends on June 30, 2019. In Slop 2, the hypothetical recipient finds that the average annual growth across all state and local government "General Revenue from Own Sources" in the most recent three year of available data. 5.2 percent, is greater than the recipient's average annual revenue growth in the three full fiscal years prior b the public health emergency. In this illustration, n (months elapsed) and counterfactual revenue would be equal to: As of. imil: 020 imifii021 I 12/3i2 Ina n (mantis elxpae ll.......................................................................................... C nfindaamalrevenaC:................. ................................................................. 18 107.9 30 113.5 n2 119.E 54 125.8 roe Analysisof Qu ualy SummuydSMaend lain Tex Raven, U.S. Comae Be—, aupn note vl. — eaoonlT a,ti of0flon.cRy Fiural Conditions(2021), owduble al miss :Noww.sthou t wpcanlant/uplood as"a lm/rool-OW-Fisaoi Conditione Report ."of. car inter far Iodine Goumry nexolaYmmt and Patent Reserve And, of M Waen wain. One Year me COM-ra. Peninsula's Nog viva effete Nona in Jo ev raumry (Mey 2021). n odable at nape:// non won ad, M/o erhoesen/rive war- Lrta-mead-11 panderni. ta,saw-,fpntnpeLaFin. indim toinvoy n. Sea, eg-No,. Fite weid in al.. Fi.caIDmg from the State and Lmel Sotoo. Libeny Santa e... nation Bung, extent Rate— Bank of New Yoh (lune 27, 2012), h tes:l/lice y iawtmmnonnn. ntxy.rkfed.erg/4013/o6/jiwl-dmyfmmthe-stole, "' pew R—ob, Stele uW Lout Gaw rmune Job C.h laps ea acmmmy Raooven (Selxembe mill. nvodable. hit Y/www.peatmisemg/eN and.ormly2tyarti a/r4/eroand 1-1mrowth-kgsnwmnoowy �"'At the time the In ocim final rule was pubWbed. the avenge annaxl growth ecmo an into and lout gtvea. "Central Reve.on tram Own Saumm" in the man ucsnt throe yoam of available date 12015-VUS) we 4.1%, which was emotions tattoo opfi.. torshe gmwh adjust—.. Stnu the inmmnn fined rule was eon lishod.2 in Jets his bean eves. svuinbie, which inaeute this into to 5.2%. 9'he final min updotu the pressup to 5,296. u shown in SMp 2, aaa As explained be... to the Rota -I.. —'apes on.wileat twl,ev n an. -is Intend an ain o. are AS, obeigee. 4402 Federal Register/Vol. 87, No. lR/Thursday, January 27, 2022/Rules and Regulations The figure below illustrate$ the hypothetical recipient calculated in reduction in revenue for the accordance with the methodology. 140 mActual Revenue =Extent of reduction in revenue 130 MR.SP .... r..o,,C 120 110 100 90 80 Jun•19 Finally, as explained in greater detail below, the clear meaning of the statutory phrase "duo to the COVI0.19 public health emergency" is that it is referring to revenue reductions caused by the public health emergency. As such, it does at include revenue reduced far r... other than the public health emergency. Treasury in the interim final rule presumed that any reduction in revenue relative to the counterfactual estimate would be considered revenue lost due to the pandemic and thereby relieved recipients of the administrative burden of determining the extent to which reduction in revenue was due to the public health emergency. The calculation methodology in the interim Real role implicitly assumed that recipients did not suffer a loss in revenue due to the public health emergency if they did not experience a reduction in aggregate revenue compared to the counterfactual estimate. The interim final rule invited comments on whether Treasury should revise its presumption to "take into account other factors, including actions taken by the recipient as well as the expiration of the COVID-19 public health emergency, in determining whetter to presume that revenue losses Deo-20 Dee-21 are'due to'the COVID-19 public health emergency." Treasury received a substantial number of comments on the revenue loss provisions set forth in the interim final rule. These comments largely pertained to the following topics: The overall methodology for calculating revenue lass; the definition of "revenue" ; whether revenue should be aggregated or calculated on some alternative basis (e.g.. source -by -souse or fundby-fund); the appropriate calculation dales fi.e., fiscal year or calendar year); the presumpton that all revenue loss is due to the pendent, fhe base year and the definition of "government services." Overall Methodology for Calculating Revenue Lass As noted above, the interim final role provided a formula for recipients to calculate revenue loss by comparing actual revenues received during a given time -period with a counterfactual amount of revenue based on revenues in the base year and an adjustment for expected growth in revenue each year. Public Comment Treasury received many public comments on the overall methodology for calculating revenue loss. Some recipients, including smaller governments, have expressed concern regarding the burden associated with Dso22 Dec•22 the calculation of revenue loss, particularly the burden involved in calculating the amount of general revenue, given that the definition of general revenue in the interim final role does not always align with the definition of revenue already calculated by recipients for other purposes, and requested clarifications regarding a number of components, including the definition of revenue. Commenters also asked for clarification on the relationship between revenue lox calculations acroas different calculation dates. Other commenters argued that the revenue lass formula does not precisely capture the nuances of local revenues or their particular situation. For example, some commenters stated that requiring that revenues be aggregated fails to capture decreases in revenue sources that cannot easily be made up for with other revenue sources. Treasury Response: In the final rule, Treasury is largely maintaining the revenue loss formula as set forth in the interim final role. To address comments that the formula for calculating revenue lase was difficult to apply, Treasury is including ev option for recipients to use a standard allowance for revenue loss. Specifically, in the final rule, recipients will be permitted to elect a fixed amount of lase that can then be used to fund government services. This fixed Federal Register/Vol. 87, No. 18/Thursday, January 27, 2022/Rules and Regulations 4403 amount, referred to as the "standard allowance," is set at up to $10 million total far the entire period of performance not to exceed the recipient's SLFRF award amount. Although Treasury anticipates that this standard allowance will be ..at helpful to smaller local governments and Tribal governments, any recipient can use this standard allowance instead of calculating revenue loss pursuant to the formula above, an long as recipients employ a consistent methodology across the period of performance (i.e., choose either the standard allowance or the regular formula). Treasury intends to emend its reporting forma to provide a mechanism for recipients to make a a. - time, inestimable election to utilize either the revenue loss formula or the standard allowance. The $to million level is based on average revenue loss across state and local governments, taking into consideration potential varfadon in venue types and losses and continued uncertainty faced by many recipients regarding revenue shortfalls. To calculate this estimate, Treasury applied a variation of the final rule'. revenue loss calculation on available aggregate state and local government tax revenue data as reported by the Census Bureau for the first calculation date of December 31, 2020. This estimate accounts for expected variation across recipient experiences and reflects the fact that the final rule revenue loss calculation provides recipients several options for specific aspects (e.g., calendar year at fiscal year basis; use of average state and local revenue growth rate or specific local rate). Treasury compered actual calendar year 2020 his revenues, in aggregate for all state and local governments, to several counterfactual trends that vary based on the end data of the fiscal base yese.aee Treasury also assessed counterfactual trends using different revenue growth cotes (a.g., the three-year average growth .to. of total state and local government general revenue for both final years ending in 2018-2018 and fiscal years ending in 2017-201% the three-year average growth rates of total slate and local government tax revenues for fiscal years ending in 2017-2019; and the one- year growth rate for total state and local g aVarrament tax revenue in the last full fiscal year before the public health emergency). To amount for the fact that the initial estimate, based on tax see 9xame the Consus pounds, a view and haul ,...a, box rwasmo data is mpoaad an e quarterly hequenq, fiscal base year end dates of Much 3l. June se. gepambor so. and n¢emlear a' wore beef in this msesnewed. revenue, only includes a subset of recipient aggregate general revenue, Treasury applied a s®ling factor to recognize that tax revenues generally make up just aver half elgeneral revenue collected by state and local governments (i.e., Treasury scaled up its estimate based on tax revenue la produce an estimate for total general revenue).=ee The resulting calculation was then extrapolated over the four-year period of performance and divided by a population of interest to arrive at an average lass estimate. As noted above, Treasury estimated a range of scenarios to account for different values of the variables that would impact average losses. For example, the end date of the fiscal base year and growth rate of counterfactual revenue impact the overall estimate of revenue loss. In addition, this estimate takes into consideration the limitations in the available data. The governments covered by the Census Berreau's survey do not entirely align with SLFRF recipients. The Census Buresu's figures are based on 50 state govemments, all local government property lax collective and local government non -property, tax imposers, representing st a minimum the more than 38,000 "General Purpose Gavemmemts" defined by Census. However, there ere only roughly 32,000 recipients of SLFRF funds. Thus, Treasury considered the difference between the number and type of entities in the Census Bureau data and the SLFRF recipients. Based on this methodology, Treasury estimates that average revenue loss (determined by comparing the counterfactual revenue to actual revenue) may range from $O to $11.7 million par recipient over the period of pert eromme?re Treasury settled on a point estimate toward the upper end of the range of potential averages, in part, to account for significant variation in the experiences of recipient governments: Some recipients likely experienced losses at the upper and of this range of potential averages. A Kidd estimate toward the upper end of te range errs toward ensuring more recipients' experiences are covered and increases the utility of the standard allowance for SLFRF recipients. Specifically, the program includes a very large number of recipients with relatively smaller awards; these recipients have tended to describe having greater difficulty completing die ass Anmul Survey of Site and Lore] Guarnmeot plmneu clan). .^+This Is as. samo of wmegce ihd Treuury ulenlmod by varying the arommmtimed assommides. regular revenue loss calculation. Thus, selecting a paint estimate toward the higher and of the expected range not only increases the likelihood thatthe standard allowance will reflect the experience of a larger number of SLFRF reciplents but is more responsive to the comments of those with smaller awards. In addition, using a point estimate toward the upper end of the range accounts for the difficulty and uncertainly in predicting revenue losses years into the future, throughout the period of perfrr eance.2er Finally, Treasury selected a single allowance level, as opposed to varying levels, to further the goals of simplicity, flexibility, and administrability. Furthermore, data limitations make it difficult to distinguish between types of Iocel governmonts.— GeneralRevenue The interim final rule adopted a definition of "Samuel revenue" based largely on the components reported under "General Revenue [ram Own Sources" in the Census Bureau a Annual Survey of State and Local Government Finances. Under the Interim final rule, general revenue included revenue collected by a recipient and generated from its underlying sconom , and it would rapture a range of different types of tax revenues, we well es other types of revenue that are available to support government servims.2" Specifically, revenue under the interim final rule included money that is received from tax revenue, current charges, and miscellaneous general revenues and excluded refunds and other connecting transactions, proceeds from issuance of debt or the sale of investments, agency or private trust transactions, revenue from utilities, social insurance trust muscat, and intergovernmental se see, e.g.. Govemmced Acommabiliry Office. store and l.ocal Goeemmam.. Fiscal Condaiem Odids the COVIRr9 VaMemic In Salepad States Buly sinu In due, that eften, and haul goo ion. cavernsa of, depend ran the overall eoand unions to atm, the spread ofthe my, virus drudcally twinned soaemlc stoner, I; hoard afeeaemom ufdhe Federal le-asve synam, Mannino, Pliny Pepod (July 9. son) hunts that the pandemic "pushed down state and local geonmment ta. conwtiw• and that whoa a. of the drag is stood, sum and total "gormmnent poodle ...lines only edged up hoer weir laws at the eased asthe pendmnit'1. •es land gewmme d his caverns data in the tonnes. hamana (burned summery of scam and Lrcal Tez Revenue, sated note 271, is provided on an aggregated haeia. —The thousand.. she released gold— clottois, Iraw a sustained der detmmis. whether e particular entity is "pert of us oaddent'8 govemmon. "See FAQ 9'M. consonance State antl Isil Fiarol Recovery Funds, Fm,luener Asked Questions, as of July m, ma; Lap.:)/hoses. hassomy.gwA,d.1a1w11J6VSVfPFdQ.pdf ua adu�;Z.n inniwtioo, puLua"instant edton naU.S. O,mgy lnfireadlon Admmwrelbn. un. Me. lace-eng®eel mveaue mmpown Annual Stands Utioly Mt. fO.Aibm 2wrj. of all Omer gz and —...a of un erne from eeWWe of hire://www, iu.gov/elecviviry/aNn_ their awn mecda on,sotbads. don, end u"nod sin Iwumnce triA revene), mawai„g red" mywim, rAQ 3.14 prande, Nnhas P Pans. on bow lonery pleased, and anq m dnnmma Meat ou'd... neiune.'ahem m,t .m no inte,ire Md rate excluded gevwcmennl for purpoam of calculatin'avenue lw. Smm eandam from in. FWeml commensal. boa it did Ceso-nra. 5,ek and local Flea) Bronson, lowd, not —Ind. mtergsvemmemel named. koeaWe, Rdaueally Askad Quesamesa of July 19, ML geveemnntel can's for peopmn revenuelee l hope hope 11hoo-.ormid garle ens /)i1WBa/ pmvblons. sltI.Qpdf. 4404 Federal Register/Vol. 87, No. 18/Thursday, January 27, 2022/Rules and Regulations transfers from the federal government, whole for past expenditures, and one- revenue (e.g., property taxes), these are including transfers made pursuant to time revenues such as revenue from the not uncommon address of revenue for section 9901 of the ARPA.aan In the rase sale of property. recipients, and their inclusion provides of Tribal governments, it also included Treasury Response: In die final rule, a more complete view of the financial revenue from Tribal business Treasury has maintained the definition health of a recipient government and is enterprises. of "general revenue' from the interim consistent with the Causes Bureau Public Comment: Many commenters final rule with two axcepUons. methodology. Treasury is also asked Treasury to include certain items Treasury has adjusted the definition maintaining the marine! an of all in the definition of 'general revenue." to allow recipients that operate utilities Payments from the federal government For instance, several commenters that that are part of their own government to [including payments for services) from operate their own utilities asked that choose whether to include revenue from general revenue in order to avoid revenue from utilities be included, these utilities in their revenue loss substantial dilution of the definition of g�iarg that decfirim in utility revenue calculation. This change responds to revenue, particularly in light of y affect contributions W their comments from recipients indicating extraordinary fiscal support provided general funds. Many of these that revenue from utilities is need to during the pandemic. Treasury is commenters noted that m..Wrlums an fund other government services Bud that mainteio ng the inclusion of utility shutoffs and a decline in utility revenues have declined on intergovernmental imnsfeen other than collections have resulted in significant aggregate.raz This approach is consistent firm the federal government for the budgetary pressures. with other eligible uses, which reasons provided in the Supplemental Same commenters also asked for the recognize decreased SM ity of any Information to the interim final rule; to exclusion of certain intergovernmental households to make utility payments; do otherwise would be to significantly transfers in the definition of general see section Assistance to Households, distort the revenue calculations for local revenue, including transfers of shared which identifies utility assistance as on governments that regularly receive revenue from the atate.rat Other enumerated eligible use of funds, revenue sharing payments, for example, commenters asked far the inclusion of including through direct or bulk from their state governments. Treasury certain transfers from the federal payments to utilities for consumer is also maintaining the approach that government, including fees paid for assistance. Furthermore, for utilities or "general revenue' includes revenue services and grants that are, In effect, other entities (e.g., certain service from Tribal enterprises. This approach paid for the provision of Bernice.. districts) that are not part of the regni cozes that these enterprises often Treasury also received multiple recipient government, a transfer from form the revenue base for Tribal requests to include revenue from Tribal the utility to the recipient constitutes an governments' budgets. enterprises in the definition of "general intergovernmental transfer and therefore To ease thard.. he bden on recipients end revenue" and that "Tribal enterprice" be I. included in the definition of "general defined broadly. Others asked far the revenue."ass account for anonmlma variations in ability to choose whether to include Treasury has also added liquor stare roved, as mentBaed above. Treasury revenue from Tribal enterprises. revenue to the definition of general has incorporated a "standard Finally. some commandant requested revenue. The Supplemental Information allowance" option into the final rule. A that the definition of general revenue to the interim final rule stated that the recipient may choose to use the exclude motion sources ofrevemm, such definition oftax revenue would include standard allowance, which herder the as revenue sources that do not support liquor store revenue, but the text of the final rule is set at up to $to million, not a general fund (f.a., revenue sources that role did not include it. Accordingly, in to exceed the reciphod's SLFRF award are restricted in use). Commenters also the final rule, Treasury is clarifying that amount, as an alternative to calculating asked that general revenue exclude revenue includes liquor store revenue. revenue loss according to the formula .venue ham speefal aseessmenls, However. Treasury believes revenue described above. This addition will settlements that make the recipient from government -awned liquor stores is promote administrative efficiency and better classified as general revenue than simplify the revenue loss calculation for A. Sol Bad mla need rlmr'eaneml it is as tax revenue, an the final rule the vast majority of recipients. Treasury mnaiand ^.x n eanue' excludes refund: end includes it es part of general revenue. intends to amend its reporting farms to camdmg trans.dim.. mama of In response to reqquests that the provide a mechanism flu recipients to exdudmg" rePonds and offer enrmnmg definition of ganerelrevanue exclude elect to utilize either the revenue loss such us...the Cars- .finflns..lanureMmdyyupnn revenue from assessments, formula or the standard allowance, in wnne Wode and I..-.a.,—dprevidn,net P geaeml h.wuue and lux m.aane un, morde.J wholesettlements past a make pendit res,recipient aadditional other changes mode as part "no or'of- lac.daomen evnenmetm.amte in whale for past expenditures, and one- of the final rule. 'rneuse oel,th. lvq'a'he the Gemrim Mduuleu timerevenuesouesy,such Treasury srevenueuryism ham the ana.ml...,,Hc es men let x„mm sale of ro art Treeam is maintaining Aggregate Revenue Loss Calculation n.miadotm. xow.mm. W beme,slemn with We ti opunity, Y n6 its position in the final rule that such Under the interim final rule, revenue revalue is v mthere included in general revenue. loss was calculated there breed do aggregate While such revenues By less revenues and fore low in one type predictable than other sources of of revenue could be offset by gainsin F another. The amount of erne funds ds available to provide government ress wes based on overall net reasons loos. In the Supplementary Information the interim final race, Treasury asked commenters to discuss the advantages and disadvantages of, and any potential concerns with, this approwhich i could be Inci.umatances in witch it could be necessary or Federal Register/Vol. 87, No. is/Thursday, January 27, 2022/Rules and Regulations 44O5 appropriate to calculate the reduction in revenue eoures Public omment Treasury mceived .any comments stating that revenue loss should be calculated on a souree- by-spume basis. Some commenters argued that a source -by -source approach would be administrative ]y .!.plot. Other commenters argued that calculating revenue loss source -by - source would butter reflect the impact of the CAViD-19 pandemic an their ability to fund government services because revenue gains in one source cannot always be used to make up for losses in another. For similar reasons, other commenters asked that revenue loss be calculated on a fund basis. Treaaury Response: Treasury considered alternative methods (e.g., source -by -source, fund -by -fund) but ultimately determined to maintain the calculation of revenue lass in the aggregate. The pandemic has had different effects on recipients (and their revenues), and Treasury recognized that one particular type of revenue or one particular source may have experienced a greater amount of lass for some recipients. He.., the statute refs. such Slate, local government, or Tribal governmenV"The statute is thus clear that Treasury is to refer to the aggregate revenue reduction of the recipient due to the public health emergency. Further, this provision is designed to address declines in the recipients' overall ability to pay for governmental services. and calculating revenue loss on an aggregate basis provides a more accurate representation of the effect of the pandemic on overall revenues and the fiscal health of the recipient. In many circumstances, recipient governments have flexibility to use revenues from an array of sources and offset declines is some sources with gains in others. While the details and configuration of this flexibility very widely across recipient governments, calculating revenue lass on a source -by -source or fund -by -fund basis would not capture how recipient governments balance their budgets in the regular course of business. Accordingly, the final rule maintains the requirement that revenue loss is to be calculated on an aggregate basis. Calculation hales Public Comment: Under the interim final rule, recipients calculate revenue loss as of the and of the calendar year. Treasury received many comments requesting that recipients be permitted to calculate revenue toes as of the and of their fiscal year. Commenters argued that doing so would be simpler and less burdensome on recipients and that financial data as oft he end of the fiscal year is audited and therefore more reliable. Commenters also argued that recipients' fiscal years are structured amund the timing of major revenue ...roes, and that the Census Bureau uses fiscal years in its Annual Survey. Treasury also received comments bout the use of multiple calculation dates. Several Tribal governments stated that they would not am ongoing revenue lasses due to the COVID-19 public health emergency and asked to be able to determine revenue lass as of the first calculation date. Several commenters asked whether revenue loss is determined independently for each year, so that a gain in one year does not offset a lose in another, or whether revenue loss is cumulative from the beginning of the pandemic. Treasury Response: In the final rule, recipients more flexibility with respect to calculation dates and to clarify certain elements. Specifically, the final rule provides recipients the option to choose whether to calculate revenue loss on a fiscal year or colander year basis. though they most choose a consistent basis for loss calculations throughout the period of performance. Treasury has also clarified in the final rule that revenue loss is calculated separately, for each year such that the calculation of revenue lost in one year does oat affect the calculation of revenue lost in prior or future years. Presumption That Revenue lass Is Due to the Pandemic As stated above, sections 602(c)(1)(C) and 603(c)(1)(C) of the Social Security Act provide that SLPRF funds may he used "far the prevision ofgovernment services to the extent of the reduction in revenue of such ... government due to the COVID-19 public health emergency relative to revenues collected in the most recent full fiscal year of the . . government prior to the emergency." As discussed in the interim final rule, although revenue may decline for reasons unrelated to COVID-19, in order to minimize the administrative burden on recipients in calculating revenue lass and take into consideration the devastating effects of the COVID-10 public health emergency, any redaction in revenue relative to the counterfactual estimate was presumed in the interim final rule to be considered revenue lust due to the pandemic. Treasury stated I. the Supplementary Information to the interim final rule that it was considering when, if ever, during the period of performance it would be appropriate to reevaluate the presumption that all losses are attributable to the public health emergency. Treasury also sought comment on whether to take into account other factors, including actions taken by the recipient as well es the expiration of the COVID-19 public health emergency, in determining whether to presume that revenue lasses am "due to" the COVID-19 public health emergency. Public Comment: Treasury received many comments in support of the presumption, as well as some opposed. Some commenters argued that the presumption eases the administrative burden on recipients bemuse, without it, it would be difficult to identify which losses ass attributable to the COVID-19 public health emergency. Many commenters also argued that Treasury should maintain the presumption because recipients are likely to experience losses due to the public health emergency even after the end of the public health emergency. Treasury also received momenta asking that it adjust any revenue lass calculation to amount for lax changes enacted by the recipient. In particular, some commenters noted that some recipients had increased taxes in order to meet additional demands for government services or to address declines in avenue due to the pandemic. These lax increases have in some cases offset some or all of the actual revenue lass attributable to the public health emergency. Because the interim final rule calculates revenue loss by reference to actual revenue collected, commenters argued that the calculation of revenue loss "due la" the public health emergency needs to take into consideration the effects of tax increases by deducting the effect of these tax increases from actual revenue collected. Treasury Response: In the final rule, Treasury has maintained the presumption that a reduction in a recipient's revenue is due to the public health emergency with curtain adjustments to respond to comments and to better account for revenue lass "due to the COVID-19 public health emergency." The final rule makes adjustments to the presumption to take into account certain government actions to change tax policy. In particular, Treasury is adjusting the presumption to amount for changes to tax policy by providing that changes in revenue that are caused by tax inermer. or decreases adopted after the is... of the final rule will not be treated as due to the public health emergency. 4406 Federal Register/Vol. 87, No. 18/Thursday, January 27, 2022/Rules and Regulations Resumption of Revenue Loss "Due To" the Pandemic In enacting sections 602(c)(1)(C) and 603(c)(1)(C) of the social Security Act, Congress provided that a stale, local government, or Tribal government could use funds to "cover costs ... for the provision of government services," but only "to the extent of the reduction in revenue. due to the COVED-19 public health emergency relative to revenues collected in the most recent full fiscal year ... prior to the emergency." In doing so, Congress recognised that the pandemic waa causing significant disruption to economic activity and sought to minimize the impact of associated revenue losses on the ability of the recipient to provide government services when such services were needed ..at.-- The text of the statute itself reinforces this important context: The law specifically limits funds to cover revenue losses that both are "due to the COVID-19 public health emergency" and could impact "the provision of government services." Courts have recognized that the phrase "due to" can refer to various causal standards.— Here, in the context of Congress's addressing economic disreplions caused by the COVID-19 pandemic that could impact both .Va.. and government services, the key consideration is whether a revenue Ines experienced by the recipient thus "due to" the pandemic) or instead from the recipient's awn discretionary actions (and, In this context, were not "due la" the pandemic). Reductions in revenue due to the public health emergency does not cover revenue reductions that resulted from a recipient's own discretionary actions. In the interim final rule, Treasury included a presumption that all revenu recipients discussed above and take into omalibinumn the devastating effects of the COVID-19 public health emergency. Based on comments. Treasury believes that the masons far the presumption continue to be valid and has determined to maintain the presumption in the final .Is with certain modifications. In •" 9aed ni ama amm)(,)eN amla) ofrho serial severity Ae mppro,maus,the fonds err ..ymem to exipimU mender to -mnigale nor In.) M. elemml, fiver the public hwllh = 1 US. Neu somm v. Postol Negmemy C. gm'n s40 F.3d r263 N.C. L4. mrr); ¢ Kimber v. rltiokol Coe)1., lee Kid rasa, rim (loot Cu, mos]; cetera v. 0imatm. OWCe. No Kid era, 821 (eth a,]Bea). particular, at this point in the course of the pandemic, with the fiscal pressure on state and local governments having been significantly reduced, it is appropriate for Treasury to reassess aspects of this presumption. As discussed below, the final rule requires recipients to exclude the value of tax policy changes adopted after Jamlary 6, 2022. Recipients of the SLFRF range from states to the smallest local governments. At the time that the interim final rule was adapted, it was important for recipients to be able to calculate with ease and certainty their amount of revenue loss so that they could begin deploying these funds to continue to maintain essential government services. To this end, the presumption in the Interim final role provided a relatively simple formula for all recipiems re use, but the exigent need fin recipients to immediately deploy funds for the provision of government services has decreased and it,. benefit of the presumption in reducing administrative burden is less relevant for those governments that are not likely to avail themselves of the standard allowance described above. Circulation with these considerations, the final rule requires recipients to exclude revenue loss due to tax changes adopted after January e, 2022. Eliminating revenue loss due to tax changes from the presumption is appropriate given the significance of tax revenue as a finite. of all revenue far state and lore) governments, the direct impact of tax policy decisions on revenue callected, and the relative ease with which recipients can isolate the estimated effect of a tax change on rev enue.••• Most state budgeting immense require a "budget score;' often developed through a ronsensn. process with executive and legislative branch experts,•°' and Treasury expects that larger localifies, those most likely to utilise the revenue loss formula rather than the standard allowance, also regularly use revenue or budget estimates when considering changes to tax policies. As such, in many cases, recipients already prepare estimates of the impact of tax changes on revenue, and as discussed below, Treasury will generally permit recipients to rely on such estimates in adjusting their revenue lass calculations. Reductions in revenue that are not attributable to tax changes would continue to be subject to the presumption. A requirement that recipients evaluate the revenue effect of changes in discretionary policy actions other than tax changes would be more difficult for recipients than evaluating the changes attributable to tax changes given that stale and local governments do not generally pre re estimates of the revenue e0ects at other actions. Finally, as noted above, taxes are the single largest source of revenue for state and local government recipient. in the aggregate. Revisions to Presumption To Address Tax Reductions For than reasons, Treasury is providinngg in the final rule that changes in Ranges revenue that ere caused by 2022) will net he treated as due to the public health emergency, and the estimated fiscal impact of such tax cuts must be added to the calculation of "actual revenue" for purposes of April 1, 2022. Tax cuts include final legislative or regulatory action or a new or changed administrative interpretation that reduces any tax (by providing for a reduction in a .to, a robato, a deduction, a credit, or otherwise) or delays the imposition of any tax or tax increase and that the recipient assesses has had the effect of reducing tax revenue relative to current lew. This includes the phase -in or taking effect of any statute or mle if the phase -in or taking effect was not prescribed prior to the issuance of the final role. in assessing whether a lax change has had the effect of reducing tax revenue, recipients may either calculate the actual effect on revenue or rely an estimates prepared at the time the tax change was adapted. Mare specifically, recipients may rely on information typically prepared in the course of developing the budget (mg., expected revenues) and/or considering mx changes (e.g., budget scares, revenue notes) to determine the amount of revenue that would have been collected in the absence of the tax cut, as long as those estimates are based on reasonable assumptions and do not use dynamic methodologies that incorporate the projected effects of macroeconomic growth, given that macroeconamic Federal Register/Vol. 87, No. 18/Thursday, January 27, 2022/Rules and Regulations 4407 growth is accounted for in the counterfactual growth assumptions. Recipients that choose to calculate the actual effect of a tax change on revenue must similarly base their calculations on reasonable estimates that do not use dynamic methodologies. Recipients should apply this adjustment in determining their actual revenue totals at Step 3 in the revenue loss calculation described above. Revisions to Presumption To Address Tax Increases As noted above, the calculation methodology in the interim final rule implicitly assumed that recipients did not experience a reduction in revenue due to the public health emergency if they did not experience a reduction in aggregate revenue relative to the counterfactual estimate. Treasury recognizes that some recipients may have experienced a reduction in revenue due to the public health emergency that was offset by other revenue, particularly in the case of increases to tax revenue resulting final a tax increase. The final rule requires recipients that increased taxes to deduct the amount of increases to revenue attributable to such tax increase, This change is also consistent with the incorporation in the interim final rule and Ideal into of a counterfactual growth rate, which effectively permits recipients to count revenue leases due to the public health emergency Nat are offset by increased tax revenue resulting from organic growth. For these reasons, Treasury is providing in the final rule that recipients must subtract from their calculation of actual revenue the effect of tax increases adapted after the date of adoption of this final role primary 6, 2022) for purposes of calculation dates that occur on or after April 1, 2022. This change and the change to the final rule described above wet tax changes in a consistent member: In the case of reduction in revenue resulting hem a tax cut, a recipient must add the amount of that reduct e, to its calculation of actual revenue, and in the case of en incomes. in revenue resulting form a tax increase, a recipient must statement the amount of additional revenue collected as a result of the tax increase from its calculation of actual revenuc.2as +m The first rule does art lwrmit raipia ve to rcMct the ef(tle of other cheaper in policy, sua in fees adopted ther adoption of the Msl rule.Iw`lwy undemmnde that the ruin bunre.a.; of such a change would be time reeiplrnu IhN will booth form the standard albwance provided for in the Mal rule and Ihet for ohm nrtipiems if. admininntive burden on recipients rmeded no calculate mac intentional As is the case with tax cuts. discussed above, tax increases that must be m0ended in the calculation of promote include final legislative or regulatory action or a new or changed administrative interpretation that increases any tax and that the recipient assesses has had the effect of increasing tax revenue relative to concert law, In assessing whether a tax change has had the effect of increasing tax revenue, recipients may either calculate the actual effect on revenue or rely on estimates prepared at the time the new change was adopted. Recippcents may rely on information typically prepared in the course of developing the budget (e.g., expected revenual and/or considering tax changes (e.g., budget scores, revenue notes) to determine the amount of revenue that was collected as a result of the lax increase as long as those estimates are based on reasonable assumptions and do not use dynamic methodologies that incorporate the prejecled effects of mameeconomic growth, given that macroeconomic growth is accounted for in the counterfactual growth assumptions. Recipients that choose to calculate the actual effect of a tax change on revenue must similarly base their calculations on reasonable estimates that do not use dynamic methodologies. Recipients should apply this adjustment in determining their actual mvenue Insists at Stop 3 in the revenue loss calculation described above. Previously Adopted Tax Changes As discussed above, the final rule will not require recipients to reflect the revenue effects of tax increases or decreases adopted prim to the adoption of the final rule. Recipients that adopted a tax change in a previous period will not be required to recalculate the amount of revenue loss as of prior calculation dates or to reflect the fiscal impacts of such tax changes in calculation dales after the effective data of the final role. However, the final role will permit recipients to elect to reflect the revenue effects of their tax changes adopted between the beginning of the public health emergency and the adoption of the final role mom If a recipient elects to do ao, it net do be with respect to all of its tax changes world -.fell the benefit of brum a sonawht Iuear amounl of funds eraihble forgwu on ae The final rule also addresses the possibility rut aome recipients may here fieul yura eadng it.., Ibe period between Ienuary 6, 2022 end wail t, ec.; such reline. alufion to v fax entries from free prance would also "Ply to chengu during this period with malts to the r.loolamnr dau is sue period. adopted between the beginningg it the public health emergency and the adoption of the final rule, Treasury intends to revise its reporting requirements to permit recipients to amend their previously reported calculation periods to reflect such changes. Determination of the Base Year Under the ARPA and interim final .to, SLFRF funds may be used "for the provision of government services to the extent of the reduction in revenue. . relative to revenues collected in the most recent full fiscal year' of the recipient. Therefore, the base year for the revenue lass calculation is the meet recent full fiscal year pprior tlethe COVID-19 public health emergency. Public Comment: Tressur received multiple comments asking for flexibility in determining base year revenues. For Instance, some commenters asked to use a different base year than the "moat recent full rural year" prior to the pandemic for calculating revenue loss; others asked to be able to average prior year. Commenlem slated that, for various reasons, revenue was artificially low in the last fuB fiscal year prior to the public health emergency, and, therefore, using revenue in that year as the base year did not accurately reort expected revenue in a normal year. For example, several Tribes stated that unforeseeable weather events resulted in forced closure of casinos which, in turn, artificially deflated revenues in the base year. Other commeatem indicated that one-time anomalies in the timing of tax collection in that year artificially pushed revenue into the following fiscal year. Similarly, a fare commenters noted that tax changes that took effect in the middle of the base year may artificially skew the at. of the revenue loss experienced by the recipient government. Treasury Response: Measury understands that recipients may have ex erienced events in the base year that Is d to lower or higher revenues than what they otherwise would have reflected. The ARPA provides that revenue lass is to be determined with respect to revenue in the most ..of full fiscal year prior to the pandemic, and therefore the final into maintains its incorporation of the statutory definition. In calculating revenue loss. recipients rosy use data on a cash, accrual, or modified accrual basis, provided that recipients are consistent in their choice of methodology throughout the covered period, which might help recipients adjust to certain delays to revenue roceipt. Both the standard allowance and elements of the formula (e.g., 4408 Federal Register/Vol. 87, No. 18/Thursday, January 27, 2022/Rules and Regulations counterfactual growth rate) incorporate generous assumptions to give recipients flexibility and to account for variation among recipients' experiences during the pandemic. Government Services The SUPPLEMENTAL INPoRMARON to the intmim final cde provided a non - exhaustive list of examples ofearvices that are government services. The interim final mle also discussed why neither payment of debt service nor replenishing financial reserves constitutes government services, as these expenditures do not provide services but relate to the financing of such services. Similarly, government services under the interim final rule did not include satisfaction of any obligation arising under or pursuant to a settlement agreement, judgment, consent decree, or judicially confirmed debt restmeturing in a judicial, administrative, orregulatory proceeding, unless the judgment or settlement required the provision of government services. Public Comment: Treasury received severe) comments requesting further clarification regarding the scope of government serving, including asking for either a specific definition of government services or that a specific use be expressly deemed to be a government service. Some commenters disagreed with the exclusions from government services in the interim final rule. For instance, many of the comments Treasury received suggested that replenishing reserve funds and at least certain types of debt service should be treated as providing governments[ services. Some commenlere also suggested that a recipient should be able to use funds for costs incurred before Mamh 3, 2021. Other commenters asked Treasury to maintain the prohibition on usbrg the funds to pay debt service. Treasury Response: Treasury continues to believe that the lists of activities that either are or ere not providing government services are accumle but is clarifying here that, generally spanking, services provided by the recipient governments are "government services" under the interim final rate and f al rule, unless Treasury has stated otherwise. Government services include, but me not limited to, maintenance or pay-gofunded building son of infrastructure, including roads; modernization of cybecescurity, including hardware, —Pay-so hhaeteanma funding nature to the Praonca of funding usual Pl.J. end, cuhna. hand hem taxes, an. arm , and moor ewrwe, noer then with borrowed acme. software, and protection of critical infrastructure; health services; environmental minedistion; school or educational services; and the provision of police, fire, and other public safety services. The aforementioned list of government services is not exclusive. However, recipients should be mindful that other restrictions may apply, including three articulated in the section Restrictions on Use. In the final role, Treasury is maintaining the limitations on government services included in the interim final rule and has addressed and responded to public nmmenlers on these issues in the section Restrictions on Use. D. Investments in Water, Sewer, and Broadband Infrastructure Summary of Interim Final Rule Under the ARPA, recipients may use funds to make necessary investments in water, sewer, and broadband infrastructure. The interim final rule provided recipients with the ability to ow funds for a brand array of uses within these categories. The interim final rule discussed two general provisions that apply across all water, sewer, and broadband infrastructure investments. First, the interim final role addressed the morning of"necessary" investments as meaning those designed to provide an adequate minimum level of service and unlikely to be made using privet. sources of funds. Second, ire interim final rule encouraged recipients to use strong labor standards in water, sewer, and broadband projects, as discussed below. Necessary Investments The statute limits investments to those that are necessary. As discussed in more detail below, Treasury determined that the types of water and sewer projmte that were authorized under the interim final rule by reference to existing Environmental Promotion Agency (EPA) programs would m all cases be necessary investments given the conditiorm applicable m such EPA programs. Similarly, the interim final mle's definition of eligible broadband projects as these designed to provide a certain standard of service to those households and businesses with limited existing service was based on the statutory requirement that investments in water, sewer, and broadband must be "necessary." As discussed further below, Treasury has expanded the amps of what is an eligible water and sewer Inf estmctura project to include additional uses. In particular, the final rule permits use of SLFRF funds for certain dam aad reservoir restoration projects and certain drinking water projects to support population growth. The nature of these additional uses is such that additional fetter. must be considered in determining whether one of these additional uses is a necessary project. in addition, Treasury recognizes that there may be a need for improvements to broadband beyond flown households and businesses with limited existing service as defined in the interim final rule. Treasury has replaced this specific requimment based on an understanding that broadband investments may be necessary for a broader set of reasons. Given this expansion of what is considered in scope as a water, sewer, or broadband infrastructure project, the final role provides a further elaboration of Treasury's understanding of the conditions under which en infrastructure project will be considered to be a necessary investment. Treasury considers a necessary investment in imf=motun to be one that is (1) responsive to an identified need to achieve or maintain an adequate minimum level of service, which may include a reasonable projection of increased need, whether due to population growth or otherwise and (2) a cost-effective morns for meeting that need, taking into amount available alternatives. In addition, given that drinking water is a resource that is subject to depletion, in the case of investments in infrastructure that supply drinking water in order to meet projected population gmedin the project most be projected to be sustainable over its estimated useful life. Not included in the list of criteria above is the requim root in the interim fort rule that [he projett be unlikely m be made using private sources of funds. Given that it my be difficult to agenda in a particular case what the probability of private investment in a project would be, Treasury hes el frosted this standard from the meaning of necessary but still encourages recipients to prioritize projects that would provide the greatest public benefit in their respective jurisdictions. Strong Labor Standards in Water, Sewer, and Broadband Co..troubm As stated in the Supplementary Information to the interim Banal rule, Treasury encourages recipients to carry out investments in water, woodr, or broadband infrestruclure in ways that produce high -quality Infrastructure, evert disruptive and costly delays, and Federal Register/Vol. 87, No. 18/Thursday, January 27, 2022/Rules and Regulations 4409 promote efficiency.'" Treasury encourages recipients to use strong labor standards, including project labor agreements (PLAs) and community benefits agreements that offer wages at or above the prevailing .is and include I..[ hire provisions. Treasury also recommends that recipients prioritize in their procurement decisions employers who can demonstrate that their workforce meals high safety and training standards (e.g., professional certification, licensure, and/or robust fn- house training), that hire local workers and/m workers from historically anderserved communities, and who directly employ their workforce or have policies and practices to place to ensure contractors and subcontractors meet high labor standards. Treasury further encourages recipients to prlon .me employers (including contractors and subcontractors) without recent violations of federal and state labor end employment laws. Treasury believes that such practices will promote effective and efficient delivery of high -quality infrastructure projects and support the economic recovery through strong employment opportunities for workers. Such practices will also reduce the likelihood of potential project challenges like work stoppages or safety accidents, while ensuring a reliable suppply of skilled labor and minimizing dismptions, such as those associated with labor disputes or workplace injuries. That will, in turn, promote on -lime and on -budget delivery. Furthermore, among other requirements contained in 2 CFR 200. Appendix 11, all contracts made by e recipient or subredpient in excess of $100,000 with respect to water, sewer, or broadband inl astructure project that involve employment of mechanics or laborers must include a provision for compliance with certain provisions of the Contract Work Hours and Safety Standards Act, 40 U.S.C. 3702 and 3704, as supplemented by Department of Labor regulations (29 CFR part 5). Treasury will continue to seek information from recipients on their workforce plans and water, sower, and broadband projects undertaken with SLFRF funds. This reporting will support transparency and competition by enhancing available information on the services being provided. Since publication of the interim final rule, Treasury has provided recipients with additional guidance and instructions on the reporting ecapdrements.s"s Environmental and Other Generally Applicable Requirements Treasury cautions that, as is the case with all projects engaged in using the SLFRF funds, all projects must comply with applicable federal, state, and local law. 1. the rase of infrastructure projects in particular, this includes environmental and permitting laws and regulations. Likewise, as with all capital expenditure projects using SLFRF funds, projects must be undertaken and completed in a manner that is technically sound, meaning that they must meet design and construction methods and use materials that are approved, codified, recognized, fall under standard or acceptable levels of practice, or otherwise are determined to be generally acceptable by the design and construction industry. 1. Water and Sewer I efixem meture Sections 602(c)(1)(D) and Section 603(e)(1)(D) of the Social Security Ad provide that recipients may use the SURF funds "to make necessary investments in at. [and] sewer. . infrastructure." The interim final role permitted a broad range of necessary investments in projects that improve access to clean drinking water and imppcave wastewater and stormwater ", rectum systems. As discussed below, after review of comments received on the interim Final rule, Treasury has made changes in the final rate to expand the scope of eligible water and sewer projects. Summerry of Interim Final Rule and Fine] Rule Structure Background: lu the interim final rule, Treasury aligned eligible uses of the SLFRF with the wide range of types or categories of projects that would be eligible to receive financial assistance through the Clean Water State Revolving Fund (CWSRF) or Drinking Water Slate Revolving Fund (DWSRF) administered m, see U.S. Exper meat of the Taueery. Compliance and Reporting Guidance, Il llwe 24, 2021), Atryel/Aome.neasury.gw/cy[remHlletlrJe/ sGFrlFtamp/gncrond-AeponingCuidon®.pdj by the Environmental Protection Agency (EPA). By referring to these existing programs, with which many recipients are already familiar, Treasury intended to provide flexibility to recipients to respond to the needs of their communities while facilitating recipients' identification of eligible projects. Furthermore, by aligning SLFRF eligible uses with these existing programs, Treasury could ensure that projects using the SLFRF are limited to "..c.a.ry °vestments." Public Comment: Treasury received many comments responding to the water and sewer infrastructure provisions of the interim final In from state, local, end Tribal governments, industry trade associations, public interest groups, private individuals, and other interested parties. Commenters requested that Treasury provide a wider .at of eligible uses for water and sewer infrastructure beyond those uses articulated by the DWSRF and CWSRF, suggesting that Treasury expend the definition of necessary water and sewer infrastructure. Treasury Response: In response to commenters, Treasury is expanding the eligible use categories for water and Sewer infrastructure, discussed in further detail below. Because the interim final rule aligned the definition of necessary water and sewer Infrastructure with the eligible uses included in the DWSRF and CWSRF, Treasury is reflecting in the final rate a revised standard for determining a necessary water and sewer infrastructure investment for eligible water and sewer uses beyond those uses that we eligible under the DWSRF and CWSRF. Interpretation of Necessary Investments and Water and Sewer luf esUudure Necessary Investments: A. discussed above, Treasury considers an investment in infrastructure to be necessary if it is (1) responsive to an identified used to achieve or maintain an adequate minimum level of service, which for some eligible project categories may include a reasonable projection of increased and, whether due to population growth or otherwise and (2) a cost-effective means for meeting that need, taking into account eve➢able alternatives. In addition, in the case of investments in drinking water service infrastructure to supply drinking water to satisfy a projected increase in population, the project must also be projected to be sustainable over its estimated useful life. As detailed further below, DWSRF and CWSRF eligible projects continue to be presumed to be necessary investments under the final 4410 Federal Register/Vol. 87, No. 18/Thursday, January 27, 2022/Rules and Regulations rule, with the exception of projects for the rehabilitation of dams and reservoirs, which the EPA has permitted in certain circumstances under the DWSRF and, as discussed below, are addressed separately in the final rule. In evaluating whether a project would respond to a need to achieve or maintain an adequate minimum level of service, a recipient should consider whether it would meet the needs of the population to be served and would satisfy applicable standards. For example, a drinking water project must be sized such that it provides an adequate volume of water to households and other customers and must at applicable standards for drinking water quality under the Safe Drinking Water Act (SDWAk Similarly, a centralized wastewater treatment project should be designed to manage updated estimated flow rates and comply with Clean Water Act requirements. These requirements are already reflected in the eligibility criteria of the DWSRF and CWSRF, respectively. In evaluating whether a project is a cost-effective means of providing the water in sewer service, the recipient should consider the used for the project, the cosy and benefits of the project compared to alternatives, and the effectlwness of the project in mention should consider Ann. For ly not use funds ehabiliation to to a community would role. As detailed further below, recipients are ovly required to assess cost-effectiveness of projects for the creation of new drinking water systems, dam and reservoir rehabilitation projects, or projects for the extension of drinking water service to meet poppulation ggrorowth Deeds. Gamin DWSRF eligibllilize for already subject to a coal -effectiveness teal. Specifically, projects that create new drinking water systems must be a cost-effective solution to addressing the identified problem.aaa The EPA also imposes a cosleffectiveness condition on dam and reservoir rehabilitation projects undertaken pursuant to its class deviation from the DWSRF into, These projects are particularly expensive and, unlike in the case of other types of eligible projects, there are often �seess era as.aszIXbl(xl(m6 available alternatives to conducting these projects. Projects for the extension of drinking water service to most population growth needs are also often P.5ulary expensive, end there are often different _eye to meet the needs of expanding populations. Treasury will accordingly require that recipients engage in a lusteffectiveness analysis when engaging to projects for the creation of new drinking water systems, dam and reservoir rehabilitation projects, or projects for the extension of drinking water service to meet population growth needs. Other types of eligible water or sewer projects will not be subject to this cost-effectiveness lest, including lead line replacement and lead monediation.aae In the case of projects that expand drinking water service infrastructure to satisfy a projected increase in population, the project must also be sustainable, meaning that the project can continue providing the adequate minimum level of service for its estimated useful life, taking into account projected impacts of changes to the climate and other expected demands on the stores of water. For example, a reservoir rehabilitation project may not be pursued if the reservoir will no longer he able to provide an adequate source of drinking water before the end of the estimated useful life of the improvements to the reservoir. In areas currently !in dad by draught or where drought conditions are expected to be more frequent or more severe In the future, sources of drinking water may be diminished mare quickly than in prior periods. In considering how much of a source of water will be available in the future for the drinking water project, a recipient must consider that a source of water may be drawn upon or otherwise used fin other current and expected uses, including use by fish and other Wildlife. The final rule applies this sustainability condition to projects that expand drinking water service infrastructure to satisfy a projected increase in population but rut to other drinking water projects. When a new source of water is required to remedy an existing threat to public health, as in the case of source projects eligible under the DWSRF, sustainability should be a consideration, but in some saes, the need to replace a contaminated source may mean that a less sustainable choice ... Merits ..., cimer the projects eve Prescriptively cast effective (ag., lead prokes weadd always de considered cost effective gown the casts impoud by lead pmsoningl or e cwb elfectivmos. 1. is law relevant glean ore lack at vulabla alumedive. or she uletively low cop of We dua may be made. Wharf faced wide such an issue, such as in the case of a contaminated well system, a project to replace the contaminated source ran be said to bs "necessary" an if the replaced source is not sustainable over the long term. Expediency may dictate that a shorter -term solution is pursued if it is cost-effective and will prevent health issues while a longer -term solution can be found. In contrast, an expansion to accommodate population growth mount be said to be necessary if it is not sustainable over its estimated useful life. Not included in the list of criteria above is the requirement in the interim final role that the project be unlikely to be made using private sources of funds. Given that it may be difficult to assess in a particular case what the probability of private investment in a project would be, Treasury has eliminated this standard from the meaning of necessary but nevertheless encourages recipients to apply funds to projects that would provide the greatest public benefit. Waterand Sawed lnfmstructure: As stated above, Congress p ovided that are availab SURF funds le for "necessary water, sewer, and broadband infrastructure." Treasury interprets the reference to water and sewer used consistent with the inclusion of broadband uses. Water. sewer, and broadband infrastructure all involve the provision of essential services to residents, businesses, and other consumers. As the pandemic has made clear, access to broadband has itself become essential for individuals and businesses to participate in education, m comerce, work, and civic matters and to receive health care and social services. Water and sewer services provided broadly to the public as essential services include the prevision of drinking water and the removal, management, and treatment of wastewater and stonnwater.— Although governments are engaged in otherinfrastructure related to water, including irrigation projects, trensportalion projects, end recreation projects, such projects go beyond the scope of what is provided to all residents as an essential aervice. Provision of drinking water and removal, management, and treatment of ea+I meey Iunsffe dn' aormw.tee%we into me sewer.". nmm dean Ile. a'.. enrmw... ryctem. Thu rpareu Iwlnrmr of w... tuna ••xseai•ieft-c.tus.1. seek® clmnn. - woes' In lea-.1. canna refer re all aso u1-11. welm. oven ten sewer ry aam. on, ..—a. land often nmsadare.If water iulmewcarm wart ro eater I ill wand-relered Iflaemmlre re this context. it ward rude. if. Ndneion of anwer inaaedmcsnre redwdent. Federal Register/Val. 87, No. 18/Thursday, January 27, 2022/Rules and Regulations 4411 wastewater and storraweter are the typical responsibilities of "water and sewer authorities throughout the country, and there is a tremendous need for improvements to the ability of state, local, and Tribal governments to provide such servirm, including to address the consequences of deferred maintenance and additional resiliency needed to adept to changes to the climate.,-" Although the meaning of water and aewer infrastructure far purposes of sections 602(c)(1)(D) end 603(c)(1)(D) of the Social Security Act does not include all water -related uses, Treasury has made clear in this final rule that investments to infrastructure include a wide variety of proleats. Treasury interprets the ward "infrastructure" in this context broadly to mean the underlying framework or system for achieving the given public purpose, Whether it be provision of drinking water or management of wastewater or stormwater.se' As discussed below, this can include not just storm drains and culvests for the management of slormwater, for example, but also bioretentiov basins and rain barrels implemented saws a watershed, including on both public and private property, that together reduce the amount of runoff that needs to be managged by traditional infrastructure. Fuller, Treasury understands that Investments he infrastructure include -1 Sea ¢g.. setter Sat rat Ne Fedael W.I. Yollotlan Control An 133 U.S C. 13621, definue, .•smea infrenruvtureas-the mogeofineasures test use plant --alryvorm.p ble pammmd or ether pormwble out or euheaee, n.memot er harvmt and reuse. or 6Musette to sore. intilume" ur cosine espitae..meet and reduce Rowe le sewer are.or In surfam. watem." improvements that increase the capacity of existing infrastructure and extend the useful life of existing infrastructure. Accordingly, water and sewer infrastructure investment projects include those that conserve water, thereby reducing pressure on infrastructure for the provision of drinking water, and that recycle wastewater and etonnwiter, thereby reducing pressure on the infrastructure for treating and managing wastewater and stormweler. As with other infrastructure projects and capital expenditure projects that are farm Rout as reopen.. to the public health emergency and its negative economic imparts, costs for planning and design and associated pre -project costs are eligible uses of SLFRF funds. Costs for the acquisition of land are also ensure compliance and the owners or operators of the systems will undertake feasible and appropriate changes in operations to ensure compliance over the long-term. Drinking Water State Revolving Fund and Clem Water State Revolving Fund Background: As stated above, in the interim final rule, Treasury included eligible uses of the DWSRF and the CWSRF as eligible uses of the SLFRF in the water and sewer infrastructure category. By providing that projocfs eligible order the DWSRF and the CWSRF are also eligible uses of SLFRF funds, the interim final role permitted a broad range of projects that improve drinking water infrastructure, such as building or upgrading facilities and transmission, distribution, and storage systems, including replacement of lead service lines. With respect to clean water and wastewater infrastructure, the interim final rule provided that recipients may use SLFRF funds to construct publicly awned treatment infrastructure, manage and treat stormwater or subsurface drainage water, and facilitate water reuse, among other uses. Consistent with the DWSRF and the CWSRF, the interim final Is provided that SLFRF funds may be used far eybersecurity needs to protect water or sewer infrastructure, such as developing effective cylaxa eerily practices and measures at drinking water systems and publicly owned treatment works. Use of DWSRF and CWSRF to Support Climate Change Adaptations. Many of the types of projects eligible under either the DWSRF or C6VSRF alao support efforts to address climate change. For example, by taking steps to manage potential sources of pollution and preverting se so urces from reaching sources of drinking water, projects eligible under the DWSRF and CWSRF may reduce energy required to treat drinking water. Similarly, projects eligible under the DW SRF and (WSRF include measures to conserve and reuse water, for example through projects to reuse or recycle wastewater, siormwater, or subsurface drainage water. Treasury encourages recipients to consider green infrastructure investments and projects to improve resilience to the effects of climate change. For example, mom frequent and extreme precipitation events combined with construction and development trends have led to increased instances of stormweler runoff, water pollution, and flooding. Green infrastructure projects that support stornewater system resiliency could include biorelendon basins that provide water storage and frination benefrts, end green xhi eta, where vegetation, soil, and engineered systems are combined to direct and Filler rainwater from ireppervious smfaas. In cases of a natural diaastec recipients may also uae SLFRF funds for water infrastructure to provide relief, such as interconnecting water systems or rehabilitating existing walls during an extended drought. Public Comment: Many commentem expressed support for the interim final rule's alignment of the use of funds for water and we, infrastructure under the SLFRF with the project categories provided through the EPA'. DWSRF and CWSRF programs. Many commentem else provided recommendations about the specific types of water infrastructure projects that should be eligible under the final rule. In many of these .... communities recommended that Treasury include.project types that ero already eligible under the DWSRF and CWSRF and thus eligible under the interim find rule and final rule. For example, several commenters requested that aquifer recharge projects, or other groundwater protection and restoration projects, be included as eligible uses of SLFRF when certain aquifer recharge projects that (1) implement a nonpoint source pollution managemevl program I- or (2) constitute reuse of --Speofically, this would include dmamaoen imparts that dearaua the burden on equifem where there is ousal rela6mship between ufor ,.withdrawals and saltwater premier it the pup se itepbmeat a nonpoint:outm pelludon commwl 4412 Federal Register/Vol. 87, No. 18/Thursday, fanuary 27, 2022/Rules and Regulations wastewater, slormwaler. or subsurface drainage water are in fact eligible uses under the CWSRF. Furthermore, under the DWSRF, eligible projects include certain aquifer storage and recovery systems for water storage. Treasury Response: Eligible projects articulated in the DWSRF and CWSRF commee to be eligible uses of SLFRF funds under the final rule. Recognizing that recipients have faced challenges interpreting eligible use categories under the interim final rule or cress - referencing EPA program materiels to interpret eligible project types, Treasury is including in this Supplementary Information additional information on the types of projects eligible under the DWSRF and CWSRF. Treasury emphasizes that this further clarification does not represent a change in eligibility. Treasury encourages recipients to reference EPA handbooks for the DWSRF and CWSRF, which provide further information and detail about the types of projects eligible under those programs and thus under the final rule. Eligible pmjects underthe DWSRF. Eligibilittas under the DWSRF, the interim fins] Is, and the final rule include projects that address present or prevent future violations of health -based drinking water standards. These include projects needed to maintain compliance with existing national primary drinking water regulations for contaminants with acute and chronic health citation. Projects to replace aging infrastructure are Alan eligible uses if they are needed to maintain compliance or further the public health protection objectives of section 1452 of the SDWA.aos The Improve the quality of drinking water to comply with primary at secondary standards and point of entry or central treatment under section 1401(4)(B)(i)(ID) of the SDWA. (it) Tmnsmiswon and distribution projects, including installation or replacement of Transmission and distribution pipes to improve water pressure to safe levels or to prevent contamination caused by leaks or breaks in the pipes. (III) Source projects, including rehabilitation of wells or development of eligible sources to replace contaminated sources. (iv) Storage projects, including installation or upgrade of eligible storage facilities, including finished water reservoirs, to prevent microbiological contaminants from entering a public water system. in) Consolidation projects, including projects needed to consolidate water supplies where, for example, a supply has become contaminated or a system is unable to maintain compliance for technical, financial, or managerial reasons. (v]) Creation of new systems, including those than upon completion, will create a community water system to address existing public health problems with serious risks caused by unsafe drinking water provided by Individual wells or surface whose sources. Eligible projects are also those that create a new regional cong stwatersystem by existing consolidating existis ng systems that have technical, financial, or managerial existing difficulties, h problems to address existing public health problems associated with we individual lls or surfacece water under followthe project ,were categories are eligible sources must be limited of scope to the the interim DWSRF, and eligibleunder to onmespecificgtion. Eiinent effectedby te the interim final rule. and continua to contaminetion.Proiects that create new mnv9emem pmgvn once session 319 orme Clean Water Act. This could include protons in which demlmeted nawa s, is uttered into the n wid amitigate or psvant wit ziov finewson, se well ee projnes in which brackish wam 3s mraved imAn agaler, demlinatad, and exumed Wsoon agmien. aw,Sen42 US C. 300y 12(a)(2)1a) 6lminng —col atso.d. awd by a dints warm nvstam or noapt gm t, sides , or elan regional community water systems by consolidating existing systems must be limited fit scene to the service area of Federelly-owned public water systems and for -profit noncommunity water systems are not eligible to receive DWSRF funds and therefore SURE funds?+^ The acquisition of water rights. laboratory fees for routine compliance monitoring, and operation and maintenance expanses are not costs associated with investments in inf rstruclum and thus would not be eligible under the final rule. ass Projects needed poi. ly to serve future population growth are also ineligible under the DWSRF; the treatment of such projects under the final rule is discussed ++°Sea 40 CFa 35.35201d1(1). + site is a1511sain1e01-141. separately below under "Expansion of Drinking Water Service"Projects eligible under the DWSRF ..at he sized only to accommodate a reasonable amount of population growth expected to error over the useful life of the Project. Eligible projects under the CWSRF. The final role..lines$ to allow the use of SLFRF funds for projects eligible under the CWSRF, consistent with the interim Real rule. Under the CWSRF, A project must meet the criteria of one of the following CWSRF eligibilities to be eligible for assistance. Section 603(c) of the Clean Water And (CWA) see provides that the CWSRF can provide assistance: (i) to any munluipdity, intermurdupal, insinuate, .,.lots agency far construction of publicly owned treatment works (as defined in section 212 of the MA); 313 (it) for the implemenmuon of a management program established under section 319 of the MA; 314 (in) for the development end implementatum of a mnaervanon end management plat under section 320 of the CWA u livl for the cons.oction, repair, or replacement of decentmliaed wastewater treatment systems that treat municipal wnabawder or domestic sewage. Eligible projects include, but are cot limited to, me eniruction of new decntralized s,t. (.gindividWainsystems and cluster .yete l�aupgrade, raped, or replacement weed sting systems. (v) for measures to manage, reduce, treat, or recapture stormwater or subsurface drainage water. Puhlicly and privately owned, permitted and unpermitled projects that manage, reduce, treat, or reception atonnwaler or subsurface drainage water are eligible. For example, projects that ere specifically required by a Municipal Separate Storm Sewer System (Mli permit are eligible, regardless of ownership. Projects may include, but an not limited to green roofs, biorwentia. basins, roadside plantings, Porous Pavement, and sei.weter intersounicipal, interstate, or stale agency for measures to reduce the demand for publicly awned treatment works moacity ihroueh water Eligible projects include, but are not limited to, the installation, replacement. or upgrade of water meters; plumbing fixture retrofits or replacement; and gray water recycling. Water audits and water conservation plane as also eligible. 33 US.G 1383(d. •"as US.C. 1292. a" 33 USE, lao. ++is U.S.C. rase, Federal Register/Vol. 87, No. 18/Thursday, January 27, 2022/Rules and Regulations 4413 Equipment to reuse effluent (e.g., gray water, condensate, and wastewater effluent reuse systems) is eligible. (vii) for the development and implementation of watershed projects meeting the criteria set forth in section 122 of the CWA."s Projects that develop or implement a watershed pilot project related to at least one of the six areas identified in section 122 of the CWA are eligible: Watershed management of wet weather discharges, stormwater best management practices, watershed partnerships. integrated water resource planning, municipality - wide stormwater management planning, or increased resilience of treatment works. (viii) to any municipality, intermunicipal, interstate, or state agency for measures to reduce the energy consumption needs for publicly owned treatment works. Projects may include, but are not limited to, the installation of energy efficient lighting, HVAC, process equipment, and electronic equipment and systems at publicly owned treatment works. Planning activities, such as energy audits and optimization studies are also eligible. fix) for reusing or recycling wastewater, stormwater, or subsurface drainage water. Projects involving the reuse or recycling of wastewater, stormwater, or subsurface drainage water are eligible. This includes, as part of a reuse project, the purchase and installation of treatment equipment sufficient to meet ranee standards. Other eligible projects include, but are not limited to. distribution systems to support effluent reuse, including piping the effluent on the property of a private consumer, recharge transmission lines, injection walls, and equipment to reuse effluent (e.g.. gray water, condensate. and wastewater effluent reuse systems). (x) for measures to increase the security of publicly owned treatment works. Security measures for publicly owned treatment works might include, but are not limited to, vulnerability assessments, contingency/emergency response plans, fencing, security camems/lighting, motion detectors, redundancy (system. and power), secure chemical and fuel storage, laboratory equipment, securing large serous sewers, and tamp a -proof manholes. The CWSRF cannot fund operations and maintenance activities. Therefore, maintaining a human presence (i.e., security guards) and monitoring activities are not eligible. ...33 US.C. 1279. Other Clarifications of DSWRF and CWSRF Eligible Project Categories Public Comment: Several commenters requested that Treasury provide clarification of the requirements associated with use of SLFRF funds for necessary investments in water and sewer infrastructure. Treusury Response: After release of the interim final rule, Treasury clarified in fudhar guidance that, while recipients most ensure that water and sewer infrastructure projects pursued are eligible under the final rule, recipients ere not required to obtain project pre -approval from Treasury or any other federal agency when using SLFRF funds for necessary water and projects that are being pursued under the eligibility categories provided through the DWSRF or CWSRF programs, project eligibilities are based on federal project categories and definitions for the programs and not en While reference in the final rule to the DWSRF, CWSRF, or other federal water programs is provided to assist recipients in understanding the types of water and sewer infrastructure projects eligible to be funded with SLFRF, recipients do not need to apply for funding from the applicable state programs or through any federal water program. Similarly, besides eligible project categories, the final rule does not incorporate other program requirements or guidance that attach to the DWSRF, CWSRF, or other federal water programs. However, as noted above, recipients should be aware of other federal or data laws or regulations that may apply to construction projects or water and sewer projects, independent of SLFRF funding renditions, and that may require pm - approval from another federal or state agency. Expanded Eligible Uses for Water and Sewer Infrastructure Summary Public Comment: Many commenters requested broader flexibility in the use of SLFRF funds for water and sewer infrastructure projects that are not eligible under the DWSRF and CWSRF. These commenters argued that localities are best situated to identify the highest - need water and sewer projects in their communities. Several Tribal government commenters noted that Tribes have different water and sewer infrastructure needs than stales and localities and that additional flexibility in the use of funds would lift current barriers to improving infrastructure on Tribal lands. To achieve additional flexibility, commenters suggested a range of options for broadening the eligible use of SLFRF funds for necessary water and sewer infrastructure. For example, several commenters suggested Treasury broaden the eligibilities provided under the interim final mle to include project type. eligible under other federal water and sewer programs. y'raasury Response: Treasuryagrees that additional flexibility for use of SLFRF funds is warranted and is providing expanded eligibilities as described below, several of which A. under certain programs w EPA under the Water iprovereents for the related grant programs cited by commenters include projects brat are otherwise already covered by the final rule, far example because they are ineligible under the final rule because they are beyond the scope of the meaning of water and sewer projects for purposes of ARPA. To minimize the need for recipients of SLFRF funds to cross reference eligibilities across multiple federal programs, which may exacerbate current challenges to understanding eligibility under SLFRF, Treasury is providing detailed information related to expanded eligibilities within the text of this SUWUMEMAM IR AMATIUR for the final rule. Stormwater Infrastructure Public Comment: Several commenters requested that additional stormwater infrastructure projects be included as eligible uses of SLFRF funds under the final rule. Commenters suggested that culvert repair and resizing and replan ment of storm sewers is necessary to address increased rainfall brought about by a changing climate. Other commenters noted that rural communities that do not manage their own sewer systems may rely on this ury Response:TheCWSRF o brood range of stormwater ¢lure projects, and as such .jests were eligible under the final rule and continue to he under the final role. These include gray infrastructure such as lmditi... I pipe, and treatment systems. Projects 4414 Federal Register/Vol. 87, No. I8/Thursday, January 27, 2022/Rules and Regulations that manage, reduce, treat, or recapture stormwater or subsurface drainage water are also eligible, including reel -time control systems fur combined sawar overflow management, and sediment control. Culvert unfortunates, project. are eligible under the CWSRF if they (1) implement a m rpoinl source management plan, (2) implement National Estuary Program Comprehensive Conservation and Management Plan, or (3) implement a stormwater management plan with the goal of providing a water quality benefit, Stormwater projects under the CWSRF also encompass a number of eligible Rican infrastructure categories, such as green roofs, green ground, and green walls, rainwater harvesting collection, storage, management, and distribution systems, real-d me control systems for harvested rainwater, infiltration basins, constrocied wetlands, including surface Row and subsurface flow (e.g., gravel) wetlands, bioretmnion/btoawales (e.g., Nomination basins, tree boxes), permeable pavement, demand, ripaden, or shoreline creation, pretection, and maturation, establishment or restoretlon of moan tree canopy, and replacement of Stay infrastructure with green infrstructem including purchase and demolition costs. In addition to the eligible uses under the CWSRF, Treasury is expanding the eligible uses under the final rule to include stormwater system infrastructure projects regardless of whether there is an expected water quality benefit from the project. Treasury anticipates that this eligible use will allow recipients to manage increased volumes of stormwater as a result of change.. to the climate. For example, the final rule now permits the use of SLFRF funds for the repair, replacement, w removal of culverts or other road -stream creating infrastructure to the extent the purpose of the project is to manage stormwater. In addition, Treasury understands that the repair, replacement, or removal of culverts may necessitate the repair or upgrade of roads. As noted in guidance issued after the interim final rule, recipients may use SLFRF funds for mad captain and upgrades that interact directly with an eligible stormwater Infrastructure project. All stormwater infrastructure project. undertaken should incorporate updated design features and current best practices. Private Wells and Septic Systems Public Comment Several commenter, requested that the scope of eligible projects be expanded to allow for the expenditure of SLFRF funds on private wells or septic systems. Commenters noted that wells may be contaminated with dangerous substances, including arsenic, lead. radon, and PFAS (per -and polyfluoroalkyl). Commenters also suggested that, because rural and underaerved communities are often reliant on these infrastructure types for their drinking water or wastewater needs, lack of appropriate funding to maintain these systems could present health end safety issues that disproportionately affect certain communities. Treasury Response: Consistent with the CWSRF, the installation, repair, or replacement of private septic units continues to be an eligible use of SLFRF funds under the final rule. For example, eligible projects include those that address groundwater contamination resulting from faulty septic units and those that would connect failing septic systems to cantra112ed wastewater treatment. Contestant with the ➢WSRF, connecting homes -greed by a private well to a public water system is an eliggible use of SLFRF funda. In addition, Treasury has provided in the final rule that recipients may use SLFRF funds for an expanded act of infirefructure projects that improve to and Remediating Lead in Water Public Comment: Several commenten, emphasized the need to fullyy r mediate lead contamination, aspects ly in structures that serve the public or populations like children that are particularly vulnerable to the effects of lead exposure, such as schools and daycare-. Many American households and an estimated 400,000 schools and childcare cents. currently lack safe rt nking water.-" TreaeoryAgapanse: The replacement of lead service lines, up to premise plumbing, I. an eligible use under the D WSRF and continues to be an eligible use of SLFRF funds. Such projects an eligible regart les. of the pipe material of the replacement lines and ownership of the property on which the service line is located. Land service line replacement projects ran serve households, schools, or any other —1h. wide reed, updued Fan S ndai a,maan befte. scram InvdN,am.nd lob. Ad (Aided 2. 2.21), hffp1:/1— tehit.inde..gvel braejingdwn/Iw,e.,,mm e.n.i. nodr mov. P dream .NM.b1IX m.nn.(nfd.o-natwc ..wpmm�eandjdew t/ entities. Given the lifelong impacts of lead axpeaure for children and the widespread prevalence of lead service lines, Treasury encourages recipients to consider projects to replace lead service lines. In addition, Treasury is providing he the final role that for lead service line replacement projects, recipients must replace the full length of the service line, and not just a partial portion of the service line. Some water a Wities, when replacing service lines, will only replace the "public portion" of the service line end physically aItce through the lead service line at the public/private line. This action can result in elevated drinking water lead levels for some period of time after replacement, suggesting the potential for harm, rather than benefit during that itme period. -,- Requiring replacement of the full length of the service line is also consistent with the requirements of the EPA's Lead and Copper Rule Revisions for water systems that have an action level exceedanca for lead-2- and certain other water systema.set Treasury is expanding eligible uses of SLFRF funds to include infrastructure projects eligible under EPA grant is include the installation or co- elion of corrosion control rl, replacing lead service lines, g galvanized pappes downstream I service line `other than lead ithin a home ar discussed end maintaining an inventery o monitoring, and cementation activities I. schools and other childcare facilities, as well as activities necessary to respond to a contaminant, are eligible uses of SLFRF funds."- Remediation ' ^ See EPA Sot— Advlaor, need, E,momon of Ibe ERMivends of Pa gel lead Send. line Repbmm®ra, (September IDrp, htiWl www.epo.aw/adwn/ealenmaENaory-hmd- eda... iviii, oast Indgereden.to reploremema (edv6ing egeinn partial lead awvke line —rounded ry •, a Enmdn,nem-1 erntemmn Agency. dpm nee LB. »Such emir, and mnndiation paoge,ns would bean eligible ou of SURF fora b given that do, Federal Register/Vol. 87, No. 18/Thursday, January 27, 2022/Rules and Regulations 4415 activities such as replacement of faucets, internal plumbing, and fixtures in schools and childcare facilities am also an eligible use of SLFRF funds. Consistent with the EPA programs, replacement of lead pipes within a home is not eligible under the final rule because the vast majority of lead contamination cases can be salved by replacing lead service lines (including on public and private property) and faucets and fixtures themselves. As such, replacement of lead pipes within a home would not be considered a cost- effective means for achieving the desired level of service and thus would not be a "necessary" investment. The provision of bottled water is also not an eligible use of SLFRF funds under this eligible use category, as it is not an investment in infrastructure. However, bottled water in areas with an action level exceedance for lead in water may be an eligible use of SLFRF funds under a separate eligible use category for "reinstallation of lead paint and other lead hazards" see Assistance to Households in Public Health and Negative Economic Impacts. Water fduetion systems ate eligible under the EPA grant programs and the Haiti role ae long as they are installed as a permanent part of a facility's system and not intended for temporary use. Conducting remediation, follow-up monitoring, and conducting public education and outreach about the availability of infrastructure programs, such as water testing and fixture replacement programs funded with SLFRF funds or otherwise, are also eligible projects. Finally, recipients should are that "remediation of lead paint and other lead hazards" is a separate eligible use category and a broader range of programs and services may be eligible under that section, including investments that are not infrastructure; sea the eligible use for "remediation of lead paint and other lead hazards" in section Assistance to Households in Public Health and Negative Economic Impacts. Dams and Reservoirs Public Comment: Many commenters requested that Treasury broaden eligibilitiee to include dams and reservoirs, infrastructure that commenters noted may in its current state be unsafe and could put surrounding communities at risk. Some would help a redpienv deerminewhetber an Inhmrnevene project, such ne a lad line replacamml, ie uecnsary In con4ut ea mentioned above the cone ofrourni d roving 0c1 in pen or a drinking waver or winawatar funitlee'operming cane would rat le cou ddieed Pon don ofiven inure pmjM. commenters argued that dams and reservoirs play an important role in providing municipal water supply and water to irsigate fsrmlend, including in arena impacted by recent droughts. Other commenters noted that a large number of dams are currently classified as hihumidstructures, the failure of which would have severe consequences for public safety and the local environment With respell to reservoirs, commenters articulated that changing climate conditions have necessitated upgrades to reservoir infrastructure to ensure existing facilities can meet the local water needs of a community. Commenters noted that communities facing drought may also need to adjust or enhance reservoirs to maintain adequate water supply. In contrast, several commenters suggested that infrastructure projects related to dams and reservoirs should not be considered eligible uses of SLFRF funds. These commenters noted that alternate sources of funding exist for dam and reservoir projects and that dams and reservoir infrastructure could result nt negative impacts to Tribal communities and negative environmental impacts, including harm to wildlife habitats. Treasury Response: Treasury understands that many dams and reservoirs I. need of rehabilitation are dams and reservoirs whose primary purpose is to provide drinking water. As discussed above, SLFRF funds ore available for projects related to the provision of drinking water. Moreover, since issuance of the interim final rule, the EPA has adopted a class deviation from the DWSRF regulations that permits such dam and meemmiir rehabilitation projects in certain circumstances.''' In approving this class deviation, the EPA recogrrized that many dams used for drinking water are aging and deteriorating and pose a public health risk to communities; that current dam conditions do not meal state safety standards; and that reservoir capacity has diminished and requires dredging to meet drinking water needs of the existing population. Treasury's final rule provides that funds may be used for rehabilitation of dams and reservoirs if the primary purpose of the dam or reservoir is for drinking water supply and the rehabilitation project is necessary for continued provision of drinking water Sva EPA, Approval of Giant E—pnon hem the ae,duay RO ndinwie on he Use of Drinking worm Srem Revelving Fund 6r ReNbiliernon of Dame end Retervotn Uuly 14. rn21). available at hopt:/ f.d.�p a.1hvRd—r ere i odurblon- opa1, rJclatxdevinflondm,�reeervoa=Nra6 salt_ a pdf supply. In considering whether a dam or reservoir project is necessary for the prevision of drinking water supply, a recipient may take into consideration future population growth in certain circumstances, as discussed under "Expansion of Drinking Water Service Infrastructure" below, but the project must in any case be designed to support no mole than a masonahle level of projected increased need. The recipient must also determine that the project is cost-effective, i.e., that there are not significantly superior alternatives that are available, taking into consideration the relative costs and benefits of the project as compared to those alternatives. This change to the foal rule would permit a wide variety of fu jects.ar^ The limitation in the final into to rehabilitation of existing dams and reservoirs reflects the scope of the EPA class deviation referenced above and Treasury's understanding of the siggnnificant need for investments in rehabilftation to address deterioration of dams and the diminished capacity of conservator. Further, Treasury expects that in many cases it would be considerably mom difficult to demonstrate that construction of a new dam or reservoir would be necessary for the purpose of the provision of drinking water than is the case for rehabilitation of dams and reservoirs already serving that purpose for a particular population, particularly given opportunities to meet drinking water needs through water reuse and conversation efforts. For these reasons, and given that the relatively short period of availability of the funds makes new dam and reservoir construction with these funds less likely. Treasury has limited the scope of the final rule to dam and reservoir rehabilitation pproje I As dismesed above. Treasury has determined that ARPA does not authorize the use ASLFRF funds for uses other than the provision of drinking water and the management of wastewater and storm water. As such, the final rule does not include infrastructure projects related to dams and reservoirs as eligible uses of SLFRF funds unless they meet the conditions discussed above. ,aa An noted I. ua¢pn'1 date dnMa fro, unplee of door relmbilitation orders include spillway rnc.rionno o. or return: dam reaudedrrg, petcbing, orotno...... Imoat.,including in rmel height inereaam unaided to mein,.!. the sinecure recently of an data grouting or xepega control or lianduc,ion remediation lea., cpory asphalt or rock): repair or referential of emerge rynemr, and eeismic stability name (e.g.. anchors). Bumplet ofrenarvoir rehabilitation prajearn i elude eMinnercubn dredging end resso.ollninq 4416 Federal Register/Vol. 87, No, 1R/Thursday, January 27, 2022/Rules and Regulations Public Comment: Several commenters act available alternatives. For this eligible Sewer Infrastructure" above for more requested that the removal of dams and use category, ex ion of drinking information. associated habitat restoration should be eligible uses of SLFRF funds, noting that water service infmstmdure, the project must also be projected to be sustainable Non -Federal Matching Requirements for in some cases, dam removal will over its estimated useful life. Authorized Bureav of Reclamation improve water quality while removing Investa ents must be determined to be Projects I long-term operational expenses for the necessary when they are initiated. The Infrastructure Investment and remprent. Accordingly, Treasury is clarifying in jobs Ad amends sections 6u2(ml and Treasury Response: Dam removal projeds and associated stream and the fuel rule that the need identified far a water or sewer project may include a 603(c) of the Social Security Act to add an additional eligible use of SLFRF habitat restoration projects are eligible uses of the CWSRF and continue to be need arising from reasonable expectations of future population funds, providing that SURF funds "may be used for purposes of satisfying eligible under the final rule when the removed implements either a conferral growth, provided that it is necessary at the time the investment is initiated for any non -Federal matching requirement required for tan authorized Bureau of source management program plan or a National Estuary Program the recipient to make the investment to Reclamation pnojedl.".za This Comprehensive Conservation end meet this growth. For example, a recipient expecting increasedSUIT amendment permits the use of funds to meal non-federal Management Plan or when the removal will provide a water quality benefit population during the period of performance may install a drinking matching requirements of any authorized Bureau of Ram eclation Habitat restorelion pprolecte more generally may also be eligible under the water treatment plant to meet that growth In addition, a recipient project, underlying regardless of whether the project would be an eligible CWSRF and the final rule if they constitute a form of stotmwater expecting increased population growth use of SURF funds under the water and infrastructure. outside the period of performance may sewer infrastructure eligible use install the treatment plant lithe category. These amendments are Exppansion of Drinking Water Service planning and construction timeline for effective as of March 11, 2021, as if Infrastructure the project would require work to begin included in the ARPA at the time of its Public Comment: Commenters asked for the ability to use funds for drinking during the performance period in order to mad the expected population growth. enactment327 Treasury will provide further guidance to recipients oa the water projects for the purpose of meeting needs arising from future +recipient may install transmission lines as part of the d... I.I me rt of new scope of Bureau of Reclamation water projects and expenses covered by this growth, which, given the resUictions housing accurn during the period of provision. applicable to the DWSRF, was not permitted under the interim final rule. performance. In this case, the housing development ..at be in progress; a Floodplain Management and Flood Mitigation Projects Treasury Response: As provided for in the SDWA, the DWSRF is meant to recipient may not use the SURF funds to install a water main, for example, to Public Comment: Several commenters serve the public health needs of the an undeveloped trail in the ex ion requested that projects to address floodwater, t at proji Flood lain ^R existing population. The EPA regulation implementing the DWSRF that in the future that trod wiltbe developed with housing, p g, because theta p management and Rood mitigation provides that projects needed primarily ed prim to serve future population growth are would be no aced for that inveed. to be made at the time it is initiated. projects, be included w an eligible use of SLFRF funds. Within this rategory ^f eligible uses of the DWSRF. A For the reasons discussed above, if a Floodplain management and ❑oo mitigation infrastructure, several prrt project that is intended primarily y address public health or regulatory project is undertaken to address expected growth population, the commenters requested that the compliance issues for the existing b project must also be installation of levees, flood walls, sea walls elevation projects, dredging, or service population may be sized fore "reasonable" amount of population cwashable,con project meaning that the project can continue providing the adequate minimum level nature -based flood mitigation projects growth over the useful life of the of service for Its estimated useful life, e bincluded as eligible projeds. TravauryResponse: Treasury notes pmjecLazs ARPA it... not include the same Inking into account projected impacts of changes to the climate and other that some Floadplain management and limitation es the SDWA. Accordingly, expected demands on the source of Road mitigation infrastructure projects, including green infrastructure designed the final rule provides that recipientswater. may use SLFRF funds for projects that In considering how much of a more of water will be available in the to protect treatment works from flood are needed to support increased future for the drinking water project, a waters end flood impact ere currently eligible under the CWSRF and therefore population in certain rases. ARPA limits projects to those investments that recipient must consider that a source of water may be drawn upon in otherwise continue to be eligible under the final are "necessary."As discussed above, used for other current and expected Is Treasury has not included Floodplain Treasury interprets this to mean that the uses, including use by fish and other management and flood mitigation investments must be (1) responsive to wildlife. A drinking water project that is 11 1"bl an identified need to achieve or designed to address a growing proi a more genera y as a tgt a under the final rule. Although Floodplain maintain an adequate minimum level of service, which for some eligible project population cannot be considered a necessary investment lithe source of management end flood mitigation are categories may include a reasonable drinking water will cease to be available functions^fmany state and local governments, they am not the sort of projection of increased need, whether to meet the population's needs before gmuvvallydue essential services to population growth or otherwise the end of the estimated useful life of included within included within the meaning of water the and (2) a costcffective, means for the project. In such a case, a recipient meeting that need, taking into account should consider alternative sources for drinking water. San "Interpretation of ,.•s.e eabac to.. w-sec vaeoalal$I (Nov. rs. z... .user va csa az.asagel(sL Necessary Investments and Water and ). ,n see Nbic Lew 11-a.§vive.(.). Federal Register/Vol. 87, No. 18/Thursday, January 27, 2022/Rules and Regulations 4417 and sewer projects under the ARPA, as and efficiency related to infrastructure First, Treasury encouraged recipients to dismissed have. improvements, e.g., incentives such as prioritize investments he fiberruptic rebates to insist] green infrastructure infrastructure wherever feasible and litigation Public Comment: Some remmenlers requested that irrigation projects be an eligible use because they canslder such projects to be critical infrastructure. Several commenters supported this request by noting that irrigation systems may he used to replenish aquifers and recharge wells, in addition to delivering water for irrigation. One commenter also noted that the national irrigation system is antiquated and in need of repair. Treasury Response: Some irrigation projects were eligible under the interim final rule and continue to be eligible under the final rule as a result of their inclusion as eligible projects under the CWSRF. For example, water efficient irrigation equipment that reduces the runoff of nutrients and im, lementa n management p ogrem established under section 319 of the CWA and/or e conservation and management plan under section 320 of the CWA are eligible uses under the CWSRP and therefore continue to be an eligible use of SLFRF funds under the final rule. Likewise, projects to receive and distribute reclaimed water for irrigation systems or other agricultural use are eligible under the CWSRF and therefore continue to be an eligible use under the Deal rule. Unlike projects for the improvement of irrigation systems generally, these reclaimed water projects are related to wastewater treatment and stormwater management, which ere within the scope of the infrastructure for purpse os of ARPA Treasury eons! ered eom adder inquests for inclusion of additional irrigation infrastructure and determined that irrigation projects more generally are not permitted order the final rate. Although these types of projects may be services included within the meaning of water and sewer projects under ARPA, as discussed above. Consumer Incentive Programs Public Comment: One commenter mquested that consumer incentive programs in the areas of water use efficiency, conservation, green infrastmctere, reuse, and other distributed solutions be an allowable use of SLFRF. Toccoa ryry Response: The DWSRF and CWSRF eligibililies include the development and implementation of incentive and educational programs that address and promote water conservation, source water protection, such es rain barrels an promote other focus on projects that deliver a physical water conservation activities. Treasury broadband connection by prioritizing clarifies that such project types were projects that achieve last -mile eligible under the interim final rule and continue to be eligible under the final rule. 2. Broadband Infrastructure Under the ARPA, recipient governments may use SLFRF funds to make "necessaryinvestments in .. . broadband infrastracturs" In the Supplementary Information to the interim final rule, Treasury interpreted necessary investments in infrastructure as investments "designed to provide an adequate minimum level of service and ithat) we unlikely to be made using private sources of funds." Treasury explained that, with respect to broadband specificelly, such necessary investments include projects that "establish 1) or improve I I broadband service to underserved populations to reach an adequate level to permit a household to work or attend school, and that ere unlikely to be met with private saumas of funds." Summary of Interim Final Rule, Public Comments, and 1)mmury Response Summary of Interim Final Rule: In implementing the ARPA, the interim final rate provided that eligible broadband infrastructure investments are limited to those that ere designed to provide service to unserved or underserved households Or businesses, defined as those that lack access to a wirelins connection capable of reliabl delivering at least minimum speeds of 25 Mbps download and 3 Mbps upload. The interim final rule also provided that eligible projects under the SLFRF are limited to those that are designed to deliver, upon project completion, service that reliably meets or exceeds symmetrical upload and download speeds of too Mbps. In instances where it would not be practicable for a project to deliver such service speeds because of the geography, topograpfry, or ce exssive casts associated with such a project, the interim final rule provided that the project would he required to be designed to deliver, upon project completion, service that reliably meets or exceeds too Mbps download speed and between at least 20 Mbps and 100 Mbps upload speeds and be scalable to a minimum of 100 Mbps symmetrical for download and upload speeds. In addilion,'Pormury, in the to pemue connections. Second, Treasury encouraged recipients to integrate affordability options into their program design. Third, Treasury encouraged recipients to prioritize support Eor local networks owned, operated, or affiliated with local governments, nonprofits, and cooperatives. Fourth, Treasury encouraged recipients to avoid investing in locations with existing agreements to build reliable wicelme service with minimum speeds of too Mbps download and 20 Mbps apload by December 31, 2024, in order to avoid duplication of efforts and resources. Finally, followfng release of the interim Real rule, Treasury provided further guidance clarifying same aspects of broadband infra druclurs eligibility, specifically on Flexibility for recipients to determine eligible areas to be served?m middle -mile projects sse pre. project development costs,330 oadhand connections to schools or libraries.'.' and the applicability of the National Environmental Policy Act (NEPA) and the Davis -Bacon AM r32 Summary of Public Comments: Treasury received several comments on the interim final mis's requirements regarding eligible areas for investment and build -to speed standards, as well as Treasury's encouragements in the Supplementary Information of the interim final role. Many commenters found the interim final rule'. requirement to limit projects to those designed to provide service to unserved or mach m a nal households or businesses to be appropriately focused on herd -to -reach areas. In contrast, other commenters argued that this requirement was too restrictive and that it would limit the ability for some some commenters ligible projects be sails of 100 Mbps an exception for areas where it was impracticable, and encouragement [hat projects be built with fiber-optic infrastructure, while a "'^Sae FAQ fid. 6.9, all. Cbrnnry on Stets and last Hml Itecay., r &. FmNenny Asked auesn®e.a afluly 1e,2021: Yepell brun..lnusuygwlyternlrzlesll3VSI "FAQ.pdf.. "m Sm FAQxm. Id. • SS FAQ ala. Id, ". Sea FAQsAa. Id " Sa FAQ 0.9, 6.11. Id 4418 Federal Register/Val. 87, No. 18/Thursday, January 27, 2022/Rules and Regulations few others argued that the interim final Federal Communications Commission's 200.471 and clarifies that modernizetion rule should remain technology -neutral (FCC.) Affordable Connectivity Program ofcybmeecurity for existing and new and that lower speed standards would (ACK or otherwise provide access to a broadband networks ere eligible uses of be more appropriate for today's usage broad -based affordability program to funds under sections 602(e)(1)(D) and needs. low-income commus re in the proposed 003(c)(1)(D). Summary of Treasury Response: In service area ofthe broadband Finally, this Supplementary response to the comments, the final rule infrastructure that provides benefits to Information to the final rule expands eligible areas for investment by households commensurate with those incorporates and confirms guidance requiring recipients to invest in projects designed to provide service to provided under the ACP. Treasury also recognizes the issued by Treasury following the interim final rule regarding middle -mile households and businesses with an identified need for additional importance of affordable broadband access for all consumers beyond those projece,33s pre -project development cests,3s^ broadband connections to broadband infrastructure investment, which would include but not be limited that are low-income. As part of their project selection process, recipients me schools or libraries?as, and applicability of the National Environmental Policy to a lack of broadband service reliably delivering certain speeds. In addition, as encouraged to consult with the community on the general affordability Act (NEPA) and Davis -Bacon Act.sss The renafnder of this section discussed further below, the final rule needs of the target markets in the provides additional details on the final further supports the expansion of proposed service area. Additionally, rule. Specifically, these sections affordable access to broadband service for households by requiring that recipients are encouraged to require that services provided by a broadband address: (1) Eligible areas for recipients use a provider that infrastructure project include at least investment;(2) build -to speed standards; (3) affordability; (4) public participates in a qualifying affordability plan. Treasury encourages recipients to one low -oast option offered without data usage caps and at speeds that are networks; (5) dupplication of efforts and prioritize projects that are designed to sufficient for a household with multiple resources; (0) cyber ass rrity; end (7) use of funds to meet non-federal match Provide service to locetions not currently served by a wirelino w users to simultaneously teleork and engage in remote learning. Recipients under the Infrastructure Investment and connection that reliably delivers at least will be required to report speed, pricing. Jobs Act. 100 Mbps of download speed and 20 and any data allowance information as MYps ofuyloadspeed. part of mandatory reporting to Treasury The final rule ousbab ins the interim The final rule also clarifies that final rule's requirement that eligible subsidies to households end projects be designed to, upon communities impacted by the pandemic completion, reliably meet or exceed to access the internet, broadband symmetrical too Mbps download and adoption programs, digital literacy upload speeds. As was the case under the interim final rule, in cases where It is not practicable, because of the excessive coat of the project or geography or topography of the ands, to e served by the project, eligible projects may be designed to reliably meet or exceed 100 Mbps download speed and between at least 20 Mbps and 100 Mbps upload speed and be scalable to a minimum of too Mbps download speed and t00 Mbps upload speed. Treasury continues to encourage recipients to prioritize investments in fiber-optic infrastructure wherever feasible and to focus on projects that will achieve last -mile connections, whether by focusing directly on funding Iabi projects or by ensuring that funded middle -mile projects have r as, ,net rule requires recipients to address the affordability needs of low - raceme consumere in accessing broadband networks funded by SLFRF, given that such a project cannot be considered a necessary investment in broadband infrastructure if it is not affordable to the population the project would serve. Recipients must require the service provider for a completed programs, and device programs are eligible programs to respond to the public health and negative economic impacts of the pendants, under sections 602(c)(1)(A) and 603(c)(3)(A). See section Assistance to Households to Negretive Economic Impacts. 77 eaury continues to encourage recipients to prioritize support for broadband networks owned, operated by, or affiliated with local governments, nonprofits, and cooperatives. In addition, to the extent recipients am considering deploying broadband to locations where there are existing enforceable federal or state funding commitments for reliable service at speeds of at least 100 Mbpe download speed and 20 Mbps upload speed, led leads must ensure that SURF funds are designed to address an identified ..it for additional broadband investment that is not met by existing federal or state funding commitments. Recipients must also ensure that SURF funds will not be used for costs that will be reimbursed by the other federal or state funding streams. Further, Treasury highlights that recipients are subject to the prohibition on use migrant funds to procure or obtain certain telecommunications and video surveillance aervices or equipment as, oullined in 2 CFR 200216 and 2 CFR Eligible Areas far Investment The interim final rule limited eligible broadband f neennews to projects focused on delivering service to unnerved ar underserved locations, defined as households or businesses that lack access to a wirelfne connection napable of reliably delivering at least minimum speeds of 25 Mbps download and 3 Mbps upload. This targeted approach was generally consistent with certain speed thresholds used in other federal programs to identify eligible areas for federal investment to broadband infrastructure, such as the FCC's Rural Digital Opportunity Fund (RDOF) program and the National Telecommunication and Information Administrations (NTIA's) Broadband Infxistruct rat Program, and generally aligns with the FCC's benchmark for an "advanced teleconununicatfons capability" for wirelfne broadband services. Public Comment: Many commenters discussed the disadvantages, of such an approach. Some commenters, including several local government recipients, argued that limiting investments to locations without access to reliable wfreline 25/3 Mbps asr was too as, $e FAQ eta Coronavirn[$Ime tied Inml Fissal Recovery Funde. Frequently Asked Questions, inof duly to, man hnpell home.aeaauq,govlsyetem7/arli361SURPFAQ.pdf. —see FAQ saz. w. —See PAQ a.re Id. se"sea PAQ d4, eaz Id, siOn she mmainder of his supplemenmry Inferverion, "2513 Mbps" mars b brcedbmd infinemaum that is, desiasml to reliably noost or armed as soar 25 Mbps, downimd speeds and 3 Federal Register/Vol. 87, No. 18/Thursday, January 27, 2022/Rules and Regulations 4419 metrictive because some urban jurisdictions am already mostly or entirely covered by a network with at least 25/3 Mbps speeds yet lack widespread broadband adoption for various response. Commenters suggested that recipients would benefit from greater flexibility to provide necessary investments in broadband access in areas that are nominally covered by speeds of at least 25/3 Maps, such as to provide affordable broadband access in low-income areas or to address service quality and reliability issues. Further, commenters argued that Tmesury's requirement that new projects meet minimum reliable speeds of 100 Mbps symmetrical was inconsistent with the requirement that broadband Infrastructure projects focus on those with access to significantly lower speeds, and further noted that several states have already expanded the focus of then broadband programs beyond those without reliable access to speeds of 25/3 Maps. Commenters argued that if the limitation to unnerved and undeserved households and businesses were maintained, the definition of unserved and undeserved households and businesses should be revised to include households and busi... a.. currently served by higher standard a. Commenters proposed a number of alternative cutoff speeds, including 25/ 25 Mbpa. 50110 Mbps, and 100 Mbps symmetrical. Others expressed support far providing flexibility for recipients to make that, own determination on eligible areas for investment. These commenters referenced studies indicating that 2513 lvlhps is inadequate for today's modern household or business needs. Some commenters advocated for unserved and undeserved areas to be prioritized while providing flexibility for recipients to serve areas beyond those designated as unserved or undeserved. Reflecting the perceived restrictiveness of the interim final rule approach, some commenters asked for assurance that projects conducted under other categories of SLFRF eligible uses, specifically to respond to the public health and negative economic impacts of the pandemic under sections 602(c)(1)(A)-(C) and 603(c)(1)(A)-(C), were not barred by the presence of 25/ 3 Mbps service, including "gap nelwwks," which are networks designed to offer low-cost or no -cost internet access for loweeincome MbW to best a ande."1m Mbpe" s rat is Is eel refers.bbroadband, ied as van ta. le deuged reliably mealaramwd as van m0al pe download ePeada end 10 MSry upbed ePeede. households with law broadband adoption rotes. Commenters suggested additional factors to be inempmated in the consideration of locations that are eligible to be served. Many commenters suggested that affordability should be considered a key factor when determining whether a community has access to broadband, as the presence of 25/3 Mbps service does not necessarily mean the service is financially accessible to the area's residents. Commenters noted that surveys indicate that affordability, not lack of coverage, is the most significant harrier for most Americans who do not have robust broadband service in that, household.. Some advocated that the final rule allow for investments in areas with existing reliable wimline access at or above 25/3 Mbps as long as existing broadband service has been unaffordable far a certain segment of the population; others advocated that Treasury presume eligibility when investments am made In certain areas, such as Qualified Census Tracts or neighborhoods with persistent poverty, or are made by Tribal governments. Separately, some commenters noted that Treasury should provide more clarification on what constitutes a "reliabllel" connection, Inducting providing details as to latency, jitter, and other technical specifications that would meet that standard, and whet it means for certain technologies, such as copper end other outdated technologies, to ba deemed presumptively unreliable. Other communism supported the interim final roles approach on ship a areas for investment or suggested tightening eligibility even further. They .good that higher speed threaholds beyond 25/3 Mbps would likely lead to investments to or building of new broadband in&aelruclure in erase already served by broadband at speeds these commenters considered sufficient: these areas, commenters suggested, am less in need of federal assistance and permitting investments here could divert funding away from rural areas to .,no densely populated ame. Treasury Response: The final role expands eligible areas for investment by requiring recipients to invest in projects designed to provide service to households and businesses with an identified need for additional broadband infrastructure investment. Recipients have flexibility to identify a need for additional broadband infrastructure investment: Examples of need include lack of access to a connection that reliably meats or exceeds symmetrical too Mbps download and upload spends, lack of affordable access to broadband service, or lack of reliable broadband service. Recipients are encouraged to prioritize projects that are designed to provide service to locations out currently served by a whales connection that reliably delivers at lean too Mbpa of download .peed and 20 Mbps of upload speed, as many commenters indicated that those without such service constitute hard -to - reach areas in need of rob.idiesd broadband deployment. Households and businesses with an identified need for additional broadband infrosomerum investment do not have to be the only ones in the service area served by an eligible broadband infrastructure project. Indeed, serving these households and businesses may require a holistic approach that provides service to a wider area, for example, in order to make ongoing service of certain households or businesses within the service area ecomomicol. Consistent with farther guidance issued by Treasury; e's in determining areas for investment, recipients may choose to consider any available data, including but not limited to documentation of existing broadband internal service performance, federal and/or elate collected broadband data, near speed test results, interviews with community members and business owners, reports firm community orhggaenization, and any other irdormation they deem relevant. In evaluating such data, recipients may take into account a variety of factors, including whether users actually receive internet service at or .bow; the speed thresholds at all home of the day, whether factors other than speed such as latency, jitter, or deterioration of the existing connections make their user experience unreliable, and whether the existing service is being delivered by legacy technologies, such as copper telephone lines (typically using Digital Subscriber Line technology) or early versions of cable system technology (DOCSIS 2.0 or earlier),sas and other factors related to 4420 Federal Register/Vol. 87, No. 18/Thursday, January 27, 2022/Rules and Regulations the services to be provided by the project. In addition, recipients may consider the actual experience of cunent broadband customers when making their determinations; whether there is a provider serving the area that advertises or otherwise claims to offer broadband at a given speed is not dispositive. Build -To Speed Standards The interim final role provided that a recipient may use funds to make investments in broadband infrastructure that is designed to. upon completion, reliably meet or exceed symmetrical 100 Mbps download and upload speeds. In rases where it is not predicable, because of the excessive coal of the project or the geography or topography of the area to be served by the project, eligible projects may be designed to reliably meet or exceed too Mbps download speed and between at least 20 Mbps and too Mbps upload speed, so long as it is scalable to a minimum of that Mbps download speed and too Mbps upload speed. Relatedly, Treasury I. the SUPKEMENTASY INFORMAnhN to the interim final rule encouraged recipients to prlodtize investments in fiber-optic infrastructure wherever feasible and to prioritize projects that achieve teat -mile com artions. Public Comment: Many commenters discussed the advantages of setting minimum symmetrical download and upload speeds of reliable too Mbps as the speed threshold for new projects. Some commenters indicated support for the interim final rule's standard as it takes into account growing demands on interest use resulting from pandemic broadband usage and suggested that such a standard will help to ensure that networks built with SURF funds remain valuable for years to come, even as demands continue to accelerate, particularly on upload speeds. Some also indicated that the interim final role standard has the effect of prioritizing the use of fiber-optic infastmctura to deliver such speeds, which some noted was a "gold standard" future -proof technology, although some commenters noted that other technologies like fixed wireless have bean shown to deliver such speeds in certain ctrcumstences. Other Commenters suggested that IN Mbps symmetrical speeds were unnecessary given consul broadband dam.f .ga idnwnlredmm.annna-bm.db.nd arnearroalaVasks..Fined-Johneavin,-arwdl ewd. Amerlmseep.rtpaflcomparlra [tear with nSL and seseeteuhndogia onanumlaw adimmsuata)', Raps://X—.ff w8/wp/mx-pbes,homabd.y-why fWr-mperiw-medium xnat-renmry-Wawdbund IProalai s, a rorlmiW backgmuml mmpring fiber teLmlrgy I. tuber lagxy tecbnd.gim). usage needs and that such high standards may have the potential to slow down expansion to unserved or underserved rural areas. Some argued that setting this symmetrical threshold may limit the type of technologies that can be used, thereby decreasing competition and limiting flexibility to recipients whose communities might be better served by technologies such as wireless solutions or inexpensive gap networks. Continuum suggested alternate minimum speeds, ranging from 25/3 Mbps (which some argued best balances reaching all communities and maximizing tine impact of were] funds) to 100/20 Mbps (which some aagued best serves the typical broadband usage paitems of households and businesses, including new pandemic -driven needs). A few commenters suggested a higher minimum speed, such as gigabit speeds, advocating that such speeds were necessary for a network to last at least a decade. Many commenters supported the interim final mla's lower speed standards for projects where it is impracticable bo meet minimum reliable speeds of IN Mbps symmetrical, as it provides flexibility for recipients to invest in herd -to -reach areas, an& he those in mountainous regions. A few commenters indicated that Treasury should more dearly define the characteristics acteristics of a location eligible for this exception. Some indicated that the minimum standard for all new projects should be too Mbps symmerical. In contrast. others argued that scalability, to 101D Mbps symmetrical should not be a requirement to meet today's demands, particularly in herd -to -reach areas. Some commenters requested that Treasury clarify eligibility for middle - mile pan hub, as these projects potentially provide connectivity to far- reaching areas, while other commnities Support. The final rule to, interim final mis's exception for projects where it is impracticable to build to ouch speeds due to excessive cost, geography, or topography of the area to be served by the project. Given the build time associated with broadband infrastructure projects, these standards will enable SURF funds to fund lasting infrastructure that will be able to accommodate it eased network demand once the network is complete?40 while providing flexibility for certain locations to meal lower speed standards when 100 Mbps symmetrical speeds are impracticable. To illustrate the accelerating need for higher upload speeds, by one measure, mean upload speeds as of October 2021 increased to 75.21 Mbps as compared to 62.11 Mbps a year earlier. an jurisdictions ere increasingly responding to the groavl demandx of their communities for hips speeds; for example, Illinois requires too Mbps symmetrical service as the construction standard for their state broadband grant programs. The IN Mbps symmetrical standard accounts for increased pandemic internal usage and provides adequate upload speeds for individuals and businesses to accommodate interactive applications such as virtual learning and vidermonferencing, while also helping ensure that funding is responsibly used to provide a true and lasting benefit for years to come. Treasury continues to encourage recipients to prioritize investments In fibelroptic infrastructure wherever feasible, as such advanced technology enables the next generation of application solutions for all communities and is capable of delivering superior, reliable performance and is generally most of 6.tly scalable to meet future are I. their "middle -mile" connections that otherwise satisfy the requirements of the final rule, Treasury continues to encourage recipients to focus on ,a Using the Federal Cenmmn ianow Commbalon (FCC) Bo adband Speed Culde, a lansebuid with two I —route. and Two To [lire. remote lear ana t.doy is eatimmed In deed ma Mbpps dwnload to work onalt-wasely. San F.dmel Commnmieatione Cu surbeion. Bro.ahm,d Spaed Go=enilabla at no, fl ww.fic.gov/ .rerno,s owear.udh.ndapandyulde, hen visited (woberia, 2021). "I United Stator' Mobile and Broadband Nimdel Spaedw�peedleat Global lnam, auvilabloe haw:/lwww.spe id t,.el/S1dM-mdex/un12d- srataaw)ued. w- Be -en Ciphers, The fye for FILrt to the Home. Todaywhy Fiber le. Superior Modinm for Elan century unwound. el.mrand Frontier Foundation (0 tabs 16. 2019). hawobetw/affaW wyanse-➢ban homerodnr.wnrjl�knFan«- dium list-cemmryJwodWne `4' Sue FAQ e 20, Commvime done and Loral Fiscal R scwery Funds, Too, ... Ily AskM Questions i ee of)uly le. 2021: https// hometreasury.ivelowemryke/13a/S1FEWAQpdf. Federal Register/Vol. 87, No. I6/Thursday, January 27, 2022/11ules and Regulations 4421 projects that will achieve last -mile connections --whether by focusing directly on funding last-mfle projects or by ensuring that funded middle -mile projects have commitments in place to support new and/or improved last -mile service. Affordability The interim final rule encouraged recipients to consider ways to integmte affordability options into their program design but did net require recipients to take particular actions. The interim final rule also provided that maisting households with internet access and digital literary is an eligible use of SI.FRF funds under sections 602(c)(1)(A) and 603(c)(1)(A) to respond to the negative economic impacts of COV10.19. Public Comment: Many commenters suggested that Tomato y provide recipients with a broader set of tools to tackle what the commenters characterized as an affordability crisis in the broadband sector. As noted above, some commenters proposed that Treasury consider affordability when determining whether an area is unserved or me ersseved by broadband. Some commenters indicated that the final rule should allow for the construction of broadband networks in low-inc. neighborhoods including low-cost or no -cost gap networks, even I. or. with existing aervfce at the .peed. required under the interim final rule. Other commenters voiced support for direct subsidies to low-fncome momentum to afford broadband service, which would provide additional incentives for providers to serve these communities. Treasury Response: In response to many commenters that highlighted the importance of affordability in providing meaningful access to necessary broadband inGastruchou, the final rule provides additional requirements to address the affordability needs of low- income consumers in accessing broadband networks funded by SURF. Recipients most require the service provider for a completed broadband infrastructure investment project that provides service to households to: a Participate in the Federal Communications Commission's (FCC) Affordable Connectivity Program (ACP); or a Otherwise provide access to a broad -based affordability program to low-income consumers in the proposed service area of the broadband infrastructure that provides benefits to households commensurate with those provided under the ACP. Recipients must require providers to participate in m provide access to these programs through the life of the ACP. Tide requirement will no ]on or apply once the SLFRF-funded broedbend Infrastructure is no longer in use. Furthermore. Treasury also recognizes the importance of affordable broadband access for all consumers beyond those that are low income. As part of their project selection process, recipients are encouraged to consult with the community on the general affordability needs of the target markets in the proposed aerates area. Additionally, recipients are encouraged to require that writes, provided by a broadband infrastructuro project include at least one low-cost option offered without data usage caps at speeds that are .Mutant for a household with multiple users to simultaneously telework and engage in remote learning. Treasury will require recipients to report speed, pricing, and any data allowance information as part of their mandatory rep itmitto Treasury. Further, Treasury is clarifying that, as a response to the public health and negative economic impacts of the pandemic, recipients may provide households and communities impacted by the pandemic with subsidies to help pay for internet service, digital literacy programs, broadband adoption Programs, and device programs that provide discounted or no -cast devices for low-income households to access the internet. For further discussion of this eligible use category, we the section internet Assistance in Assistance to Households in Public Health and Negative Economic Impacts. Public Networks The interim final rate encouraged recipients to Pro .much, support for local networks owned, operated, or affiliated with local governments, nonprofits, and cooperatives. Public Comment: Many commenters voiced their support for Treasury's encouragement that recipients work with governmental or community entities to establish local networks, arguing that they have been shown to effectively provide broadband access to areas that would otherwise be le8 with uneffordable or insufficient service. These commenters suggested that, since these entities are less driven by financial returns to investment than private providers, in some circumstances they may be able to provide robust service at a lower price as compared to private providers, along with potentially increasing local compefitem fn a sarvic area. Other commenters argued against Treasury's encouragement, remarking that private businesses have a robust track record of serving hard -to -reach customers. These commenters argued that commercial providers have greeter technical and operational expertise to deploying and operating broadband networks and may be able to construct broadband networks with greater efficiency. Additionally, some commenters argued that providing what they considered an unfair competitive advantage for government- or community -owned or operated networks may hurt consumers over ifine. Treasury Response: The final rule maintains the interim final ride's encouragement for recipients to prioritize support for broadband networks owned, operated by, or affiliated with local governments, nonprofits, and cooperatives, given that these networks have less pressure to generate profits and s commitment to serve entire communities. This encouragement provides fusibility for recipients to select providers that best fit their needs, while noting the critical role that networks owned, operated, or affi listed with local governments and community organizations can play in providing sufficient coverage, affordable access, or increased competition in the broadband sector. Duplication of Efforts and Resources Public Comment: Some commanlere .lead concerns that Treasury's encouragement in the interim final rule that recipients avoid funding projects I. locations with an existing agreement to provide service that reliably delivers 100120 Mbps by December 31, 2024 was too restrictive. Consumers noted that many plans do not always lead to a successful and complete deployment, as issues may arise that provent such infrastructure from deploying on time or at all, and that several existing federal grants were designed and awarded butane the onset of the COVI0.19 pandemic and do not meet the critical broadband needs highlighted by the pandemic. Other commenters argued that Treasury's encouragement to avoid duplication of resources should be strengthened, as investing in areas with existing agreements would be an inefficient duplication of efforts. Treasury Response: Given the final ride's revised requirements on eligible areaa for investment, this • the®meanva ca. of me a idvd, Cam awnty Bread arvdbeed services 0aeuo, zonal. hmdlohrmewaoelrw .. ens'elsimrl d*ua/fh,vdmx oaeueny.WteLhexdm, e,e by_mecuf1.Jr1m.fJh.yrvdd-1,vo, 4422 Federal Register/Vol. 87, No. 18/Thursday, January 27, 2022/1bules and Regulations Supplementary Information to the fuel mle also modifies the interim final tale's requirements amund duplication of resources. Since recipients must ensure that the objective of the broadband projects is to serve locations with an identified need for additional broadband investment, the final role provides that, to the extent recipients me, considering deploying broadband to locations where there are existing enforceable federal or state funding commitments for reliable service at speeds of at least I00 Mbps download speed and 20 Mbps upload speed, recipients must ensure that SLFRF funds are designed to address an identified used for additonal broadband investment that is not met by existing federal or state funding commitments. Recipients must also ensure that SLFRF funds will not be used for costs that will be reimbursed by the other federal or state holding streams. Cyberseci rity Public Comment: Several commenters eybersecurity of new broadband projects funded with SLFRF funds and urged Treasury to prohibit recipients from utilizing SLFRF funds to procure equipment from certain moviders from pose a national security dak. These commenters ooinled out that the 2019 several for given the growing threat of cyber-attacks and cyber-intrushate into the nation's infrastructure. TreusuryResponse:Treasury highlights that investments in broadband infrastructure most be carried out in ways that comply with applicable federal laws, including the 2019 NDAA. Among other requirements contained he 2 CFR part 200, 2 CFR 200.216 implements certain provisions of the NDAA and contains prohibitions on the use of federal financial assistance to procwe or obtain certain telecommunications and video surveillance services or equipment provided or produced by designated entitles. including certain entities owned or controlled by the People's Republic of Chine. In addition, 2 CFR 200.471 provides that certain telecommunications and video surveillance costa associated with 2 CFR 200.216 are unallowable. Further, the feral role allows for modernization of eyberescurity for existing and new broadband infrastructure as an eligible use under sections W2(c)(1)(D) and 603(c)(1)(D) as such investments am necessary for the reliability and resiliency of broadband infrastructure.34a Recipients may provide necessary investments in eybersecurity, including mmdemiatition of hardware and software, for existing and new broadband infrestrutor, regardless of their speed delivery standards. The final rule maintains the interim final rule's provision that allows for broader modernization of eybereecmity, including hardware, software, and protection of critical infrostmcture as an eligible provision of government services, to the extent of revenue loss due W the pandemic, under sections 602(c)(1)(C) and 603lc)(1)(C). Use of Funds To Meet Non -Federal Match Under the Infrastructure Investment and Jobe Act The Infrastructure Investment and Jobs Act specifies that, except as otherwise movided. an entity urine nribution, derived from rods (or funds from a all commission or . of not less than 25 may include funds provided to an eligible entity or subgrantee under the American Rescue Plan Act for the purpose of deployment of broadband aervica, which includes funds provided under the S11T program. SLFRF and the program established under section 60102 of the Infrastructure Investment and jobs Ad are separate programs with separate requirements. While section W102 allows states and other eligible entities to use SLFRF funds as the source of matching funds for broadband deployment, the requirements of the SLFRF program still apply. As such, recipients that use SLFRF funds to meet the section 60102 matching requirement will continue to he subject to the requirements of the SLFRF program. m5ror more on fire imFoevere nreyberseemity to the reliability rew maitlermy of broadband networks, era: Federal bmmunimuffol emammsron. hsy";daer.J .saw;u arlochmen'--'o_Al der: amo4i,ge Institute, Ilab_in. me Cybme¢wlty ofnmmire: rva.— )F'abmery,i xoirl,ha', owww.bmo'o-so"a/ Oloa/trobor k/aoareco"/y,waa;nathe ry6avaaaarlrya).or wasee o, e« Sae In6anmctnre or atment and lobe Act. Pnbbc law 117 is lion o). 111. Restrictions on Use While recipients have considerable Flexibility to use funds to address the diverse needs of their communities, some restrictions on use of funds apply. The ARPA includes two statutory provisions that further define the boundaries of the statute's eligible was. First, section 602(c)(2)(A) of the Social Security Act provides that states and beriberi. may not "use the fund.. . to either directly or indirectly offset a Induction in ... net tax revenue .. . resulting from a change in law, regulation, or administrative Interpretation during the covered period that reduces any tax .. or delays the imposition of any tax or tax intasase." Second, sections 602(c)(2)(11) and 603(c)(2) prohibit all recipients, except Tribal governments, from using funds for deposit into any pension fund. These restrictions support use of funds only for the congressionally permitted purposes described in the Eligible Uses section by providing a backstop against the use of funds for proposes outside of the eligible use categories provided for I. the statute. In addition to the restrictions on use of funds provided for in the ARPA statute. the interim final rule noted that several uses of funds would be ineligible under any eligible use category, including as a response to the public health and negative economic impacts of the pandemic or as a "government service" under the revenue Ion eligible use category. Specifically. use of funds for debt service, to replenish financial reserves, or to satisfy an obligation arising from a judicial settlement or judgment wine ineligible uses of funds under the eligible use categories for public health and negative economic impacts and revenue lose. These restrictions apply to all recipients. Recipients should note that restrictions on use of fund. for debt service, to replenish financial reserves, or to satisfy an obligation arising from a judicial settlement or judgment apply to all eligible use categories, not just the eligible use categories in which they were discussed in the interim goal rule. Recipients are also subject to other restrictions on use of funds in the ARPA, the Award Terms and Conditions, and other federal laws. As discussed further below, uses of funds may not conflict with the overall statutory purpose of the ARPA to reduce the spread of COVID-19. Per the Award Terms and Conditions, recipients must adopt and abide by policies to prevent coot ids of interest. Finally, recipients are reminded that other federal laws Federal Register/Vol. 87, No. 18/Thursday, January 27, 2022/Rules and Regulations 4423 also apply to uses of funds, including, environmental and civil rights laws. To enhance clarity, this SUPPLEMEMANy INFORMATION for the final rule consolidates these restrictions on me of funds into one section and makes clear that they apply to all eligible use categories and any use of funds under the program by recipients to whom each specific restriction appplies. Ris section discusses the aforementioned restrictions, public comments received, and Treasury's response to these comments. For clarity, Tremory has divided the following discussion into (A) statutory restrictions under the ARPA, which include (1) offsetting a reduction in net tax revenue, and (2) deposits into pension funds, and (B) other restrictions on use, which include ft) debt service and replenishing reserves, (2) settlemevis and judgments, and (3) general restrictions. A. Ineligible Uses of Fund. Under the ARPA Statute 1. Offset a Reduction in Net Tax Revenue For stales and territories (recipient Ion—prommts the use to directly or Indirectly v in net tax revenue covered uses SURF ARPA na, the smm ear umn..ry must 'momg an amount equal to hill) g00 0f the e reduction attributable to the %this offset and (ii) the amount funds received by the state or SLFRF funds to offset a reduction in net tax revenue does not forfeit its entire allocation of SLFRF funds (unless it misused the full allocation to offset a reduction in net tax revenue) or any mmSLFRF funding. The interim final rule implemerrta these conditions by establishing a framework for states and territories to determine the cast of throng. in law, regulation, or interpretation that reduce tax revenue and to identify and value mkn onq m vrerxv era rmuur5es. N other satiana, "recrpaenr govemmmai'relersorore n.. th. SrMF. o govammanu receiving eroding Sam We aLFRF. >"Fur in hxn .rob tome fe 2}ema Io ea 1h.—xanlaw. rtgulerf�es er miser rcm mlx mr me wrnomau or na, mwr.aemsar ra,maenaa. the sources of funds that will offeet— i.e., cover the cost .1—any reduction in net tax revenue resulting from such changes. The interim final role recognizes three sources of funds that may offset a reduction in net tax ..us other than SLFRF funds: Organic revenue growth, increases in revenue due to policy changes (e.g., an increase in a lox rate), and mrtein cuts In ape ndie gg. Specifically, the interim final role establishes a step-by-step process for determining whether, and the extent to which, SLFRF funds have bean used to offset a reduction in net tax revenue, based an information reported by the recipient government e First, each year, each recipient government will identify and value the changes in law, regulation, or interpretation that would result in a reduction in net tax revenue, as it would in the ordinary course of its budgeting process. The sum of these values in the year for which the government is reporting is the amount it needs to "pay for' with sources other than SURF funds (total value of revenue reducing changes). Second, the interim final rule recognizes that It may he difficult to predict how a change would affect net tax revenue in future years and, ecmrdingly, provides that if the total value of the changes in the year for which the recipient government is reporting is below a de minimis level. as discussed below, the recipient government need not identify any sources of funding to pay for revenue reducing changes and will not be subject to recoupmenl. a Third, a recipient government will consider the amount of actual tax revenue recorded in the year for which it is reporting. if the recipient governments actual tax revenue is greater than the amount of tax revenue received by the recipient for Hie fiscal year ending 2019, adjusted annually for inflation, the recipient government will not be considered to have violated the offset provision because there will not have been a reduction in net tax revenue. a Fourth, if the recipient government's actual tax revenue is less than the amount of tax revenue received by the recipient government for the fiscal year ending 2019, adjusted annually for inflation, in the reporting year the recipient government will identify any sources of funds that have been need to permissibly offset the total value of covered tax changes other than SURF funds. These are: o State or territory tax changes Net would increase any source of general fund revenue, such as a change that would income a tax to; and o Spending cuts in areas not being replaced by SLFRF funds. The recipient government will calculate the value of revenue reduction remaining after applying these sources of offsetting funding to the total value of revenue reducing changes —that is, how much of the tax change has not been paid for. The recipient government will then compare that value to the difference between the baseline and actual tax revenue. A recipient government will not be required to repay to Treasury an amount that is greater than the recipient government's actual tax revenue shortfall relative to the baseline (i.e., fiscal year 2019 tax revenue adjusted for initiator). This "revenue reduction cap." together with Step 3, ensures that tampion governments can use organic revenue growth to offset the cost of revenue reductions. e Finally, if them are any amounts that could be subject to recoupmem, Treasury will provide notice to the recipient government of each amounts In with an explanation of such amounts. This process is discussed in greater detail in section Remadiation and Recoupment of this Supplementary Information. Together, these steps allow Treasury to identify the amount of reduction in net tax revenue that both is attributable to covered changes and has been directly or fndimedy offset with SURF funds. Overview of Comments: Many commenters supported the framework established under the interim final rule. These commenters .,good that the offset provision, and the interim final ride's implementation of the offset provision, was essential to ensuring SURF funds are used in a manner consistent with the statutes defined eligible uses and, in p rebrular. to support the use of SURF funds to build public sector capacity. Several mmmentem argued that the framework should be made more restrictive; for example, some comments advocated that the offset provision be applied to local governments. Other commenters argued that the offset provision and the interim final ride's implementation of the offset provision is too restrictive, with some asserting that the offset provision prohibits staters from making changes to reduce taxes. Many of these commenters argued that the offset prevision presents constitutional mncems. These commenters asserted that the offset provision is ambiguous and the restriction is unrelated to the purpose of the ARPA. These commenters also 4424 Federal Register/Vol. 87, No. 18/Thursday, January 27, 2022/Rules and Regulations argued that the generous amount of SLFRF funds provided to those governments gave recipient governments little choice as to whether to accept the SLFRF funds and, as a result, the offset provision is coercive. In describing these concerns and arguments, several of these commenters referencrd litigation regarding the offset provision.34a Many of these commenters also expressed concern regarding the interim final mle's implementation of the offset provision. Some of these commenters argued that Treasury lacked the authority to implement the provision, asserting that the significance of the provision required Congress to make an explicit delegation of mt... king authority and provide clearor principles by which Treasury should implement the prevision, Finally, one commenter argued that the offset provision should only apply if the recipient expressly and Intentionally uses SLFRF funds to offset a reduction in revenue, arguingg that the tens "offset" implies a deliberete use SLFRF funds to "pay for" a tax cut. As discussed in the interim final role, the offset provision does not prevent a recipient government from enacting a broad variety of tax changes. Rather, the offset provision prevents a recipient government from using SLFRF funds to offset a revenue reduction resulting from a tax cut. A recipient government would only be considered to have used SLFRF funds to offset a reduction in net tax revenue resulting from changes in law, regulation. or Interpretation if, and to the extent that, the recipient government could not identify sufficient funds from sources other than SLFRF funds to offset the reduction in net tax revenue. Only if sufficient fonds from abler sources cannot be identified to cover the full cost of the reduction in net tax revenue resulting from changes in law, regulation, or interpretation, will the remaining amount mt covered by these sources be considered to have been ousel by SLFRF funds, in contravention of the offset provision. Consistent with the statutory text, the approach taken in the interim Real rule recognizes that, because money is fungible, even if SLFRF funds are not explicitly cortically used to cover the mab of changes that reduce net tax revenue, these funds may be used in a manner inconsistent with the statute by indirectly being used to substitute for the slate's or territory's funds that ea, SM eg, Sbh of wW Serowe Y. Us. De .meat ofthe THoaury, No. 721-p-410465- MQ 2021 WL 2952063 (N.n Ala. her 14, deco; State ofOhtov. Yellen. No 1'uly le62021 WL 2712220 (S.D. Ohio Jul. 1, mil). would otherwise have been needed to cover the cogs of the reduction. As discussed below, the scope of changes in law, regulation, or interpretation is further limited to Ihose that the recipient government voluntarily enacted during the covered period. Congress has the authority under the Spending Clause in Article 1, section a of the Constitution to specify the permissible and impermissible uses of federal grants. The Supreme Court has repeatedly "upheld Congress's authority to condition the receipt of funds on the States' complying with restrictions on the use of those funds, because that is the means by which Congress resume that the funds are spent according to its view of the'gmeral We1fare.'"3an "The power to keep a watchful eye on expenditures ... is bound up with congressional authority to spend in the fiat place."351 Assertions that the amount of SLFRF funds are sufficiently large to be coercive are inconsistent with the Supreme Court's reasoning in NFM, which distinguished between conditions placed on new federal funds and conditions placed on existing federal funds and nor based on the size of funds.31tz Further, the conditions placed on the me of SLFRF funds under the ARPA—both the eligible uses and additional limitations on deposits into pension funds and the offset provision —were well known to recipient governments prior to recipient governments requesting to receive SLFRF funds. Finally, the ARIA provides Treasury with the express authority "to issue such regulations as may be necessary or appropriate to carry out" section 602, which includes the offset provision. A number of commenters expressed concern regarding the burden associated with complying with the offset provision and the interim fora[ role. Similarly, other commenters argued that the framework provided in the interim final rule complicated implementation ae Nation) Pad'n oflnda, one e. Se xhat, INPIS.567 U.S.519, SW(2012) (plunllty ppini.m. e(Nmr�r�WIusm,mI7Lno Bed.uummere nfor Fail ail IM 18. State ol. Agin.nod.11 boa 958 card) F 36315mldr xadented, a s.CLea sm. oL Fw edditioml dtscuulon o, Or), Inua'. No in3d67 doh GYr. RIP261 Wer). are Yellen. -Sabd v. OverM Starve, 541 U.S. e00, sae 2m41. x,.The new federal fertile offered by the seedless. Cem An .Wait aloe bill fee payee,. Bean the di seemlmJudi me almost out "chagreu warn hire ... do tun he new mndmg provided Under the ACA orgegant an ar, en a of the come of the Methods hltpnubn"although they duagreed with Use a.l.rey meat,.heel... mat funding—d tion win we<nble. fare m..... a. are. divert). of the offset provision. Treasury took several steps to minimize burden for recipient governments in the interim final rule. For example, the interim final mle incorporates the types of Information ..it modeling already used by stales and territories In their own fiscal and budgeting processes. By inecorporeting existing budgeting processes and capabilities, states and territories will be able to assess and evaluate the relationship of tax and budget decisions to uses of SLFRF funds based on information they likely have or can readily obtain. This approach ensures that recipient governments have the information they need to understand the implications of their decisions regarding the use of SLFRF funds —and, in particular, whether they am using the funds to directly or indirectly offset a reduction in not tax revenue resulting from a change in law, regulation, or interpretation, making the funds potentially subject to recoup ry nt. To further reduce burden, Treasury is considering whether the scope of mporting requirements can be further tailored. As described in greater detail below, Treasury is finalizing its implementation of the offset prevision largely without change. This approach is coneistmt with the text of the ARPA. The remainder of this section discusses and responds to comments on specific aspects of the framework. 1. Definitions Covered change. The offset provision is triggered by a reduction in not lax revenue resulting from "a change to law, regulation, or administrative Interpretation." Consistent with this language, the interim final Dole defines a "covered change" to include any final legislative or regulatory action, a new or changed administrative interpretation, and the phase-m m taking effect of any statute or role where the phase -in or takmg./fad was not presmibm1 P,tor to the start of the covered nerind. Then. the ousel provision applies only to actions for which the change in policy occurs during the covered period; it excludes regulations or other actions that implement a change in law substantively enacted prior to March 3, 2021. For example, covered changes do not include a change in rate that is triggered automatically and based on statutory or regulatory criteria in effect prior to the covered pinto l.3s3 Changed For maple, a.. hisdan a., its mined leamx credit (mrJI m a Seed parentage of coo eNe coETC win ern le 9TC payment. .momairelly Inmanrend thue no as raw... reduwd�e®use of tha recent government'. enpmebn efthe ETC in the APPA See, ego, Tax Federal Register/Vol. 87, No. 18/Thursday, January 27, 2022/Rules and Regulations 4425 mhnmimcdive interpretations would grants, or other types of interventions requested clarification on the scope of not include corrections to replace prior that do not reduce tax revenue.ss+ln changes that would be considered as inaccurate interpretations; such addition, by including changes in conforming to recent changes in federal had be treated as legislation occurred considered covered changes. Finally, covered changes do not include changes that simply conform with recent changes in federal law (including those to conform to recent changes in federal taxation of unemployment insurance benefits and taxation of loan forgiveness under the Paycheck Protection Program). Scope of Covered Changes Public Comment: Several commenters argued that the definition of covered change, and thus the limitations of the offset provision, should apply to subsidies for businesses. Similarly, other cummenters requested that Treasury clarify that the offset provision applies to lax abatements and reductions in corporate taxes, even if administered by a sub -unit of the recipient government Citing to empirical research and other evidence, these commenters argued that these types of economic development policies were poorly administered, reduced public sector capacity, and were ineffective at achieving stated objectives of creating jobs, inmreasing income, and increasing economic growth. On the other hand, scone commandoes argued that, because subsidies were economically similar to same lax cuts, neither action should be considered a covered change and subject to the offset provision. Ainally, other commenters requested that Treasury clarify whether covered changes must be broad -based policies or whether administrative decisions applicable to individuals would be considered covered changes. Treasury Response: Section 602(c)(2)(A) applies to any change that "reduces any tax (by providing for a reduction in s to a rebate, a deduction, a credit, or otherwise or delays the imposition of any lax or tax increase." Accordingly, and consistent with this statutory text, the final rule applies to covered changes that reduce any tax, which can include lax abatements, but does not apply to loans, Mi, ne^Ur, How do... earned is —tax vedib weds?. he,J/www.hv,hnicv.ow,.ag/ boo,o,,balh."—hie-eornad.in ole.- anufts- world (I. vWhwl Mov.. as2p. regulation or administrative Interpretation. in addition to changes in law, within the scope of the offset provision, the ARPA recognizes that a recipient government may make a covered change through its legislature or may delegate the authority to make a covered change including, but not limited to, to a sub -unit o[government. Treasury has revised the definition of "covered change" in the final rule using the statutory language above to make clear that the offset provision only applies to such changes in law, respect to the reduces any tax, Such changes may apply to one or more individuals or entities, provided that —consistent with the statutory text —they result from a change in law, regulation, or administrative interpretation. Prior Enactlnent and Phase -In Public Comment: A number of commenters expressed cromern, or requested clarification, regarding changes that were enacted prior to the covered period but take effect or phase in during the covered period. Several commenters argued that the definition of covered change should include changes that were made prior to the covered period but that phase -in during the covered period. Treasury Response; As discussed above, the offset provision is triggered by a reduction in net tax revenue meeting from "a change in law, regulation, or administrative interpretation" made during the covered period. Consistent with the statutory text, "covered change" is defined to include any final legislative or regulatory action, a new or changed administrative interpretation, and the phase -in or taking effect of any statute or rule where the phase -in or taking effect was not prescribed prior to the alert of the covered period. Conformity Public Comment: A number of commenters requested clarification on the scope of covered changes. Specifically, several commenters "'Nsinance mutt be comiNenr with eligible sea of SMF funds. Sea sonim Eligible Uxn of Nu..". MMY WroRNRrpH. law. These rmmenters requested that Treasury, clarify whether actions to selectively conform with federal law would be considered covered changes and requested clarification regarding the extent to which changes would be considered "recent" For example, these commenters requested clarification regarding conformance with the Global Intangible Low -Taxed Income provision of the 2017 Tax Cuts and Jobs Act. Some commenters further argued that changes that selectively conform or decouple from the internal Revenue Code should be included within scope of covered changes and thus subject to the offset provision. Treasury Response: The final rule maintains the treatment of changes that simply conform with recent rhanges in federal law, such as those to conform to recent changes in federal taxation of unemployment insurance benefits and taxation of loan forgiveness under the Paycheck Protection Frogman so' and including other changes over the past several yearn. Regardless of the particular method of conformity and the effect on net tax revenue, Treasury views such changes as permissible under the offaut provision. Accordingly, and for the reasons discussed above, Treasury is maintaining the definition of covered change without change. Tax revenue. The interim final rule s definition of "tax revenue." is based em the Census Bureau a definition of taxes, used for its Annual Survey of State Government Financea.sss It provides a consistent, well -established definition with which stales and territories will be familiar and is consistent with the approach taken in auction Revenue Loss of this SUPMPIERrASY MrdtMRMN describing the implementation of section. 502(c)(1)(C) and 0W(c)(1)(C) of the Social Security Act regarding revenue loss. A number of commenters expressed concern and requested clarification regarding the definition of "tax revenue." These comments and responses are discussed in section Revenue Loss of this Supplemental Information and, for the reasons discussed above Treasury is firmlizing the, definition of tax revenue without a, See Statement on stela PbW Recovery Funds and l'ex LonCanon, April r. Ahn, anitable at i sp J/honm.lmoeurygov/nwa/pess-mlaaaee/ va. 'euoon Cemuechosen. .., ossa hh J and lure)Cwemment.i swre'1.hv.bwid / euod 11.0P igHod Ap, p/pnb/aeoeU g/oasory hMd IbN visaed Apr. ]o. 3e1h). 4426 Federal Register/Vol. 87, No. III/Thursday, January 27, 2022/Rules and Regulations change and maintaining a consistent definition of"tax revenue."ssv Baseline. For purposes of measuring a reduction in net tax revenue, the interim final rule measures actual changes in tax revenue relative to a revenue hemline (baseline). The baseline is calculated as fiscal year 2019 (FY 2019) lax revenue indexed for inflation in each year of the covered period, with inflation calculated using the Bureau of Economic Analysis's Implicit price Deflator.[" Public Comment: Some commenters expressed concern regarding the choice of FY 2019 as lire baseline, arguing that the choice lacked justification and would make the offset provision more restrictive as applied to recipient governments that experienced a decline in revenue independent of making any covered changes. Treasury Response: Measuring a "reduction" in net tax revenue requires identification of a baseline. In other words, a "reduction" can be assessed only by compering two amounts. The Act defines "covered period" to begin on March 3, 2021, and d u. the baseline year must end prior to March 3, 2021. As discussed in the interim final rule, FY 2019 is the last full fiscal year prior to the COVI0.19 public health emergency, and thus is consistent with the statutory definition and does not include the extraordinary effects of the pandemic that began in 2020. Further, as discussed above, the interim final rule recognizes three potential ways that a recipient government may offset or "pay for" a reduction in net tax revenue due to a covered change: Increases in taxes, decreases in spending, and organic revenue growth. U.S. gross domestic product rebounded to exceed its pre -pandemic level in 2021?w suggesting that an FY 2019 pre- 'e'Ae dboursad in action Revenue Lam ofthie t W Rcmomy Stata rent by Catherine Witcher, wo,g eboueot So.., for B annny Policy, for the Treibury Boubso, At awry committee N.vember r, ion (NWI mu). walked. ar wly,a://Lome.ema.urygov/mu+/prou mleasu/ oass. pandemic baseline is a reasonable comparator for future revenue levels and provides recipients with flexibility to identify organic growth as a permissible offset Finally, this baseline year is consistent with the approach directed by sections 602(c)(1)(C) and so3(c)(1)(C), which identify the "most recent full fisted year of the [elate, territory, or Tribal government) prior to the emergency" as the comparator for measuring revenue loss. For these reasons, Treasury is finalizing the definition of "baseline" without change. The interim final rule includes several other definitions that are applicable to the implementation of the offeet provision, such as the term "reporting year."a"o Commentate did not express concern regarding other definitions in the interim final rule. 2. Framework The interim final .]a provides a step. by -step framework, to be used in each reporting year, to determine whether a state or territory used SLFRF funds to offset a reduction in net tax revenue. Consistent with section 602(c](2) and the interim final rule, the final is At) lies to states and territories: Il) Covered changes that reduce tax revenue. Under the interim final rule, e recipient government identifies and values covered changes that the recipient government predicts will have it would in the ordinary course of its budgeting process. The interim final rule states that the value of these covered changes may be reported based on estimated vetoes produced by a budget model, incorporating reasonable approach for measuring the effects of fiscal policies, and that measures these effects relative to a current law baseline. If the recipient would prefer, the covered changes may also be reported based on equal values using a statistical methodology to isolate the change in year -over -year revenue attributable to the covered change(s), relative to the current law baseline prior to the change(s).sat Further, estimation approaches may not use dynamic methodologies that incorporate the PoOm Ammgae er ned d.ur—ba. oal refire-vi to fixel your refer to the coral year of me maptw4 "a.gnmg year' b dannad in the farm. Beal ca. bed fled rule to m.au ". single el ed ato rdal y earn tutor covered penal, Tmrrics, deans ter. mused facts!n. stars or ra' By pmmiel, recipient 8ov.ramem. to u.e sleet or a ti terad value., tM inWrb. Bwl rule and Abel col. provide fla tibilily m mcipionte.ad thm mburena, burdeu projected effects of macroeconomic growth because macroeconomic growth is accounted for separately in the framework. Estimation Public Comment A number of commenters expressed concern that estimating the value of rovered changes required a number of aasumpuons and that the equal effects of covered changes on tax revenue would be difficult to predict. Several commenters expressed support for the interim final rule 's approach to dynamic scoring methodologies, end one commenter argued that the final rule should prohibit the use of prior cash balances in calculations of permissible tax cuts. Treasury Response: Treasury commons that estimating the effects of covered changes requires assumptions and that many other factors influence the amount of tax revenue received. The interim final role addresses these concerns in several ways. First. in general acid where possible, reporting should be produced by the agency of the recipient government responsible for estimating the costs end effects of fiscal Policy changes. This approach offers and thus provide greater consislenry, among states and territories. Finally, as discussed below, the interim final rule includes a de mfnf rd. threshold, below which the sum of covered changes will be deemed net to have any revenue - reducing effects. Timing of the Impact of Covered Changes Public Comment: Several commenters expressed concern that recipient governments, to evade the offset provision, may backlaad die costs of certain covered changes outside of the covered period, and advocated that covered changes be instead evaluated as the net present value in the year that the covered change is enacted. These commenters argued that some tax cute could have effects on tax revenue for many decades or could be structured to take effect afro the and of the covered period. Treasury Response: As discussed in section Timeline for Use of SLFRF Funds, SLFRF funds must be used to cover costs incurred prior to December 31, 2024. Accordingly, SLFRF funds Federal Register/Vol. 87, No. 18/Thursday, January 27, 2022/Rules and Regulations 4427 generally would not be able to offset a reduction in net tax revenue occurring after December 31, 2024, For these reasons, Treasury is maintaining this element of the interim final role without change. (2) In excess of the de minimis. Under the framework established to the interim final rate, after establishing that a covered change occurred, the recipient government next calculates the total value of all covered changes In the reporting year resulting in revenue reductions, identified in Step 1. If the total value of the revenue a dieshms resulting from se thechanges is below the de mintmis level, the recipient government is deemed not to have any revenue -reducing changes for the purpose of determining the recognized net reduction. If the total is above the its minimis level, the recipient government must identify sources of in -year revenue to cover the full costs of changes that reduce tax revenue. Under the interim final rule, the de minimis level is calculated ea 1 percent of the reporting year's baseline. Public Comment: Many commenters supported the inclusion of the de minimis, noting that the de minimts protects recipients from penalty resulting from minor or incidental changes, minimizes administrative hard., and enhances predictability of the application of the offset provision. Some commenters expreazsd concern that the Gxad threshold could result in cliff effects. Treasury Response: A clear de minimis threshold supports recipient governments' compliance with the offset provision. A de minimis level recognizes the inherent challenges and uncertainties that recipient governments face, and thus allows relatively small reductions in tax revenue without consequence. In other words, sites and territories may make many small changes to altar the composition of their tax revenues or implement other policies with marginal effect/ on tax revenues. They may also make changes based on projected revenue effects that turn out to differ from actual effects, unintentionally resulting in minor revenue changes that are not fairly described es "resulting from" tax law changes. Ilowever, a de minimis does not automatfrally result to consequences under the offset provision, since a recipient govennm..I could demonstrate that other, non- SLFRF funds to offset a net reduction in tax revenue. Accordingly, any rli(f effects associated with a clear de minarets threshold are mitigated by other aspects of the framework. Public Comment: Commenters expressed a range of views regarding the amount of the do minimis. Some commenters argued that the its Dominate was too generous, noting that the choice of 1 percent could, m some cases, permit reductions in list lax revenue of hundreds of millions of dollars. These commanders advocated that the de minimis be lowered (e.g., to 25 basis points) or be lied to a fixed amounL Other commanders argued that the choice of de minimis was not well supported by the statute, advocated for a larger de minimis and suggested that the amount be tied to the cotillion govemment's total expenditures in the prior fiscal year. Treasury Response: Treasury adopted a do minimis threshold as an administrative accommodation for the reasons discussed above. As discussed In the!electm final cote, Treasury determined that the 1 percent de minimis level reflects the historical reductions in revenue due to to. changes in state Fiscal policies and was determined by assessing the historical effects of swtc-level tax policy changes in awls EITCs implemented to effect policy goals other than reducing net tax amame s.3s2 For these reasons, Treasury is adopting the 1 percent de minimis without change. (3) Safe harbor. Next, under the interim fine] mle, if the revenue reduction caused by the covered changes exceeds the 1 percent de minimts threshold, the recipient government compares the reporting year's actual tax revenue to the baseline. If actual no revenue is greater than the baseline, Treasury will deem the recipient government not to have any recognized net reduction for the reporting year, and therefore to be in a safe harbor and outside the ambit of the offset provision. This approach is consistent with the ARPA, which contemplates recoupment of SLFRF funds only in the event that such funds are used to offset a reduction in net tax revenue. If net tax revenue has not been reduced, the offset prevision does not apply. In the event that actual to. revenue I. have the baseline, the organic revenue growth that has occurred, plus any other revenue-ratsi2g changes, by definition must have been enough to offset the toyearcosts of any covered changes. One commenter argued that the offset for organic growth be adjusted to reflect population growth. To minimize administrative burden, and '"Date provided by the Ufl— B,oukinp Tex Polity Cis.6r state level r11 ch..M fix, Nes- rms. for the reasons discussed above, Treasury is maintaining the measurement of actual tax revenue without adjustment far population growth. (4) Comidealuen of other sources of funding. The mcipdent government will then identify and calculate the total value of changes that could pay for revenue induction due to covered changes and sum these items. This amount can be used to pay for up to the total value of revenue -reducing changes in the reporting year. These changes consist of two categories: (a) Tax and other increases in revenue. The recipient government must identify and consider covered changes in policy that the recipient government predicts will have the affect of increasing general revenue in a given reporting year. Recipient governments should use the same approach to Identify and value covered changes that increase tax revenue as applied to covered changes that reduce tax revenue. For the reasons discussed aspects of identifying and valuing covered changes without change. (b) Covered spending cuts. A recipient government also may cut spending in cert ain areas to pay for covered change. that reduce tax revenue, up to the amount of the recipient government's net reduction in total .pending as described below. These changes ..at he reductions in government outlays in an arse where the recipient government has not spent SLFRF funds. To better align with existing mpor[ing and accounting, the interim final rule considers the government has r authority. R the has not spent reduction in xpenit counts asa covered spending cut, up to the mumart government a not reduction in local spending. Rlhey have spent SLFRF funds in such department, agency, or authority, the SLFRF funds generally would be deemed to have replaced the amount of spendi cut and only reductions in spendinngg above the amount of SLFRF funds spent on the department, agency, or authority would count. This approach —allowing only spending reductions in areas whey the recipient government has not spent SLFRF foods to be used as an offset for a reduction in net tax revenue —aims to prevent recipient governments from using SLFRF funds to supplant slate or territory funding in the eligible use 4428 Federal Register/Vol. 87, No. 18/Thursday, January 27, 2022/Rules and Regulations areas, and then using those state or territory funds to offset lax cuts. Such an approach helps ensure that SLFRF funds are net used to "indirectly" offset revenue reductions due to covered changes. Department, Agency, or Authority Public Comment Several commenters approach to considering spending cuts at the department, agency, or authority level, on the basis that this approach is foal a the offsetting spending cuts was too restrietiva; specifically, that measurement at the agency or department -level may not adequately account for the size and various programs that could occur in one agency or department. One commenter argued that recipient governments should instead be permitted to consider spending cuts on a more granular sub- unit of a department but noted that this additional Flexibility would come at the cost of transparency and clarity. Treasury Comment: Treasury recognizes that some recipients may vary in their budgeting processes, with some budgeting on a department level and others budgeting at more or less granular sub -units of government. Relying on spending at a department, agency, or authority level allows recipient governments to report how SLFRF funds have been spent using reporting units already incorporated Into that budgeting process. Spending Cuts Baseline Under the interim final mle, to calculate the amount of spending rmts that are available to offset a reduction in tax revenue, the recipient government must first consfde, whether there has been a reduction in total net spending, excluding SURF fonds (net reduction in total spending). This approach enures that reported spending cuts actually create fiscal space, either than simply offset When spending increases. A net reduction in total spending is measured as the difference between total spending in each reporting yew, excluding SLFRF funds spent, relative to total spending for the recipient's fiscal year ending in 2019, adjusted for inflation. Mounting reductions in spending relative to zing refiners the fact that the fiscal space created by a spending cut persists so long as spending remains below its original level. even if it does not decline further, relative to the same amount of revenue. Public Comment: Several commandoes expressed concern regarding the measurement of spending cuts relative to the recipient's FY 2019, for example arguing that the choice did not Wks into account increases in spending in 2020' As one commenter acted, the fiscal year 2020 required extraordinary intervention by recipient governments and the ongoing public health emergency continues to require extraordinary intervention. Treasury Response: FY 2019 provides a reasonable and relatively generous baseline for considering spending because it is the last full fiscal your prior to the COVIn__19 public health emergency and governments' extraordinary efforts to address the impact of the pandemic. This approach also aligns with the FY 2019 baseline for measuring revenue loss. Measuring spending cuts from year W year would, by contrast, not recognize any available funds W offset revenue reductions unless spending continued to decline, failing to reflect the actual availability of funds created by a persistent change and limiting the discretion of states and territories. For the reasons discussed above. Treasury is adopting the approach taken in the interim final rule without change. (5) Identification of amounW subject to recoupment. If a recipient government (i) report. covered changes that reduce Wx revenue (Step 1); fill to a degree greater then the de minhnis (Step 2); (if!) has experienced a reduction in net tax revenue (Step 3); and (iv) lacks sufficient revenue from other, permissible sources to pa}' for the entirely of the reduction (Step 4j, then the recipient government will be considered to have used SURF funds to offset a reduction in net tax revenue, up to the amount that revenue has actually declined. That is, the maximum value of the reduction revenue due to covered changes that a recipient government must cover is rapped at the difference between the baseline and actual tax mannue.363 In the event that the baseline is above actual tax revenue but the difference between them is less than the sum of revenue reducing changes that are not paid for with other, permissible sources, organic revenue gmwtli has implicitly offset a portion of the reduction. The revenue reduction cap implements this approach for •erlata rep le applied in acute ss.e(c) of the 4.1era. alarm, the amount of fettle... d in vig.fie, of the tax .pea t p wtiete. permitting organic revenue growth to cover the cost of tax cuts. Finally, a metplent government may request ea request of any amounts identified In a notice from Treasury as subject to escarpment under this framework. Comments and responses to the recoupment process was discussed in section Remedistion and Reroupment of this Supplemental information. 3. Reporting To facilitate the implementation of the framework above, and in addition to reporting required an eligible uses, recipient governments are required to report certain information. The interim final rule indicated that Treasury would provide additional guidance at a later date and that, on an annual basis, it expected each recipient government would be required to provide the following information: a Actual net tax revenue for the reporting year, Each revenue -reducing change made to date during the covered period and the in -year value of each change; e Each revenue -reining change made to date during the covered period and the in -year value of each change; and a Each covered spending rut made to date during the co,w rd period, the in - year value of each cut, and documentation demonstrating that each spending lmi is covered as prescribed under the interim final rule. Since the adoption of the interim final mle, Treasury has provided guidance on reporting regarding eligible uses and has required recipient governments to indicate whether they have made covered changes and the value of such Changes.3e4 Reporting Burden Public Comment: Some commenters argued that the framework for identifying and reputing impermissible offset. wee burdensome and that the burdens should be accounted for under Executive Order 13132 (Federalism, August 4, 1999). Treasury Response: Taking into consideration comments received regarding burden. Treasury is considering a tiered approach to meaning on the offset provision, Specifically, under this approach, a recipient would only be required to report information to the extent needed to determine whether SURF funds had been used to offset a reduction in net tax revenue. For example, a recipient government would be required to report "I Sae separate Guidance. Section C11, available at hop.://homa.mmau raaWsyaram/fileV 1.1S ap.canpinnceand-aeportin, Gurdm,ce.pdf. Federal Register/Vol. 87, No. 18/Thursday, January 27, 2022/Rules and Regulations 4429 information regarding permissible offsets only if it had also reported covered changes that were to excess of the it. randons and had reported a net reduction In tax revenue. Treasury will provide additional guidance and instructions on the reporting requhemants at a later date. As discussed in section Regulatory Analyses of this Supplemental Information, Treasury maintains that the final rule does not have federalism implications within the meaning of Executive Order 13132 (Federalism, August 4, 1999). In the ARPA, Congress requires stales and territories to repay the Secretary for amounts used in violation of the prohibition on using SLFRF funds to offset reductions in nel tax revenue, and it authorizes the Secretary to issue regulations to carry out this limitation and other requirements of the statute. Section e(b) of Executive Order 13132 contemplates that contain regulations will be required by statute, as is the case with the interim final rule and the final rule, in which rase section 6(b)(2)(B)'s requirement to include a federalism summary list* statement in than Supplementary Information .the regulation does oat apply. Notwithstanding the above, Tmosury has engaged in efforts to consult end work cooperatively with affected stale, local, and Tribal government officials and associations in the process of developing the interim final rule. Reporting Transparency public Comment several ...at. argued that information supporting the net tax offset calculation should be publicly available. Some of these commenters requested that refunding be made available in a machine-readable format, and others advocated that recipient governments disclose this information on their local budget agency's website. These commenters argued that making information regarding lax changes publicly available would increase transparency and accountability. Further, several commenters suggested that Treasury provide a mechanism for citizens to register that, concerns about particular tax actions. Treasury Response: As discussed in other sections, reporting requirements promote transparency and accountability for the general public and constituents of recipient governments to understand haw state, local, and Tribal governments have used SLFRF funds. Since the publication of the interim final rule, Treasury issued supplementary reporting guidance in the Compliance and Reporting Guidance and in the User Guide: Treasury's Portal for Recipient Reporting (User Guide), which addresses the particular content and form of required Rporting. Treasury will nonfinancial issue updated gguidmrce prior to earl reporting period rlar fying any modifications to requested report content and will continue to consider haw reporting can best support transparency and accountability while minimizing recipient administrative burden. Further, as discussed be the section Remedtatmm and Recoupment, Treasury may address potential violations of this final rule based on bath information submitted from recipients, either through quarterly reports or self -reporting, and from other sources of information (e.g., information submitted from the public). 2. Deposit Into Pension Funds Background: Subsection 802(e)(2)(B) of the Social Security Act provides that "Into Stet. or territory may use funds made available under this secicn for deposit into any pension fund." Similarly, subsection 003(c)(2) of the Social Security Act provides that "Info metropolitan city, nonentitement unit of local government, m county may use funds made evadable under this auction For deposit into any pension fund." For purposes of thus restriction on pension deposits, the interim final rule defined deposit to mean "an extraordinary payment of an accrued, unfunded liability." The interim final rule also specified that a deposit does not include routine contributions made as part of a payroll obligation, such as the normal cost component of a pension contribution or the component that consists of amortization of unfunded liabilities calculated by reference to the employer's payroll costs. The interim final role applied the restriction on pension deposits to all recipients. Public Comment Seveml commenters observed that the statutory restriction on deposits into pension funds does not apply to Tribal governments. Treasury Response: In response, Treasury is clarifying in the final rule that the pension restrielton dose not apply to Tribal governments. Public Comment: Treasury also received a comment expressing concern that the interim final rule perreiiled recipients to make a larger than usual pension contribution, so long as the timing of that contribution aligns with the hiMmical timing of contributions. Treasury Response: The interim final role prohibited the use of SLFRF funds from the ARPA to make extraordinary payments. and the SOPMEMENTARY INFOAMAIION to the interim final rule said that a payment would be an extraordinary payment if it reduces a liability incurred prior to the start of the COVID-19 public health emergency and access outside the recipient's regular timing for making the payment. At the same time, however, as suggested by the comment Treasury received, a payment made at the regular time for pension contributions may very well be an extraordinary payment, for example, if it is larger than a regular payment would have been. Such a payment would be a restricted use. Public Comment: Other commenters asked which pension contributions are permitted. Tmosery Response: To be an eligible use of SLFRF funds, a use ..at (0 be eligible under one of the eligible use categories end (2) at combustion any of the applicable restrictions on uses of funds. Same pension contributions may be eligible because they both fit within an eligible use category and do not contravene the restriction on deposits into pension funds (i.e.. they are not an extraordinary payment of an lex med, unfunded liability). For example, payroll and covered benefits for public health and safety staRresponding to COVID-19 are an eligible use of funds to respond to the public health and negative economic impacts of the pandemic; routine pension contributions as part of an employee's regular covered benefits an permissible under that eligible use category. B. Other Restrictions on Use of Funds 1. Debt Service and Replenishing Financial Reserves The SIRPLEMENIAAY 111FORMATON to the interim feel rule provided that debt service is not an eligible use of funds either to respond to the public health emergency or its negative economic impacts or as a provision of government services to the extent of revenue loss uoi The trustee final rate also provided that replenishing financial reserves (e.g., rainy day funds) is not an eligible use of funds either to respond to the public health emergency or its negative economic impacts or as a provision of °'"Ielooemmmn service: would mu madde Rosiest or mimipal on day outstanding debt instrument. including. nor example. ehnnimn 1 con ,numipnum nuns, ur tee or re.muue costs associated wish the ndeaux of new dam. nor no aa,ne ren.me. ®,.mom would not include seliaholm of a.,.1dis ioo judberg under erpnnnaet m n eeelem,mt agreement. gmam, emsnnt decree. or Facially mnaemM debt restructuring in a judicial, adsomi.manva, or ro,ohnot, proceeding, exnpt if the inclement or inlement retuned the wwieion ofgm,. ,mines. Fa 267% .1(May 11. man. 4430 Federal Register/Vol. 87, No. 18/Thursday, January 27, 2022/Rules and Regulations government services to the extent of revenue loss.... As explained in greater detail below, Treasury, in the final rule, has retained these restrictions and is clarifying that these restrictions on the use of SLFRF funds apply to all eligible use categories. Public Comments Several commenters suggested that debt service and reserve replenishment should qualify as the provision of a government service and be an eligible use of funds, up as 'he amount of revenue loss due to the pandemic. Many commenters indicated that they had been forced to borrow money or dip into ,came funds to continue providing government services during the public health emergency and that using SURF funds for resulting debt service or reserve replenishment casts should therefore be considered a government service. Many comments from Tribal governments noted that their governments depend on revenue from Tribal enterprises to pay government debts and provide services. The comments suggsal drat it should be an eligible use of St to replace lost revenue from these enterprises that would typically be used to pay debt service coals. Other commenters argued that paying the interest or pprincipal on debt should in some cases be considered provision of govemment services and an eligible use of funds as such expenditures facilitate the provision of government services. Some commenters argued that debt coats or reserve drawdowns during the public health emergency constitute a negative economic impact to recipient governments, and thus debt service or reserve replenishment should be an eligible use to respond to that negative economic import. For example, s.r.a.1 commandoes suggested that there should be a specific carve -out allowing the use of SURF funds for debt service on debt incurred fin government services after January 27. 2020, the start of the public health emergency, or short-term debt incurred for this purpose. Others suggested that recipient governments should be his to service debt, up to the amount of debt incurred m direct response to the pandemic. These commenters generally reasoned that the cost of responding to the public health emergency and its negative economic impacts prior to APRA's passage .1. wdin.n, replmnMng f _.tl.l e.—. (eg, niny day.,.therm rve Nndn tvwld net bo—,i&,ee provisoes d agov mvi., ,rah expmua do na dee. ly relate m the povmi dgovmmnmt—ices" constitutes a negative economic impact of the pandemic. Same commenters argued that the specific impacts of the pandemic on the novel, tourism, and hospitality sector bad affected their ability to meet debt service costs. For example, some commenters explained that specific tax streams fe.g., hotel room taxes) or revenue sources (e.g., hospitality generally) are tied to specific debt instruments and that these revenue sources had declined during the public health emergency; commenters argued that this constitutes a negative economic impact that SURF funds should be permitted to address. Finally, some commenters questioned why servidng debt incurred after March for the interim final SURF funds should be used to provide current services to communities in Ysponse to the public health emergency end that use of funds for debt service or reserve replenishment represented, respectively, payment for past costs or savings for potential future costs. In some commentora should also 1 replenishment or for paying off debt owed through IN cost funds. One commenter argued that Treasury should further restrict recipient governments, for example by preventing Y.Y.pients from making cuts to an allowable budget item, filling the budget gap with SURF funds, and then using the savings from the initial cut for debt service or reserve replenishment. Treasury Response The final rule maintains the restriction on the use of funds far debt service or reserve replenishment for the reasons described below and clarifies that this restriction applies to all eligible US e cut egoriel. Fimt, debt service and reserve replenishment costs do not constitute the provision of services to constituents. As noted in the interim final rule, financing expenses —such as Issuance of debt or payment of debt service —do not provide services or aid to citizens. Similarly, contributions to rainy day funds and similar financial reserves constitute savings for future spending needs. As such, these expenses do not respond to the current and ongoing public health and negative economic impacts of the pandemic, nor do they provide a government service. Second, payments from the SURF are intended to be used prospectively (see section Timeline for Use of SURF Funds). The interim final rate provided that funds may be used for casts incurred beginning on March 3, 2021, which Treasury has maintained in the final ro I., Use of funds for deb service on indebted noss issued prior to March 3, 2021 necessarily entails using funds for costa incurred during prior time periods, rothor than the present response to the public health emergency and its negative economic impacts or W provide government services. Third, SLFRF funds provide recipients with substantial latitude to use funds to support the diverse needs in their communities. With SURF resources available, recipients have less need to incur debt for otherwise -eligible SLFRFuses. Finally, given the strong performance of overall revenues and low municipal bond yields, state end local governments generally do not face high levels of fiscal straw, Limits on debt service or replenishment of reserves would not have a substantial impact on recipients' ability to provide service.. The ratio of state end )oral debt-ta-GOP, which spiked briefly during the pandemic, has recovered to its pre- Fendemic level and remains well below vels seen during the Great Recessmn?er 2. Settlements and Judgments The interim final rule also provided fliat satisfaction of any obligation arising under or pursuant to a settlement agreement, judgment, consent decree, or judicially confirmed debt mistrucluriog in a udicial, administrative, or regu�story proceeding would not be an eligible use of funds to respond to the public health and negative economic impacts of the pandemic or as a government service provided under the revenue loss eligible use category. However, if the judgment or settlement requires the recipient to provide services that are otherwise eligible under an SURF eligible use category, specifically if the settlement or judgment requires the recipient to provide sorvicos to respond to the COVM-19 public health emergency or its negative economic impacts or to provide government services, then those costs are eligible uses of SURF funds. ".Ta CZl of No Rti Cal Amounts ofthe Ilnitd SWen.9aatd of Gavttrwn of the F"dml Ronne System, and Table r la.fNenanal In -me .M pmdaR A...' , etvwo of Ecnnnndc Mdnl.. Federal Regialer/Vol. 87, No. 18/'Thursday, January 27, 2022/Rules and Regulations 9931 In other wards, satisfaction of a itself is itself practices included in the CDC's and gender identity), rellggtion. disability, settlement or judgment not guidelines and mcommendatfans far or age, or familial status(having an eligible use of funds, unless the stopping the spread of COVID-19. This children under the age of l a). eettlemenl requires the recipient to services or incur other casts includes programs that impose a condition to discourage compliance ry program Administration Provisions that are eligible was of SLFRF funds. with practices in line with CDC The interim line] rule included In the final rule, Treasury is guidance (e.g., paying off fines to several sections that described the maintaining the interim final ode businesses incurred for violation of processes and requirements for approach and clarifying that it applies COVID-19 vaccination or safety administering the program on An to all eligible use categories and any use requirements), as well as programs that ongoing basis, specifically: Distribution of funds under the SLFRF program, require households, businesses, often transfer of funds, use of funds f d 3. General Reatited.. In addition to the above restrictions, there are three general restrictions that apply to SLFRF funds. These restrictions, which reflect existing laws and regulations, the Award Terms and Conditions, and application of the ARPA statute, applied under the interim final rule, and they continue to apply under the final rule. A primary purpose of the SLFRF in the ARPA is to support efforts to stop the spread of COVID-HhIaa As discussed above, recipients of SLFRF funds ere required to comply with the Award Terms and Conditions established for the use of such funds. The interim final rule and final rule implement this objective by, in part. providing that recipients may use SLFRF funds for COVID-19 mitigation and prevention see Sea section Public Health in Public Health and Negative Economic Impacts. The CDC has provided recommendations and guidelines to help mitigate and prevent COVID-19 and has identified vaccines and masks As tw.. f the best feels to prevent the spread of COVID-19. The interim final rule and final into ]yelp support recipients in slapping the spread of COVID-19 through these recommendations and guidelines. Consistent with the purpose of the ARPA and as implemented through the interim final rule and final rule, a recipient may not use SLFRF funds for a pregram, service, or capital expenditure that includes a term or condition that undermines .(fens to stop the spread ofCOVID-19. A program or service that imposes conditions an pparticipation or acceptance of the service that would undermine efforis to atop the spread of COVID-19 or discourage compliance with recommendations and guidelines in CDC guidance for stopping the spread Of COVID-19 is not a permissible use of SLFRF funds. In other words, recipients may not use funds for a program that undermines >r swsec. so21ag11..0.00kso21df11: fie9]cSoo "Sou secool; Cmonat Hi eeh end Ircel Fusel Recovery Fonda, ¢fi FR et 2fi>afi. nonprofits, or other entities not to use practices in line with CDC guidance as or program a in arstmtron, reporting on the use of funds, and remediation and a condition of receiving funds (e.g., recoupmenn of funds used for ineligible requiring that businesses abstain from purposes. requiring mask use or employee To enhance clarity, this vaccination as a condition of receiving S9PFlEMENTANY INFORMATION for the SLFRF funds). final rule organizes these issues into one Second, a recipient may am use section on Program Administration SLFRF funds in violation of the conflict Provisions. Recipients should also of interest requirements contained in consult Treasury's Compliance and the Award Terms and Conditions or the Reporting Guidance for additional Office of Management and Budget's information on program administration Uniform Guidance, including any self- processes and requirements, including dealing or violation of ethics rules. the applicability of the Uniform Recipients am required to establish Guidance. policies sort procedures to manage potential conflicts of imemsLa70 Treasury may provide further guidance on the types of activities or con0icts that the recipient's policies and procedures ..at cover. Lastly, recipients should also be cognizant that federal, state, and local laws and regulations, outside of SLFRF program requirements, may apply. Recipients may not use revenue lass funds, for instance, to violate other background laws that limit the scope of activities that may be conducted as "government services," including other stale and federal laws. State and local procurement, contracting, and conflids, of -interest laws and regulations may include applicable requirements, including, for example, required procurement processes for contractor selection or competitive price setting. Furthermore, recipients am also required In comply with other federal, stale, and local background laws, federal civil rights and which origin, sax, (including sexual orientation —icadnally, Ana Avoca Toms and Conoco... p onde that'[decipunt u.denlands and egass it maul malt. cunnm aminnr policy co.ebte.t wlin r 6R 200.318(d. and that sued arlact ocmlareal policy la applicable to ach activity fimded under this award Recipients and wNedplants bluer dlaclwe in wdlns to Trans., or the puaMough agency. te appropriate, any ,hadW ... M M. of ImmM aRxUng tan aweMed knits in adwdl v with s CPR 2MI12." "'A. excryllon is stands that do a. apply omen explicitly.mod, Including, op.. the Nahanni Envirmunentd policy AR And the Cevis-Reds. Ad. A. payments in Tmnches to Local Governments and Certain States Section 802(b)(6)(A)(ii) ofthe Social Security Act authorizes the Secretary to withhold payment of up to 50 percent of the amount allocated to each slate and territory for a period of up to 12 months from the date on which the state or territory provides its statutorily. required certification to the Secretary. The Social Security Act requires any such withholding be based on the unemployment rate in the state or territory as of the date of the coordination. Under the interim final rule. Treasury provided that it we old withhold 50 percent of the amount allocated from any state that had an unemployment rate less than two percentage points above its unemployment rate in February 2020 as of the date the state submitted its initial certification for payment of funds pursuant to section 502(d)(1) of the Social Security Ad. Based on daft Available at the time of the issuance of the interim final role, this threshold was expected to result in a majority of states being paid in two (ranches. Treasury did not split the payments of any headed". Public Comment: One commenter asked Treasury to allow a state to request release of the portion either state's second trandee payment after the slate could demonstrate that it had allocated the Anthony of the first tronche, a need to continue ongoing grugrama, and a denim to avoid borrowing coats. Another commenter asked Treasury to clarify whether states that received ]calf their funding in the 4432 Federal Register/Vol. 87, No. IB/Thursday, January 27, 2022/Rules and Regulations first payment would receive their second half payment within 12 months. Similarly, some recipients requested clarification on whether they could obligate second Irench. funds before reralpt or use second tranche funds for costs incurred prior to receipt. TreasuryResponse: The final rule maintains the approach in the interim final rule with two modifications. As described in the interim final cola, splitting payments for most slates provides consistency with payments to local governments and encourages slates to adapt their use of funds to developments that arise in the course of the economic recovery. Moreover. SLFRF hinds may be used for costs incurred during the period of performance. Recipients may use their jurisdiction's budgeting and procurement practices and laws to determine how end when second tranche funds may be obligated. Tha final rule makes two adjustments for operational purposes. First, the final ,.In provides that Treasury expects to make all second trenche payments to states available beginning 12 months from the data that funding was first made available by Treasury (May 10, 2021) regardless of when each individual state submitted its initial certification. This should increase clarity and consistency on the timing of second tranche payments for both states and Treasury. Second, also to ease recipient states' administmtve burden, the final rule strikes a requirement from the interim final rule that stales moat certify for their second trencher payments and file all required reports at least 30 days prior to the date on which their second payment is its available. The final rule simply requires that states certify for their second trenche payment and file all required reports before receiving their second tranche payment. with no 30 day wait period required. B. Payments to Nonentitement Units of Local Government (NEU.) and Units of Local Government (UGLG.) Within Non- UGLG Counties The interim food rule established requirements related to distributions of SLFRF funds by states and territories to NEU,, and UGLGs within non-UGLG counties. Specifically, the interim final nil. provided that the total distribution to an NEU cannot exceed 75 percent of the most recent budget for the NEU (the 75 percent budget rap): a requirement set forth in section 603(b)(2)(C)(iti) of the Social Security Act. The interim Bad rule SOPPIEMENTANY INFORMATION defined the NEes percent U's budget for purpos of calculating the 75 budget cap as the NEU's "most recent annual total Aerating budget, including its general fund and other hods, as of January 27, 2020." The interim final rule further provided that stales and territories must permit NEUs without formal budgets as of January 27, 2020 to self -certify their most recent annual expenditures as of January 27, 2020 for the purpose of calculating the 75 percent budget cap. Further, the interim final role prohibited states and territories from placing additional conditions or requirements on distributions to NEUs beyond those required by the statute, the interim final rule, or Treasury's guidance and from offsetting any debt owed by such NEUs against such distributions. Comment. predominantly focused on the definition of an NEU's budget for gurposse, of calculating the 75 percent budget cap, NEU allocations and eligibility, and the prohibition on stales and territories imposing additional conditions or requirements in the NEU distribution process. Definition of NEU Budget Public Comment Commenters suggested that Treasury provide greater clarification on the definition of an NEU'a "most recent budget" for purposes of the 75 percent budget cap calculation. Treasury provided updated guidance on its interpretation of the 75 pereent budget cap on June 30, 2021, and a commenter suggested that Treasury incorporate such updated interpretation into the SUPPIEMEMMY VNI NNnTKIN of the final rule. Treasury Response: Consistent with the Update on Interpretation for the 75 Percent Budget Cap Calculation published on June 30, 2021?7e the SUPPLEMENTARY INHORMATIM of the final rule defines on NEW. budget for purposes of calculating the 75 percent budget cap as its total annual budget, including both operating and capital ex enditure bud ate in a f m Comenters addressed how a locality was classified as an NEU or metropolitan city, deviations between Treasury's allocation calculations and eafrom other estimates froother sources, treatment of =incorporated areas, sources for population data, and Treasury's allocation of NEU funding to states and territories based on the population of a stale and territory outside of its metropolitan cities. Two commentate proposed that Treasury provide an appeal process for localities that were not identified on the List of Local Governments used by states and territories, as part of the process in which a state or territory determines the eligibility of an NEU in accordance with Treasury guidance, or for Minor Civil Divisions (MCD.) that were denied funding as part of a f ictsand- circumstances test undertaken by a weak-MCD state. Treasury Response: Neither the interim final rule nor the final rule addresses eligibility or al locations issues, and comments on these topics are outside the scope of this rulemaking. These questions are addressed in other Treasury guidance, including the Guidanca r n Distribution of Funds to Nan -entitlement Units of Local Government and Non -entitlement Unit of Local Government Definitional and Data Methodology guidance documents available on Treasury's websiw.e" Because Treasury interpreted the definition of an NEU 374 in accordance with the statute and established an NEU distribution process in May 2021. the final rule does not incorporate an appppeals process regarding the defbutans or the facht and - circumstances test used for eligibility determinations. Prohibition on Additional Conditions or Requirements in the NEU Distribution Process bl' p g as, o Arc Comment One commenter January 27, 2020. The guidance also expressed support for Treasury', gives states and territories flexibility to prohibition on states and territories to their NEUs errant budget definition will better facilitate states' and territories distribution of SLFRF funds to NEUa. Allocations and Eligibility Public Comment: Many commenters provided feedback on specific allocation calculations and eligibility of local governments for NEU funding. ... 'feasson"s Updatu m, b arefOmian car the 75 Pamm,t aaapt cap calculation can be found at: hnpN/hmm.treasurygav/ey avolfilea/r)s/Neu Updaro75-Po,an t-Budge! Cap.pdf, •'s The Gludmas au nionfl ooim, of F—d a to Nmrmtltkmenl Units of ineal Govemmen, Oee be found.1 this ton: RHpa:/ he—,hemurygov/ 8yarem7fm/1)6/NBU_LLrdonn.pdJ The Nanmanlemant Una of Local Ge"'I'm OeNnnimat and Oars Methodalogy can be bond at Ws Unk Nips://donn.r,eavury.6av/rye(em/)ka/ r).Mrasserthodolntr.pd) ^rheuaryt- i ualsed le NEU d in s lly sir .seafibothesim omd p6cw and Mttot web ovafim.,toitt,. areareeno,4—k eblect MMstothehere .sea hiM be th seei-do-Mmstarve.that vace Mtnnm mess dpa dada nal anode , toac ,—that Nnda endpmvidmabroad ..d atam.iWthattenuld. be 1 ,eligible uses under ARYA. Mare to Unitan be twnd 1.er v he Nmran6essed a Unit of Level.1m..-lie saat Uefwtfmalend ugMethodology,evnoINat maheadhone rreasory gav/sysrem/JileNvse/NeU_ MNhodobgypd) Federal Register/Vol. 87, No. Ill/Thursday, January 27, 2022/Rules and Regulations 4433 placing additional conditions or requirements on distributions to NEUs. This prohibition restricts states and territories from imposing limitations on NEUs' use of SLFRF funds based on me NEU's proposed spending plan or other policies, offsetting any debt awed by an NEU against the NEU's distribution, or providing fundingg on a reimhumemnnt modal. In partica, or, the commenter noted that a reimbursement model would lead to inequities in accessing SLFRF funds. Treast ryllesPPonse: The final rule maintains and finalizes the prohibition on stales and territories placing additional conditions or requirements on distributions to NEUs as well as /o any UGLGs within counties that are von-UGLGs. Such conditions or requirements may contravene the statutory requirement that states and territories make distributions based on population and within the statutorily defined Hominess. Other Provisions Treasury did not receive substantive cemmeuts on the requirement that states and territories permit NEUs without formal budgets as of January 27, 2020 to seR-certify their most recent annual expenditures as of January 27. 2020 for the purpose of calculating the 75 percent budget cap, or Treasury's interpretation of the 75 Foment budget cap applying only to a consolidated section 603(b)(2J but not to a consolidated government's county allocation under section 603(b)(3). Further, Treasury did not receive substantive comments on the interim final rate's allowance that stales and territories be able to use SLFRF funds under section 602(c)(1)(A) to fund expenses related to administering payments to NEUs and units of generel local government. As such, the final rule maintains these provisions as written in the interim final rule without modification. Treasury received some comments that are not addressed because they are beyond the scope of the NEU provision of the interim final rule or act authorized by the statute, including comments related to state amounting practices, reallocations of NEU allocations that exceed the 75 percent budget cep, and concerns around eligible uses under SLFRF that small local governments may find particularly salient C Timeline for Use of SLFRF Funds The interim final rule provided that "(el recipient may only use funds to cover were incurred during the period beginning March 3, 2021 and ending December 31, 2024." The interim final ode also provides that the period of performance will con until December 31, 2026, which will provide recipients an additional two years during which they may expend funds for casts incurred (i.e., obligated). As explained to more detail below, m the final rate treasury is maintaining these time periods. Treasury will retain Marsh 3, 2021 as the first data when coals may be incurred, to provide for forward -looking or prospective use of funds and to align with the start date of the "covered period" as such term is used in section 602(c)(2)(A). The deadline for mate to be incare d— which the final rule clarifies means obligated —December 31, 2024, is specified in the AMA statute, end Treasury will retain December 31, 2026 as the end of the period of performance to provide a reasonable amount of time for recipients to liquidate obligations incurred by the statutory deadline. Public Comments. Some commenters expmaned concerns about costs incurred before March 3, 2021 net being covered and recommended the "start dale" be changed to January 2020 to coincide with the declaration of the public health emergency. These commenters argued that recipient governments began incurring costs to respond to COVI0.19 and its economic impacts in Januar 2020 and that prior federal focal rely ief, such as relief provided in the Coromvirus Aid, Relief, and Economic Security Act, did not fully compensate rem plant governments for these costs. These commenters recommended that costs incurred before March 3, 2021 that otherwise fit within eligible use categories for SLFRF should be permissible uses of funds. Some commenters asked Treasury to clarify whether local governments are subject b the same covered period as states and territories beginning March 3, 2021. Comment. noted that section 603(g) of the Social Security Act does not contain the some definition of "covered period" as section 602(g)(1) of the Social Security Act, which references a statutory provision that only applies to states and territories. Many commenters requested that the deadline for costs to be incurred and the period of performance be extended due to the longer timeline for completing water and sewer projects. One commenter requested that recipients be able to split projects late different phases so that funds could be expended on larger, longer term projects (e.g., by obligating funds on one potion of the project by the statutory deadline). One commenter recommended that the period of performance be extended for at least two additional year: beyond the expenditure deadline set forth in the Interim final rule, i.e., until December 31, 2028. One commenter wrote that the final rule should allow for extended projecs (e.g., aver a time horimn of more than ten years) for recipients working to develop long -tens to, supplies to prepare for extreme drought. 7 easury Response. In the final rule, Treasury is maintaining March 3, 2021 as the data when recipients may begin to incur costs using SI.FIW funds. As described in the interim final rale, we of SLFRF funds is forward looking and the eligible use categories provided by statute are all prospective in nature. While recipients may identify and respond In negative economic impacts that occurred during 2020. the costs incurred to respond to these impacts is main prospective, Further, Treasury camfders the beginning of the covered period for purposes of determining compliance with section 602(c)(2)(A) to be a relevant reference point for this purpose that provides some flexibility far recipients that began incurring costs in the anticipation of enactment of the AMA or in advance of the Issuance of the interim final rate and receipt of pa ment. FSnally, establishing an earlier start data would permit governments to use funds received in 2021 to satisfy obligations incurred in 2020. This tree raises a substantial risk of SLFRF funds being used to supplant other recipient funds previously used to pay for such 2020 obligations, freeing funds for recipients to use for any purpose rather than eligible uses of SLFRF funds under the AMA. Permitting such usage would undermine the provisions setting forth permissible and impermissible uses in the statute. Therefore, a reading of the statute permitting use of funds prim to March 3, 2021 would be inconsistent with the statutory structure. In the final rule, Treeaury is Ise maintaining the deadlines by which funds at be obligated (Le., December 31, 2024) and by which such obligations must be liquidated (i.e., December 31, 2026). The December 31, 2024 deadline by which eligible casts ..at be incurred is established by statute. Treasury is finalizing its interpretation of "incurred" to be equivalent to the definition of"obligation," based on the definition used for purposes of the Uniform Guidance. Treasury is also maintaining the period of perfoanence, which will run through December 31, 2026, and provides the deadline by which recipients must expend obligated funds. Most recipients received SLFRF funds in the spring and summer of 2021, 4434 Federal Register/Vol. 87, No. 18/Thursday, January 27, 2022/Rules and Regulations meaning that they have over three years to obligate and over five years to expend funds. This provides a sufficient amount of time for recipients to plan and execute projects. D. Transfers of Funds Under section 602(c)(3) of the Social Security Act. a state, territory, or Tribal government may transfer SLFRF brads to a "private nonprofit organization .. . a Tribal organization.. , a public benefit corporation involved in the transportation of possergms or cargo, or a special-purpose unit of state or local government." Similarly, section 603(c)(3) authorizes a local government to transfer SLFRF funds to the mere entities (other than Tribal organizations). Separately, section 603(c)(4) authorizes a local government to transfer SLFRF funds to the state in which it is located. Entities Eligible for a Transfer Under Sections 602(c)(3) and 603(c)(3) Regarding transfers permitted under sections 602(c)(3) and 603(c)(3) of the Act, the interim final rule Supplementary Information clarified that the lists of transferees in them ructions are not exclusive and that state, Inc.], territorial, and Tribal governments may transfer funds to other constituent units of government or private entities beyond those apmified in Ore statute. Public Comment: Several commenters supported Treasury's interpretation of eligible transferees in sections 602(c)(3) and 603(c)(3) as nonexclusive. However, many commenters asked for greater clarity as to whether specific entities not Tribal governments, was eligible transferees. One commenter also asked whether a recipient may transfer SLFRF funds to a higher level of government, mch as a locality to the worry in whirl Treasury Response: The final ,it. clarifies that, in addition to the entities enumerated in sections 602(c)(3) and 603(c)(3), recipients may transfer SLFRF funds to any entity to carry out as a subrocipient an eligible use of funds by the transferee, as long as they comply with the Award Terms and Conditions and other applicable requirements, including the Uniform Guidance at 2 CFR 2W.331-2W.333. Eligible submcipients include, but are not limited to, other units of government (including Tribal governments), nonprofits and other civil society organizations, and private entities. Further, the final rule clarifies that transfers may, be made to both constituent or non -constituent units of government. For example, county A may transfer SLFRF funds to county B as long as county B abides by the use restrictions applicable to county A and the transfer would constitute an eligible use of the funds by county A. County A must receive a benefit proportionate to the amount transferred. As detailed in the interim final role Supplementary Information, once transfers are received, the tray eferee must abide by the restrictions on use applicable to the transferor under the ARPA and other applicable law, regulations, and program guidance. Further, the transferor remains responsible for monitoring and overseeing the subrecipient's use of SLFRF funds and other activities related to the award to ensure that the subrocipient complies with the statutory and regulatory requirements and the Award Terms and Conditions. Recipients also remain responsible for reporting to Treasury on their subrecipients' use of payments from the SLFRF for the duration of the ..it. Pooling Funds Public Comment: Several commenters asked for clarification about whether they may pool SLFRF funds for a project with other recipients, including when doing so involves o transfer to another entity, such as a regional organization or government that undertakes projects no behalf of a number of local governments. Commenters else asked for clarification on the oversight and reporting obligations that would result from such imnsfers. Treasury Response: Consistent with guidance issued fol lowing the interim final rule,arn the final role clarifies that recipients may pool SLFRF funds for projects, provided that the project is itself an eligible use of SLFRF funds for each recipient that is contributing to the pool of funds and that recipients are able to track the use of funds in line with the reporting and compliance requirements of the SLFRF. In general, when pooling funds for regional pro)mts, recipients may expend funds directly on the project or transfer funds to another government or other entity that is undertaking the project on behalf of multiple recipients. To the extent recipients undertake regional projects via transfer to another organization or government, recipients would need to comply with the rules on transfers specified in the final rule WPPLEMENTAW INFORMATION. A —Cormieviros stets and Weil Fiscal Recovery Funds, Roanemly Raked (fumiona, ss oflidy ra. 2021, rims,11home.lmpsury.gav/ayRem7kNraa/ SI PFAQ.Pdf. recipient may transfer funds to 0 government outside its boundaries leg., county transfers to a neighboring county), provided that the transferor can document that the transfer constitutes an eligible expense of the transferor government and that its jurisdiction receives a benefit proportionate to the amount transferred. Blending and Braiding of Funds Treasury is clarifying in the rural rule that, consistent with further guidance issued by Treasury following the interim final mle,srs recipients may fund a project with both SLFRF funds and other sources of funding, provided that the costs are eligible costs under each source program and are compliant with all other related statutory and regulatory requirements and policies. The reci cent must comply with annReabRa noncoms, mcniasnumn for all with env requirements and projects, investments, or services that are eligible under the SLFRF program. SLFRF funds may not he used refund an activity that is not, in its entirety, an eligible use under the SLFRF program. For example: o SLFRF funds maybe used in conjunction with other sources of funds to make an investment in water inbastoo ure that is eligible under section 02 or 603 of the Social Security Act and the final role. o SLFRF funds could not be used to fund the entirely of a water infrastructure project that was partially, although not entirely, an eligible use under Tramory's focal role. However, the recipient could use SLFRF funds only for a smaller component project that does constitute an eligible use, while using other funds for the remaining portions of the larger planned water infrastructure project that do not constitute an eligible use. In this cam, the "projeru" for SLFRF purposes under this program would be only the eligible um camponmt of the larger project. • In addition, because SLFRF funds must be obligated by December 31, 2024, and recipients must expend all funds under the award no later than December 31, 2026. recipients most be able to, at a minimum, determhle and report to Treasury on the amount of SLFRF fund obligated and expended and when such funds were obligated and expended. ar• Soo FAQ cI 0. 1d. Federal Register/Vol. 87, No. I8/Thursday, January 27, 2022/Rules and Regulations 4435 Scope of a 603(c)(4) Transfer Unlike in the case of a transfer under sections 602(c)(3) or 603(c)(3), the interim final rule WPPLEMENTANY INFORMATION specified that transfers from a local government to the stale under section 603(c)(4) will result in a cancellation or termination of the award on the part of the Mansferor local government and a modification of the award to the transferee state. Public Comment: Two commenters suggested that Treasury expand section 603(c)(4) beyond transfers from localities to the state to include transfers from counties to their constituent local governments, which would incentivize counties to augment funds to address the needs of local governments. These commenters noted that counties are disincentiviaed to make transfers under section 6031c)(3), as is currently allowed, as such transfers would require that counties provide overight and monitoring over its subrecipients. Treasury Response: Section 603(c)(4), by its terns, applies only to transfers from local governments to states. Accordingly, tire fund rule must maintain the interim final rule's limitation of section 603(c)(4) transfers we applicable only to transfers from local governments to stales. Expansions of section 603(c)(4) transfer authority beyond transfers from local governments to states ware not explicitly authorized by Congress. As such, transfers under section 603(c)(4) may only be made by local governments to the state in which they are located. Congress enumerated two separate transfer provisions for local governments —section 603(c)(3) and section 603(c)(4)—drat use different language and were intended to operate differently. Section 603(c)(4) contains prefatory language ("Notwithstanding paragraph (1)"—a reference to the eligible SLFRF usea) that section 603(c)(3) does mt. In other words, section 603(c)(4) insisters are not required to constitute an eligible use of the funds from the perspective of the transferor loan] government. but section 603(c)(3) conifers are required to constitute an eligible use. A transfer to accomplish an eligible use fits within the recipient-subreclpient framework. Further, treating section 603(c)(3) transfers as leading to a cancellation of the award for the transferor local government would result in scenarios that are Inconsistent with the statutory language. An award cancellation pursuant lu a section 603(e)(3) transfer would result in either (1) nm- governmenta) entities becoming award recipients under the program, which would contravene the purpose of SLFRF in (2) transfers to governmental and nongovernmental entities being treated in a distinct and inconsistent manner. That is, section 603(c)(3) transfere to governmental entities would lead to award cancellation but section 603(c)(3) transfers to non -governmental entities would lead to a recipient-submcipient relationship. Therefore, in the final rule, Treasury maintains its distinct treatment of a section 603(c)(3) transfer and section 603(c)(4) transfer. The final rule clarifies that a transfer under section 603(c)(4) will result in a modification, termination, or cancellation of the award on the pert of the transferor local government and a modification of the ...,it to the transferee state or territory. As detailed in the SOPPLEMEMMY INFORMATION to the interim final rule, the transferor ..at provide notice of the transfer to Treasury in a format specified by Treasury. Until the local government provides such notice and Treasury provides confirmation of its acceptance of the notice, the local government will remain responsible for ensuring that the SLFRF award is being used in accordance with the Award Terms and Conditions, section 602 or 603 of the Social Security Act, the final rule, and program guidance including reporting on such uaes of the award funds to Treasury. A state that receives a transfer from a local ggovernment under section so31c](4) will be bound, by statute, by all of the use restrictions set forth in section 602(c) with respect to the use of those SLFRF funds, including the prohibitions on use of such SLFRF funds to offset certain reductions in taxes or to make deposits into pension funds. The state will be responsible as the prime recipient for the use and reporting on any funds transferred under section 603(c)(4) by the local government. Such transferred funds will be subject to the Award Terms and Conditions previously accepted by the state in connection with its SLFRF award. Subreclpient Transfers Public Comment: Commenters sought clarification as in how funds may be transferred from a recipient to another entity. For instance, one commenter requested that recipients be able to advance funds to subrocipienls as opposed to reimbursing subreciplents for expenses incurred. Treasury Response: Treasury did not specify in the interim final role whether recipients may advance funds to subrecipients. This omission was not intended to prevent recipients from advancing funds to subrecpients, consistent with the various methods permitted under the Uniform Guidance. Given the broad flexibility that recipients have in selecting eligible uses and the broad variety of potential subrecipients, Treasury believes that specifying a single method of advancement or reimbursement would add unnecessary administrative difficulty to program administration. Recipients may determine the optimal payment structure for the transfer of funds (e.g., advance payments, reimbursement basis, etc.) from recipients to subrecipluds. Ultimately, recipients ..at comply with the eligible use requirements and any other applicable laws or requirements and are responsible for the actions of their subrecipients. E. Administrative Expenses Via interim final .Is permitted, under the beading "[exxpenses to improve efficacy of public health or economic relief programs," use of funds for "loldminislative costs associated with the recipient's COVID-19 public health emergency assistance programs, including services responding to the COVID-19 public health emergency or its negative economic impacts, that are not federally funded.^ Following release of the interim final rule, Treasury issued Compliance and Reporting Guidance that provided that "recipients may use funds for administering the SLFRF program, including costs of consultants to support effective management and oversight, including consultation far ensuring compliance with legal, regulatory, and other requirements. Further, ..is most be reasonable and allocable as outlined in 2 CFR 200.404 and 2 CFR 200.406. Pursuant to the SLFRF Award Terms and Conditions, recipients are permitted to charge both direct and indirect coals to their SLFRF award as administrative costs. Direct costs are thus. that are identified specifically as costs of implementing the SLFRF program objectives, such as contract support, materials, and supplies for a project. Indirect casts are general overhead cases of an organization where a portion of such costs are [sic] allocable to the SLFRF award such as the coat of facilities or administrative functions like a director's office."s" Several commenters n' ll.a. IhPertmnnt nr 1bn Tmn,ry, Ralpim[ C..,Niire end R ,aavg Rapomibnitla, en or al—d r 5, 2021: hllpalrhom,-0 aggovr pNiry tuceJwroreeudautatw1.colf -local oadaawl-gomrwaeanraane.ond-ma r),.rc, c,wm„n 4436 Federal Register/Vol. 87, No. 18/Thursday, January 27, 2022/Rules and Regulations requested clarity on which Fund."e Recipients may use SURF with standard accounting practices and administrative ex time are permissible funds to fund the principal ofthe loan the Uniform Guidance. uses of funds and how, recipients should .tried ure.dremislmtive costs. In the final role, Treasury is clarifying that direct and indirect administrative expenses are permissible uses of SURF funds and am a separate eligible use category from "lejxpenses to improve efficacy of public health or ar.m omic relief programs," which refers to efforts to improve the effectiveness of public health and economic programs through use of date, evidence, and renewed refer to on incurred and in that case most track repayment Of principal and interest U.s., "program income," as defined under 2 CPR 200). When the loan is made, recipients most report the principal of the loan as an expense. Repayment of principal may be used only for eligible new and is subject to restrictions on the timing of the use of funds. Interest payments received prior to the and of the period of performance will be considered an addition to the total award and may be used for any purpose that is an eligible use of funds under the statute end final role. Recipients are not subject to reslricttorra under 2 CFR 200.307(e)(1) lot me same purpose in use won respect to seen payments. circumstances must be heated For loans with maturities longer than consistently as either direct or indtrecl December 31, 2026, the recipient most costs. estimate the cost to the recipient of F. Treatment of Lawns The interim final rule allowed recipients to use SURF funds to make loans for uses that am otherwise eligible (for example, for ...It business assistance). Subsequent guidance clarified how recipients must hack and dispose of program income from loans, consistent with the statutory requirements for the timing of SURF expenditures. SURF fends moat be used to cover "casts incurred" by the recipient between March 3, 2021 and December 31, 2024. The interim final rule provided that SURF funds must be obligated by December 31. 2024 and expended by December 31, 2026. In using SURF funds to make loans, recipients most be able to determine the amount of funds used to make a lea¢ and must comply with restrictions on the timing of the use of funds and with restrictions in the Uniform Guidance. When SURF funds am used as the principal for loans, them is an expectation that a significant share of the leaned funds will be repaid. Thus, recipients may net simply consider the full amount of ioanad funds to be permanently expended and must appropriately account for the mum of loaned funds. For loans that mature or are forgiven on or before December 31. 2026. the recipient most account for We use of funds on a cash Raw basis, consistent with Treasurys guidance regarding loans made by recipients using payments from the Coronavires Relief every-funds—.11 nr.,ho--and-mponing responvLlGtxs. n ld. recipient must measure the projected rest of the loan and may use SURF funds for the projected cost of the loan. Recipients have two options for estimating this amount They may estimate the subsidy at (/.e., net present value of estimated cash Rows) m the discounted all Row under current expected credit losses (i.e., CRCL method). See further guidance issued by Treasury for further explanation.aes public Comment: Many commenters asked for further clarification on the treatment of loans and the calculation of "costs incurred." Some commenters requested that grants mad. for eligible activities prior to December 31, 2024 to a revolving loan fund, an economic development corporation, a land bank, or a similar facility should be considered obligated and expended at the time of the grant. This would allow funds to be expended by the grantee beyond the covered period and for funds returned to the grantee to be re- invested in further was outside allies, covered period. Treasury Response: The final rule maintains the treatment of loans from the interim final mle and subsequent guidance, as, discussed above. This approach is consistent with the statutory requirement that funds be used for costs incurred for eligible purpose. by December 31, 2024 and is consistent =reGunnavirna Rend Fund for Shon,Tibal Gwe�n,nenre, and Cerlein Migible Lord Gwmmrcnla, a6 FR 0 te.z. m See£AQ9 ].0 ua Ses. and Lwel PhcoI Rewvmy 4Lnda, Frequently Aseic QUwfi—, ea nflwy It. 2021: Imps,// home. hmsm y 8o✓/system/files/1 ]e/SLFgPFAQ.pdf. G. Use of Fonds far Match or Cost -Share Requirements As a general matter and as referenced to the SUPPLEMENTARY INFORMATION to the interim final rule, funds provided under one federal program may not be used by a recipient to meet the non- federal match or cost -share requirements ofanother federal program. However, Treasury has since determined that, consistent with this general principle and the requirements of the Uniform Guidance al 2 CFR 200.306(b)(5), it,. funds available under sections W2(c)(1)(C) and W3(c)(1)(C) of the Social Security Act for the provision of government services, up to the amount of the recipient's reduction in revenue due to the public health emergency, generally may be used to meal the non-federal cletrahare or matching requirements of other federal programs. Federal funds that constitute revenue sharing to slate and local governments may generally be used to meet non-federal match requiremente.a n The broad eligible uses of the SURF funds available under sections 602(e)(1)(C) and 603(c)(1)(C) of the Social Security Act, combined with the purpose of these previsions (which is to provide general fiscal assistance to governments facing revenue losses due to the public health emergency), demonstrate that these funds are revenue sharing. They thus should generally be permitted to be used to meet the non-federal match and coal - sham requirements clothier federal programs. As such, the SURF funds available for the provision of government services, up to the amount of the recipient's reduction in revenue due to the public health emergency, may be used to meet the non-federal Water State available to meet the match or cost - share requirements of an agency's federal program, such awarding agency is required to accept such funds for the purpose of that program's match or cost - sham requirements except in the circumstances enumerated in that section. The Office of Management end Budget he. authority under 2 CFR —See U S. Go w—ce Acmmtebility Office, Annoplas of £edeml Appicpnada e, low. Third Helium, Vote-11, , 10-09, GAO-% JBZSP (February 2006). bnps //wuw,yvo,vv/asses/ ao- 06-36]sppdf Federal Register/Vol. 87, No. IS/Thursday, January 27, 2022/Rules and Regulations 4437 200.102 of the Uniform Guidance to tons waivers of this requirement on request of the relevant awarding agency. Analogous requirements and waiver authorities may be present in other regulations. If a recipient seeks to me SURF funds to satisfy match or cost - share requirements for a federal grant program, it should first confirm with the relevant awarding agency that no waiver has been grenlad for that program, dial no other circumstances enumerated under 2 CFR 200.306(b) would limit the use of SURF funds to meet the match or cost -share requirement, and that there is no other statutory or regulatory impediment to using the SURF funds for the match or cost -share requirement. Note that SURF funds may not be used as the nun-foderal share for purposes of a slate's Medicaid and CHIP programs because the Office of Management and Budget has approved a waiver as requested by the Centers fm Medicare & Medieatd Services pursuant to 2 CFR 200.102 of the Uniform Guidance and related regulations. SURF funds beyond those that are available under sections 602(c)(1)(C) or 603(e)(1)(C) of the Social Security AR for the provision of government services may not be used to meet the non-federal match or cost -share requirements of Other federal programs other than as specifically provided forby statute. For example, as discussed in other sections of this final role, section 40909 of the Infrastructure Investment and Jobs Act provides that SLFRF funds may be used to meet the non-federal match requirements of any authorized Bureau of Reclamation project, and section M102 of the Infrastructure Investment and Jobs Am provides that the SURF may be used to meet the non-federal match requirements of the broadband infrastructure program authorized under that section [see sections water and Sewer Infrastructure and Broadband Infrastructure). H. Reporting The interim final rule established Treasury's authority to called information from recipients through requested experts and any additional requests for information. The interim final rule also provided Treasury flexibility to extend or accelerate reporting deadlines and to modify requested content for the Interim Report, Project and Expenditures reports, and Recovery Plan Performance reports. The SUPPLEMENTARY INFORMATION of the interim final role provided initial guidance on the reporting requirements for the SURF funds. States (defined to include the District of Columbia), territories, metropolitan cities, counties, and Tribal governments were required to submit one interim report and quarterly Project and Expenditure reports thereafter. Nonentitlementunits of local government were not required to submit an interim report States, territories, and metropolitan cities and counties with a population greater than 250,000 residents were also required to submit an annual Recovery Plan Performance report to Treasury. The Supplementary Information of the interim final role provided guidance on the deadlines and content required for each 1,Pe of report. Pub se Comment: Treasury received many comments on the content and specific data elements required of program reporting. Some commenters expressed enthusiasm for including particular details to reporting to promote transparency. Other commenters requested that Treasury streamline reporting requirements to avoid imposing undue administrative burdens and compliance costs. Many commenters requested further clarification on or amendments to reports and specific reporting elements be public, including a request for a public website with a number of mo moveratic data metrics about if.. use the moortirm Portal. which allows modifications to the portal. Finally, some commentere requested that Treasury provide example materials and reporting metrics to aid recipient understanding. Treasury Response: Since the publication of the interim final rule, Treasury issued supplementary reporting guidance in the Compliance and Reporting Guidance and in the User Guide: Treasury's Portal for Recipient Reporting (User Guide). ear Treasury has addressed many of these comments in the Compliance and Reporting Guidance and User Guide and will continue to issue updated guidance prior to each reporting period clarifying any modifications to requested report content. Treasury notes that the interim final rule did not address the specific ..tent and data elements required in reporting, the reporting portal or submission process, and the specific —US. nepnnment of tha Trenaury, n...... ant r—phsnce mid R,,ioi a R,Vvintklieen... of No,mbn s. 2021, bttpW/Lamehxu ggot/ andweiry-ie edw a iaranmJmafaMdomL �MbaLrnm soveenbA/atdfateondlowl-JUmb rovery jundslcaipien rvcompllmzeond-mpwNng- reepnnsiblbhee. form of reporting (e.g., example templates, machine readability); comments on these topics are outside the ex of the final rule and, as noted, are addressed instead in Compliance ..it Reporting Guidance,. Reporting Deadlines Public Comment: Treasury received comments requesting various changes to reporting deadlines to ease compliance bu choo, For example. Treasury received several comments requesting that Treasury delay early reporting deadlines for various reasons, including to align with the timeline for issuing a final rule and to allow for more time for recipients to determine SURF alterations. Commenters also requested changes to the immediacy of reporting, for example requesting that 'I'reasury allow expenses to be reported with a lag instead of the quarter in which they were accrued or that reports be due 90 days after period close instead of 30 days after the close of a reporting period. Some commenters requested changes to the reporting frequency, for example to report biannually rather than quarterly. Treasury Response: Treasury has clarified reporting deadlines in the Compliance and Reporting guidance.'"' Treasury is mooning the reporting deadline of 30 days after the close of the reporting period to ensure timelyy amounting of the use of SURF herds; this if melt.. also aligns with practices in any that federal programs. The final rule maintains Treasury's discretion to extend or delay reporting deadlines. Administrative Costs for Reporting and Compiler. Public Comment: Many commenters sought clarification about whether various administrative costs related to reporting and compliance were eligible uses of funds and asked for clarification on the limits of such use. Treasury Response: Treasury notes that administrative costs are generally allowable uses of SURF funds, including fee roparting. For additional information on administrative expenses, please ace section Administrative Expenses under Program Administration Provisions. Uniform Guidance Public Comment: The SUPPLEMENTARY INFORMATION of the interim final rule clarified that SURF funds were generally subject to the provisions of the Uniform Administrative Requirements, Cost Principles, and Audit 4438 Federal Register/Vol. 87, No. I8/Thursday, January 27, 2022/1ules and Regulations Requirements for Federal Awards (2 CFR part 200) (the Uniform Guidance), including the cost principles and restrictions on general previsions far selected it... of cost. Treasury received many comments requestingg clarification about or modifications to the applicability of the Uniform Guidance on various issues. For example, one commenter requested that Treasury remove requirements that expenditures of funds be made in conformance with the Uniform Guidance, particularly in case of expenditures made during period from March 3, 2021 to the release of the interim final rate, while other comments mqqund ed that Treasury raise the single -audit threshold form $750,000 to $5 million. Comment.. sought clarification on items such as: The applicability of the Uniform Guidance for funds that are used for the prevision of government services, the applicability of particular sections of the cost principles provided in subpart E of the Uniform Guidance, the applicability of the procurement provisions of the Uniform Guidance, and requirements for suboad oient sm nnoth e. Guidance me and of Ire period of performance on December 31, 2026 unless otherwise specified in this rule or program - specific guidance. Costs must follow the requirements in 2 CFR 200 Subpar E, Cost Principles, including procurement standards. Recipients that receive an aggregate amount of federal financial assistance in a given fiscal year that ce exeds the Single Audit threshold are subject to the requirements in 2 CFR 200 Subpart F, Audit Requirements, unless otherwise specified in program -specific guidance. SLFRF funds transferred to subrecipients are also subject to reporting and Uniform Guidance requirements. Additional information about the definition of su irecipients is available in the section Distin¢uishina Assistance Listing for details an the specific previsions of the Uniform Guidance that do not apply to this program. The Assistance Listing is available on SAM.gov. Additional changes to compliance and reportin guidelines, including any clarifiwti on Uniform Guidance requirements, will be address al in Compliance an Reporting Guidance and the User I. Remediution and Rcoupment Sections 602(e) and 603(a) of the Social Security Act provide the Secretary with the power to recoup "funds used in violation" of the Social Security Act. The interim final role implemented these provisions by establishing a process for recoupment. Treasury may identiffyy hods used in violation of the Sacia7 Security Act based an information submitted by recipients, including as part of reporting requirements, es well as information from other soumes.ass Its potential violation is identified. Treasury will provide the recipient an initial written notice mthe amount subject to recoupment along with an explanation of such amounts. A recipient then has 60 calendar days following receipt of a recoupment notice to submit a request for reconsideration containing any information it believes supports its use of funds. Within on calendar days of receipt of the request for reconsideration, the interim final rule provided that a recipient will receive a Seal notice of the Secretary's decision to of inn, withdraw, or modify the recoupment notice. If the recipient did not submit a request for reconsideration, Cinitial notice of recoupment would deemed a final notice. A recipient would then be required to repay any amounts subject to recoupment within 120 calendar days of either the initial recoupment notice, if the recipient does net request reconsideration, or the final recoupment notice, if the recipient does requestreconsideration. Public Comments Treasury received several comments on the process for recoupment For instance, some commenters, including many Tribal governments, requested additional time to file a request for namaddereton and submit repayment to ensure that small entities have the time necessary to carry out any logistical steps and consult with counsel. Treasury was also asked to align iffi rocoupmenI process with that of the Office of the Inspector General and other departmental administrative processes to resolve findings, agency decisions, and related timelines. One commenter asked if the 120-calendar- day time limit for repayment was based on the initial notice, rather it.. a final decision issued by the Secretary. Several commentsre expressed concern regarding the recoupment process, arguing that consideration of "all relevant facts and circumstances" provided Treasury with too much •ea Treenvy will also consists, the tax orfeet prove lon an an sous bash. authority and created ambiguity. Other commenters urged Treasury to establish a robust enforcement and compliance program and process and advocated for the creation of a vehlstleblower mechanism or public complaint process to allow public and private entities to report suspected misuses of funds. Finally, some commenters requested clarification regarding the process after a violation is identified and becomes final. One commenter also asked to allow recipients to emend reports deemed to contain ineligible expenses and inform recipients haw the agency intends to resolve instances where a use was later deemed unacceptable. Another commenter asked if recouped funds could be released back to the recipient. Commenters also expressed concern about Treasury's authority to mcoup funds used in violation of the tax offset provision. Some commenters requested additional clarity around when tax cuts would trigger Treasury's recoupment authority and the duration of Treasury's authority to seek recoupment of such funds. Treasury Response The final rule largely preserves the process established in the interim feel rule but includes several adjustments to clarify certain elements. Like the interim final rule, the final rule provides that. after en initial determination is made that a recipient has used SLFRF funds in violation of the law, a recipient may submit a saquesl for reconsideration concerning any amounts identified in a notice provided by Treasury, If a recipient chooses to seek reconsideration of the initial notes, the recipient must submit a request for reconsideration as provided under the final rule. If a recipient does not request reconsideration, the initial notice that the recipient received will be deemed the final notice.36e Treasury has clmifred that a recipient must invoke and exhaust the procedures available under section 35.10 of the final rule prior to seeking judicial review of a recoupment decision. Consistent with Section 602(b)(6)(A)(ii)(M) of the Social Security Act, if a state or territory is required to repay funds pursuant to the Secretary's recoupment authority. the Secretary may reduce the amount payable to the state or territory in a second Interim payment by the amount that the slate or territory would be required to repay as recoupment. a the final rule, Treasury has clarified that, if it identifies a potential '^' Fwda sublect to ranupmern cannot later be returned. Federal Register/Vol. 87, No. 18/Thursday, January 27, 2022/Rules and Regulations 9939 violation,me it may request additional information from a recipient before initiating the recoup seem process and, where necessary, provide written notice to the recipient along with an ex lanation of eurh amounts potentially subject to recoupseem. Furthermore. Treasury has also made clear that it retains the ability to expedite or extend timelines in any adjudication or pre - adjudication process pursuant to section 35.4(b) of the final rule, although the general timelines set forth in the interim final rule are maintained in the final rule. This process is intended to provide the recipient with an adequate opportunity to present additional information regarding its uses of funds and provides flexibility for recipients to determine the information relevant to the particular facts and circumstances. It is also flexible enough to align with other adjudication procedures in other ARPA recovery programs administered by the Office of Recovery Programs at Treasury. As discussed above, the initial notice will provide recipients with an explanation of the identified potential violation in order to preside recipients with a meaningful opportunity to respond. Such initial notice will generally include information regarding the specific use of SLFRF funds and the source of such information not This process also will allow the Secretary to take into consideration the information provided by recipients, along with other relevant information, to ensure SLFRF funds are used in a manner consistent with the Social Security Am. Finally. Treasury expects to work with recipients to support the use of SLFRF funds consistent with the law. For exam ]a. Treasury may request additional information from a recipient before initiating the recoupment process. In addition, Treasury may pursue other forms of encrustation and monitoring in conjunction with, or as an alternative to, rec eopment.mm These efforts may include working with recipients to identify and substitute permissible uses of SLFRF funds or amending uses of SLFRF funds to comply with applicable restrictions. In response to comments regarding the amount of time provided to respond to an initial notice, the final rule clarifies that Treasury retains the ability re•Twrnrr—, eddies¢p emort oetho ons bantl av Wnsomenon submitted from retlpiants, either through quarterly oneser or self ropmnad sommeles, end horn other sours of information as Treem, dears necessary and appro,miam ere. feemorInromutbn submitted hum the public). tooTrom., intends to work with red,imas to eupport the sae of SLFRF funds cansisteM with We taw. to expedite or extend timelines in any only upon a reasoned determination adjudication or pre -adjudication process that their benefits justify their costs pursuant to section 35.4(b) of the final (recognizing that some benefits and rule, although the general timelines set costs are difficult to quantify); (2) tailor forth in the interim final rule are its regulations to impose the least maintained to the final role. burden on society, consistent with V. Regulatory Analyses obtaining regulatory objectives taking into account, among other things, and to Executive Orders 12866 and 13563 the extent practicable, the costs of if Ill (3) ]ed' Regulatory Impact Assessment This final rule is a "significant regulatory action" under section 3(f) of Executive Order 12866 for the purposes of Executive Orders 12866 and 13563 because it is likely to have an annual effect on the economy of $100 million or mom. As explained below, this regulation meets a substantial need: ensuring that recipients —states, territories, Tribal governments, and local governments— uf SLFRF funds fully understand the requimments and parameters ofhe program as set forth In the statute and deploy funds in a manner that best reflects Congers' intent to provide necessary relief to recipient governments adversely impacted by the COVID-19 public health emergency. Furthermore, as required by Executive Orders 12866 and 13563, Treasury has weighed the costs and benefits of this final rule and varying alternatives and has reasonably determined that the benefits of the final rule to recipients and their communities far outweigh any mats. The role has been reviewed by the Office of Management and Budget (OMB) in accordance with Executive Order 12866. Executive Orden: 12666 end 13563 Under Executive Order 12866, OMB must determine whether this regulatory action is "significant," and therefore, subject to the requirements of the Executive Order and subject to review by OMB. Section 3Ill of Executive Order 12e66 defines a significant regulatory action as an action likely to result in a to on le that may, among other things, have an annual effect on the economy of $100 million or more. This role is likely to have an annual effect on the economy of $100 million or more, and therefore, It fs subject to review by OMB under section 3(f) of Executive Order 12866. Treasury has also reviewed these regulations under Execrative Order 13563, which supplements and explicitly reaffirms the principles, structures, and definitions governing regulatory review established in Executive Order 12866. To the extent permitted by law, section 1(b) of Executive Order 13563 requires that an agency: (11 Propose or adapt regulations e, .tentative oma a rve reago onse, m choosing among alternative regulatory approaches, those approaches that maximize net benefits (including potential economic, environmental, public health and safety, and other advantages; distributive Impacts; and equity); (4) to the extent feasible, specify performance objectives, rather than the behavior or manner of compliance a regulated entity must adopt; and (5) identify and assess available alternatives to direct regulation, including providing economic incentives —such as user fees or marketable pmmits—to encourage the desired behavior, or PProviding information that ana61. the public to make choices. Executive Order 13563 also requires an agency "to use the best available techniques to quantify anticipated present and future benefits and costs as accurately as possible." OMB'a Office of Information and Regulatory AffaGs RKRA) has emphasized that these techniques may include "identifying changing future compliance costs that might result from technological innovation or anticipated behavioral changes." Based on the analysis that follows and the reasons stated elsewhere in this document. Treasury believes that this final Is is cousistent with the principles set forth in Executive Orders 12866 and 13563. This Regulators qualitative, of this regulatory action, and is issuing this final rule only on a masoned determination that the benefits exceed the casts. In choosing among alternative regulatory approaches, Treasury selected those approaches that would maximize net benefits. Need for Regulatory Action This final rule implements the $350 billion SLFRF program of the ARPA, which Congress passed to help states, territories. Tribal governments, and localities respond to the ongoing COVIQI9 public health emergency and its economic impacts. As the agency charged with execution of these programs, Treasury has concluded that this final rule fs ..tied to ensure that recipients of SLFRF funds fully 4440 Federal Register/Vol. 87, No. I8/Thursday, January 27, 2022/Rules and Regulations understand the requirements and parameters of the program as set forth in the statute and deploy funds in a manner that hest reflects Congress' mandate for targeted local relief. This final ode governs the use of $950 billion in grant funds from the federal government to states, territories, Tribal governments, and localities, generating a significant macroeconomic effect on the U.S. economy. Treasury has sought to implement the program in ways that maximize its potential benefits while minimizing its costs. It has done so by: aiming to target relief in key areas according to the congressional mandate; offering clarity to states, territories, Tribal governments, and localities while maintaining their flexibility to respond to local needs; and limiting administrative burdem. Analysis of Benefits Relative to a pre -statutory baseline, the SLFRF funds provide a combined 5350 billion to state, local, and Tribal governments for fiscal reliefand support for costs incurred responding to the COVIO-19 pandemic. Treasury believes that this transfer will generate substantial additional economic activity, although given the flexibility accorded to recipients in the use of funds, it is not possible to precisely estimate the extent to which this will occur and the liming with which it will occur. Economic research has demonstrated that slate fiscal relief is an efficient and effective way to mitigate declines in jobs and output during an economic downturnPm Absent such fiscal relief, fiscal austerity among state, local, and Tribal governments could exert a prolonged drag on the overall economic recovery, as occurred following the 2007-2009 recession.rvn This final rule provides benefits across severe) areas by implementing the four eligible use categories, as defined in statute: strengthening the response to the COVIU-19 public health emergency and its negative economic impacts; replacing lost revenue to ease fiscal pressure on state, local, and Tribal governments that might otherwise lead to harmful cutbacks in employment or government services; providing premium pay to essential workers; end making necessary investments in water, sewer, and broadband infrastructure. These benefits are achieved in the final rule through a broadly flexible —Sm. e.g., Gabriel f.TodmowRBkb n xl.. Due; ;tote Fled AeDeJ Dunrrg Aeceesiam fnezeorc Ampluyment) Eed;nce)cool He A—dn;n Aeeorery xvma1118 menf M, 4 Amenean amaomrc)ou.nal fie-fas (xorx)drtpJ/dx.da.ozg/ Ia. la J.}re. am sos'aaa, .g, Filzpanic4.;u(va nMe Rf& approach that sets clear guidelines on eligible uses of SLFRF funds and provides state, hand, and Tribal government officials discretion within those eligible uses to direct SLFRF funds to areas of greatest need within their jurisdiction. While preserving recipients' overall flexibility, the final role includes several provisions that implement statutory requirements and will help support use of SLFRF funds to achieve the intended benefits. Preserving flexibility for recipients not only serves an imp rtanl public policy goal by allowing them to meet particularized and diverse needs of their local communities but also enhances the economic benefits of the Intl role by allowing recipients to choose eligible uses of funds that provide the highest utility in their jurisdiction. In implementing the ARPA, Treasury has also prioritized supporting underserved communities that have been disproportionately impacted by the pandemic. The SLFRF program as implemented by the final mle provides even greater flexibility to recipients for uses of funds in underserved communities, recognizing that pes- existing health and economic disparities in these communities amplified the impact of the pandemic there. In general, investments in improving health outcomes and economic opportunities provide high economic returns, so this approach is likely to achieve substantial near -term economic and public health benefits, in addition to the longer -term benefits arising from the allowable investments I. water, sewer, and broadband infrastructure. The remainder of this section clarifies how Treasury's approach to key provisions in the final role will contribute to greater realization of benefits from the program. Public Health and Negative Economic Impacts The eligible use category fro responding to the public health and negative economic impacts of the pandemic covers a wide range of eligible uses of funds. Treasury addresses several key uses of funds in this analysis, as well as ways that Treasury has structured this eligible use to minimize recipient administrative burden while also maintaining targeting of the funding to entities that experienced negative impacts from the pandemic. Government Employment: In order to bolster the government's ability to effectively administer services, the final role allows far a broader set of eligible uses to mature and support public sector employment relative to the interim final rule. In particular, eligible uses include hiring up to apre-pandemic haseline that is adjusted for historic underinvestment in the public sector by allowing funds to be used to pay for payroll and covered benefits associated with the recipient increasing its number of employees up to 7.5 percent above its pre-pandemie haseline. Eligible uses also include providing additional funds for employees who experienced pay cuts or were furloughed, avoiding layoffs, providing worker retention incentives, and paying for ancillary administrative costs related to hiring. Treasury believes this expanded approach, relative to the interim final rule, provides useful flexibility to recipients, which may increase a state or local government's ability to effectively deliver services to its residents. While the interim final rule already explicitly permitted usingg funds to restore recipients' ve rkfmow up to ppre- pandemic levels, the final mle's inclusion of an upward adjustment factor recognizes that, as the population or economy of a jurisdiction grows over time, more workers are generally needed to effectively meet responsibilities. It also provides recipients greater room to employ funds toward building beck the public sector workforce after years of chronic underimmatment since the Great Recession. Treasury arrived at the 7.5 percent adjustment factor through an analysis of dale from the Bureau of Labor Statistics on state and local government employment and data from the Comes Bureau on population to estimate the extent of underinvestment in the public seam since the onset of the Great Recession. While Treasury considered a range of methodologies and point estimates to set the adjustment factor, a 7.5 percent factor arm on the side of recipient flexibility. Treasury believes this adjustment enhances recipients' ability to identify and meet the particularized needs of their communities. Treasury also believes that the additional enumerated eligible uses for supporting the workforce provide recipients several means to help retain current workers, decreasing turnover costs. Identifying Eligible Populations Treasury has provided several methods for recipients to identify households, populations, and communities eligible for services that respond to the public health and negative economic impacts of the pandemic. In general, these methods seek to provide mcipients options to identify eligible populations with minimal administrative burden, while also maintaining targeting of the funds Federal Register/Vol. 87, No. IS/Thursday, January 27, 2022/Rule8 and Regulations 4441 to entities impacted by the pandemic. Recipients also retain flexibility to identify end serve other populations and entities that experienced pandemic impacts, ensuring That recipients can meet the particularized needs of their local communities. Defrning !.wand Modemte Income: To streamline the provision of funds relating to negative economic impacts resulting from the pandemic, Treasury has created an eligibility standard making it easier for recipients to provide assistance to low- and moderate -income populations without needing to identify Said document a specific negative economic impact. Populations failing under the definition of low income are presumed to have been disproportionately impacted by the pandemic, while those falling under the definition of moderate income are presumed to have been impacted by the pandemic. In addition, the final rule recognize. categorical eligibility for certain enumerated programs and populations if a recipient chooses to implement categorical eligibility when identifying impacted and disproportionately impacted populations. Treasury considered several options for eligibility standards that would reduce administrative bardeas far recipients when determining who qualifies as low and moderate income. One option involved claiming a household as low income or moderate income based only on FPG thresholds and could use levels lower then those selected. This option involved setting uniform thresholds throughout the country. A second option. took a broader approach, defining a household as law income if it has (I) income at or below 185 percent of the FPG for the size of its household or (it) income at or below 40 percent of the AMI for its county and size of household. The option defined a household es moderate income if it has (I) income at or below 300 percent of the FPG for the size of its household or (it) income at en below 65 percent of the AMI for its county and at,.. of household. The combination of an FPG floor with AMI allows for a regional adjustment in areas with substantially higher ..faced incomes. Finally, Treasury also considered a range of FPG and AMI thresholds above and below these levels. Treasury chose the second option. Treasury believes that the higher FPG Floor will ease administrative burden. by making more households presumptively eligible for funds meant to address negative economic impacts in a targeted meaner. With respect to the low-income cutoff. 185 percent of the FPG for a family of four is $49,025, which is approximately the wage earnings for a two -earner household where both earners receive the median wage in eccupalions, such as waiters and waitresses and hotel clerks, that were heavily impacted by COVID-19. As such, this cutoff is likely to include more workers in industries heavily impacted by GOVID-19, who may be most likely to face disproportionate impacts of the pandemic, than a lower threshold.sea With respect to the moderatedncome cutoff, many households with incomes between 200 percent and 300 percent of the FPG struggle with a lack of economic security, suggesting that 300 percent of the FPG was an appropriate cutoff for moderato income. Treasury also considered relatively higher thresholds for both an FPG and AMI approach; however, increasing income thresholds for presumed eligibility increases the likelihood that higher -income workers, who generally experienced fewer economic impacts from the pandemic, would became presumed eligible for responsive services. Providing services to households that did not experience a negative economic impact, or experienced a relatively minimal impact, would provide much leas benefit than serving households that p need more severe impacts, diluting the benefits of the SLFRF funds. In all, Treasury anticipates that these selected thresholds, combined with the regional adjustment, will allow resources to be targeted toward individuals and households with the greatest need while also reducing administrative burdens on recipients. Disproportionately Impacted Populations: In the interim final rule, Traaeury or crated a broader set of eligible uses for disproportionately impacted communities, in recognition of the pre-existing health, economic, and social disparities that contributed to disproportionate pandemic impacts in certain communities and that addressing root causes of those disparities constitutes responding to the public health and negative economic impacts of the pandemic. To identify these communities and reduce administrative burden, Treasury allowed recipients to presume that certain populations —those in QGrs and those being.erved by Tribal _^ see U.S. aure.o of lnwr sense., IOmo0n.11coand 6m,pehsr k [nM eauea_n...nai vices Nwenbs9,20211. n governments —were disproportionately impacted. In the final rule, to further decrease .dminisimtive burden and enhance recipient flexibility, Treasury is allowing recildeats to also presume that low-income households were disproportionately impacted. Treasury anticipates that adding low-income hmrsaholds as a presumed eligible population will maintain targeting of funds to populations and communities ..at likely to have experienced severe pandemic impacts, while providing a more flexible approach for recipients. Identlfying Impaored Classes: In the final rule, Treasury reiterated its stance In the interim final rule allowing recipients to designate a class of households or other entities as impacted or disproportionately impacted and provide responsive services. After designating a class, recipients ran serve a household or entity by simply identifying that the household or entity I. a member of the class. Relative to restricting services in only presumed eligible populiukma identified by Treasury, this decision provides vital administrative flexibility for recipients that may identify particular impacted classes in the context of their jurisdiction. Treasury anticipates that SURF funds will be targeted to impacted or disproportionately impacted communities, as recipients most demonstrate that the designated class experienced negative economic impacts or meaningfully more severe negative economic impacts. This approach maintains the requirement that entities served have to have experienced a negative economic impact, while simultaneouely minimizing any administrative casts associated with meeting this requirement. Addi0onel Enumerated Uses The interim final rule enumerated eligible uses of SLFRF funds to serve both impacted and disproportionately impacted communities. For example, enumerated eligible uses to serve impacted communities included food assistance; at, mortgage, or utility assistance; and counselling and legal aid to prevent eviction or homelessness. Examples ofenumerated eligible uses to serve disproportionately impacted communities included rem aliation of lead paint or other lead hazards and housing vouchers and assistance relocating to neighbiala ods with higher level. of economic opportunity. In the final rule, Treasury had the option to retain, expand, or reduce enumerated eligible uses, or shift use eligibility between disproportionately impacted and impacted communities. Many 4442 Federal Register/Vol. 87, No. 18/Thursday, January 27, 2022/Rules and Regulations public comments suggested potential expansions of uses, including shifting enumerated eligible uses for disproportionately impacted communities to serve a broader population of impacted communities. Taking these comments into amount, Treasury generally took this approach, in anticipation that the benefits of the program will income. while recipient administrative costs in identilyingg and justifying non-anummated uses of funds will decrease. Specifically, Treasury added enumerated eligible uses for impacted populations including paid sick, m nfical, or family leave; health insurance subsidies; and services for the unhanked and underbanked, on the basis that impacts of the pandemic that were broadly experienced by many mmmunities would bead ass by these uses. Treasury also shifted some eligible uses, formerly restricted only to disproportionately impacted communities, to impacted communities. These uses included community violence intervention, assistance accessing or applying to public benefits and services, affordable housing development, and services to promote healthy childhood environments like childcare and early learning. These uses were shifted on the basis that the associated impacts of the pandemic were experienced by a broader population, and responses are, accordingly, eligible to benefit a broader population. Additionally, the Final into clarified that investments in parks and other public outdoor recreation spaces are enumerated eligible uses for disproportionately impacted communities. In including these uses, Treasury took into amount evidence on the social determinants of health, ar the ways that social context, like the neighborhood built environment, impacts health outcomes. By taking a more holistic approach to public health, the final ode allows recipients to respond more broadly to factors that contributed to the pandemic's health impacts and more fully mitigate those health impacts. To balance administrative flexibility with a maintenance of focus on impacts of the pandemic, Treasury considered, but dfd not include, other proposed enumerated uses that did not respond to the impacts of the pandemic in responded to impacts that were not experienced generally across the country by many jurisdictions and populations. For example, Treasury did not include pollution remediation broadly, a proposed enumerated eligible use for disproportionately impacted communities, on the basis that associated projects would only respond to disproportionate impacts of the pandemic depending on the specific issue addressed. In sum,'1'remarry expanded enumerated eligible uses while retaining a focus on broadly experienced impacts of the pandemic. Treasury anticipates that this will give recipients further flexibility to presume eligibility and respond to pandemic impacts without increasing administrative burden. Capital Expenditures: To the interim final rule, Treasury permitted funds to be used far a limited number of capital expenditures mostly related to the COVID-19 public health response. This decision granted recipients some discretion to use SI.FRF funds to address COVID-19 prevention and mitigation through certain investments in equipment, real property, and facilities, which Treasury recognized as critical components of the public health response. In the final role, Treasury considered maintaining the provisions in the interim final rule or expanding allowable capital expenditures to provide recipients greater flexibility to pursue other capital investments that are responsive to the public health emergency and its negative economic impacts. While expanding allowable on ital expenditures may increase the risk that recipients will undertake large expenditures that do at sufficiently address intended harms, or address harms in a less cost-efficient manor than an eltemative investment (e.g., a program or service), expanding allowable capital expenditures would likely help fill critical gaps in SLFRF'e final r while expected total cost at or over $1 million. Treasury believes this approach balances the implementation of appropriate risk -based compliance requirements and the prevision of administrative convenience for smaller capital expenditures, while generally allowing recipients the flexibility to undertake a greater variety of responsive capital expenditures. Revenue Loss Revenue I. Formulacln this final rule, Treasury's approach to revenue loss allows recipients to compute the extent of reduction in revenue by comparing actual revenue to a counterfactual trend representing what could have plausibly been expected to occur in the absence of the pandemic. The counterfactual trend begins with the last full fiscal year prier to the public health emergency (as required by statute) and projects forward with an annualized growth adjustment. Treasury has made several adjustments in the final rule to decrease administrative burden, reducing costs for recipients, while still accurately cepturitrg reductions in revenue due to the pandem c. Linder the interim final role, Treasury specified that recipients calculate revenue loss on a calendar year basis. In this final rule, Treasury is providing recipients the option to calculate revenue loss on a calendar year or fiscal year beets, which will allow recipients the administrative flexibility to minimize administrative burdens based on the data available to them. Treasury's decision to incorporate a growth adjustment into the calculation of revenue loss ensures that the formula mare fully captures revenue shortfalls relative to recipients' pre -pandemic expectations. Recipients will have the opportunity to calculate revenue lass at several points throughout the program, recognizing that some recipients may experience revenue effects with a lag. This option to re -calculate revenue loss on an ongoing basis is intended to result in more support for recipients to avoid harmful cutbacks in fatum years. In calculating revenue loss, recipients will look at general revenue in the aggregate, .the, then on a source -by -source basis, given that recipients may have experienced offsetting changes in revenues across sources. The final role also provides for removing the impact of tax increasing or decreasing changes, which affect the amount of revenue collected but are not "doe to" the pandemic, from the calculation of revenue loss due to the public health emergency. Both of these components of Treasury's approach provide a more accurate representation of the effect of the pandemic on overall revenues. Revenue Loss Standard Allowance: In addition to largely preserving the formula to calculate revenue loss from the interim final rule, Treasury also added an alternative "eandard allowance" option for the revenue loss calculation to this final rule. Tramury's decision to elect to allow a fixed amount of loss that can [in used to Find "government services" allows recipients the flexibility to use minimal administrative capacity on the calculation if desired. The decision also benefits recipients by allowing them to avoid expending administrative Federal Register/Vol. 87, No. 18/Thursday, January 27, 2022/Rules and Regulations 4443 resources to determine how unique nations in revenue interact with the revenue loss formula. Premium Pay Per the ARPA statute, recipients have broad latitude to designate critical infrastructure sectors and make grants to third -party employers for the purpose of providing prumium pay. While the final rule provides significant flexibility to implement the statutory requirement that premium pay respond to essential workers, it requires recipients give written justification in the case that premium pay would increase a worker's annual pay above a certain threshold or is awarded to an individual whose annual pay is already above that threshold. To act this threshold, Treasury analyzed data from the Bureau of Labor Statistics to determine a level that would not require holder justification for premium pay to the vast majority or essential workers, while requiring higher scrutiny for prevision of premium pay to higher earners who, even without premium pay, would likely have greater personal financial resources to cope with the effects of the pandemic. Alternatively, a recipient need not submit written justification to Treasury if the worker receiving premium pay is eligible for overtime under the FLSA. Treasury believes this alternative, which fs an addition to the final rule, will give recipients more flexibility and will simplify application of the final rule as employers, public and private, are already legally required to determine whether an employee is eligible for overtime pay under the FLSA. Treasury believes the threshold and overtime eligibility provision in the final role strike the appropriate balance between preserving flexibility and helping encourage use of these resources to help those in greatest need. The final rule also requires that workers eligible for premium pay have regular in-pemon interactions or regular physical handling of items that were also handled by others. This requirement will help encourage rise of financial memories for those who have endured the heightened risk of performing essential work. Water and Sewer Infrastructure In the interim final rule, Treasury aligned eligible vase of funds for water and sewer infrastructure to those projects eligible to receive financial assistance through the DWSRF and CWSRF administered by the EPA. The benefits of this approach included giving recipients an existing list that would provide them clarity as well as flexibility in identifying eligible projects, particularly given the broad range of projects eligible under the CWSRF and DWSRF. The approach also ensured that projects would conform to vetted project types from a widely used program. Treasury received comments from recipients requesting additional project categories to be considered eligible, indicating a potential cost to maintaining alignment with the CWSRF and DWSRF. For the final rule, Treasury has expanded eligibility to include several additional project types beyond those covered by the CWSRF and DWSRF. Treasury behoves that expanded eligibility will benefit recipients by allowing them additional flexibility to pursue beneficial projects, including project categories that support the provision of drinking water and the removal, marmgr manq and treatment of wastewater and stormwatec Additional slortnwater management projects, private well infraffiructure, additional projects that address lead in water, and certain dam and reservoir rehabilitation projects undertaken to address the provision of drinking water. A potential cost of this approach is that used beyond the CSWRF and DWSRF may have less litfes. However, Treasury at this eligibility 11 revide a net benefit to allowing them Won. ant to theirgoals that were ter the interim final rule. .ion to allow private wall Treasury considered multiple alternatives when selecting this standard. The threshold for the interim final role allowed benefits to accrue in a more targeted moaner to the approximately 9 percent of the country with dereas to speeds under tine 25/3 Mbps thershold.ss+ However, since SLFRF funds are distributed to lane of thousands of governments across the country with a variety of broadband needs, Treasury believes that allowing recipients greeter flexibility to determine locations to a tt in their jurisdictions —including considering affordability and competition barriem— will lead to greater long-term public benefit Further, given that many federal broadband grant programs are focused solely on unserved and underserved mesa, Treasury believes that the final ride's flexibility enables these funds to rill an important role in the overall federal broadband landscape. In the final rule, Treasury also requires that hroadbend projects must meet a standard of reliably delivering at least 100 Mbps download speeds and upload speeds, or in cases where it is not practicable to do so, reliably delivering t least too Mbps download speed and between at boost 20 Mbps and IOU Mbps upload speed while being scalable to 100 Mbps upload and download speeds. Treasury expects that this threshold will yield long-term benefits end allow networks m meet both pandemic -related and future needs. of SLFRF. Private currently a household with two to three siv serve rural remote reamers using the interne[ households, and expanding eligibility to include this use may allow SLFRF funds to benefit such households. While distributional impacts ere uncertain, Treasury believes that the potential for benefits to accrue to rival and low- tncome households makes it important to clarify that these types of projects are eligible. Broadband Infrastructure In the final rule, Treasury expands eligible areas for broadband investment by requiring that recipients invest in projects designed to provide service to households and businesses with an identified need for additional broadband investment, including increasing access to high-speed broadband, increasing the affordability of broadband services, and improving the reliability of broadband service. sea s" NdMr, IM fuel cute eve ueeges, but does net ans ire, tout reupive. pee ue broadband In entrucene projects in locations not comedy threshold may rnRdswcmre mat would more quickly —potentially in the near-tered— become obsolete and no longer meet household needs, potentially requiring sooner replacement sad generally decreasing the return on investment. As seseved by a evi eh- vnnectmn Nat relmbly ddivve at ldO so Miss of do..] it ipo land Po Mbre of,,d-d.,d. TM Dma season, eedeml Cmusentontmne Commented shoes dint as&June 2020,9.07 po eerel off. Us. popuknw hW pno woilable lien 2s hNpe drum and spvede end n afiremortal speeds. Federal Comm identima commission, Plod emndband Deployment. FMpeJ/ aeendbandmnpfnsov/a/ Owt stared May 9, 2on1. ,aa see rmaeal C arm nuetlmna Cummimnn. Broadband Spied Guide, evadable at loss, / gww.loesos/oonanmors/snleoam.00ehmtd-speed- uido Il«t visited October nod 20211. 4444 Federal Register/Vol. 87, No. 18/Thursday, January 27, 2022/Rules and Regulations such, projects meeting a lower threshold could not be rnrmidered "neresaary" investments in broadband infrastructure, so Treasury has retained the threshold from the interim final refs. Further, the final rule adds a requirement that recipients address the affordability needs of low-income consumers in accessing broadband networks funded by SURE, either by requiring service providers that provide service to households to either participate in the FCC's Affordable Connectivity Program IACP), or a broad - based affordability program with commensurate benefits. Treasury believes that this requirement will increase the number of customers that son able to lake advantage of broadband infrastructure funded by SLFRF, increasing the effectiveness of funds in connecting households and businesses to high-speed internet that is critical to work, health, and education. There is a potential that this requirement may marginally increase project costa for recipients and providers, but this impact is uncertain, given the varying business models and pricing stmcturas of broadband projects and providers. Labor Standards In this Supplementary Information for the final rule, Treasury encourages recipients to ensure that capital expenditures to respond to the public health and negative economic impacts of the pandemic and water, sewer, and broadband projects use strong labor standards, including, for example, project labor agreements and community benefits agreements that offer wages at or above the prevailing rate and include local hire previsions. Treasury believes that its encouragement of labor standards caries benefits because it will ensure that workers have access to strong with infrastructure projects, which will in turn aid the economic recovery. Treasury believes that infrastructure projects may also benefit from stronger labor standards due to the potential of these standards to ensure a stronger skilled labor supply and minimize labor can result in costly disruptions to projects. Treasury assesses that these benefits will increase the economy and efficienry of infiestructure projects undertaken through SLFRF and will outweigh the potential for a marginal increase in labor coals. Splitting Payments to Recipients Treasury is required by statute to deliver funds to local governments in two payments separated by at least twelve months, and the interim final mle provided for split payments to a majority of slates as well. As discussed above., splitting payments ensures that recipients can adapt spending plans to evolving economic conditions and that el leaat some of the economic benefits will be realized in 2022 in later. However, consistent with authorities granted to Treasury in the statute, Treasury recognizes that a subset of states with significant remaining elevation in the unemployment rate could face heightened additional near term needs to aid unemployed workers end stimulate the recovery. Therefore, for a subset of stele governments, Treasury has provided funds in one payment, Treasury believes that this approach strikes an appropriate balance between the general masons to provide funds in two payments and the heightened additional near -term needs in specific stales. As discussed above, Treasury set a threshold based on historical analysis of unemployment rates in recessions. Reaching Undmxerved Communities Finally, the final rule aims to promote and streamline the provision of assistance to individuals and communities in greatest need. particularly communities that have been historically underserved and have experienced disproportionate impacts of the COVI0.19 crisis. Targeting relief is in line with Executive Order 13985, "Advancing Recial Equity and Support for Underserved Communities Through the Pederel Government;" which laid out an Administration -wide priority to support "equity for all, including people of ..for and others who have been historically underserved, marginalized, and adversely affected by persistent poverty and inequality." To this end, the final rate enumerates a list of services that may be provided using SLEEP funds in disproportionately impacted communities, including low- income areas, to address the more severe impacts of the pandemic in these communities; establishes the characteristics of essential workers eligible for premium pay and encouragement to serve workers based on financial need; provides that recipients may use SLFRI, funds to restore state end local workforces, where women sod people of color are disproportionately represented; and requires that broadband infrastructure projects participate in programs to support affordability of broadband service. Collectively, these provisions will promote use of resources to facilitate the provision of assistance to individuals and communities with the greatest need. Analysis of Costs This regulatory action will generate administrative costs relative to a pre - statutory baseline. This includes, chiefly, costs required to administer SURF funds, aversions subrceipfonts and beneficiaries, and file periodic reports with Treasury. It also requires states to allocate SURE funds to nonentitle rieu units, which are smaller units of beet government that are statutorily required to receive their funds through states. Treasury expects that the administrative burden associated with this program will be moderate for a grant program of its size. Treasury expects that many recipients receive direct or indirect funding from federal government programs and that many have familiarity with how to administer and report on federal funds or grant funding provided by other entities. In particular, states, territories, and large localities will have received funds from the Ceremonies Relief Fund (CRT) and Treasury expects them to rely heavily on established processes developed .barred the level Government Accountability Office and others that additions would improve the oversight of recipients' use of funds. To balance the oversight benefits with the costs of added reporting burdens, Treasury has incorporated other mechanisms to mitigate burden. For example, Treasury is "tiering" reporting requirements so that recipients that receive relatively leaser amounts of SLFRF funds are required to submit less frequent reports linen recipients receiving greater amounts of funds. Treasury is noting administrative costs as a generally allowable use of SURF funds, which defrays administrative expenses to recipients that may be needed to comply with reporting requirements. Treasury has also provided options for recipients to use familiar with during administrate SURE funds, which will enable recipients to avoid the costs of sett up new programs and reporting mechanism to meet reporting and each as Federal Register/Vol. 87, No. 18/Thursday, January 27, 2022/Rules and Regulations 4445 In making implementation choices. Treasury has boated numerous consultations with a diverse range of direct recipients —states, cities, counties, and Tribal governments — along with various communities across the United Stales, including those that are undeuerved. Furthermore, Treasury has made clear in guidance that SURF funds maybe used to cover certain expenses related to administering programs established using SLFRF funds.'-- Bxacuffea Order13132 Executive Order 13132 (entitled Federalism) prohibits an agency from publishing any rule that has federalism implications tithe rule either imposes substantial, direct compliance costs on child Executive @der. This Executive Order and does not impose substantial, direct compliance costs on slate, local, and Tribal governments or preempt state law within the meaning of the Executive Order. The compliance costs are imposed on state, local, and Tribal governments by sections 602 and 603 of the Social Security Act, as enacted by the ARPA. Notwithstanding the shove, Treasury has engaged in efforts to consult and work cooperatively with affected slate, local, and Tribal government officials and associations in the process of developing the interim final rule and this final rule. Pursuant to the requirements set forth in section flat of Executive Order 13132, Treasury certifies that it has complied with the requirements of Executive Order 13132. Adminishahve Procedure Act The Administrative Procedure Act (APA), 5 U.S.C. 551 el sail.. generally requires public notice and an opportunity for comment before a rule becomes effective. However, the APA provides that the requirements of 5 U.S.G. 553 do not apply "to the extent that the. is involved ... a matter relating to agency ... grants." The APA also provides an exception to ordinary notice -end -comment procedures "when the agency for good cause finds (and incorporates the finding and a brief statement of reasons therefor in the rules issued) that notice and public procedure thereon are impracticable, unnecessary, or cenlmry to the public internal. "5 U.S.C. 553(b)(B). The interim Leal rule was issued without prior notice and comment procedures because it implemented statutory conditions on the eligible uses of SLFRF funds, and addressed the payment of those funds, the reporting on uses of funds, and potential consequences of ineligible uses to help address the economic and public health emergency. See the SUPPLEMENTARY INPoRMATON auction of the May 17, 2021 interim final mle for the applicability of the requirements of 5 U.S.C. 553. In addition, under the exception discussed in that section for matters relating to agency grants, the requirements of 5 U.S.C. 553 also du not apply to this final role. After careful consideration of the comments received, this final rule adopts the May 17, 2021 interim final rule with the revisions discussed In this SUPPrEMPNTARY INFORMATION. Congressional Review Act The Administrator of OIRA has determined that this is a major role for purposes of Subtitle E of the Small Business Regulatory Enforcement and Fairness Act of 1996 (also known as the Congressional Review Act or CRA) (5 U.S.G. 1304(2) of saes.). Under the CRA, a major rule generally may take effect no earlier than 60 days after the rule is published in the Federal Register. 5 U.S.C. 801(a)(3). Popenvork Reduction Act The information collections associated with the SLFRF program have been reviewed and approved by OMB pursuant to the Paperwork Reduction Act (44 U.S.C. Chapter 35) (PRA) and assigned control number 1505-0211. Under the PRA, an agency may not conduct or sponsor, and a respondent is not required to respond to, an information collection unless it displays a valid OMB control number. Estimates of hourly burden under this program are aft forth in the table below. Reporting Number '"Pandenis Number responses per re6PondEN Total responses favors per response Total gum in hours($40.60 host to Violent. Psi how ReWient Payment Form 5,050 1 5,050 .25 (15 minutes) .... 1,262.5 $61,610 Acceptance of Award T....... .............._._..._.. 5,050 1 5,050 25 (15 minulea) .... 1,262.5 61,610 Tithe to sonars ace a ..... ......._..._.......__........_..._ 6050 1 5,050 .W(30 minutes).... 2,525 123,2211 Tribal Employment Information Farm .._...._......._ Ss4 1 584 Y5 (45 minutes) .... 438 21,374 Request for Extension Form ... .._..._..._............... 96 1 9f 1 ........... ................. e6 4.685 Annual Recovery Plan Fedoad anm Report ........ 430 1 430 100 ........................ to licn 2,098,400 NEU Ulsldbldlon Template.._...._ ........................ M 2 110 10 .___...._._......_. 1,100 53,680 No1FUGLG Distributed Template ........................ 55 2 110 5 ................. 550 26,840 Transfer Forms .. ........... ..._... ................................ 1,500 1 1,500 1........... 1,5eo 73,200 Pressor am ExpandWre Raised ........................... 37,000 1 3],D00 5 .._................_... _. 185A0o Jim" 54,870 .................... sa'sa0 ...................._.._..._ 236,735 11,552,fle Tolat ...._........................ ........._....._............. 'Borden of Labor Stathlies, U.S. Department of labor, Occupational Outlook Handbook, Accountants and Autli d , on the framer at hoped/ www.bb'.poWoahblrslrress-end-lmanaeUaccnurrlerps-aMaud'fors.hhn (waited March 28, 2028. Base wage of $33.89/Mur increased by 44 per- cent to account for fully loaded employer cost of employee compensa tion (become, do) far a ly loaded wage rate of $48.80. Regulatory Flexibility Analysis The Regulatory Flexibility Ad (RFA) generally requires that when an agency issues a proposed rate, or a final rule plummet to section 553(h) of the Administrative Procedure Act or another law, the agency ..at prepare regulatory Flexibility analysis that meets the requirements differ RFA and Gomoevhuaslatemd Lp<IPIa®I iaof July 19, 2021 Fttpal/Fome.a,.axnrygw/ em-ovvy Punds.Pmqumlly Aahad4uentianem3. ed.1filestlaWSURPRAQ,of. publish such analysis in the Federal Register. 5 U.S.C. 603. 604. Rules that are exempt from notice and comment under the APA or any other law are also exempt from the RFA 4446 Federal Register/Vol. 87, No. IS/Thursday, January 27, 2022/Rules and Regulations requirements, including the requirement 435.3 Donations. calculated by reference to the to conduct a regulatory flexibility Baseline ..one tax revenue of the employer's Payroll costs. analysis, when among other things the agency for good cause finds that notice recipient for its fiscal year ending in 2019. adjusted for inflation in each Eligible empleyer me an -an employer of an eligible worker whoponforms and public procedure are impracticable, reporting year using the Bureau of essential work. unnecessary, or contrary to the public Economic Analysis's Implicit Price Eligible workers means workers interest. Because this rule is exempt Definer for the gross domestic product needed to maintain continuity of from the notice and comment of the United Stales, operations of essential critical requirements of the APA, Treasury is Capital expenditures has the same infrastructure sedans, including health not required to conduct a regulatory flexibility analysis. meaning given in 2 CFR 200.1. County means a county, parish, or care; emergency response; sanitation, disinfection, and cleaning work; Rule Text other equivalent county division (as defined by the Canons Bureau). maintenance work; grocery stores, List of Subjects in 31 CFR Pert 35 Covered benefits include, but are not restaurants, food production. and food delivery; pharmacy; biomedical Executive compensation, State and limited to, the costs of all types of leave (vacation, family -related, sick, military, research; behavioral health work; Local Governments, Tribal bereavement, sabbatical, jury duty), medical testing and diagnostics; home - and community -based health care or commufteraw Governments, Public health emergency. emploae mouranee(health, life, dental, asd fthactiedhalth cam,vities of daily orliving; For the reasons stated in the vision retirement (pensions, 401(k)), unemployment benefit plans (Federal family or childcare; social aery ors preamble, the United States Department of the Treasury amends 31 CFR parr 35 and State), workers compensation work; public health work; vital services to Tribes; any work performed by an as follows: insurance, and Fedaral Insumnm Contributions Act taxes, (which includes employee of a State, local, or Tribal PART 35—PANDEMIC RELIEF Social Security and Medicaretaxes). govarmnenl; educational work, school nutrition work, and other work required PROGRAMS Covered change means a change in law, regulation, or administrative to opstate a school facility; laundry • 1. Revise Subpart A to read as follows: interpretation that reduces any tax (by providing far a reduction in a rate, a work. elections work; solid ..to or hazardous materials management, Subpart A—Coronavirus State and p Local Fiscal Recovery Funds rebate, a deduction, a credit, or otherwise or dela s the imposition of ) Y P response, and cleanup work work requiring al with Sec. any tax or tax increaso. la change in law includes any final legislative patients; dental rare work; mind s work, transportation and warehousing; t e l 35.2 Purpose. 35.3 Applicability. iRty. regulatory action, a new or changed a administrativeseIotointerpretation. and the hotel commercial lodging facilities that are used for COVIU-19 mitt mitigation g 35.3 Definitions. 33.9 Reserviolm of anthwit y, repomng. Phase -in th taking effect of any statute rule fP the phase-fn taking effect and containment; work is a mortuary; and work a critical clinical research, 35.5 Use offend. 35.a Eligible use. to er was not Prescribed prior to the start of development, and lasting necessary for CO1) respect 35.o Pensions. the covered period. Covered period means, with respect to With t toaredpfereent is (1JWpolita 35.e Tex. 35.a. Compliance with applicable laws, 35.10. RecoupmenL a slate or'amtory, the period that (1] Bepjn3 en Ma[Ch 3, 2021; and a metropolitan city, nanentftlement unit city, of local government, or coon workers 35.11 PeymentE l0 States. 35a2. Distributions to nermutlemmt units (2) En a 0n the last do of the fiscal y Year of m It State or territory in which in an aditional non-public Y public sectors as each Clti¢f executive officer of each ce each f local government and Efts of general local government. all funds received by Litany or to my from a payment made under recipient me designate critical to rcipie the health and well-being t the P ng city: 42 U.S.C. eo2(0:92 U.S.C. sor lion 602 or 603 ofthe Social Security Act have been expended or returned to, residents of their metropolitan city, nonentftlement unit of lore] swill. or recovered by, the Secretary. government, or county; or 135.1 Purpss . COVID-19 means the Comnavirus (2) With respect to a State, territory, This part implements section 9901 of Disease 2019. COVID-19 public health emergency or Tribal government, workers in any norea additional non-public ses as ch the American Rescue Plan Act (Subtitle M of Title IX of Pub. L 117-2), which means the period beginning on January Governor of a State or territory, or each amends Title VI of the Social Securit y 27, 2020 and laslivg until the termination of the national emergency Tribal government, may designate a - critical to protect the health and well- Act (42 U.S.C. b01 ate addin 9J Y g concerning the C()VID-19 outbreak being of the residents of their State, sections 602 end 603 m establish the Coronavirus State Fiscal Recovery Fund declared pursuant to the National territory, or Tribal government. and Coronavirus Local Fiscal Recovery Emergencies Act (50 U.S.C. fell at seq.). Essential work means work that: (1) Ira not performed while Fund. Deposit means an extraordinary telewarking from a residenco; and 635.2 Applicability. payment of an accrued, unfunded (2)love],.: This part applies to states, announce, liability. The farm deposit does not refer to muting contributions made by an (i) Regular in -person interactions with patients, the public, or coworkers of the Tribal governments, metropolitan cities, employer to pension funds as part of the individual that is performing the work; no uratitlement units oflocal employer's obligations related to or government, counties, and units of general local government that accept a payroll, such as either a pension contribution consisting of a normal cost (ii) Regularphysical handling of items that were handled by, or are to be payment or transfer of funds made component related to current employees handled by patients, the public, or under section 602 or 603 of the Social or a component addressing the coworkers of the individual that is Security Act. amorliration of unfunded liabilities performing the work. Federal Register/Vol. 87, No. 18/Thursday, January 27, 2022/Rules and Regulations 4447 Funds means, with respect to a the Housing and Community (2) With regard to work that the recipient, amounts provided to the Development Act of 1974 (42 U.S.C. eligible worker continues to perform, recipient pursuant to a payment made 5302(a)(4)) and includes cities that pay of up to $13 par hour that Is in under section 602(b) or 603(b) of the relinquish or defer their status as a addition in the eligible worker's regular Social Security Act or transferred to the metropolitan city for purposes of rate of wages or remuneration. with no recipient pursuant to section 603(c)(4) receiving allocations under section 106 reduction, substitution, offset, or other of the Social Security Act. of such Act (42 U.S.C. 5306) for fiscal diminishment of the worker's current General rewnaa means money that is year 2021. and prospective wages or remuneration, received from tax revenue, current Net reduction in total spending is Qualif'ed census rmet has the same charges, and miscellaneous general measured as We State or territory's total meaning given in 26 U.S.C. revenue, excluding refunds and other spending for a given reporting year 42(d)(5)(9)(h)(1). correcting transactions and proceeds excluding its spending of funds, Recipient means a State, territory, from issuance of debt or the sale of subtracted from its total spending for its Tribal government, metropolitan city, investments, agency or private trust fiscal year ending in 2019, adjusted for nonenlitlement unit of local transactions, and intergovernmental inflation using the Bureau of Economic government, county, or unit of general transfers from the Federal Government, Analysis's Implicit Price Deflator for the local government that receives a including transfers made pursuant to gross domestic product of the United payment made under section 602(b) or section 9901 of the American Rescue States for that reporting year. 603(b) ofthe Social Security Act or Plan Act. General revenue also includes Nonentitlement unit of local transfer pursuant to section 603(n)(4) of revenue from liquor stares that are government means a "city;' as that term the Social Security Act. owned and operated by state and local is defined in section 102(a)(5) of the Reparting year means a single year or governments. General revenue does not Housing and Community Development partial year within the covered period, include revenues from utilities, except Act of 1974 (42 U.S.O. 5302(a)(5)), that aligned to the current fiscal year of the recipients may choose to include is not a metropolitan city. Nonprofit means a nonprofit State or territory during the covered revenue from utilities that are part of then own government as general organization that is exempt from Federal tied. PeSecremry means the Secretary of the revenue provided the recipient does so income taxation and that is described in Treasury ' consistent) over the remainder of the Y section 501(c)(3) or 501(c)(19) of the Internal Revenue Cade. State means each the 50 States end period performance. Revenue from Tribal business enterprises must be Obligation means an order placed for the District of Columbia, Small business means a booths: included in B enema revenue. Properly and services and entering into contracts, and similar concernorother organization Intergovernmental transfers means e money from other transactions that require peyroenl. s the require Pension fund means a deemed benefit plo (t) Has no more than 500 employees or, if a licebla, the size standard in ants, in governments, including grants and sexes. plan and does not include a defined numberof era to eras established b the P Y Y shared Inehold me household mearrsa Contributionplan.Administrator Period ofperfdescribed SmallBusinessin lh ion f r the in the household with: (t) Income at or below 185 percent of period duringeans which may in §tea during which or which me business concern or which es business concern she Federal Poverty for the lent a recipient may obligate and expend funds in accordance with sections organization operates, and (2)IsIsmallbnstnessconcern as b...itioes sizert its household basedd the poverty guidelines most and Social defined I. Smell the Department of Health recently ytheDepartment o Security and this subpart. Security Act and this subpart. Premium amount of up Business Act (15 U.S.C.6 Business er a .S.C. revenue Tax revenue means revenue received a and Human Services; or (2) Income at or below percent of hour that paid $13 per hour that as pion men from compulsory contribution that is for the Area Median mcome mr its county el eligible worker, an addition to wages or a a uvemmeut for public exacted and e dale host worker remuneeHon lees. for purposes excluding nd refundpurposes d re a tly by the published most recently by the all otherwise receives, for all work coctionsand,r s of § 35.8. of corrections end, for pnsfer Department of and Urban perfortheCmedbyt rker .s Tax intergovernmentalenuedonotransfgyrur Development. pub]igihlalth emergency. the Gamount public health revenue does notgrants payments for e meaor a smell Mness Such amount may not exceed Sane in a special privilege granted or service that that has five or Fewer . total over the period performance rendered, employee employer employees, one more of whom owns employees. in l with respect to any single eligible r assessments end contributions m ss the small business. worker. Premium poy maybe awarded first retirement and losses insurance a household means a Msehold workers and or special m household with: with: essential wing astern l work. performing workers ppay meam entssmenls paytrusfor capital s. pay for (1) Income at or of Premium pay will es ton will h to Territory the Commonwealth the Commonwealth Guidelines s for the the Federal Poverty Guidelines for remuneration an addition m wages r remuneration of Puerto Rao, the Unamd Stains Puerto d, the h gaze of its household based poverty poverty the worker otherwise receives if, Islands, Guam, the Commonwealth at t f ec guidelines published most recently omemae as measured on an hourly rate, the ouryrat theNorthernSa Malone Islands, or the Department of Health and Human n premium pay as: American Samoa. Services; or (1)With regard work that the I eligible schools meansschools (2) at .].claw percent of ev performed, worker previously eligible Ti receive services order section eligible AreaMe for the Area Median Income for its county equal the sum pay end equal pay an 1113 I, Partc of the Elementary and sate of household based data of all wages and remuneration wages amn Secondary and Secondary Education Act of he published most recently by the previously received plusupto per i1965, including as amendeded U.S.C. ncluding Department of Housing and Urban how with tiuti reduction, substitution, schools served under section aim Development. offset, or o the, nt is 1113 of that Act. Mn limn me meaning rk previous, curt nt. or Tribal enter Trebel enterprise means a business given that term in section 102(a)(4) of that I. mcls prosble ective ages r remuneration; prospective wages or remuneration; or concern: 4446 Federal Register/Vol._87, No. 18/Thursday, January 27, 2022/Rules and Regulations (1) That is wholly owned by one or more Tribal flovernarents, or by a corporation that is wholly owned by one or more Tribal governments; or (2) That is owned in part by one or more Tribal governments, or by a corporation (hat is wholly owned by one or more Tribal governments, if all other owners are either United States citizens or small business cons., as these terms are used and consistent with the definitions in 15 U.S.C. 657a(b)(2)1D). 3'ribal government means the recognized governing body of any Indian or Alaska Native Tribe. band, nation, pueblo, village, community, component band, or component reservation, individually identified (including parenthetically) in the list published on January 29, 2021, pursuant to Section 104 of the Federally Recognized Indian Tribe List Act of 1994 (25 U.S.C. 5131). Unemployment one means the U-3 unemployment rate provided by the bureau of Labor Statistics as part of the Local Area Unemployment Statistics program, measured as total unemployment as a percentage of the civilian labor fore.. Unemployment trust fund means an unemployment trust fund established under section 904 of the Social Security Act (42 U.S.C. 1104). Unit ofgeneml local government has the meaning given to that term in section 102(11)(1) often Housing end Community Development Act of 1974 (42 U.S.C. 5302(e)(1)). 935A Reaerve6m of au unity, reVading. (a) Reservation efouthority. Nothing In this part shell limit the authority of the Secretary to take action to enforce conditions or violations of Low, including actions necessary to prevent evasions of this subpart. (b) Rxtensians or accelerations of timing. The Secretary may extend or accelerate any deadline or compliance date of this part, including reporting requirements that implement this subpart, if the Secretary determines that such extension or acceleration is appropriate. In determining whether an extension or accel t' 't era ion re approprra e, the Secretary will consider the period of time that would be extended or accelerated and how the modified timeline would facilitate compliance with this subpart (c) Reporting and requests for other information. During the period of performance, recipients shall provide to the Secretary periodic reports providing detailed eccouudng of tlm uses of funds, modifications m a State or Territory's lax revenue sourom end such other information as the Secretary may require for the administration of this section. In addition to regular reporting requirements, the Secretary may request other additional information as may be necessary or appropriate, including as may be necessary to prevent evasions of the requirements of this subpart. False statements or claims made to the Secretary may result in criminal, civil, or administrative sanctions, including fines, imprisonment, civil damages and penalties, debarment from participating in Federal awards or contracts, and/or any other remedy available. by law. §35.5 Uneoffunds. (a) In general. A recipient may only use funds to cover costs incurred during the period beginning March 3, 2021, and ending December 31, 2024, for one or more of the purposes enumerated in sections 602(c)(1) and 603(c)(1) of the Social Security Act, as applicable, including those enumerated in § 35.6, subject to the restrictions sot forth in sections 602(c)(2) and 603(c)(2) of the Social Security Act, as applicable. (b) Costs incurred. A cost shall be considered to have been incurred for purposes of paragraph (a) of this section if the recipient has incurred an obligation with respect to such cost by December 31, 2024 (c) Return officals, A recipient must return any funds rat obligated by December 31, 2024. A recipient must also return funds obligated by December 31, 2024 but not expended by December 31, 2026. §35.6 Eligible uses. (a) In general. Subject to §§ 35.7 and 35.8, a recipient may use funds for one or more of the purposes described in paragraphs (b) through (f) of this section. (b) Responding to the public health emergency or its negative economic impacts. A recipient may use funds to respond to the public health emergency or its negative economic impacts if the use meets the criteria provided in paragraph (bill) of this section or is enumerated in paragraph (b)(3) of this section; provided that, in the case of a If date seen on r a capital exersdrtre u under paragraphs (b)(1) or (g)(3) of this section, the use of funds most also meet the criteria provided in paragraph (b)(4) of this section. Treasury may also articulate additional eligible programs, services, or capital expenditures from time to time that satisfy the eligibility criteria of this paragraph (b), which shall be eligible under this paragraph (b). (1) Identifying eligible responses to the public health emergency., its negative economic impacts. (i) A program, service, or capital expenditure is eligible under this paragraph (b)(1) if a recipient identifies a harm or impact to a beneficiary or class of beneficiaries caused m exacerbated by the public health emergency or its negative economic impacts and the program, service, or capital expenditure responds to such harm. (a) A program, service, or capital expenditure responds to a harm or impact experienced by an identified beneficiary or class of beneficiaries if it is reasonably designed to benefit the beneficiary or class of beneficiaries that experienced the harm or impact and is related and remanebly proportional to the extent and type of harm or impact experienced. l2) Identified harms: Presumptions of impacted and disproportionately impacted beneficiaries. A recipient may rely on the following presumptions to identify beneficiaries presumpptively impacted or disproportionately impacted by the public health emergency or its negative economic impacts for the purpose of providing a response under paragraph Pb)(1) or (b)(3) of this section; (i) Households or populations that experienced unemploymane experiencedincreae, Near; insecurity; qualify for the Children's Health Insurance Program (42 U.S.C. 1397m of mq.), Childcare Subsidies through the Child Can. and Development Fund Program (42 U.S.C. 9857 of seq. and 42 U.S.C. 618), or Medicaid (42 U.S.C. 1396 at seq.); if funds are to be used for affordable housing programs, qualify for the National Housing Trust Fund (12 U.S.C. 4568) or the Home Investment Partnership. Program (42 U.S.C. 12721 at segJ; if funds are to be seed to address impacts of lost instructional time for students in kindergarten through twelfth grade, any student who did not have access to in -person instruction for a significant period of time; and low- and moderate -income households and populations are presumed to be impacted by the public health emergency or its negative economic impact.; fi) The general public is presumed to be impacted by the public health emergency for the purposes of providins the uses set forth in subparagraphs (b)(3)(i)(A) end (b)(310)(C); and (ifi) The following households, communities, .It businesses, and nonprofit organizations are presumed to be disproportionately impacted by the public health emergency or its negative economic impacts; (A) Households .it populations residing in a qualified census tract; Federal Register/Vol. 87, No. 18/Thursday, January 27, 2022/Rules and Regulations 4449 households and populations receiving ameices provided by Tribal governments; households and populations residing in the territories; households and populations receiving services provided by territorial governments; low-income households and populations; households that qualify for Temporary Assistance for Needy Families (42 U.S.C. 601 at seq.), the Supplemental Nutrition Assistance Program (7 U.S.C. 2011 at seq.), Free and Reduced Price School Lunch and/ or Breakfast programs (42 U.S.G. 1751 st seq, and 42 U.S.C. 17731, Medicare Part D Low-irmome Subsidies (42 U.S.C. 1395w-114), Supplemental Security Income (42 U.S.C. 1381 el seq.). Heed Start (42 U.S.C. 9831 at seq.). Early Head Start (42 U.S.C. 9831 at seq.), the Special Supplemental Nutrition Rrrpern for Woman. Infants, and Children (42 U.S.C. 1786), Section 8 Vouchers (42 U.S.C. 14370, the Low - Income Home Energy Assistance Program (42 U.S.C. 6621 at seq.), Pell Giants (20 U.S.C. 1070a), and, if SI.F'RF funds are to be used for services to address educational disparities, Title 1 eligible schools; B) Small businesses operating in a qualified census hart. operated by Tribal governments or on Tribal lands, or operating in the territories; and grouting organirstions operating in a qualified census tract, operated by Tribal governments or an Tribal lands, or operating in the territories. [3) Enumamfed eligible uses: Responses presumed reasonably proportional. A recipient may use funds to respond to the public health emergency or its negative economic impacts on a beneficiary or class of beneficiaries for one or more of the following purposes unless such use is grossly disproportionate to the harm caused or exacerbated by the public health emergency or its negative (A) C0VID-1 n mitigation and prevention in a manner that Is consistent with recommendations and guidance from the Centers for Disease Control and Prevention, including vaccination programs and incentives; testing programs; contact tracing; isolation and quarantine; mitigation and prevention practices in congregate settings; acquisition and distribution of medical equipment for prevention and treatment of 000110.19, including personal protective equipment; COVID- 19 prevention and treatment expenses for public hospitals or health care facilities, including temporary medical facilities; establishing or enhancing public health data systems installation and improvement ofvenlilation systems in congregate settings, health facilities, or other public facilities; and assistance to small businesses, nonprofits, or impacted industries to implement m'tigganon measures; (B7 Medical expenses related to testing and treating COVI0.19 that are provided in a manner consistent with recemmendatons and guidance from the Centers for Disease Control and Prevention, including emergency medical response expenses, lrwtment of long-term symptoms or effects of COVID-19, and costs to medical providers or to individuals for testing or imal health rare, including treatment, emergency or Jor programs, harm recovery, and behavioral health facilities and equipment; and (D) Preventing and responding to increased violence resulting from the public health emergency, including expending to increased nsul[ing from the public ncy, including payroll and its aeseciated W lth dicing strategies - ions to reduce ;an investing in technology (it) Responding to the negative economic impacts of the public health emergency for purposes including: (A) Assistance to households and individuals, including: (3) Assistance for food; emergency housing needs; burials, home repairor weatherivation; interest access or digital literacy; cash assistance; and assistance accessing public benefits; (2)Paid sick, medical, or family leave programs, or assistance to expand access to health insurance; (3)Childcare, early learning services, home visiting, or assistance for child welfare -involved families or foster youth; (4) Programs to address the impacts of lost instructional time for students in kindergarten through twelfth grade; (5) Development, repair, and operation of affordable housing and services or programs to increase long- term housing security; (61 Financial services that facilitate the delivery of Federal, State, or local benefits far unb.nk.d and underbanked individuals; (7) Benefits for the surviving family members of individuals who have died from COVID-19, including cash assistance to surviving spouses or dependents of individuals who died of COVID-19; (6) Assistance far individuals who want and are available for work, including those who are unemployed, have looked for work sometime in the Past 12 months, who are employed part time but who went and ere available for full-time work, or who are employed but seeking a position with greater opportunities for economic and equipment related to Unemployment Trust Fund and repayment of principal amounts due on advances received under q'itle XII of the Social Security Act (42 U. S.C. 1321) up to an amount equal to the difference between the balance in the recipient's Unemployment Trust Fund as of January 27, 2020 and the balance of such account as of May 17, 2021 plus the pdacipal amount outstanding as of May 17, 2021 on any advances received under Title XB of the Social Security Act between January 27, 2020 and May 17. 2021; provided that if a recipient repays principal on Title XII advances or makes a contribution to an Unemployment Trust Fund after April 1. 2022, such recipient shall not reduce average weekly benefit amounts or maximum benefit entitlements prior to December al, 2024; and (b) Any interest due on such advances received under Title XII of the Social Security Act (42 U.S.C. 1321); and (LI) A program, service, capital expenditure, or other assistance that is provided to a disproportionately impacted household, population, or community, including: (I) Services to address health disparities of the disproportionately impacted household, population, or community; (h) Housing vouchers and relocation assistance; (in) Investments in communities to promote improved health outcomes and public safety such as parks, recreation facilities, and programs that increase access to healthy fonds; (iv) Capital expenditures and other services to address vacant or abandoned properties; (v) Services to address educational disparities; and (vi) Facilities and equipment related to the provision of these services to the disproportionately impacted household, population, or community. 4450 Federal Register/Vol. 87, No. 18/Thursday, January 27, 2022/Rules and Regulations (B) Assistance to small businesses, including: capita] expenditures, including support for provided that funds she]) only be used (])Programs, services, or capital payroll costs and covered benefits for employees, compensating returning for additional budgeted full-time equivalent employees shove the expenditures that respond to the employees, support for operations and recipient's number of budgeted Poll -time negative economic impacts of the maintenance of existing equipment and equivalent employees as of March 3, COVID-19 public health emergency, facilities, and technical assistance;aad 2021; including loans or grants to mitigate financial hardship such as decOnes in (E) Expenses to support public sector capacity and workforce, including: (3) Costs to improve the design and execution of programs responding to the revenues or impacts of periods of business closure, or providing technical assistance; and (])Payroll and covered benefit expenses for public safely, public health, health care, human COM-19 pandemic and to administer or improve the efficacy of programs (2) A program, service, capital expenditure, or other assistance that services, and similar employees to the extent that the employee's time is spent mitigating or addressing the public health emergency or its negative economic impacts; and (4) Costs associated with addressing responds to disproportionately responding to the COVID-19 public ndmi.istrative needs of recipient impacted small businesses, including rehabilitation of commercial properties; health emergency; (2) Payroll, covered benefit, and other governments that were caused or exacerbated by the pandemic, storefront and fayade improvements; technical assistance, business costs associated with programs or services to support the public sector (4) Capital expenditures. A recipient, other than a Tribal government, must incubators, and grants for start-ups or workforce and with the recipient: prepare a written justification for certain expansion costs for small businesses; and programs or services to support (i) Hiring or rehiring staff to fill budgeted full-time equivalent positions capital expenditures according to Table 1 to paragraph (b)(4) ofthis section. micro -businesses; (C) Assistance to nonprofit that existed on January 27, 2020 but that were unfilled or eliminated as of March Such written justification must include the fallowing elements: organho tions including programs, 3, 2021; or (I) Describe the harm or used to be services, or capital expenditures, (a) Increasing the number of its addressed; Including loans or grants to mitigate budgeted full-time equivalent (it) Explain why a capital expenditure financial hardship such as declines in employees by up to the difference is appropriate; and revenues or increased costs, ar technical between the number of its budgeted full- (III) Compare the proposed capital assistance; (0) Assistance to tourism, travel, hospitality, time equivalent employees on January 27,2020, multiplied byy l.WS,andthe expenditure to at least two altmentive capital expenditures and demonstrate and other impacted induslrtes for programs, services, or number of its budgotod full-time equivalent employees on March 3. 2021, why the proposed capital expenditure is superior. TABLE 1 TO PARAGRAPH (b)(4) It a prolem has tetet expected It a prl expenddurea a sad the use I$ emmrerated in lolls). then (11 ). and the use o net enumerated in legal, Man O( ). Less than $1 million ........................ No Writer lusidla.u., matolmot .............................. No Wagon Ju Nitiroem required. Greater than or equalae to $1 million. Wnn Justification required but recipients are not Written JustRrzlpn required and recipients must but less than $10 million. required to submit as pad of regular baNning to soma ae pad of regular reporting to Treasury. Treasury. $1O million or more ............... Written Written Justification required and recipients must submit es pen of regular morning to Treasun, workers of the recipient who perform essential work or to provide grants to eligible employers that have eligible workers who perform essential work, provided that any premium pay or grants pmvided under this paragraph (a) must respond to eligible workers performing essential work during the COVID-19 public health emergency. A recipient uses premium pay or grants provided under this paragraph(c) to respond to eligible workers performing essential work during the COVI0.i9 public health emergency if: (1) The eligible worker's total wages and remuneration, including the premium pay, is less than or equal to 150 percent of the greater of such eligible worker's residing State's or reardy's average annual wage for all occupations as defined by the Bureau of Labor Statistics' Occupational Employment and Wage Statistics; (2) The eligible worker is not exempt from the Fair labor Standards Act overtime provisions (29 U.S.G. 207); or (3) The recipient has submitted to the Secretary a written justification that explains how providing premium pay to the eligible worker is responsive to the eligible worker performing essential work during the COVID-19 public health emergency (such as a description of the eligible workers' duties, health, or financial risks faced due to COVID-19, d why the recipient determined that the premium pay was responsive despite the worker's higher income). (dl providing government services. A recipient may use funds for the provision of government services to the extent of the reduction in the recipient's general an.. due to the public health emergency, calculated according to this paragraph (d). A recipient must make a one-time election W calculate the amount of the reduction in the recipient's general revenue due to the public health emergency according to either paragraph (d)(1) or (d)(2) of this section: (1) Standard allowance. The reduction in the recipient's general revenue due to the public health emergency over the period of performance will be deemed to be ten million dollars; or (2) Formula. The reduction I. the recipient's general revenue due to the public health emergency over the period of performance equals the sum of the reduction in revenue, calculated as of each date identified in paragraph (d)(2)(i) of this section and according to the formula in paragraph (d)(2311il of this section: Federal Register/Vol. 87, No. 18/Thursday, January 27, 2022/Rules and Regulations 4451 (i) A recipient must make a one-time election to calculate the reduction in its general revenue using information as of either: (A) I1¢cember 31, 2020, December 31, 2021, December 31, 2022, and December 31, 2023; or (B) The lest day of each of the recipient's fiscal years ending in 2020, 2021, 2922, and 2023. (it) A reduction in a recipient's general revenue for each date identified in paragraph (d)(2)(i) of this section equals: Max {(Base Yeor Revenue • h ♦ Growth A dluscramtk[All 211—Actual General Revenue; u) Where: (A) Bede Your Revenue is the recipient's general revenue for the most recent full fiscal year prior to the MVID-19 public health emergency; (B) Growth Adjustment is equal to the greater of 5.2 percent (or 0.052) and the recipient's average annual revenue growth over the three full fiscal years prior to the COVID-19 public health emergency; (C) n equals the number of months elapsed from the end of the base year to the calculation data; (D) Subscript t denotes the specific calculation date; and (E) Actual General Revenue is a recipient's actual general revenue collected during the 12-month period ending on each calculation date identified in paragraph (d)(2)(i) of this section, except: (1) For purposes of all calculation dates on or after April 1, 2022, in the case of any change made after January 61 2022 to any law, regulation, or administrative interpretation that reduces any tax (by providing for a reduction in a rate, a others, a deduction, a credit, or otherwise) or delays the imposition of any tax or tax in raase and that the recipient assesses has had the effect of decreasing the amount of tax revenue collected during the 12-month period ending on the calculation date relative to the amount of tax revenue that would have been collected in the absence of such change, the recipient must add to actual general revenue the amount of such due... in tax revenue; (2) For purposes many calculation date on or after April 1, 2022, in the case of any change made after January 6, 2022 to any law, regulation, or administrative interpretation that increases any tax (by providing for an increase in a rate, the reduction of a rebate, a deduction, or a coed it. or otherwise) or accelerates the imposition of any tax or tax increase and that the recipient assesses has had the effort of increasing the amount of tax revenue collected during the 12-month period ending on the calculation dote relative to the amount of lax revenue that would have been collected in the absence of such change, the recipient must subtract train actual general revenue the amount of such increase in tax revenue; (3) If the recipient makes a one-time election to adjust general revenue to reflect tax changes made during the period beginning on January 27, 2020 and ending on January 6, 2022, for purposes of each calculation date identified in paragraph (d)[2)(d of this section: (i) In the case of any change made during such prior period to any law, regulation, or administrative interpretation that reduces any tax (by providing for a reduction in a rate, a rebate, a deduction, a credit, or otherwise) or delays the imposition of any tax or tax increase and that the recipient assesses has had the effect of decreasing the amount of tax revenue collected during the 12-month period ending on the calculation dale relative to the amount of lax revenue that would have been collected in the absence of such change, the recipient must add to actual general revenue the amount of such decrease in tax revenue; and (it) In the case of any change made during such prior period to any law, regulation, or administrative interpretation that increases any tax (by providing for an increase in a rate, the reduction of a rebate, a deduction, or a credit, or otherwise) or accelerates the imposition of any tax or tax increase and that the recipient assesses has had the effect of increasing the amount of tax revenue collected during the 12- month period ending an the calculation date relative to the amount of tax revenue that would have been collected in the absence of such change, the recipient must subtract from actual general revenue the amount of such increase in tax revenue; and (4) With respect to any calculation date during the period beginning on January 6, 2022 and ending on March 31, 2022, if the recipient makes the election in paragraph (d)(3) of uns section, the recipient most also make the adjustments referenced in paragraph (d)(3) of this section with respect to any such changes in law, regulation, or administrative interpretation during the period beginning on January 6, 2022 and ending on such calculation date. id Making necessary investments in water, sewer, and broadband infrastructure. A recipient may use funds to make the fallowing investments in water, sewer, and broadband infrstructum. (1) Water and.smerrinvestments—(i) Clean Water State Revolving Fund projects. Projects or activities of the type that meal the eligibility requirements of section 603(c) of the Federal Water Pollution Control Act (33 U.S.C. 1383(c)); (it) Additional starmwater projects. Projects to manage, reduce, treat, or recapture stormwater or subsurface drainage water regardless of whether such projects would improve water quality ifsucb projects would otherwise meet the eligibility requirements of section 603(c)(5) ofthe Federal Water Pollution Control Act (33 U.S.G. 1383(c)(5)); (ifi) Drinking Water State Revolving Fund projects. Projects or activities of the type that meet the eligibility requirements of section 1452 of the Safe Drinking Water Act (42 U.S.C. 300j-12) as implemented by the regulations adopted by the Environmental Protection Agency (EPA) under 40 CFR 35.3520. provided that: (A) The recipient is not required to comply with the limitation under 40 CFR 35.3520(c)(2) to acquisitions of land from willing sellers or the prohibition under 40 CFR 35.3520(e)(6) on was of funds for certain Tribal pro acts; and (>31 In the case of lead service line replacement projects, the recipient must replace the full length of the service line and may not replace only a partial portion of the service line. [iv) Additional lead remediation and household water quality testing. Projects or activities to address lead in drinking water or provide household water quality testing that are within the scope of the programs the EPA is authorized to establish under aectfons 1459A(b)(2), 145911(b)(1), 1464(d)(2), and 1465 ofthe Safe Drinking Water Act (42 U.S.G. 300j-19a(b)(2),300j-19b(b)(1), 300j- 24(d)(2), and 300r25), prode vid that (A) In the case of lead service line replacement projects, the recipient must replace the full length of the service line and may not replace only a partial portion of the service line; and (B) In the case of projects within the scope of the program the EPA is authorized to establish under section 145911(b)(1) of the Safe Drinking Water Act, the recipient may determine the income eligibility of homeowners served by lead service line replacement projects to its discretion. (a) Drinking water projects to support increased population. Projects of the type that meet the eligibility requirements of 40 CFR 35.3520 other than the requirement of subparagraph 4452 Federal Register/Vol, 87, No. 18/Thursday, January 27, 2022/Rules and Regulations (bill) of such regulation to address present or prevent future violations of health -based drinking water standards, if the following conditions are at; (A) The project is needed to support increased population, with need assessed as of the time the project is undertaken; (B) The project is designed to support no mere than a reasonable level of projected increased need, whether due to population growth or otherwise; CI The project is a cost-effective means for achieving the desired level of service; and (D) The project I. projected to continue to provide an adequate level of drinking water over its estimated useful life. (A) Dams and reservoirs. Rehabilitation of dams and reservoirs if the following conditions are at: (A) The project meals the requirements of 40 CFR 35.3520 other than the following requirements: (1) The prohibition on the rehabilitation of dams and rueervohs in 40 CFR 35.3520(e)(1) and (3); and (2) The requirement in 40 CFR 35.3520(h)(1) that the project is needed to address present or prevent future violations of health -based drinking water standards, provided that if the dam or reservoir project does not meet this requirement, the project must be needed to support increased population, with need assessed as of the time the project is undertaken, and the project must be projected to continue to provide an adequate level of drinking water over its estimated useful life; (B) The primary purpose of the dam m reservoir is for drinking water supply; (C) The project is needed for the prevision of drinking water supply, with need assessed as of the time the project is initiated; (D) The project is designed to support na more then a reasonable level of projected increased need, whether due to population growth or otherwise; and Ili) The project is a cost-effective means for achieving the desired level of service. (vii) private walls. Rehabilitation of private wells, testing initiatives to identify contaminants in private wells, and treatment activities and remediatton projecs that address contamination in private wells, if the project meets the requirements of 40 CFR 35,3520 other than the limitation to certain eligible systems under 40 CFR 35.3520(e). (2) Broadband investments 4i) General. Broadband infrastructure if the following conditions are met: (A) The broadband infraslrudme I. designed to provide service to households and businesses with an identified need, as determined by the recipient, for such infrastructure; (8) The broadband infrastructure is designed to, upon completion: (1) Reliably meet or exceed symmetrical 100 Mbps download speed and upload speeds; or (2) In ca.ea where it is not practicable bemuse of the excessive cost of the project or geography or topography of the area to be served by the project, to provide service reliably meeting or exceeding symmetrical too Mbps download sppsad and upload speeds: (ijImliably meet or exceed iN Mbps download speed and between at least 20 Mbps and 100 Mbps upload speed; and (fi) Be scalable to a minimum of IN Mbps download speed and too Mbps upload speed; and (C) The service provider for a completed broadband infrastructure investment project that provides service to households is required, for as long as the SLFRF-funded broadband infrastructure is in use, by the recipient ou (1) Participate in the Federal Communications Commission's Affordable Connectivity Program (ACP) through the lifetime of the ACP; or (2) Otherwise provide access to a broad -based affordability program to low-income consumers in the proposed service arse of the broadband infrastructure that provides benefits to household. commensurate with those provided under the ACP through the lifetime of the ACP. (it) Cybenecurity infrostrucNm investments. Cybersecarity infrastructure investments that are designed to improve the reliability and resiliency of new and existing broadband infrastructure. Such investments may include the addition or modernisation of network security hardware sad software tools designed to strengthen cybersecurity for the end - users of these networks. (I) Meeting the non-federal matching requirements for Bureau of Reclamation projects. A recipient may use funds to meet the non-federal matching requirements of any authorised Bureau of Reclamation project. §35.7 pensions. A recipient (other than a Tribal government) may not u.e funds far deposit into any pension fund. §35.8 Tax. (a) Restriction. A State or Territory shall not use funds to either directly or indirectly offset a reduction in the net tax revenue of the Slate or Territory resulting from a covered change during the covered period. (b) Violation. Treasury will consider a State or Territory to have used funds to offset a reduction in act lax revenue if, during a reporting year. (1) Covered change. The Slate or Territory has made a covered change that, either based on a reasonable statistical methodology to isolate the impact of the covered change in actual revenue or based on projections that use reasonable assumptions and do not incorporate the effects of macroeconomic growth to reduce or increase the projected impact of the covered change, the State or Territory assesses has had or predicts to have the effect of reducing tax rovenue relative to current law; (2) Exceeds the de mimaris threshold. The aggregate amount of the measured or predicted reductions in tax revenue caused by covered changes identified under paragraph (b)(1) of this section, in the aggregate, ezownt.I percent of the State's or Territory's baseline; (3) Reduction in net tax revenue. The State or Territory reports a reduction in net tax revenue, measured as the difference between actual tax revenue and the Slate's or Territory's baseline, each measured as of the end of the reporting year; and `4) Consideration ofafherchamwe, The aggregate amount of measured or predicted reductions in tax revenue caused by covered changes is greater than the sum of the following, in each case, as calculated for the reporting year: (I) The aggregate amount of the expected increases in tax revenue caused by one or more covered changes that, either based on a reasonable statistical methodology to isolate the impact of the covered change in actual revenue or based on projections that use reasonable assumptions and do not incorporate the effects of macroeconomic growth to reduce or increase the projected impact of the covered change, the State or Territory assesses has had or predicts to have the effect of increasing tax revenue; and (it) Reductions in spending, up to the amount of the State's or Territory's net reduction in total spending, that are in: (A) Departments, agencies, or authorities to which the Stale or Territory is not using funds; and (B) Departments, agencies, or authorities in which the State or Territory is using funds, in an amount equal to the value of the spending cuts in those departments, agencies, or authorities, minus funds used. (c) Amount and revenue reduction cap. If a Slate or Territory is considered to be m violation pennant to paragraph (b) of this section, the amount used in Federal Register/Vol. 87, No. I8/Thursday, January 27, 2022/Rules and Regulations 4453 violation of paragraph (a) of this section 's eeqqual to the lesser of: h (1) The reduction in net tax revenue of the State or Territory for the reporting year, measured m the differ. ne. between the State's or Territory's baseline and its actual tax revenue, each measured as of the and of the reporting y...... d, (2) The aggregate amount of the reductions in tax revenues reused by covered changes identified in paragraph (b)(1) of this section, minus the sum of the amounts in identified in paragraphs (b)(4)(I) and (i i) of this section. §35.9 (:omplience with applicable laws. A recipient must comply with all other appl triable Federal estates, regulations, end executive orders, and a recipient shall provide for compliance with the American Rescue Plan Act, this subpart, and any interpretive guidance by other parties in any agreements it enters into with other parties relating to these funds. §354e flecoupmam. (a) Identification of ter oboes—(l) M general. Any amount used in violation of § 35.5, 35.6, or 35.7 may be identified at any time prior to December 31, 2026. (2) Annual sporting of amounts of violations. On an annual basis, a recipient that is a State or territory must calculate and report any amounts used in violation of § 35.8. (b) Cakulution of amounts subject to recoupment—(1) In general. Except as provided in paragraph (b)(2) of this auction, the Secretary will calculate any amounts subject to recoupment resulting from a violation of § 35.5, 35.6 or 35.7 as the amounts used in violation of such malridims. (2) Violations of § 35, S. The Secretary will calculate any amounts subject to commitment resulting from a violation of $ 35.8. equal to the lesser of (i) The amount set forth in $ 35.8(c); and, (9) The amount of funds received by such recipient. Cc) Initial notice. If the Secretary calculates an amount subject to recoupment under paragraph (h1 of this section, Treasury will provide the recipient an initial written notice of the amount subject to recoupment along a'Ih an explanation of such amounts. (it) Request for reconsideration. Unless the Secretary extends or acwldatea the time period, within 60 calendar days of receipt of an initial notice of recoupment provided under paragraph Cc) of this section, a recipient may submit a written request to the Secretary requesting reconsideration of any amounts subject to rearmament under paragraph (b) of this section. To request reconsideration of any amounts subject to cram you n , a recipient must submit to the Secretary a written request that includes: (1) An explanation of why the recipient believes all or some of the amount should not be subject to recoupman; and (2) A discussion of supporting reasons, along with any additional information. (e) Final amount subject to mcoupment. Unless the Secretary extends or accelerates the time period, within 50 colander days of receipt of the recipient's request for reconsideration provided pursuant to paragraph (d) of this section or the expiration of the period for requesting reconsideration provided under paragraph (d), the recipient will be notified of the Smodary's decision to affirm, withdraw, or modify the notice of incompetent. Such notification will include an explanation of the decision, including responses to the recipient's supporting masons and consideration of additional information provided. A recipient must invoke and exhaust the procedures available under this subpart prior to seeking judicial review of a decision under § 35.10, If Repayment of funds. Unless the Secretary extends or accelerates the time period, a recipient shall repay to the Secretary any amounts subject to recoupment in accordance with instructions provided by the Secretary: (1) Within 120 calendar days of receipt of the notice of recoupment provided under paragraph (c) of this section, in the case of a recipient that does not submit a request far reconsideration in accordance with the requirements of paragraph (d) of this section; or (2) Within 120 calendar days of receipt of the Secretary's decision under paragraph (a) of this section, in the case of a recipient that submits a request for. reconsideration in accordance with the requirements of paragraph (d) of this section. (g) Other remedial actions. Prior to seeking rearmament or taking other appropriate action pursuant to paragraph Cc), (d). (.1, or (p of this section, the Secretary may notify the recipient of potential violations and provide the recipient an opportunity for Informal consultation and remediation. §25.11 Paymanlatostatet. (a) /n general. With respect to any Stale or Territory that has an unemployment rate as of the date that it submits an initial wrtifiation for payment of funds pursuant to section 602(d)(1) of the Social Security Act that is less than two percentage points above its unemployment rate in February 2020, the Secretary will withhold 50 percent of the amount of funds allocated under section 602(b) of the Social Security Act to such State or territory until at least May 10. 2022 and not more than twelve months from the data each initial certification is provided to the Secretary. Ili) Payment of withheld amount. In order to receive the amount withheld under paragraph (a) of this section, the State or Territory must submit to the Secretary the following information: (1) A certification, in the form provided by the Secretary, that such State or Territory requires the payment to may out the activities specified in section 602(c) of the Social Security Act and will use the payment in compliance with section 602(c) of the. Social Security Ad; and (2) Any reports required to be filed by that data pursuant to this part that have not yet been filed. §35.12 ddd;u0onslononanthoment unite d local government and units of general local government. (a) Nonenfitlement units of local government. Each State or Territory that receives a payment from the Secretary pursuant to section 603tb)(2)(B) of the Social Security Act shall distribute the amount of the payment to nonentillement units of Intel government in such State or Territory in accordance with the requirements set forth in section 603(b)(2)(C) of the Social Security Act and without offsetting any debt owed by such nonentitlement units of local governments against such pa mats. (b) Budget cap. A State or Territory may not make a payment to a nonenlitlement unit of Cowl government pursuant to section 6m(b)(2)(C) of the Social Security Act and paragraph (a) of this section in excess of Use ...at equal to 75 percent of the most recent budget far the nonentitemenl unit of local government as of January 27, 2020. For purposes of this section 35.12, a none atitlemenl unit of local government's most recent budget shall mean the nonentitlement unit of local government's total annual budge, Including both operating and capital expenditure budgets, in effect as of January 27, 2020. A State or I mritory shall permit a nonentitloment unit of local government without a formal budget as of January 27, 2020, to provide a mhlifwtion from an authorized officer of the nonenlitlement unit of local government of its most recent annual expenditures as of 4454 Federal Register/Vol. 87, No. IS/Thursday, January 27, 2022/Rules and Regulations January 27, 2020, and a Slate or Territory may rely on such certification for purposes of complying with 0ris section 35.12. (c) units ofgenaml localgovernment. Each State or Territory that receives a payment from the Secretary pursuant to section 603(b)(3)(BI(ii) of the Social Security Act, in the case of an amount to he paid to a county that is not a unit of general local government, shall distribute the amount of the payment to units ofgeneral local government within such county in accordance with the requirements set forth in section 603(b)(3)(B)lii) of the Serial Security Act and without offsetting any debt owed by such units of general local government against such payments. (d) Additional cemiibons. A Stela or Territory may not place additional conditions or requirementa on distributions to mmentidement units of local government or units of general local government beyond those required by section 603 of the Social Security Act or this subpart. Jacob Wbenlufl, aiefR--,Off r. IF2 Coc. 2022-e0292 Files 1-2fi-22: ale eml awe0 CODE F Compliance and Reporting Guidance Senlenrher 20, 2022 1"'I'stnn: 5.0 LLS. OEP MENTOFTHETREASMRY Coronavirus State and Local Fiscal Recovery Funds Guidance on Recipient Compliance and Reporting Responsibilities On March 11, 2021, the American Rescue Plan Act was signed into law, and established the Coronavirus State Fiscal Recovery Fund and Coronavirus Local Fiscal Recovery Fund, which together make up the Coronavirus State and Local Fiscal Recovery Funds ("SLFRF") program. This program is intended to provide support to State, territorial, local, and Tribal governments in responding to the economic and public health impacts of COVID-19 and in their efforts to contain impacts on their communities, residents, and businesses. In May 2021, Treasury published the interim final rule ("IFR") describing eligible and ineligible uses of SLFRF, as well as other program requirements. The initial versions of this Compliance and Reporting guidance reflected the IFR and its eligible use categories. On January 6, 2022, the U.S. Department of the Treasury ("Treasury") adopted the final rule implementing the SLFRF program. The final rule became effective on Apnl 1, 2022. Prior to the final rule effective date, the IFR remained in effect; funds used consistently with the IFR while it was in effect were in compliance with the SLFRF program. However, recipients could choose to take advantage of the final rules flewbilities and simplifications ahead of the effective date. Recipients may consult the Statement Regarding Compliance with the :'Oronavims State and Local Fiscal Recovery Funds Into im Final Rule and Final Rille for more information on compliance with the IFR and the final rule. To support recipients in complying with the final rule, this reporting guidance reflects the final rule and provides additional detail and clarification for each recipient's compliance and reporting responsibilities under the SLFRF program, and should be read in concert with the Award Terms and Conditions, the authorizing statute, the final rule. other program guidance including the Final Rule FAOs, and other regulatory and statutory requirements, including regulatory requirements under the Update and 2022 SLFRF Gorriplianco S pplerlellt Please see the Assistance Listing in SAM.gov under assistance listing number (formerly known as CFDA number) 21.027 for more information. Please Note: This guidance document applies to the SLFRF program only and does not change or impact reporting and compliance requirements for the Coronavirus Relief Fund ("CRF°) established by the CARES Act. This guidance includes two parts: Part 1: General Guidance This section provides an orientation to recipients' compliance responsibilities and Treasury's expectations and recommends best practices where appropriate under the SLFRF program. A. Key Principles....................................................................................... P. 4 B. Statutory Eligible Uses... ............... .......... ................. ........................ ....... P. 4 C. Treasury's Final Rule............................................................................ P. 5 D. Uniform Guidance (2 CFR Part 200)........................................................... P. 7 E. Award Terms and Conditions..................................................................... P. 11 Coronavirus state and Local Fiscal Recovery Funds Compliance and Reporting Guidance U 5. DEPARTMENT OF THE TREASURY Part 2: Reporting Requirements This section provides information on the reporting requirements for the SLFRF program. A. Interim Report ....... ........................................................................... P.16 B. Project and Expenditure Report...... ......................................... ................. . P. 17 C. Recovery Plan Performance Report................. ........ ................. .................. P. 34 Appendix 1: Expenditure Categories......................... ............................ .............. P. 42 Appendix 2: Evidenced -Based Intervention Additional Information ............................. P. 47 Appendix 3: Expenditure Categories under the Interim Final Rule ............................. P. 48 OMB Control Number: 1505-0271 OMB Expiration Date: 04/30/2025 21]:1:LrN]93:1 I Y[i7.II .[-1YC The information collected will be used for the U.S. Government to process requests for support. The estimated burden for the collections of information included in this guidance is as follows: 30 minutes for Title VI Assurances, 2 hours per response for the Interim Report, 6 hours per response for the Project and Expenditure Report and 100 hours per response for the Recovery Plan Performance Report (if applicable). Comments conceming the accuracy of this burden estimate and suggestions for reducing this burden should be directed to the Office of Privacy, Transparency and Records, Department of the Treasury, 1500 Pennsylvania Ave., N.W., Washington, D.C. 20220. DO NOT send the form to this address. An agency may not conduct or sponsor, and a person is not required to respond to, a ccllecticn of information unless it displays a valid control number assigned by OMB. Coronavirus!rate and Local Fiscal Recovery Funds Compliance and Reporting Guidance 3 LLs. MPMTMENTOF THETREASURY Part 1: General Guidance This section provides an orientation on recipients' compliance responsibilities and Treasury's expectations and recommended best practices where appropriate under the SLFRF program. Recipients under the SLFRF program are the eligible entities identified in sections 602 and 603 of the Social Security Act as added by section 9901 of the American Rescue Plan Act of 2021 (the "SLFRF statute') that receive an SLFRF award. Subrecipients under the SLFRF program are entities that receive a subaward from a recipient to carry out the purposes (program or project) of the SLFRF award on behalf of the recipient Recipients are accountable to Treasury for oversight of their subrecipients in accordance with 2 CFR 200.332, including ensuring their subrecipients comply with the SLFRF statute, SLFRF Award Terms and Conditions, Treasury's interim final role and final rule, applicable federal statutes, regulations, and reporting requirements. A. Key Principles There are several guiding principles for developing your own effective compliance regimes: • Recipients and subrecipients are the first line of defense and responsible for ensuring the SLFRF award funds are not used for ineligible purposes, and there is no fraud, waste, or abuse associated with their SLFRF award; • Many SLFRF-funded projects respond to the COVID-19 public health emergency and meet urgent community needs. Swift and effecfive implementation is vital, and recipients must balance facilitating simple and rapid program access widely across the community and maintaining a robust documentation and compliance regime; • Treasury encourages recipients to use SLFRF-funded projects to advance shared interests and promote equitable delivery of government benefits and opportunities to underserved communities, as outlined in Executive Order 13985 On Advancinq Racial Equity and Support for Underserved Communities I through the Federal Government; and • Transparency and public accountability for SLFRF award funds and use of such funds are critical to upholding program integrity and trust in all levels of government, and SLFRF award funds should be managed consistent with Administration guidance per Memorandum M-2121=20 and Memorandum M-20-21. B. Statutory Eligible Uses As a recipient of an SLFRF award, your organization has substantial discretion to use the award funds in the ways that best suit the needs of your constituents — as long as such use fits into one of the following four statutory categories: 1. To respond to the COVID-19 public health emergency or its negative economic impacts; 2. To respond to workers performing essential work during the COVID-19 public health emergency by providing premium pay to eligible workers of the recipient that are performing such essential work, or by providing grants to eligible employers that have eligible workers who perform essential work; 3. For the provision of government services, to the extent of the reduction in revenue of such recipient due to the COVID-19 public health emergency, relative to revenues collected in the most recent full fiscal year of the recipient prior to the emergency; or 4. To make necessary investments in water, sewer, or broadband infrastructure. Treasury adopted an interim final role in May 2021 and the final rule on January 6, 2022 to implement these eligible use categories and other restrictions on the use of funds under the SLFRF Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance ,11111111114, Id LLS. DEPPRTMENTOPMETREASURY program. The final rule took effect on April 1, 2022, and the interim final rule remained in effect until that time, although recipients could choose to take advantage of the final rule's texibilties and simplifications prior to April 1, 2022. Recipients may consult the Statement Regarding Compliance with the Colonevirus State and Local Fiscal Recovery Funds Interim Final Rule and Final Rule for more information on compliance with the interim final rule and the final rule. It is the recipient's responsibility to ensure all SLFRF award funds are used in compliance with the program's requirements. In addition, recipients should be mindful of any additional compliance obligations that may apply — for example, additional restrictions imposed upon other sources of funds used in conjunction with SLFRF award funds, or statutes and regulations that may independently apply to water, broadband, and sewer infrastructure projects. Recipients should ensure they maintain proper documentation supporting determinations of costs and applicable compliance requirements, and how they have been satisfied as part of their award management, internal controls, and subrecipient oversight and management. C. Treasury's Final Rule Treasury's final rule details recipients' compliance responsibilities and provides additional information on eligible and restricted uses of SLFRF award funds and reporting requirements. 1. Eligible and Restricted Uses of SLFRF Funds. As described in the SLFRF statute and summarized above, there are four enumerated eligible uses of SLFRF award funds. As a recipient of an award under the SLFRF program, your organization is responsible for complying with requirements for the use of funds. In addition to determining a given project's eligibility, recipients are also responsible for determining subrecipient's or beneficiaries' eligibility, and must monitor subrecipients' use of SLFRF award funds. To help recipients build a greater understanding of eligible uses, Treasury's final rule establishes a framework for determining whether a specific project would be eligible under the SLFRF program, including some helpful definitions. For example, Treasury's final rule establishes: • A framework for determining whether a project responds to the COVID-19 public health emergency or its negative economic impacts; • Definitions of "eligible employers," "essential work," "eligible workers," and "premium pay' for cases where premium pay is an eligible use; • The option to select between a standard amount of revenue loss or complete a full revenue loss calculation of revenue lost due to the COVID-19 public health emergency; • A framework for necessary water and sewer infrastructure projects that aligns eligible uses with projects that are eligible under the Environmental Protection Agency's Drinking Water and Clean Water State Revolving Funds along with certain additional projects, including a wider set of lead remediation and stormwater infrastructure projects and aid for residential wells; and • A framework for necessary broadband projects that allows for projects that are designed to provide service of sufficient speeds to eligible areas, as well as an affordability requirement for providers that provide service to households. Treasury's final rule also provides more information on important restrictions on use of SLFRF award funds, including that recipients other than Tribal governments may not deposit SLFRF funds into a pension fund; and recipients that are States or territories may not use SLFRF funds to offset a reduction in net tax revenue resulting from the recipient's change in law, regulation, or administrative interpretation. In addition, recipients may not use SLFRF funds directly to service debt, satisfy ajudgment or settlement, or contribute to a *rainy day" fund. Recipients should refer to Treasury's final rule for more information on these restrictions. Coronavirus State and Local Fiscal Recovery Funds Compliance and Reposing Guidance ® uS DEPuRrMEmrorreErREasurn Treasury's final rule outlines that funds available under the "revenue loss" eligible use category (sections 602(c)(1)(C) and 603(c)(1)(C) of the Social Security Act) generally may be used to meet the non-federal cost -share or matching requirements of other federal programs. However, the final rule notes that SLFRF funds may not be used as the non-federal share for purposes of a state's Medicaid and CHIP programs because the Office of Management and Budget COMB*) has approved a waiver as requested by the Centers for Medicare & Medicaid Services pursuant to 2 CFR 200.102 of the Uniform Guidance and related regulations. If a recipient seeks to use SLFRF funds to satisfy match or cost -share requirements for a federal grant program, it should first confirm with the relevant awarding agency that no waiver has been granted for that program, that no other circumstances enumerated under 2 CFR 200.306(b) would limit the use of SLFRF funds to meet the match or cost -share requirement, and that there is no other statutory or regulatory impediment to using the SLFRF funds for the match or cost -share requirement. SLFRF funds beyond those that are available under the revenue loss eligible use category may not be used to meet the non-federal match or cost -share requirements of other federal programs, other than as specifically provided for by statute. For example, the Infrastructure Investment and Jobs Act provides that SLFRF funds may be used to meet the non-federal match requirements of authorized Bureau of Reclamation projects and certain broadband deployment projects. 2. Eligible Costs Timeframe. Your organization, as a recipient of an SLFRF award, may use SLFRF funds to cover eligible costs that your organization incurred during the period that begins on March 3, 2021 and ends on December 31, 2024, as long as the award funds for the obligations incurred by December 31, 2024 are expended by December 31, 2026. Costs for projects incurred by the recipient State, territorial, local, or Tribal government prior to March 3, 2021 are not eligible, as provided for in Treasury's final rule. Recipients may, in certain circumstances, use SLFRF award funds for the eligible use categories described in Treasury's final rule for costs incurred prior to March 3, 2021. Specifically, a. Public Health/Neoative Economic Impacts: Recipients may use SLFRF award funds to provide assistance to households, small businesses, and nonprofits to respond to the public health emergency or negative economic impacts of the pandemic — such as rent, mortgage, or utility assistance — for costs incurred by the beneficiary (e.g., a household) prior to March 3, 2021, provided that the recipient State, territorial, local or Tribal government did not incur the cost of providing such assistance prior to March 3, 2021. b. Premium Pav: Recipients may provide premium pay retrospectively for work performed at any time since the start of the COVID-19 public health emergency. Such premium pay must be "in addition to" wages and remuneration already received and the obligation to provide such premium pay must not have been incurred by the recipient prior to March 3, 2021. c. Revenue Loss: Recipients have broad discretion to use funds for the provision of government services to the extent of reduction in revenue. While calculation of lost revenue is based on the recipient's revenue in the last full fiscal year prior to the COVID-19 public health emergency, use of funds for government services must be forward looking for costs incurred by the recipient after March 3, 2021. d. Investments in Water Sewer. and Broadband: Recipients may use SLFRF award funds to make necessary investments in water, sewer, and broadband infrastructure. Recipients may use SLFRF award funds to cover costs incurred for eligible projects planned or started prior to March 3, 2021, provided that the project costs covered by the SLFRF award funds were incurred by the recipient after March 3, 2021. Any funds not obligated or expended for eligible uses by the timelines above must be returned to Treasury, including any unobligated or unexpended funds that have been provided to subrecipients and contractors as part of the award closeout process pursuant to 2 C. F.R. 200.344(d). For the purposes of determining expenditure eligibility, Treasury's final rule provides Curanavlrus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance V.S.OEPP o"OFTHEiRE o- that "incurred" means the recipient has incurred an obligation, which has the same meaning given to "financial obligation" in 2 CFR 200.1- 3. Reporting.Generally, recipients mustsubmitone initial Interim Report, quarterly or annual Project and Expenditure reports which include subaward reporting, and in some cases annual Recovery Plan reports. Treasury's final rule and Part 2 of this guidance provide more detail around SLFRF reporting requirements. 4. Expenditure Categories. Treasury's final rule provides greater flexibility and simplicity for recipients to fight the pandemic and support families and businesses struggling with its impacts, maintain vital services amid revenue shortfalls, and build a strong, resilient, and equitable recovery. As such, recipients report on a broader set of eligible uses and associated Expenditure Categories ("EC"), which began with the April 2022 Project and Expenditure Report. Appendix 1 includes the new ECs, as well as a reference to previous ECs used for reporting under the interim final rule. Assistance Listing The Assistance Listing for the Coronavirus State and Local Fiscal Rewvery Funds (SLFRF) was published May 28, 2021 on SAM.gov under Assistance Listing Number ("ALN"), formerly known as CFDA Number, 21.027. The assistance listing includes helpful information including program purpose, statutory authority, eligibility requirements, and compliance requirements for recipients. The ALN is the unique 5-digit number assigned to identify federal assistance listing, and can be used to search for federal assistance program Information, including funding opportunities, spending on USASpending.gov, or audit results through the Federal Audit Clearinghouse. To expedite payments and meet statutory timelines Treasury issued initial payments under an existing ALN, 21,019, assigned to the CRF. If you have already received funds or captured the initial number in your records, please update your systems and reporting to reflect the new ALN 21.027 for the SLFRF program. Recipients must use ALN 21.027 for all financial accounting, subawards, and associated program reporting requirements for the SLFRF awards. D. Uniform Administrative Requirements The SLFRF awards are generally subject to the requirements set forth in the Uniform Guidance. In all instances, your organization should review the Uniform Guidance requirements applicable to your organization's use of SLFRF funds, and SLFRF-funded projects. Additional details about applicability of certain provisions of the Uniform Guidance may be found in: • SLFRF final rule; • SLFRF Assistance Listing; and • SLFRF Final Rule FAQs, including FAQ 4.9. 10.1, and Section 13. The following sections provide a general summary of your organization's compliance responsibilities under applicable statutes and regulations, including the Uniform Guidance, as described in the most recent compliance supplement issued by OMB. Note that the descriptions below are only general summaries and all recipients and subrecipients are advised to carefully review the Uniform Guidance requirements and any additional regulatory and statutory requirements applicable to the program. 1. Allowable Activities. Each recipient should review program requirements, including Treasury's final rule and the recipient's Award Terms and Conditions, to determine and record eligible uses Coronavims State and Local Fiscal Recovery Funds Compliance and Reporting Guidance US. OEr ENTOFTHETREvii.W of SLFRF funds. Per 2 CFR Part 200.303, your organization must develop and implement effective internal controls to ensure that funding decisions under the SLFRF award constitute eligible uses of funds, and document determinations. Allowable Costs/Cost Principles. As outlined in the Uniform Guidance at 2 CFR Part 200, Subpart E regarding Cost Principles, allowable costs are based on the premise that a recipient is responsible for the effective administration of Federal awards, application of sound management practices, and administration of Federal funds in a manner consistent with the program objectives and terms and conditions of the award. Recipients must implement robust internal controls and effective monitoring to ensure compliance with the Cost Principles, which are important for building trust and accountability. Please note that as outlined in Final Rule FAO 13.15, only a subset of the Uniform Guidance requirements at 2 CFR Part 200 Subpart E (Cost Principles) applies to recipients' use of funds in the revenue loss eligible use category. SLFRF funds may be, but are not required to be, used along with other funding sources for a given project. Recipients should note that SLFRF funds available under the 'revenue loss" eligible use category generally may be used to meet the non-federal cost -share or matching requirements of other federal programs. If a recipient seeks to use SLFRF funds to satisfy match or cost -share requirements for a federal grant program, the recipient should first confirm with the relevant awarding agency that no waiver has been granted for that program, that no other circumstances enumerated under 2 CFR 200.306(b) would limit the use of SLFRF funds to meet the match or cost -share requirement, and that there is no other statutory or regulatory impediment to using the SLFRF funds for the match or cost -share requirement. For instance, recipients should note that SLFRF funds may not be used as the non-federal share for purposes of a state's Medicaid and CHIP programs because the OMB has approved a waiver from this provision as requested by the Centers for Medicare & Medicaid Services pursuant to 2 CFR 200.102 of the Uniform Guidance and related regulations. SLFRF funds beyond those that are available under the revenue loss eligible use category may not be used to meet the non-federal match or cost -share requirements of other federal programs, other than as specifically provided for by statute. As an example, the Infrastructure Investment and Jobs Act provides that SLFRF funds may be used to meet the non-federal match requirements of authorized Bureau of Reclamation projects and certain broadband deployment projects. Recipients should consult the final rule for further details if they seek to utilize SLFRF funds as a match for these projects. Treasury's final rule, program guidance, and the Uniform Guidance outline the types of costs that are allowable, including certain audit costs. For example, per 2 CFR 200.425, a reasonably proportionate share of the costs of audits required by the Single Audit Act Amendments of 1996 are allowable; however, costs for audits that were not performed in accordance with 2 CFR Part 200, Subpart F and the Compliance Supplement are not allowable. Please see 2 CFR Part 200, Subpart E regarding the Cost Principles for more information. a. Administrative costs: Recipients may use funds for administering the SLFRF program, including Costs of consultants to support effective management and oversight, including consultation for ensuring compliance with legal, regulatory, and other requirements.I Further, costs must be reasonable and allocable as outlined in 2 CFR 200.404 and 2 CFR 200.405. Pursuant to the SLFRF Award Terms and Conditions, recipients are permitted to charge both direct and indirect costs to their SLFRF award as administrative costs as long as they are accorded consistent treatment per 2 CFR 200.403. Direct Costs are those that are idenfified specifically as costs of implementing the SLFRF program objectives, such as Recipients also may use SLFRF funds directly for administrative costs to improve the design and execution of programs responding to the COVID-19 pandemic and to administer or improve the efficacy of programs addressing the public health emergency or its negative economic impacts. 31 CFR 35.6(b)(3)(ii)(E)(3). Coronavirus State and Local Fiscal Recovery Funds Compliance and Repoding Guidance U 5. nEPPn1MENi CF THE 1PEPSl1liY contract support, materials, and supplies for a project. Indirect costs are general overhead costs of an organization where a portion of such costs are allocable to the SLFRF award such as the cost of facilities or administrative functions like a director's office.- Each category of cost should be treated consistently in like circumstances as direct or indirect, and recipients may not charge the same administrative costs to both direct and indirect cost categories, or to other programs. If a recipient has a current Negotiated Indirect Costs Rate Agreement (" NICRA") established with a Federal cognizant agency responsible for reviewing, negotiating, and approving cost allocation plans or indirect cost proposals, then the recipient may use its current NICRA. Alternatively, if the recipient does not have a NICRA, the recipient may elect to use the de minimis rate of 10 percent of the modified total direct costs pursuant to 2 CFR 200.414(f). b. Salaries and Expenses: In general, certain employees' wages, salaries, and covered benefits are an eligible use of SLFRF award funds. Please see Treasury's final rule for details. 3. Cash Management. SLFRF payments made to recipients are not subject to the requirements of the Cash Management Improvement Act and Treasury's implementing regulations at 31 CFR Part 205 or 2 CFR 200.305(b)(8)-(9). As such, recipients can place funds in interest -bearing accounts, do not need to remit interest to Treasury, and are not limited to using that interest for eligible uses under the SLFRF award. 4. Eligibility. Under this program, recipients are responsible for ensuring funds are used for eligible purposes. Generally, recipients must develop and implement policies and procedures, and retain words, to determine and monitor implememation of criteria for determining the eligibility of beneficiaries and/or subrecipiems. Your organization, and if applicable, the subrecipient(s) administering a program on behalf of your organization, will need to maintain procedures for obtaining information evidencing a given beneficiary, subrecipient, or contractor's eligibility, including a valid SAM.gov registration (except with respect to individuals or households for which a SAM.gov registration is not required). Implementing risk -based due diligence for eligibility determinations is a best practice to augment your organization's existing controls. S. Property Management Any purchase of real or personal property with SLFRF funds must be consistent with the Uniform Guidance at 2 CFR Part 200, Subpart D, unless stated otherwise by Treasury. For example, as outlined in Final Rule FAQ 13.1.5 only a subset of the Uniform Guidance requirements at 2 CFR Part 200 Subpart D (Post Federal Award Requirements) applies to recipients' use of funds in the revenue loss eligible use category. Furthermore, as outlined in Final Rule FAQ 13.16, Treasury has clarified the use and disposition requirements for real and personal property, supplies, and equipment purchased with SLFRF funds. 6. Matching, Level of Effort, Earmarking. There are no matching, level of effort, or earmarking compliance responsibilities associated with the SLFRF award. See Section C.1 (Eligible and Restricted Uses of SLFRF Funds) for a discussion of restrictions on use of SLFRF funds. Please see 2. Allowable Costs/Cost Principles above for information on the use of SLFRF funds for non - Federal match or cost -sharing requirements in other Federal programs. 7. Period of Performance. Your organization should also develop and implement internal controls related to activities occurring outside the period of performance. All funds remain subject to statutory and regulatory requirements that they must be used for costs incurred by the recipient during the period that begins on March 3, 2021, and ends on December 31, 2024, and that award funds for the financial obligations incurred by December 31, 2024 must be expended by December r 2 CFR 200.413 Direct Costs. a 2 CFR 200.414 Indirect Costs. Coronavlrus state and Local Fiscal Recovery Funds Compliance and Reporting Guidance US OEPARRAENTOFTHFTREASURY 31, 2026. Any funds not used must be returned to Treasury as part of the award closeout process pursuant to 2 C.F.R. 200.344(d). S. Procurement, Suspension & Debarment. Recipients are responsible for ensuring that any procurement using SLFRF funds, or payments under procurement contracts using such funds, are consistent with the procurement standards set forth in the Uniform Guidance at 2 CFR 200.317 through 2 CFR 200.327, unless stated otherwise by Treasury. As outlined in Final Rule FAQ 13_15, only a subset of the Uniform Guidance requirements at 2 CFR Part 200 Subpart D (Post Federal Award Requirements) applies to recipients' use of funds in the revenue loss eligible use category. The procurement standards set forth in the Uniform Guidance at 2 CRF 200.317 through 2 CRF 200.327 are not included in Final Rule FAQ 13.15's list of applicable Subpart D requirements that apply to recipients' use of funds in the revenue loss eligible use category. The Uniform Guidance establishes in 2 CFR 200.319 that all procurement transactions for property or services must be conducted in a manner providing full and open competition, consistent with standards outlined in 2 CFR 200.320, which allows for non-competitive procurements only in certain circumstances. Recipients must have and use documented procurement procedures that are consistentwith the standards outlined in 2 CFR 200.317 through 2 CFR 200.320. The Uniform Guidance, pursuant to 2 CFR 180, requires an infrastructure for competitive bidding and contractor oversight, including maintaining written standards of conduct and prohibitions on dealing with suspended or debarred parties. Your organization must ensure adherence to all applicable local, State, and federal procurement laws and regulations. 9. Program Income. Generally, program income includes, but is not limited to, income from fees for services performed, the use or rental of real or personal property acquired under Federal awards, and principal and interest on loans made with Federal award funds. Program income does not include interest earned on advances of Federal funds, rebates, credits, discounts, or interest on rebates, credits, or discounts. Recipients of SLFRF funds should calculate, document, and record the organization's program income. Additional controls that your organization should implement include written policies that explicitly identify appropriate allocation methods, accounting standards and principles, compliance monitoring checks for program income calculations, and records. The Uniform Guidance outlines the requirements that pertain to program income at 2 CFR 200.307. Treasury has clarified in its Final Rule FAQs that recipients may add program income to the Federal award. Any program income generated from SLFRF funds must be used for the purposes and under the conditions of the Federal award. Further, Final Rule FAQ 4.9 provides additional information about program income requirements applicable to certain eligible uses, and Final Rule FAQ 13.15 clarifies that only a subset of the Uniform Guidance requirements at 2 CFR 200 Subpart D (Post Federal Award Requirements) applies to recipients' use of funds in the revenue loss eligible use category. The list of applicable Subpart D requirements in Final Rule FAQ 13.15 does not include the program income requirements in 2 CFR 200.307. 10. Reporting. All recipients of federal funds must complete financial, performance, and compliance reporting as required and outlined in Part 2 of this guidance. Expenditures may be reported on a cash or accrual basis, as long as the methodology is disclosed and consistently applied. Reporting must be consistent with the definition of expenditures pursuant to 2 CFR 200.1. Yourorganizabon should appropriately maintain accounting records for compiling and reporting accurate, compliant financial data, in accordance with appropriate accounting standards and principles. In addition, where appropriate, your organization needs to establish controls to ensure completion and timely submission of all mandatory performance and/or compliance reporting. See Part 2 of this guidance for a full overview of recipient reporting responsibilities. Consolidated jurisdictions or other types of jurisdictions that received multiple SLFRF allocations Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance 10 S.OEPMWENTOE TIE TREASmY (e.g., a county and city with a consolidated government) are only required to file once per reporting period, and such reports will cover the total SLFRF allocations received by the jurisdiction. This includes Non -entitlement units of local government ("NEUs") andror Units of general local government located within counties that are not units of general local government. In addition, the total SLFRF allocations across all sources for a given jurisdiction will be used to identify that jurisdiction's Reporting Tier. 11. Subrecipient Monitoring. SLFRF recipients that are pass -through entities as described under 2 CFR 200.1 are required to manage and monitor their subrecipients to ensure compliance with requirements of the SLFRF award pursuant to 2 CFR 200.332 regarding requirements for pass - through entities. First, your organization must clearly identify to the subrecipient: (1) that the award is a subaward of SLFRF funds, (2) any and all compliance requirements for use of SLFRF funds; and (3) any and all reporting requirements for expenditures of SLFRF funds. Next, your organization will need to evaluate each subrecipient's risk of noncompliance based on a set of common factors. These risk assessments may include factors such as prior experience in managing Federal funds, previous audits, personnel, and policies or procedures for award execution and oversight. Ongoing monitoring of any given subrecipient should reflect its assessed risk and include monitoring, identification of deficiencies, and follow-up to ensure appropriate remediation. Accordingly, your organization should develop written policies and procedures for subrecipient monitoring and risk assessment and maintain records of all award agreements identifying or otherwise documenting subrecipients' compliance obligations. Recipients should note that NEUs are not subrecipients under the SLFRF program. They are SLFRF recipients that report directly to Treasury. Recipients should also note that subrecipients do not include individuals and organizations that received SLFRF funds as end users. Such individuals and organizations are beneficiaries and not subject to audit pursuant to the Single Audit Act and 2 C.F.R. Part 200, Subpart F. Many recipients may choose to provide a subaward or contract to otherentities to provide services to other end users. For example, a recipient may provide a subaward to a nonprofit to provide homeless services to individuals experiencing homelessness. In this case, the subaward to a nonprofit is based on the services that the recipient intends to provide (assistance to households experiencing homelessness), and the nonprofit is serving as the subrecipient, providing services on behalf of the recipient. Subrecipients are subject to an audit pursuant to the Single Audit Act and 2 CFR part 200, subpart F regarding audit requirements, whereas contractors are not subject to an audit pursuant to the Single Audit Act and 2 CFR part 200, subpart F regarding audit requirements. Please note that as outlined in Final Rule FAO 13.14, recipients' use of funds in the revenue loss eligible use category does not give rise to subrecipient relationships. As a result, subaward reporting is not required for projects in the revenue loss eligible use category. 12. Special Tests and Provisions. From time -to -time, Treasury may issue subregulatory guidance as well. as frequently asked questions. Across each of the compliance requirements above, Treasury has described some beat practices for development of internal controls in Table 1 below, with an example of each best practice. Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance U.eAEPPRT4ENTUP THE TREASUFY Table 1: Internal controls best practices r Written policies and Formal documentation of Documented procedure for procedures recipient policies and determining worker eligibility procedures for premium pay Written standards of Formal statement of Documented code of conduct mission, values, principles, conduct / ethics for and professional standards subcontractors Risk -based due diligence Pre -payment validations Enhanced eligibility review conducted according to an of subrecipient with assessed level of risk imperfect performance history Risk based compliance Ongoing validations Higher degree of monitoring monitoring conducted according to an for projects that have a assessed level of risk higher risk of fraud, given program characteristics Record maintenance and Creation and storage of Storage of all subrecipient retention financial and non -financial payment information. records. E. Award Terms and Conditions The Award Terms and Conditions of the SLFRF financial assistance agreement sets forth the compliance obligations for recipients pursuant to the SLFRF statute, the Uniform Guidance, Treasury's final rule, and applicable federal laws and regulations. Recipients should ensure they remain in compliance with all Award Terms and Conditions. These obligations include the following items in addition to those described above: 1. SAM.gov Requirements. All eligible recipients are required to have an active registration with the System for Award Management ("SAM") (htros://www.sam.cov) pursuant to 2 CFR Part 25. To ensure timely receipt of funding, Treasury has stated that NEUS who have not previously registered with SAM.gov may do so after receipt of the award but before the submission of mandatory reporting.4 2. Recordkeeping Requirements.Generally, your organization must maintain records andfinancial documents for five years after all funds have been expended or returned to Treasury, as outlined in paragraph 4_c. of the Award Terms and Conditions. Treasury may request transfer of records of long-term value at the end of such period. Wherever practicable, such records should be collected, transmitted, and stored in open and machine-readable formats. Your organization must agree to provide a make available such records to Treasury upon request, and to the Government Accountability Office ("GAO"), Treasury's Office of Inspector General ("OIG"), and their authorized representative in order to conduct audits or other investigations. 3. Single Audit Requirements. Recipients and subrecipients that expend more than $750,000 in Federal awards during their fiscal year will be subject to an audit under the Single Audit Ad and its implementing regulation at 2 CFR Part200, Subpart F regarding audit requirements.' Note that the Compliance Supplement provides information on the existing, important compliance requirements that the federal government expects to be considered as a part of such audit. For example, the SLFRF Compliance Supplement describes an alternative to the Single Audit for 4 See flexibility provided in htlps:l/w.whaehouse.gov/wp-content/uploads/2021/03/M 21_20.pdf. ' For -profit entities that receive SLFRF subawards are not subject to Single Audit requirements. However, they are subject to other audits as deemed necessary by authorized governmental entities, including Treasury and Treasury's OIG. Coronavirus Slate and Local Fiscal Recovery Funds Compliance and Reporting Guidance 12 U S.OEPARi NTOF THE TRIE U Y eligible recipients. Recipients should consult the Compliance Supplement for more information about the alternative compliance examination engagement The Compliance Supplement is routinely updated, and is made available in the Federal Register and on OMB's website: httosa/www whitehouse.gov/oinb/office-federal-financial-manaoemenV Recipients and subrecipients should consult the Federal Audit Clearinghouse to see examples of Single Audit submissions. 4. Civil Rights Compliance. Recipients of Federal financial assistance from the Treasury are required to meet legal requirements relating to nondiscrimination and nondiscriminatory use of Federal funds. Those requirements include ensuring that entities receiving Federal financial assistance from the Treasury do not deny benefits or services, or otherwise discriminate on the basis of race, color, national origin (including limited English proficiency), disability, age, or sex (including sexual orientation and gentler identity), in accordance with the following authorities: Title VI of the Civil Rights Act of 1964 (Title VI) Public Law 88-352, 42 U.S.C. 2000d-1 at seq., and the Department's implementing regulations, 31 CFR part 22; Section 504 of the Rehabilitation Act of 1973 (Section 504), Public Law 93-112, as amended by Public Law 93-516, 29 U.S.C. 794; Title IX of the Education Amendments of 1972 (Title IX), 20 U.S.C. 1681 et seq., and the Department's implementing regulations, 31 CFR part 28; Age Discrimination Act of 1975, Public Law 94-135, 42 U.S.C. 6101 et seq., and the Department implementing regulations at 31 CFR part 23. In order to carry out its enforcement responsibilities under Title VI of the Civil Rights Act, Treasury will collect and review information from recipients to ascertain their compliance with the applicable requirements before and after providing financial assistance. Treasury's implementing regulations, 31 CFR part 22, and the Department of Justice (DOJ) regulations, Coordination of Non-discrimination in Federally Assisted Proorams 28 CFR part 42, provide for the collection of data and information from recipients (see 28 CFR 42.406). Treasury may request that non -tribal recipients submit data for post -award compliance reviews, including information such as a narrative describing their Title VI compliance status. As explained in Treasury FAO 12.1, the award terms and conditions for Treasury's pandemic recovery programs, including the SLFRF program, do not impose antidiscrimination requirements on Tribal governments beyond what would otherwise apply under federal law. Coronavirus state and Local Fiscal Recovery Funds Compliance and Reporting Guidance 13 u s. oEPNMWIENT OF THE 1FE4surrr Part 2: Reporting Guidance There are three types of reporting requirements for the SLFRF program. The report requirements are approved and documented under OMB PRA number - OMB # 1505-0271. • Interim Report: Provide initial overview of status and uses of funding. This is a one-time report. See Section A, page 16. • Project and Expenditure Report: Report on projects funded, expenditures, and contracts and subawards equal to or greater than $50,000, and other information. See Section B, page 17. • Recovery Plan Performance Report: The Recovery Plan Performance Report (the "Recovery Plan) will provide information on the projects that large recipients are undertaking with program funding and how they plan to ensure program outcomes are achieved in an effective, efficient, and equitable manner. It will include key performance indicators identified by the recipient and some mandatory indicators identified by Treasury. The Recovery Plan will be posted on the website of the recipient as well as provided to Treasury. See Section C, page 28. The reporting threshold is based on the total award amount allocated by Treasury under the SLFRF program, not the funds received by the recipient as of the time of reporting. States and territories are also required to submit information on their distributions to NEUs. Please refer to Section D for additional details. Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance 14 0 U.S.DEAP ENTOFTHETH UW Table 2: Re ortin re uirementa by reci Pent type Project and Recovery Plan Tier Recipient Interim Report Expenditure Performance Report Report States, U.S. territories, By August 31, By January 31, By August 31, metropolitan cities and 2021 or 60 2022, and then the 2021 or 60 days counties with a days after last day of the after receiving 1 population that exceeds receiving month after the end funding, and 250,000 residents funding g of each quarter annually funding was thereafter thereafter by received by October 15, Note: NEUs were July 31 Metropolitan cities and counties with a with not required to 2 population below expenditures by submit a Project 250,000 residents that category. and Expenditure are allocated more than Report on January $10 million in SLFRF Note: NEUs 31, 2022. The first funding, and NEUs that were not reporting date for are allocated more than required to NEUS was April 30, $10 million in SLFRF submit an 2022. fundinq Interim Report Tribal Governments that 3 are allocated more than $30 million in SLFRF funding Tribal Governments that By April 30, 2022, 4 are allocated less than and then annually $30 million in SLFRF thereafter fundin Metropolitan cities and counties with a 5 population below 250,000 residents that are allocated less than $10 million in SLFRF funding, and NEUs that are allocated less than $10 million in SLFRF funding Note: Based on the period of performance, reports will be collected through April 30, 2027. See the specific dates listed in Sections B and C. lue As mentioned above, the total SLFRF allocations across all sources for a given jurisdiction will be used to identify that jurisdiction's Reporting Tier, beginning in April of 2022. Treasury may reach out to jurisdictions to update Reporting Tiers. The remainder of this document describes these reporting requirements. User guides describing how and where to submit required reports are posted at vnnre,. GceewvucvISLFRPReoortino and updated on a regular basis. Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance 15 U.S.OEPMIAIENTOF THE TRERSURY Comparison to reporting for the CRF This guidance does not change the reporting or compliance requirements pertaining to the CRF. Reporting and compliance requirements for the SLFRF are separate from CRF reporting requirements. Differences between CRF and SLFRF include: • Project Expenditure, and Subaward Reporting: The SLFRF reporting requirements leverage the existing reporting regime used for CRF to foster continuity and provide many recipients with a familiar reporting mechanism. The data elements for the Project and Expenditure Report will largely minor those used for CRF, with some minor exceptions noted in this guidance. The users' guide will describe how reporting for CRF funds will relate to reporting for the SLFRF. • Timing of Reports: CRF reports were due within 10 days of each calendar quarter end. For quarterly reporters, SLFRF reporting will be due the last day of the month following the end of the period covered. For annual reporters, SLFRF reporting will be due on an annual schedule (see table in Section B below). • Program and Performance Reporting: The CRF reporting did not include any program m performance reporting. To build public awareness and accountability and allow Treasury to monitor compliance with eligible uses, some program and performance reporting is required for SLFRF. A. Interim Report Note: The Interim Reports were submitted under the interim final rule. States, U.S. territories, metropolitan cities, counties, and Tribal governments were required to submit a one-time interim report with expenditures' by Expenditure Category covering the period from Match 3rd to July 31, 2021, by August 31, 2021 or sixty (60) days after first receiving funding if the recipients date of award was between July 15, 2021 and October 15, 2021. The recipient was required to enter obligations' and expenditures and, for each, select the specific expenditure category from the available options. See Appendix 3 for Expenditure Categories applicable for the Interim Report. 1. Required Programmatic Data Recipients were also required to provide the following information if they had or planned to have expenditures in the following Expenditure Categories. a. Revenue replacement (EC 6.1'): Key inputs into the revenue replacement formula in the Interim Final Rule and estimated revenue loss due to the Covid-19 public health emergency calculated using the formula in the Interim Final Rule as of December 31, 2020. • Base year general revenue (e.g., revenue in the last full fiscal year prior to the public health emergency) • Fiscal year end date • Growth adjustment used (either 4.1 percent or average annual general revenue growth over 3 years prior to pandemic) • Actual general revenue as of the twelve months ended December 31, 2020 ' For purposes of reporting in the SLFRF portal, an expenditure is the amount that has been incurred as a liability of the entity (the service has been rendered or the good has been delivered to the entity). T For purposes of reporting in the SLFRF portal, an obligation is an order placed for property and services, contracts and subawards made, and similar transactions that require payment. • See Appendix 3 for the full Expenditure Category (EC) list. Please note that Appendix 3 includes the expenditure categories under the interim final rule, applicable to the Interim Report. Coronavirus Sfale and Local Fiscal Rmwery Funds Compliance and Reporting Guidance e5.DE--1Nro1rRET1bkSuW • Estimated revenue loss due to the Covid-19 public health emergency as of December 31, 2020 • An explanation of how revenue replacement funds were allocated to government services (Note: additional instructions was provided in the user guide) In calculating general revenue and the other items discussed above, recipients should have used audited data if it was available. When audited data was not available, recipients were not required to obtain audited data if substantially accurate figures could be produced on an unaudited basis. Recipients should have used their own data sources to calculate general revenue and did not need to rely on revenue data published by the Census Bureau. Treasury acknowledges that due to differences in timing, data sources, and definitions, recipients' self - reported general revenue figures may differ from those published by the Census Bureau. Recipients were permitted to provide data on a cash, accrual, or modified accrual basis, provided that recipients are consistent in their choice of methodology throughout the covered period and unfil reporting is no longer required. Recipients' reporting should align with their own financial reporting. In calculating general revenue, recipients should have excluded all intergovernmental transfers from the federal government. This includes, but is not limited to, federal transfers made via a State to a locality pursuant to the CRF or SLFRF. To the extent federal funds are passed through States or other entities or intermingled with other funds, recipients should have attempted to identify and exclude the federal portion of those funds from the calculation of general revenue on a best-efforts basis. Consistent with the broad latitude provided to recipients to use funds for government services to the extent of reduction in revenue, recipients were required to submit a description of services provided. This description may be in narrative or in another form, and recipients were encouraged to report based on their existing budget processes and to minimize administrative burden. For example, a recipient with $100 in revenue replacement funds available could indicate that $50 were used for law enforcement operating expenses and $50 were used for pay -go building of sidewalk infrastructure. As discussed in the interim final rule, these services can include a broad range of services but may not be used directly for pension deposits or debt service. Reporting requirements did not require tracking the indirect effects of Fiscal Recovery Funds, apart from the restrictions on use of Fiscal Recovery Funds to offset a reduction in net tax revenue. In addition, recipients were required to indicate that Fiscal Recovery Funds were not used to make a deposit in a pension fund. B. Project and Expenditure Report All recipients are required to submit Project and Expenditure Reports. Note on NEUs: To facilitate reporting, each NEU will need an NEU Recipient Number. This is a unique identification code for each NEU assigned by the State or territory to the NEU as part of its request for funding. 1. Quarterly Reporting The following recipients are required to submit quarterly Project and Expenditure Reports: • States and U.S. territories • Tribal governments that are allocated more than $30 million in SLFRF funding • Metropolitan cities and counties with a population that exceeds 250,000 residents Coronavlrus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance 17 U.S. OEMRTMENT OF THE TREASURY • Metropolitan cities and counties with a population below 250,000 residents that are allocated more than $10 million in SLFRF funding and NEUs that are allocated more than $10 million in SLFRF funding. For these recipients, the initial quarterly Project and Expenditure Report covers three calendar quarters from March 3, 2021 to December 31, 2021 and was required to be submitted to Treasury by January 31, 2022. The subsequent quarterly reports will cover one calendar quarter and must be submitted to Treasury by the last day of the month following the end of the period covered. Quarterly reports are not due concurrently with applicable annual reports. Table 3 summarizes the quarterly report timelines: Table 3: Ouarterly Preieet and 1 Report • 2021 2 —4 March 3— Period 31 • Date Janua 31, 2022 2 2022 1 January1 — March 31 April 30 2022 3 2022 2 April i — June 30 Jul 31 2022 4 2022 3 Jul 1 — September 30 October 31 2022 5 2022 4 October 1 — December 31 January31 2023 6 2023 1 January1 — March 31 April 30 2023 7 2023 2 April 1 —June 30 Jul 31 2023 8 2023 3 Jul 1 — September 30 October 31 2023 9 2023 4 October 1 — December 31 January31 2024 10 2024 1 January 1 — March 31 April 30 2024 11 2024 2 April 1 — June 30 July 31 2024 12 2024 3 Jul 1 —September 30 October 31, 2024 13 2024 4 October 1 — December 31 January 31 2025 14 2025 1 Janua 1 —March 31 April 30, 2025 15 2025 2 Aril i —June 30 July 31, 2025 16 2025 3 Jul 1 — September 30 October 31, 2025 17 2025 4 October 1 — December 31 January 31 2026 18 2026 1 January 1 — March 31 A riI 30 2026 19 2026 2 April 1 — June 30 Jul 31 20426 20 2026 3 Jul 1 — September 30 31 October 2026 21 2026 4 October 1 — December 31 April 30 2027 2. Annual Reporting The following recipients are required to submit annual Project and Expenditure Reports: • Tribal governments that are allocated less than $30 million in SLFRF funding • Metropolitan cities and counties with a population below 250,000 residents that are allocated less than $10 million in SLFRF funding and NEUs that are allocated less than $10 million in SLFRF funding. For these recipients, the initial Project and Expenditure Report covered from March 3, 2021 to March 31, 2022 and was required to be submitted to Treasury by April 30, 2022. The subsequent annual reports will cover one calendar year and must be submitted to Treasury by April 30. Table 4 summarizes the annual report timelines: Coronavirus state and Local Fiscal Recovery Funds Compliance and Reporting Guidance 18 U.S. DERMIMENT OF THE TREASURY Table 4: Annual Project and Expenditure Report timeline 1 Report March 3, 2021 — March 31 2022 r Date A M 30 2022 2 April 1, 2022—March 31, 2023 April 30 2023 3 April 12023—March 31, 2024 A 0130 2024 4 April l 2024—March 312025 Aril 30 2026 5 April 1, 2025 — March 31, 2026 A riI 30 2026 6 Aril 1, 2026—December 31, 2026 All 30, 2027 3. Required Information The following information is required in Project and Expenditure Reports for both quarterly and annual reporting: a. Projects: Provide information on all SLFRF funded projects. Projects are defined as a grouping of closely related activities that together are intended to achieve a specific goal or are directed toward a common purpose. These activities can include new or existing eligible government services or investments funded in whole or in part by SLFRF funding. For each project, the recipient is required to enter the project name, identification number (created by the recipient), project expenditure category (see Appendix 1), description, and status of completion. Project descriptions must describe the project in sufficient detail to provide an understanding of the major activities that will occur, and must be between 50 and 250 words. Projects should be defined to include only closely related activities directed toward a common purpose. Recipients should review the Required Programmatic Data described in 3.g. below and define their projects at a sufficient level of granularity. Note: For each project, the recipient is asked to select the appropriate Expenditure Category based on the scope of the project (see Appendix 1). Projects should be scoped to align to a single Expenditure Category. For select Expenditure Categories, the recipient also is asked to provide additional programmatic data (described further below). b. Obligations and Expenditures: Once a project is entered the recipient will be able to report on the projecl's obligations and expenditures. Recipients will be asked to report: • Current period obligation • Cumulative obligation • Current period expenditure • Cumulative expenditure c. Project Status: Once a project is entered the recipient will be asked to report on project status each reporting period, in four categories: • Not Started • Completed less than 50 percent • Completed 50 percent or more • Completed d. Program Income: Recipients should report the program income earned and expended to cover eligible project costs, if applicable. exceeds 250,000 residents MY) Each state, territory and metropolitan city and county with a population that exceeds 250,000 residents will provide the budget adopted for each project by its jurisdiction associated with SLFRF funds. Treasury will use this information to better understand the intended impact, identify opportunities for outreach, and understand the recipient's progress in program implementation. Treasury is not approving or pre -approving pmjects or budgets. Coronavims State and Local Fiscal Recovery Funds Compliance and Reporting Guidance 19 U.S. DEPAmHEW Cf THE TREfVWRY • Recipients will enter the Adopted Budget based on information that exists currently in the recipient's financial systems and the recipient's established budget process. Treasury understands that recipients may use different budget processes. For example, a recipient may consider a project budgeted once a legislature has appropriated funds; whereas another recipient may consider a project budgeted at the moment when the funds have been obligated. • Additional information is provided on the differences between Adopted Budget, Obligations, and Expenditures as part of the user guide posted at www.treasury gov/SLFRPRe porting. I. Project Demographic Distribution (applicable to Public Health and Negative Economic Imoact ECs EC 1.1-2.371— Collection began Apn12022 Recognizing the disproportionate public health and negative economic impacts of the pandemic on many households, communities, and other entities, recipients must report whether certain types of projects are targeted to impacted and disproportionately impacted communities. Recipients will be asked to respond to the following: a. What Impacted and/or Disproportionally Impacted population does this project primarily serve? Please select the population primarily served. b. If this project primarily serves more than one Impacted and/or Disproportionately Impacted population, please select up to two additional populations seared. Recipients will select from the following options: Public Health • General Public • Assistance to • Low- or -moderate income • Low-income households and Households households or populationsa populations" • Households that experienced • Households and populations unemployment residing in Qualified Census Tracts • Households that experienced • Households that qualify for certain increased food or housing insecurity federal programs" • Households that qualify for certain • Households receiving services federal programs1e provided by Tribal governments • For services to address lost • Households residing in the U.S. instructional time in K-12 schools: territories or receiving services from any students that lost access to in- these governments person instruction for a significant period of time Low or moderate4ricome households and communities are those with (i) income at or below 3013 percent of the Federal Poverty Guidelines for the size of the household based on the most recently published poverty guidelines by the Department of Health and Human Services (HHS) or III) income at or below 65 percent of the Area Median Income for the county and size of household based on the most recently published data by the Department of Housing and Urban Development(HUD). 10 For Impacted households, these programs are Children's Health Insurance Program ('CHIP'); Childcare Subsidies through the Child Care and Development Fund ('CCDP') Program; Medicaid; National Housing Trust Fund ('HTF'), for affordable housing programs only; Home Investment Partnerships Program ('HOME'), for affordable housing programs only. 11 Low-income households and communities are those with (i) income at of below 185 percent of the Federal Poverty Guidelines for the size of the household based on the most recently published poverty guidelines by HHS or (ii) income at or below 40 percent of Area Median Incase for Its county and size of household based on the most ricentty published dam by HUD. 12 For Disproportonately Impacted households, these programs are Temporary Assistance for Needy Families ('TAW). Supplemental Nutrition Assistance Program ("SNAP'). Free- and Reduced -Price Lunch ('NSLP") anchor School Breakfast ('SW) programs, Medicare Part D Low -Income Subsidies, Supplemental Security Income ("SSI'), Head Start, Special Supplemental Nutrition Program for Women, Infants, and Children ('NAC"), Section 8 Vouchers, Low -Income Home Energy Assistance Program CLIHEAP'), and Pell Grants. Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance 20 u.s. MPARrmENTOF THE mEAsurrr . Other households or populations . For services to address educational that experienced a negative disparities, Title I eligible schools" economic impact of the pandemic . Other households or populations other than those listed above that experienced a disproportionate (please specify) negative economic impact of the pandemic other than those listed above leasespecify) Assistance to . Small businesses that experienced a . Small businesses operating in Small negative economic impact of the Qualified Census Tracts Businesses pandemic . Small businesses operated by Tribal . Classes of small businesses governments or on Tribal lands designated as negatively . Small businesses operating in the economically impacted by the U.S. territories pandemic (please specify) . Other small businesses disproportionately impacted by the endemic leasespecify) Assistance to . Non -profits that experienced a . Non -profits operating in Qualified Non -Profits negative economic impact of the Census Tracts pandemic (please specify) . Non -profits operated by Tribal . Classes of non -profits designated as governments or on Tribal lands negatively economically impacted by . Non -profits operating in the U.S. the pandemic (please specify) territories . Other non -profits disproportionately impacted by the pandemic (please specify) id to Impacted . Travel, tourism, or hospitality sectors NIA Industries (inciuding Tribal development districts) . Industry outside the travel, tourism, or hospitality sectors that experienced a negative economic impact of the pandemic (please specify) g. Subawards. Contracts, Grants, Loans. Transfers. and Direct Payments: Each recipient shall also provide detailed obligation and expenditure information for any contracts and grants awarded, loans issued, transfers made to other government entities, and direct payments made by the recipient that are equal to or greater than $50,000. As noted in Treasury's Project & Expenditure User Guides, subaward reporting for funds spent under the revenue loss eligible use category has not been required in past reporting periods. Please note that as outlined in Final Rule FAQ 13.14. Treasury is not collecting subaward data for projects categorized under the revenue loss eligible use category. Recipients do not need to submit separate monthly subaward reports to FSRS.gov as required pursuant to the 2 CFR Part 170, Appendix A award term regarding reporting subaward and executive compensation, which is included in the SLFRF Award Terms and Conditions. Treasury 13 For educational services and other affirms to address educational disparities. Treasury will recognize Title I eligible schools as disproportionately impacted and responsive services that suppod the school generally or support the whole school service as eligible. "Title I eligible schools' means schools eligible b receive services under section 1113 of Title I, Pad A of the Elementary and Secondary Education Act of 1965, as amended (20 U.S.C. 6313), including schools served under section 1113(b)(1)(C) athat Act. Coronavirus State and Local Fiscal Recovery Funds Compliance and Rationing Guidance 21 U.S. ME ARTMENTCFTHETWASURY will submit this reporting on behalf of recipients using the $50,000 reporting threshold, timing, and data elements discussed in this guidance. If recipients choose to continue reporting to FSRS.gov in addition to reporting directly to Treasury on these funds, they may do so and will be asked to notify Treasury as part of their quarterly submission. In general, recipients will be asked to provide the following information for each Contract, Grant, Loan, Transfer, or Direct Payment equal to of greater than $50,000: • Subrecipient identifying and demographic information (e.g., UEUTIN number and location) • Award number (e.g., Award number, Contract number, Loan number) • Award date, type, amount, and description • Award payment method (reimbursable or lump sum payment(s)) • For loans, expiration date (date when loan expected to be paid in full) • Primary place of performance • Related project name(s) • Related project identification number(s) (created by the recipient) • Period of performance start date • Period of performance end date • Quarterly obligation amount • Quarterly expenditure amount • Project(s) • Additional programmatic performance indicators for select Expenditure Categories (see below) Aggregate reporting is required for contracts, grants, transfers made to other government entities, loans, and direct payments that are below $50,000. This information will be accounted for by Expenditure Category at the project level. Note that all obligations and expenditures made directly to individuals, regardless of dollar amount, should be included in aggregate reporting. As required by the 2 CFR Part 170, Appendix A award term regarding reporting subaward and executive compensation, recipients must also report the names and total compensation of their five most highly compensated executives and their subrecipients' executives for the preceding completed fiscal year if (1) the recipient received 80 percent or more of its annual gross revenues from Federal procurement contracts (and subcontracts) and Federal financial assistance subject to the Transparency Act, as provided by 2 CFR 170.320 (and subawards), and received $25,000,000 or more in annual gross revenues from Federal procurement contracts (and subcontracts) and Federal financial assistance subject to the Transparency Act (and subawards), and (2) if the information is not otherwise public. In general, most SLFRF recipients are governmental entities with executive salaries that are already disclosed, so no additional information would be required to be reported for them. The recipient is responsible for the subrecipients' compliance with registering and maintaining an updated profile on SAM.gov. h. Civil Rights Compliance: Treasury will request information on recipients' compliance with Title VI of the Civil Rights Act of 1964, as applicable, on an annual basis. This information may include a narrative describing the recipient's compliance with Title VI, along with other questions and assurances. This collection does not apply to Tribal governments14 i. Ineliaible Activities: Tax Offset Provision (States and territories only): Section 602(c)(2)(A) of the Social Security Act prohibits a State or territory from using SLFRF funds to directly or indirectly offset a reduction in the net tax revenue of the State or territory resulting from a change in law, regulation, or administrative interpretation during the covered period (the "Tax Offset Provision"). The Final Rule implements the Tax Offset Provision at 31 CFR § 35.8. Violations of the Tax 14 Please note, as explained in Treasury FAQ 12.1. that the award terms and conditions for Treasury's pandemic recovery programs, including the SLFRF, do not impose antidiscrimination requirements on Tribal governments beyond what would otherwise apply under federal law. Coronavims State and Local Fiscal Recovery Funds Compliance and Reporting Guidance 22 US DEPARVUENTOF THETREASUM Offset Provision may be subject to recoupment. The following information is required for Treasury to ensure SLFRF funding is not used for ineligible activities related to the Tax Offset Provision. For each reporting year, in the quarterly reporting cycle occurring 90 days after the end of the recipient's fiscal year, States and territories will report certain items related to the Tax Offset Provision, as detailed below. For example, if a recipient's fiscal year ends June 30, 2022, reporting on the Tax Offset Provision for fiscal year 2022 will be due in October 2022. All States and territories reported on the Tax Offset Provision for fiscal year 2021 in July 2022. As indicated in the final rule, Treasury is implementing a tiered approach to reporting on the Tax Offset Provision, which is described below. Although Treasury is implementing a tiered approach to reporting, recipients should maintain records to support their compliance with the Tax Offset Provision. The terms "reporting year," "baseline," "covered change," "covered period, "net reduction in total spending," and "tax revenue are defined in the Final Rule, 31 CFR § 35.3. For purposes of calculating a net reduction in total spending, total spending for the fiscal year ending 2019 should be reported on an inflation -adjusted basis, consistent with the Final Rule. Similarly, for purposes of calculating baseline tax revenue, tax revenue for the fiscal year 2019 should be reported on an inflation -adjusted basis, consistent with the Final Rule. For purposes of reporting actual tax revenue for the requested fiscal year and baseline tax revenue for the fiscal year ending 2019," (a) if available, recipients should report information using audited financials and (b) recipients may provide data on a cash, accrual, or modified accrual basis, but must be consistent in their approach across all reporting periods. Similarly, for purposes of calculating a net reduction in total spending, recipients should report data using audited financials where available. Recipients will first answer a series of summary questions to determine the tiering of their tax offset reporting: Summary Questions • Do you have revenue -reducing covered changes) to report for the requested fiscal year and for future fiscal years? Yes/No o If no, recipients have no further reporting requirements in the tax offset section. (Remaining summary questions will be greyed out). o If yes, recipients will complete part i and additional fields. • Is the aggregate value of your revenue -reducing covered charges) for the requested fiscal year less than the de minimis? Yes/No. o If yes, recipients will complete parts 1 and 2, and no further reporting is required in the tax offset section. (Remaining summary questions will be greyed out). o If no, recipients will complete parts 1, 2 and additional fields. • Do you have a reduction in net tax revenue for the requested fiscal year, meaning that actual tax revenue for the requested fiscal year is less than baseline tax revenue? Yes/No. o If yes, recipients will complete parts 1, 2, and 3 and additional fields. o If no, recipients will complete parts 1, 2, and 3, and no further reporting is required in the tax offset section. (Remaining summary questions will be greyed out). • Do you have revenue -increasing covered change(s) andfor covered spending cuts to report for the requested fiscal year? Yes/No o If yes, recipients will complete parts 1, 2, 3, and 4. o If no, recipients will complete the revenue reduction cap. Reporting Part 1: Revenue -reducing Covered Changes "Tax revenue for fiscal year ending 2019 is relevant for calculating the recipient's baseline. Coronavirus State and Local Fiscal Recovery Funds Compliance and Reposing Guidance 23 Us.DEM MENTOFTIiF.TRFPSUFN • Do you have revenue -reducing covered changes) to report for the requested fiscal year and for future fiscal years? Yes/No o If yes, complete grid or upload spreadsheet with the name of each revenue -reducing covered change and the value of the revenue -reducing covered change for the requested fiscal year and for future fiscal years. o If no, a recipient has no revenue -reducing covered changes to report, no additional reporting is required. • Enter in the aggregate value of all revenue -reducing covered changes) for the requested fiscal year.ts Revenue -reducing Covered Changes: Guidance For each reporting year, a recipient must report the value of covered changes that the recipient predicts will have the effect of reducing tax revenue in a given reporting year (revenue -reducing covered changes), similar to the way it would in the ordinary course of its budgeting process. The value of these revenue -reducing covered changes may be reported based on esfimated values produced by a budget model, incorporating reasonable assumptions, that aligns with the recipient government's existing approach for measuring the effects of fiscal policies, and that measures relative to a current law baseline. The revenue -reducing covered changes may also be reported based on actual values using a statistical methodology to isolate the change in year - over -year revenue attributable to the covered change(s), relative to the current law baseline prior to the change(s). Estimation approaches should not use dynamic methodologies that incorporate the projected effects of the policies on macroeconomic growth. In general and where possible, reported values should be produced by the agency of the recipient government responsible for estimating the costs and effects of fiscal policy changes. Recipients must maintain records regarding the identification and predicted effects of revenue -reducing covered changes. Reporting Part 2: Baseline Revenue and De Minimis Threshold • Enter Baseline Revenue: • Enter in the aggregate value of the revenue -reducing covered change(s) for the requested fiscal year as a percentage of baseline revenue: • Is the aggregate value of the revenue -reducing covered changes) for the requested fiscal year less than one percent of baseline revenue? Y/N o If yes, a recipient's aggregate value of the revenue -reducing covered changes in the reporting year is less than the de minimis threshold, and no additional reporting is required. Baseline Revenue: Guidance Baseline has the meaning defined in the Final Rule, 31 CFR 35.3. Recipients must determine whether the aggregate value of the revenue -reducing covered changes in the reporting year is less than one percent of baseline revenue (the de minimis threshold). Reporting Part 3: Actual Tax Revenue and Reduction in Net Tax Revenue • Enter Actual Tax Revenue for the requested fiscal year: • Enter Reduction in Net Tax Revenue: baseline revenue minus actual tax revenue rs The final rule defines covered change. 'Covered change means a change in law, regulation, or administrative interpretation that reduces any tax (by providing for a reduction in a rate, a rebate, a deduction, a credit, or otherwise) or delays the imposition of any lax or lax increase. A change in law includes any final legislative or regulatory action, a new or changed administrative interpretation, and the phase -in or taking effect of any statute or rule if the phase -in or taking effect was not prescribed prior to the start of the covered period." Coronavlrus state and Local Fiscal Recovery Funds Compfance and Reporting Guidance 24 V.S. VEPPRTMENT C THE TREASURY o If the value of the reduction in net tax revenue is zero or negative (meaning that actual tax revenue is equal to or greater than baseline revenue), no additional reporting is required. Actual Tax Revenue: Guidance Actual tax revenue means the tax revenue received by the recipient government in the reporting year. Tax revenue has the meaning defined in the Final Rule, 31 CFR 35.3. Reduction in Net Tax Revenue: Guidance The reduction in net tax revenue is equal to baseline revenue minus actual tax revenue in each reporting year. If this value is zero or negative, there is no reduction in net tax revenue. Reporting Part 4: Revenue -increasing Covered Changes and Covered Spending Cuts • Do you have revenue -increasing covered change(s) and/or covered spending cuts to report for the requested fiscal year? Yes/No. • If yes, complete grid or upload spreadsheet with the name of each revenue -increasing covered change and the value. • Enter in the aggregate value of revenue -increasing covered change(s): • Enter net reduction in total spending for the requested fiscal year: • Complete grid or upload spreadsheet of specific spending cuts and the corresponding "reporting unit", including the name of the reporting unit, description of the spending cut, the amount of the reduction in spending in the reporting unit for the reporting year relative to its inflation -adjusted FY 2019 level, the amount of any Fiscal Recovery Funds spent in the reporting unit in the reporting year, and the amount by which the reduction in spending in the reporting unit in the reporting year exceeds the Fiscal Recovery Funds spent in the reporting unit in the reporting year, if at all. • Enter the aggregate value of covered spending cuts. • Enter the aggregate value of revenue -increasing covered changes+ the aggregate value of covered spending cuts. • Enter the total value of revenue -reducing covered changes minus the total of (aggregate value of revenue -increasing covered changes + aggregate value of covered spending cuts). • Is the aggregate value of revenue -reducing covered changes minus the total of (aggregate value of revenue -increasing changes+ aggregate value of covered spending cuts) negative or equal to zero? (Yes/No) o If yes, recipients have no further reporting requirements related to the Tax Offset Provision. o If no, recipients must move on to the calculation of the revenue reduction cap. Revenue -increasing covered changes: Guidance If a recipient has revenue -reducing covered changes, the aggregate value of which exceed the de minimis threshold, and its actual tax revenue does not exceed baseline tax revenue, a recipient must report the value of covered changes that have had or that the recipient predicts will have the effect of increasing tax revenue in a given reporting year (revenue -increasing covered changes), similar to the way it would in the ordinary course of its budgeting process. The value of these revenue -increasing covered changes may be reported based on estimated values produced by a budget model, incorporating reasonable assumptions, that aligns with the recipient's existing approach for measuring the effects of fiscal policies, and that measures relative to a current law baseline. The revenue -increasing covered changes may also be reported based on actual values using a statistical methodology to isolate the change in year - over -year revenue attributable to the revenue -increasing covered change(s), relative to the current law baseline prior to the change(s). Estimation approaches should not use dynamic methodologies that incorporate the projected effects of the policies on macroeconomic growth. Corunavirus State and Local Fiscal Recovery Funds Compliance and Repoding Guidance 25 U.S. MPPRtnENTOFTHETREPSURY In general and where possible, reporting should be produced by the agency of the recipient responsible for estimating the costs and effects of fiscal policy changes. Recipients should maintain records regarding revenue -increasing covered changes and estimates of such changes. Net reduction in total spending, and tables of speck spending cuts: Guidance Recipients may cut spending in certain areas to pay for revenue -reducing covered changes, up to the amount of the recipient's net reduction in total spending. To calculate the amount of spending cuts that are available to offset a reduction in tax revenue, the recipient must first consider whether there has been a reduction in total net spending, excluding Fiscal Recovery Funds (net reduction in total spending). As defined in the Final Rule, 35 CFR 35.3, net reduction in total spending is measured as the recipient government's total spending for a given reporting year excluding Fiscal Recovery Funds, subtracted from its total spending for its fiscal year ending in 2019, adjusted for inflation using the Bureau of Economic Analysis's Implicit Price Deflator for the gross domestic product of the United States for that reporting year. If that calculation yields a positive value, there has been a net reduction in total spending: N it yields zero or a negative value, there has not been a net reduction in total spending. If there has been no net reduction in total spending, a recipient will have no spending cuts to offset a reduction in net tax revenue. Next, a recipient must determine and aggregate the value of spending cuts in each "reporting unit." "Reporting units" are departments, agencies, or authorities of the recipient's government. For each reporting unit, the recipient must report (1) the amount of the reduction in spending in the reporting unit for the reporting year relative to its inflation -adjusted FY 2019 level, (2) the amount of any Fiscal Recovery Funds spent in the reporting unit in the reporting year, and (3) the amount by which the reduction in spending in the reporting year exceeds the Fiscal Recovery funds spent in the reporting unit in the reporting year. If a recipient has not spent amounts received from the Fiscal Recovery Funds in a reporting unit, the full amount of the reduction in spending counts as a covered spending cut and may be included in the aggregate value of spending cuts. If the recipient has spent amounts received from the Fiscal Recovery Funds, such amounts generally would be deemed to have replaced the amount of spending cut, and only reductionsin spending above the amount of Fiscal Recovery Funds spent on the reporting unit would be eligible to offset a reduction in net tax revenue. Only such amounts above the amount of Fiscal Recovery Funds spent on the reporting unit should be included in the aggregate value of spending cuts. To align with existing reporting and accounting, the Final Rule considers the department, agency, or authority from which spending has been cut and whether the recipient government has spent amounts received from the Fiscal Recovery Funds on that same department, agency, or authority. Some commenters on the interim final rule argued that the methodology for identifying offsetting spending cuts at the department, agency, or authority level was too restrictive, but as discussed in the final rule, Treasury maintained the approach of requiring this reporting at the department, agency, or authority level. Recipients are encouraged to define reporting units in a manner consistent with their existing budget process and should, to the extent possible, report using the same reporting unit in each reporting year. Spending cuts must be reported relative to FY 2019 spending levels, adjusted for inflation, and excluding Fiscal Recovery Funds from reporting year spending levels. Recipients should maintain records regarding spending cuts. Reporting Part 5: Revenue Reduction Cap The 'revenue reduction cap," together with Part 3, ensures that recipient governments can use organic revenue growth to offset the cost of revenue -reducing covered changes. If, based on the calculations completed so far, a recipient has not yet demonstrated how its revenue -reducing coronavirus stare and Local Fiscal Recovery Funds compliance and Reporting Guidance 26 U.S. nEPARRAENTUF THETREASUW covered changes were offset by non-SLFRF sources, the reporting portal will auto -calculate the revenue reduction cap, which will be the lesser of the following two amounts: • Reduction in Net Tax Revenue (baseline tax revenue minus actual tax revenue) Ipre- populated from Part 3] and • Aggregate Value of revenue -reducing covered changes minus (total of (aggregate value of revenue -increasing changes +aggregate value of covered spending cuts) ]pre -populated from Part 4]. j. Reguired Programmatic Data (other than infrastructure projects): For all projects listed under the following Expenditure Categories (see Appendix 1), the information listed must be provided in each report. 1. Public Health and Negative Economic Impact (EC 1.1-3.51- Collection began in April 2022 • Brief description of structure and objectives of assistance program(s), including public health or negative economic impact experienced • Brief description of how a recipient's response is related and reasonably proportional to a public health or negative economic impact of COVI D-19." Note: The final rule presumes that all enumerated eligible uses for programs and services, including COVID-19 mitigation and prevention programs and services, are reasonably proportional responses to the harm identified unless a response is grossly disproportionate to the type or extent of harm experienced. Many of the Eligibility Categories encompass multiple speck enumerated eligible uses and may be provided to a variety of populations. For example, EC 2.13 Healthy Childhood Environments: Services to Foster Youth or Families Involved in Child Weliare System includes a wide array of financial, educational, child development, or health supports, or other supports necessary, including supports for kinship care, and may be provided to foster youth and/or families involved in the child welfare system. Between these two fields above, recipients should provide enough information to identify the type of enumerated eligible use being provided within the EC (e.g., kinship care support services), the public health or economic impact experienced, who the program and/or service is being provided to, and what services are being provided (e.g., respite resources). For enumerated eligible uses, recipients are not required to provide substantive documentation that the response is related and reasonably proportional in the Project and Expenditure Report 2. Capital Expenditures (EC 1.1-3.5) - Collection began in January 2022, with additional fields required starting in July 2022 • Does this project include a capital expenditure? (Collection began in January 2022) • Total expected capital expenditure, including pre -development Costs, if applicable (Collection began in January 2022) • Type of capital expenditure, based on the following enumerated uses (Collection began in July 2022): • COVID-19 testing sites and laboratories, and acquisition of related equipment • COVI619 vaaination sites • Medical facilities generally dedicated to COVID-19 treatment and mitigation (e.g., emergency rooms, intensive care units, telemedicine capabilities for COVID-19 related treatment) • Temporary medical facilities and other measures to increase COVID-19 treatment capacity, including related construction costs • Acquisition of equipment for COVID-19 prevention and treatment, including ventilators, ambulances, and other medical or emergency services equipment 17 Please note that capital expenditures are not considered "programs and services' and are not presumed to be reasonably proportional responses to an identified harm except as provided in the final rule. Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance 27 U.S. OEPp a-1 OF THE.EAURY • Emergency operations centers and acquisition of emergency response equipment (e.g., emergency response radio systems) • Installation and improvement of ventilation systems in congregate settings, health facilities, or other public facilities • Public health data systems, including technology infrastructure • Adaptations to congregate living facilities, including skilled nursing facilities, other long-term care facilities, incarceration settings, homeless shelters, residential foster care facilities, residential behavioral health treatment, and other group living facilities, as well as public facilities and schools (excluding construction of new facilities for the purpose of mitigating spread of COVID-19 in the facility) • Mitigation measures in small businesses, nonprofits, and impacted industries (e.g., developing outdoor spaces) • Behavioral health facilities and equipment (e.g., inpatientor outpatient mental health or substance use treatment facilities, crisis centers, diversion centers) • Technology and equipment to allow law enforcement to efficiently and effectively respond to the rise in gun violence resulting from the pandemic • Affordable housing, supportive housing, or recovery housing development • Food banks and other facilities primarily dedicated to addressing food insecurity • Transitional shelters (e.g., temporary residences for people experiencing homelessness) • Devices and equipment that assist households in accessing the internal (e.g., tablets, computers, or routers) • Childcare, daycare, and early learning facilities • Job and workforce training centers • Improvements to existing facilities to remediate lead contaminants (e.g., removal of lead paint) • Medical equipment and facilities designed to address disparities in public health outcomes (includes primary care clinics, hospitals, or integrations of health services into other settings) • Parks, green spaces, recreational facilities, sidewalks, pedestrian safety features like crosswalks, streetlights, neighborhood cleanup, and other projects to revitalize public spaces • Rehabilitations, renovation, remediation, cleanup, or conversions of vacant or abandoned properties • Schools and other educational facilities or equipment to address educational disparities • Technology and tools to effectively develop, execute, and evaluate government programs • Technology infrastructure to adapt government operations to the pandemic (e.g., video-conferencing software, improvements to case management systems or data sharing resources), reduce government backlogs, or meet increased maintenance needs • Other(please specify) For recipients (other than Tribal governments) investing in projects with total expected capital expenditures for an enumerated eligible use of $10 million or more, as well as projects with total expected capital expenditures for an 'other" use of $1 million or more, provide a written justification (Collection began in July 2022) For projects with total expected capital expenditures of over $10 million, provide labor reporting as outlined for infrastructure projects on pages 26 and 27 (Collection began July 2022) Coronavirus state and Local Fiscal Recovery Funds Compliance and Reporting Guidance 28 LLS. OEn1RIMENTOFTHETREMURT 3. Household Assistance (EC 2.1-2.8) —Collection began January 2022: • Number of households served (by program if recipient establishes multiple separate household assistance programs) 4. Small Business Economic Assistance (EC 1.8. 2.29-2.33) — Collection began April 2022 • Number of small businesses served (by program if recipient establishes multiple separate small business assistance programs) 5. Assistance to Non -Profits (EC 1.9. 2.34)- Collection began April 2022 • Number of Non -Profits served (by program if recipient establishes multiple separate non- profit assistance programs) 6. Aid to Travel Tourism and Hospitality or Other Impacted Industries (EC 1.10 2,35-2.36) — Collection began April 2022: • If aid is provided to industries other than travel, tourism, and hospitality (EC 2.36), describe if the industry experienced at least 8 percent employment loss from pre - pandemic levels, or the industry is experiencing comparable or worse economic impacts as the national tourism, travel, and hospitality industries as of the date of the final rule, and rationale for providing aid to the industry • For each subaward: o Sector of employer (Note: additional detail, including list of sectors, to be provided in the user guide posted to w lreasurv.acvlSLFRP) o Purpose of funds (e.g., payroll support, safety measure implementation) 7. Education Assistance (EC 2.14, 2.24-.2.27) — Collection began in January 2022: • The National Center for Education Statistics ("NCES') School ID or NCES District ID. List the School District if all schools within the school district received some funds. If not all schools within the school district received funds, list the School ID of the schools that received funds. These can allow evaluators to link data from the NCES to look at school - level demographics and, eventually, student performance.'• 8. Payroll for Public Health and Safety Employees (EC 3.1) — Collection began in January 2022 Number of government FTEs responding to COVID-19 supported under this authority 9. Rehiring Public Sector Staff (EC 3.2) — Collection began in January 2022: • Number of FTEs rehired by governments under this authority 10. Premium Pay (both Public Sector EC 4.1 and Private Sector EC 4.2) — Collection began in January 2022; additional field began in April 2022 • List of sectors designated as critical to protecting the health and well-being of residents by the chief executive of the jurisdiction, if beyond those included in the final rule (Collection began January 2022) • Number of workers to be served (Collection began January 2022) • Employer sector for all subawards to third -party employers (i.e., employers other than the State, local, or Tribal government) (Collection began January 2022) • For groups of workers (e.g., an operating unit, a classification of worker, etc.) or, to the extent applicable, individual workers, other than those where the eligible worker receiving premium pay is earning (with the premium pay included) below 150 percent of their residing state or county's average annual wage for all occupations, as defined by the Bureau of Labor Statistics Occupational Employment and Wage Statistics, whichever is tB For more information on NCES identification numbers see Mips Ii Ices etl aovlocd/districtsearchl (districts) and htrps /lnces. ed. aavlocdischoolsearchi (schools). Coronavirus state and Local Fiscal Recovery Funds Compliance and Reporting Guidance 29 US aEPAR1MENT0FTHETREASURV higher, on an annual basis; OR the eligible worker receiving premium pay is not exempt from the Fair Labor Standards Act overtime provisions: A brief written narrative justification of how the premium pay a grant is responsive to workers performing essential work during the public health emergency. This could include a description of the essential workers' duties, health or financial risks faced due to COVID-19, and why the recipient government determined that the premium pay was responsive to workers performing essential work during the pandemic. This description should not include personally identifiable information; when addressing individual workers, recipients should be careful not to include this information. Recipients may consider describing the workers' occupations and duties in a general manner as necessary to protect privacy (Collection began January 2022) Number of workers to be served with premium pay in K-12 schools (Collection began April 2022) 11. Revenue replacement (EC 8 1)— Collection began in August 2021: As outlined in the final rule, recipients have the option to make a one-time decision to Calculate revenue loss according to the formula outlined in the final rule or elect a -Standard Allowance" of up to $10 million, not to exceed the award allocation, to spend on government services throughout the period of performance. The option to make this one-time decision was provided during the April 30, 2022 reporting deadline. For recipients electing the 'Standard Allowance;' Treasury will presume that up to $10 million, not to exceed the award allocation, in revenue has been lost due to the public health emergency. Recipients are permitted to use that amount to fund "government services." Please note that electing the standard allowance does not charge a recipient's total allocation. Recipients that elect to use this standard allowance will make this election instead of calculating lost revenue using the formula. For recipients calculating revenue loss according to the formula, the final rule permits recipients to choose whether to use calendar or fiscal year calculation dates. Recipients must use the same calculation time frame (calendar a fiscal year) throughout the award period. Recipients Calculating lost revenue using the formula should report the following: • Choice of fiscal or calendar year revenue loss (choice must remain consistent throughout award period) • General revenue collected over the past 12 months as of the most recent calculation date, as outlined in the final mle. • Calculated revenue loss due to the Covid-19 public health emergency; and • An explanation of how the revenue replacement funds were allocated to government services (note: additional instructions and/or template provided in the user guide posted at www.tr asury.goy/SLFRPReoortinc). For information on treatment of future tax changes, please see the Statement Regarding Compliance with the Coronavirus State and Local Fiscal Recovery Funds Interim Final Rule and Final Rule. k. Required Programmatic Data for Infrastructure Projects (EC 5): For all projects listed under the Water, Sewer, and Broadband Expenditure Categories (see Appendix 1), more detailed project - level information is required. Each project will be required to report expenditure data as described above, but will also report the following information: 1. All infrastructure oroiects (EC 5) — Collection began in January 2022. Coronavirus Slate and Local Fiscal Recovery Funds Compliance and Reporting Guidance IL US. DEPARTMENT OF THE TREASURY Projected/actual construction start date (monthtyear) Projected/actual initiation of operations date (month/year) Location For projects over $10 million (based on expected total cost): a. A recipient may provide a certification that, for the relevant project, all laborers and mechanics employed by contractors and subcontractors in the performance of such project are paid wages at rates not less than those prevailing, as determined by the U.S. Secretary of Labor in accordance with subchapter IV of chapter 31 of title 40, United States Code (commonly known as the "Davis -Bacon Act"), for the corresponding classes of laborers and mechanics employed on projects of a character similar to the contract work in the civil subdivision of the State (or the District of Columbia) in which the work is to be performed, or by the appropriate State entity pursuant to a corollary State prevailing -wage -in -construction law (commonly known as "baby Davis -Bacon Acts"). If such certification is not provided, a recipient must provide a project employment and local impact report detailing: • The number of employees of contractors and sub -contractors working on the project; • The number of employees on the project hired directly and hired through a third party; • The wages and benefits of workers on the project by classification; and • Whether those wages are at rates less than those prevailing. 18 Recipients must maintain sufficient records to substantiate this information upon request. b. A recipient may provide a certification that a project includes a project labor agreement, meaning a pre -hire collective bargaining agreement consistent with section 8(f) of the National Labor Relations Act (29 U.S.C. 158(f)). If the recipient does not provide such certification, the recipient must provide a project workforce continuity plan, detailing: • How the recipient will ensure the project has ready access to a sufficient supply of appropriately skilled and unskilled labor to ensure high -quality construction throughout the life of the project, including a description of any required professional certifications and/or in-house training; • How the recipient will minimize risks of labor disputes and disruptions that would jeopardize timeliness and cost-effectiveness of the project; • How the recipient will provide a safe and healthy workplace that avoids delays and costs associated with workplace illnesses, injuries, and fatalities, including descriptions of safety training, certification, and/or licensure requirements for all relevant workers (e.g., OSHA 10, OSHA 30); • Whether workers on the project will receive wages and benefits that will secure an appropriately skilled workforce in the context of the local or regional labor market; and • Whether the project has completed a project labor agreement. c. Whether the project prioritizes local hires. d. Whether the project has a Community Benefit Agreement, with a description of any such agreement. 2. Water and sewer oroiects (EC 5.1-5.18) Required once the project starts: • National Pollutant Discharge Elimination System (NPDES) Permit Number (8 applicable; for projects aligned with the Clean Water State Revolving Fund) (Collection began in January 2022) 16 As determined by the U.S. Secretary of Labor in accordance with subchapter IV of chapter 31 of title 40, United States Code (commonly known as the *Davis -Bacon Act'), for the corresponding classes of laborers and mechanics employed on projects of a character similar to the contract work in the civil subdivision of the State (or the District of Columbia) in which the work is to be performed. Coronavlrus state and Local Fiscal Recovery Funds Compliance and Reporting Guidance 31 U S.OEPMTMENTC4 THE 1flEPSURY • Public Water System (PWS) ID number (if applicable; for projects aligned with the Drinking Water State Revolving Fund) (Collection began January 2022) • Median Household Income of service area (Collection began in April 2022) • Lowest Quintile Income of the service area (Collection began in April 2022) 3. Broadband Projects (EC 5.19-5.21) Collection includes new fields that began in July 2022. Additional fields will be phased in through future reporting periods, as noted below. Overall Project Information • Confirm that the project is designed to, upon completion, reliably meet or exceed symmetrical 100 Mbps download and upload speeds. o If the project is not designed to reliably meet or exceed symmetrical 100 Mbps download and upload speeds, explain why not, and o Confirm that the project is designed to, upon completion, meet or exceed 100 Mbps download speed and between at least 20 Mbps and 100 Mbps upload speed, and be scalable to a minimum of 100 Mbps download speed and 100 Mbps upload speed. • Confirm that the service provider for the project has, or will upon completion of the project, either participated in the Federal Communications Commission (FCC)'s Affordable Connectivity Program (ACP) or otherwise provided access to a broad -based affordability program that provides benefits to households commensurate with those provided under the ACP to low-income consumers in the proposed service area of the broadband infrastructure (applicable only to projects that provide service to households). Detailed Project /nformat/on • Project technology type(s) (Planned/Actual) o Fiber o Coaxial Cable o Terrestrial Fixed Wireless o Other (specify) • Total miles of fiber deployed (Planned/Actual) • Total number of funded locations served (Planned/Actual) o Total number of funded locations served, broken out by speeds: • Pre-SLFRF Investment: • Number receiving 25/3 Mbps or below • Number receiving between 25/3 Mbps and 100120 Mbps • Post-SLFRF Investment (Planned/Actual): • Number receiving minimum 100/100 Mbps • Number receiving minimum 100/20 Mbps and scalable to minimum 100/100 Mbps o Total number of funded locations served, broken out by type (PlannedlActual): • Residential • Total Housing Units • Business • Community anchor institution • Speed tiers offered, corresponding non -promotional prices, including associated fees, and data allowance for each speed tier of broadband service (collection to be phased in a future reporting period) Location -by -Location Project Information For each location served by a Project, the recipient must collect from the subrecipient or contractor and submit the following information to Treasury using a predetermined file format that will be provided by Treasury (collection of certain fields will begin in October 202Z as spectrred below): Coronavirus state and Local Fiscal Recovery Funds Compliance and Reporting Guidance 32 US. DERARTMENTC THETREASURY • Latitude/longitude at the structure where service will be installed(required starting October 2022) • Technology used to offer service at the location (required starting October 2022) • Location type (required starting October 2022) o Residential • If Residential, Number of Housing Units o Business o Community anchor institution • Speed tier at the location pre-SLFRF investment (collection to be phased in) 0 25/3 Mbps or below o Between 25/3 Mbps and 100/20 Mbps • Speed and latency at the location post-SLFRF investment (collection to be phased in) o Maximum download speed offered o Maximum download speed delivered o Maximum upload speed offered o Maximum upload speed delivered o Latency I. Additional Required Programmatic Data for States. U.S. territories, and metropolitan cities and counties with a population that exceeds 250.000 residents only: As noted in the Recovery Plan section of this guidance, states, U.S. territories, and metropolitan cities and counties with a population over 250,000 are required to provide additional data in the Project and Expenditure report for projects in the following expenditure categories: 1. Use of Evidence (for relevant ECs noted in Appendix 1)—Collection began April 2022 • The dollar amount of the total project spending that is allocated towards evidence -based interventions • Whether a program evaluation of the project is being conducted 2. Household Assistance (EC 2.2, Lonn-Tenn Housing Security (EC 2.15-2.16) and Housing Support (EC 2.17-2.18): • Number of households receiving eviction prevention services (including legal representation) • Number of affordable housing units preserved or developed 3. Assistance to Unemployed or Underemployed Workers (EC 2.10) and Community Violence Interventions (EC 1.11): • Number of workers enrolled in sectoral job training programs • Number of workers completing sectoral job training programs • Number of people participating in summer youth employment programs 4. Addressing Educational Disparities (EC 2.24-2.261 and Addressing Impacts of Lost Instructional Time (EC 2.27): • Number of students participating in evidence -based tutoring programs20 5. Healthy Childhood Environments (EC 2.11-2.14): • Number of children served by childcare and early learning services(pre-school/pre-K/ages 3-5) • Number of families served by home visiting 2s For more information on evidence -based tutoring programs, refer to the U.S. Department of Education's 2021 ED COVID-19 Handbook (Volume 2), which summarizes research on evidence -based tutoring programs (see the bottom of page 20. Coronavims Stale and Local Fiscal Recovery Funds Compliance and Reporting Guidance 33 U S. MPARWENTOF TNETfEASURY m. NEU Documentation (NEUs only): Each NEU is also required to provide the following information once its accounts are established in Treasury's Reporting Portal and prior to the due date for their first Project and Expenditure Report (due April 30, 2022): • Copy of the signed award terms and conditions agreement (which was signed and submitted to the State as part of the request for funding) • Copy of the signed assurances of compliance with Title VI of the Civil Rights Act of 1964 (which was signed and submitted to the State as part of the request for funding) • Copy of actual budget documents validating the top -line budget total provided to the State as part of the request for funding NEU accounts are established in Treasury's Portal based on information provided by the States or territories, as further described in Section Part 2 D below. C. Recovery Plan Performance Report States, territories, and metropolitan cities and counties with a population that exceeds 250,000 residents (i.e., Tier 1 recipients) will also be required to publish and submit to Treasury a Recovery Plan performance report ("Recovery Plan"). Each Recovery Plan must be posted on an easily discoverable webpage on the public -facing website of the recipient by the same date the recipient submits the report to Treasury. Treasury recommends that Recovery Plans be accessible within three clicks or fewer from the homepage of the recipient's website. Within Treasury's reporting portal, recipients must upload a link to the publicly available Recovery Plan and provide required data. The Recovery Plan provides the public and Treasury both retrospective and prospective information on the projects recipients are undertaking or planning to undertake with program funding and how they are planning to ensure program outcomes are achieved in an effective, efficient, and equitable manner. White this guidance outlines some minimum requirements for the Recovery Plan, each recipient is encouraged to add information to the plan that they feel is appropriate to provide information to their constituents on efforts they are taking to respond to the pandemic and promote economic recovery. Each jurisdiction may determine the general form and content of the Recovery Plan, as long as it includes the minimum information required by Treasury. Treasury provided a template (located at www.treasurv.cov/SLFRP) but recipients may modify this template as appropriate for their jurisdiction, provided the modified template meets Treasury's requirements, outlined below. Through the Recovery Plan, recipients may link to public documents, including, but not limited to, legislation, dashboards, survey results, community engagement reports, and equity frameworks to support the Recovery Plan narrative. The Recovery Plan should include key performance indicators identified by the recipient and some mandatory indicators identified by Treasury, as noted below. The initial Recovery Plan covered the period from the date of award to July 31, 2021 and was required to be submitted to Treasury by August 31, 2021, or 60 days after receiving funding. Thereafter, the Recovery Plan will cover a 12-month period and recipients are required to submit the report to Treasury after the end of the 12-month period by July 31. The Recovery Plan should include both retrospective information covering the time period of the Recovery Plan along with prospective information on future work to be undertaken with SLFRF funds or on the planning that has been undertaken during the covered period. Table 6 summarizes the report timelines: Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance 34 tl US. CEP WGNTCFTHETRIhSURT Annual Report July Period Covered 1, 2022—June 30, 2023 Due Date 243u,0UI Jul 1, 2023—June 30, 2024 Ju3 224 1, 2024—June 30, 2025 July 31, 2025 6 July 1 2025—June 30 2026 July 31, 2026 7 July 1, 2026—December 31, 2026 Aril 30, 2027 Recovery Plans submitted as part of reporting are used by Treasury, third party organizations, the public, and other stakeholders to obtain a comprehensive understanding of SLFRF's largest recipients' planned and actual usage of SLFRF funding, including the jurisdiction's policy goals, its strategy for achieving them, and specific projects or initiatives underway. Alignment of data reported in Project and Expenditure reports and Recovery Plans is expected by both Treasury and SLFRF's many stakeholders. Finally, Recovery Plans will be posted publicly by Treasury to provide transparency about how program funds are being used by recipient governments. The Recovery Plan must include, at a minimum, the following information: 1. Executive Summary In this section, recipients should provide a high-level overview of the jurisdiction's intended and actual uses of funding including, but not limited to: the jurisdiction's strategy, goals, and plan for using Fiscal Recovery Funds to respond to the pandemic and promote economic recovery, key outcome goals, progress to date on those outcomes, and any noteworthy challenges or opportunities identified during the reporting period. 2. Uses of Funds In this section, recipients should describe in further detail the strategy and goals of their jurisdiction's SLFRF program, such as how their jurisdiction's approach would help support a strong and equitable recovery from the COVID-19 pandemic and economic downturn. Recipients should describe how their intended and actual uses of funds will achieve their goals. Given the broad eligible uses of funds established by the final rule and the specific needs of different jurisdictions, recipients should also explain how the funds would support the communities, populations, or individuals in their jurisdiction. Recipients should describe how their use of funds supports their overall strategy and goals in the following areas: a. Public Health (EC 1): As relevant, describe how funds are being used to respond to COVID-19, the broader health impacts of COVID-19, and the COVID-19 public health emergency, including community violence interventions and behavioral health. b. Negative Economic Impacts (EC 2): As relevant, describe how funds are being used to respond to negative economic impacts of the COVID-19 public health emergency, including services to households (such as affordable housing, job training, and childcare), small businesses, non- profits, and impacted industries. c. Public Health -Negative Economic Impact: Public Sector Capacity (EC 3): As relevant, describe how funds are being used to support public sector workforce and capacity, including public sector payroll, rehiring of public sector workers, and building of public sector capacity. d. Premium Pay (EC 4): As relevant, describe the approach, goals, and sectors or occupations served in any premium pay program. Describe how the approach prioritizes low-income workers and/or any particular group of eligible workers. e. Water, sewer, and broadband infrastructure (EC 5): As relevant, describe the approach, goals, and types of projects being pursued. Where relevant, recipients should note how projects contribute to addressing climate change and/or how projects benefit disadvantaged communities in line with the Justice401nitiative." en See Executive Order 14008 On Tackling the Climate Crisis at Home and Abroad and the Interim Implementation Guidance for the Justi.40 Initiative, Ofd(d M-21i18. Coronavirus state and Local Fiscal Recovery Funds Compliance and Reporting Guidance 35 0 US. OEEARnIENTOF THE TREASURY f. Revenue Replacement (EC B): Describe the loss in revenue, including if electing the standard allowance, due to the COVIO-19 public health emergency, and how funds have been used to provide government services, including any funds used under revenue loss for non-federal cost - share or matching requirements of other federal programs. If appropriate, recipients may also include Intimation on their jurisdiction's use (or planned use) of other federal recovery funds, including other programs under the American Rescue Plan such as Emergency Rental Assistance, the Homeowner Assistance Fund, the Capital Projects Fund, the State Small Business Credit Initiative, and so forth, to provide broader context on the overall approach for pandemic recovery. Jurisdictions may also address use of SLFRF funds in coordination with, or in preparation for, funding available through the Infrastructure Investment and Jobs Act. 3. Promoting equitable outcomes Treasury encourages uses of funds that advance strong, equitable growth, including economic and racial equity. For the purposes of the SLFRF, equity is described in the Executive Order 13985 On Advancing Racial EcuitV and Support for Underserved Communities Through the Federal Government, as issued on January 20, 2021, In this section, recipients should describe, as applicable, their efforts to promote equitable outcomes, including economic and racial equity, and their efforts to design, implement, and measure their SLFRF program and projects with equity in mind. In describing their efforts to design their SLFRF program and projects with equity in mind, recipients may consider the following: a. Goals: Are there particular historically underserved, marginalized, or adversely affected groups that recipients intend to serve within their jurisdiction? b. Awareness: How equitable and practical is the ability for residents or businesses to become aware of the services funded by SLFRF? c. Access and Distribution: Are there differences in levels of access to benefits and services across groups? Are there administrative requirements that result in disparities in ability to complete applications or meet eligibility criteria? d. Outcomes: How are intended outcomes focused on closing gaps and/or reaching universal levels of service? How is the considering disaggregating outcomes by race, ethnicity, and other equity dimensions where relevant for the policy objective? In describing their efforts to implement their SLFRF program and projects with equity in mind, recipients may consider the following: a. Goals and Targets: Please describe how planned or current uses of funds prioritize economic and racial equity as a goal, name specific targets intended to produce meaningful equity results at scale, and include initiatives to achieve those targets. b. Protect Implementation: In addition, please explain how the jurisdiction's overall equity strategy translates into focus areas for SLFRF projects and the specific services or programs offered by the jurisdiction in the following Expenditure Category, as indicated in the final rule. Negative Economic Impacts (EC 2): assistance to households, small businesses, and non- profits to address impacts of the pandemic, which have been most severe among low-income populations. This includes assistance with food, housing, and other needs; employment programs for people with barriers to employment who faced negative economic impacts from the pandemic (such as residents of low-income neighborhoods, minorities, disconnected youth, the unemployed, formerly incarcerated people, veterans, and people with disabilities); services to provide long-term housing security and housing supports, address educational disparities, or provide child care and early learning services; and other strategies that provide Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance 3a 1I.5. CEPFRIMENTCF THE IREPSUPY impacted and disproportionately impacted communities with services to address the negative economic impacts of the pandemic The first annual Recovery Plan, due in 2021, was required to describe initial efforts and intended outcomes to promote equity, as applicable. Beginning in 2022, each annual Recovery Plan must provide an update, using qualitative and quantitative data, on how the recipients' approach achieved or promoted equitable outcomes or progressed against equity goals during the performance period, as applicable. Each jurisdiction should describe any constraints or challenges that impacted project success in terms of increasing equity. In particular, this section should describe the geographic and demographic distribution of funding, including whether it is targeted toward traditionally marginalized communities (recipients may reference the demographic data information in their Project and Expenditure Reports as relevant). - 4. Community Engagement In this section, recipients should describe how their jurisdiction's planned or current use of funds incorporates community engagement strategies including written feedback through surveys, project proposals, and related documents; oral feedback through community meetings, issue -specific listening sessions, stakeholder interviews, focus groups, and additional public engagement; as well as other forms of input, such as steering committees, taskforces, and digital campaigns that capture diverse feedback from the community. Recipients may describe completed or planned community engagement strategies specifically focused on their SLFRF program and projects or community engagement strategies that included SLFRF among other government programs. Recipients should also describe how community engagement strategies support their equity goals, including engagement with communities that have historically faced significant barriers to services, such as people of color, people with low incomes, limited English proficient populations, and other traditionally underserved groups. 5. Labor Practices In this section, recipients should describe workforce practices on any infrastructure projects or capital expenditures being pursued. How are projects using strong labor standards to promote effective and efficient delivery of high -quality infrastructure projects while also supporting the economic recovery through strong employment opportunities for workers? For example, report whether any of the following practices are being utilized: project labor agreements, community benefits agreements, prevailing wage requirements, and local hiring. 6. Use of Evidence In this section of the Recovery Plan, recipients should describe whether and how evidence -based interventions ancUor program evaluation are incorporated into their SLFRF program. Recipients may include links to evidence standards, evidence dashboards, evaluation policies, and other public facing tools that are used to track and communicate the use of evidence and evaluation for Fiscal Recovery Funds. Recipients are encouraged to consider how a learning agenda, either narrowly focused on SLFRF or broadly focused on the recipient's broader policy agenda, could support their overarching evaluation efforts in order to create an evidence -building strategy for their jurisdiction." In the Project Inventory section of the Recovery Plan (see Section 8 below), recipients should identify whether SLFRF funds are being used for evidence -based interventions'' and/or if projects are being evaluated through rigorous program evaluations that are designed to build evidence. In the Project Inventory, recipients must briefly describe the goals of the project and the evidence base for the interventions funded by the project. As part of the Project Inventory section, recipients must also specifically identify the dollar amount of the total project spending that is allocated towards evidence - based interventions for each projectin the Expenditure Categories noted with an asterisk in Appendix 1. Please note that to increase consistency, the Project and Expenditure report now also includes a For more information on leaming agendas, please we OMB M-19-23 As noted in Appendix 2, evidence -based refers to interventions with strong or moderate levels of evidence. Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance By, Alill Id us. osPaarxr 0FmErBFssum fields for recipients to identify the dollar amount of the total project spending that is allocated to evidence -based interventions and to indicate if a program evaluation of the project is being Conducted. Recipients are encouraged to reference relevant evidence clearinghouses, among other sources, to assess the level of evidence for their interventions and identify evidence -based models that could be applied in their -jurisdiction; such evidence clearinghouses include the U.S. Department of Education's What Works Clearinghouse, the U.S. Department of Labors CLEAR, and the Childcare & Early Education Research Connections and the Home Visiting Evidence of &Effectiveness clearinghouses from Administration for Children and Families, as well as other clearinghouses relevant to particular projects conducted by the recipient. Recipients are exempt from reporting on evidence -based interventions in cases where a program evaluation is being conducted. In such cases where a recipient is conducting a program evaluation, recipients must describe the evaluation design, including whether it is a randomized or quasi - experimental design; the key research questions being evaluated; whether the study has sufficient statistical power to disaggregate outcomes by demographics; and the timeframe for the completion of the evaluation (including a link to the completed evaluation if relevant).'° Once the evaluation has been completed, recipients must post the evaluation publicly and link to the completed evaluation in the Recovery Plan. Once an evaluation has been Completed (or has sufficient interim findings to determine the efficacy of the intervention), recipients should determine whether the spending for the evaluated interventions should be counted towards the dollar amount categorized as evidence -based for the relevant project. For all projects, recipients may be selected to participate in a national evaluation, which might, for example, study their project along with similar projects in other jurisdictions that are focused on the same set of outcomes. In such cases, recipients may be asked to share information and data that is needed for the national evaluation. Appendix 2 contains additional information on evidence -based interventions for the purposes of the Recovery Plan. 7. Performance Report In this section, recipients should describe how performance management is incorporated into their SLFRF program, including how they are trectdng their overarching jurisdictional goals for these funds as well as measuring results for individual projects. The recipient has flexibility in terms of how this information is presented in the Recovery Plan, and may report key performance indicators for each project, or may group projects with substantially similar goals and the same outcome measures. In some cases, the recipient may choose to include some indicators for each individual project as well as crosscutting indicators. Recipients may include links to performance management dashboards, performance management policies, and other public facing tools that are used to track and Communicate the performance of Fiscal Recovery Funds. In addition to outlining in this section their high-level approach to performance management, recipients must also include key performance indicators for each SLFRF project in the Project Inventory section (described below in #8). Performance indicators should include both output and outcome measures. Output measures, such as the number of students enrolled in an early learning program, provide valuable information about the early implementation stages of a project. Outcome measures, such as the percent of students reading on grade level, provide information about whether a project is achieving its overall goals. Recipients are encouraged to use logic models's to identify their output and outcome measures. 34 For more information on the required standards for program evaluation, sea OM3 M-20-12. "A logic model is a tool that depicts the intended links between program investments and outcomes, specifically the relationships among the resources, activities, outputs, outcomes, and impact of a program. Coronavirus state and Local Fiscal Recovery Funds Compliance and Reporting Guidance 38 US MPW.FNTOF THE mEASUW While the initial Recovery Plan focused heavily on early output goals, recipients should include the related outcome goal for each project and provide updated information on achieving these outcome goals in subsequent annual reports. In cases where recipients are conducting a program evaluation for a project (as described above), the outcome measures in the performance report should be aligned with those being evaluated in the program. As described in the final rule, to support their performance measurement and program improvement efforts, recipients are permitted to use funds to make improvements to data or technology infrastructure and data analytics, as well as perform program evaluations. While recipients have discretion on the full suite of performance indicators to include, a number of mandatory performance indicators and programmatic data must be included. These are necessary to allow Treasury to conduct oversight as well as understand and aggregate program outcomes across recipients. This section provides an overview of the mandatory performance indicators and programmatic data. This information should be included in the Project Inventory, but this data will also need to be entered directly into the Treasury reporting portal as part of the Project and Expenditure report, as Treasury has added these fields (for Tier 1 recipients only) to the Project and Expenditure report. Below is a list of required data for each Expenditure Category, where relevant. a. Household Assistance (EC 2.2). Long -Term Housing Security (EC 2.15-2.16) and Housing Support (EC 2.17-2A8): • Number of households receiving eviction prevention services (including legal representation) • Number of affordable housing units preserved or developed b. Assistance to Unemployed or Underemployed Workers (EC 2.10) and Community Violence Interventions (EC 1.11): • Number of workers enrolled in sectoral job training programs • Number of workers completing sectoral job training programs • Number of people participating in summer youth employment programs c. Addressing Educational Disparities (EC 2.24-2.26) and Addressing Impacts of Lost Instructional Time (EC 2.27): • Number of students participating in evidence -based tutoring programs'' d. Healthy Childhood Environments (EC 2.11-2.14): • Number of children served by childcare and early learning services (pre-school/pre-K/ages 3- 5) • Number of families served by home visiting The initial report should have included the key indicators above. Each annual report thereafter should include updated data for the performance period as well as prior period data, and a brief narrative adding any additional context to help the reader interpret the results and understand any changes in performance indicators over time. To the extent possible, Treasury also encourages recipients to provide data disaggregated by race, ethnicity, gentler, income, and other relevant factors. 8. Project Inventory In this section, recipients should list the name and provide a brief description of each SLFRF funded project. Projects are defined as a grouping of closely related activities that together are intended to achieve a specific goal or are directed toward a common purpose. These activities can include new or existing eligible government services or investments funded in whole or in part by SLFRF funding. m For more information on evidence -based tutoring programs, refer to the U.S. Department of Education's 2021 ED COVID-19 Handbook (Volume 21, which summarizes research on evidence -based tutoring programs (see the bottom of page 20.). Comnavirus Was and Local Fiscal Recovery Funds Compliance and Repoding Guidance 39 US DEPMTMEVTOF THE TMASURY For each project, recipients should include the project name, funding amount, identification number (the same identification number created by the recipient that matches the identification number used in the quarterly Project and Expenditure Report), project Expenditure Category (see Appendix 1), and a description of the project that includes an overview of the main activities of the project, approximate timeline, primary delivery mechanisms and partners, and intended outcomes. Each jurisdiction should also include a link to the website of the project if available. This information will provide context and additional detail for the information reported quarterly in the Project and Expenditure Report. For infrastructure projects, where relevant, recipients should describe how the project contributes to addressing climate change and/or advances the Justice40 initiatlVe27, which sets a target of providing 40 percent of the benefits of certain federal investments, including climate and clean energy investments to disadvantaged communities. As noted above in section 6, the Project Inventory must also include information about the dollar amount of the total project spending that is allocated towards evidence -based interventions (or describe how projects are being evaluated as noted above). As described above in section 7, the Project Inventory must also contain information about the performance indicators for each project, including both those measures that recipients have defined for each project as well as the mandatory performance indicators defined by Treasury. Recipients have flexibility in the presentation and format of their Project Inventory, provided it includes the minimum required information. Recipients have the option of downloading a spreadsheet of the information entered into their Project and Expenditure Report to assist them in creating the Project Inventory in their Recovery Plan. However, recipients must ensure that their Project Inventory contains the additional information required by this guidance, including but not limited to information about performance measures and evidence/evaluation for each project. in all cases, recipients must post publicly (and submit to Treasury) a single PDF file of their Recovery Plan, which includes the Project Inventory, D. Distributions to NEUs Each state and territory is required to provide regular updates on their NEU distributions as well as their distributions to units of general local government within counties that are not units of general local government. The distribution template generally requests information on whether the local government has (1) received funding; (2) declined funding and requested a transfer to the state under Section 603(c)(4) of the Act; or (3) not taken action on its funding or declined funding. For NEUs, states and territories should be prepared to report on their information, including the following: • NEU name • NEU UEI number • NEU Taxpayer Identification Number(TIN) • NEU Recipient Number (a unique identification code for each NEU assigned by the State or territory to the NEU as part of the request for funding) • NEU contact information (e.g., address, point of contact name, point of contact email address, and point of contact phone number) • NEU authorized representative name and email address • Initial allocation and, if applicable, subsequent allocation to the NEU (before application of the 75 percent cap) a See hxeculme Order 14008, On Tackling the Climate Crisis at Home and Abroad and the Interim Implementation Guidance for the Justice401nitiative, OMB M-21 28. Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance 40 U S. CEPARIDIENi OF iHETREASIIRY • Total NEU reference budget (as submitted by the NEU to the State or territory as part of the request for funding) • Amount of the initial and, if applicable, subsequent allocation above 75 percent of the NEU's reference budget which will be returned to Treasury • Payment amount(s) • Payment dates) States with "weak" minor civil divisions (i.e., Illinois, Indiana, Kansas, Missouri, Nebraska, North Dakota, Ohio, and South Dakota) should also list any minor civil divisions that the state deemed ineligible. For each eligible NEU that declined funding and requested a transfer to the state under Section 603(cx4) of the Social Security Act, the state or territory must also attach a form signed by the NEU, as detailed in the Guidance on Oistiibut,ons of Funds to NonEntitlementUnits of Local Government Comnavirus Stare and Loral Fiscal Recovery Funds Compliance and Reporting Guidance U S. DEPARTMENT OF THE TREASURY Appendix 1: Expenditure Categories Treasury's final rule provides greater flexibility and simplicity for recipients to fight the pandemic and support families and businesses struggling with its impacts, maintain vital services amid revenue shortfalls, and build a strong, resilient, and equitable recovery. As such, recipients began reporting on a broader set of eligible uses and associated Expenditure Categories ('EC'), starting with the April 2022 Project and Expenditure Report than they did in their interim reports, initial Recovery Plans, and January Project and Expenditure Report. The table below includes the new Expenditure Categories, as well as a reference to previous Expenditure Categories aligned with the interim final rule and used for reporting before this date. The Expenditure Categories (EC) listed below must be used to categorize each project as noted in Part 2 above. The term 'Expenditure Category" refers to the detailed level (e.g., 1.1 COVID-19 Vaccination). When retained to as a category (e.g., EC 1) it includes all Expenditure Categories within that level. 'Denotes areas where recipients must identify the amount of the total funds that are allocated to evidence -based interventions (see Use of Evidence section above for details) "Denotes areas where recipients must report on whether projects are primarily serving disproportionately impacted communities (see Project Demographic Distribution section above for details) Expenditure Category EVI Previous 1: Public Health COVID-19 Mitigation & Prevention COVID-19 Vaccination- COVID-19 Testing- 1.2 1.2 COVID-19 Contact Tracin - 1.3 1.3 Prevention in Congregate Settings (Nursing Homes, Prisons/Jails, Dense Work Sites, Schools, Child care facilities, etc.. - 1.4 1.4 Personal Protective E ui menM 1.5 1.5 Medical Expenses(including Alternative Care Facilities)- 1.6 1.6 Other COVID-19 Public Heath Expenses (including Communications, Enforcement, Isolatlon/Quaranfine)A 1.7 1.8 COVID-19 Assistance to Small BusinessesA 1.8 COVID 19 Assistance to Non-Profits- COVID-19 COVID-19 Aid to Impacted Industries- 1.10 Community Violence Interventions Community Violence Interventions*A 1,11 3.16 Behavioral Health Mental Health Services'^ 1.12 1.10 Substance Use Services'" 1.13 1,11 Other Other Public Health ServicesA 1.14 1A2 Capital Investments or Physical Plant Changes to Public Facilities that respond to the COVID-19 public health emer enc 1,7 '2: Negative Economic Impacts Assistance to Households Household Assistance: Food Pro rams"A 2.1 2.1 �s Under the final rule to be used starting with April 2022 repors Under the interim final rule to be used in Interim Report and January 2022 Project and Expenditure Report Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidanoe 42 ne DEM^ MFMTOFTHETRFASlJW Expenditure Category Household Assistance: Rent, Man a e, and UtilityAid'^ EC�' Previous Household Assistance: Cash Transfers`" 2.3 2.3 Household Assistance: Internet Access Pr rams'" 2.4 2.4 Household Assistance: Paid Sick and Medical Leave" 2.5 Household Assistance: Health Insurance`^ 2.8 Household Assistance: Services for UnlUnbanked*" 2.7 Household Assistance: Survivor's Benefits^ 2.8 Unemployment Benefits or Cash Assistance to Unemployed Workers'^ 2.9 2.6 Assistance to Unemployed or Underemployed Workers (e.g. job training, subsidized employment, employment supports or incentives) *A 2.10 2.7 Healthy Childhood Environments: Child Care*A 2.11 3.6 Healthy Childhood Environments: Home Visiting *^ 2.12 3.7 Healthy Childhood Environments: Services to Foster Youth or Families Involved in Child Welfare S stem'^ 2.13 3.8 Healthy Childhood Environments: Early Learning *A 2.14 3.1 Long-term Housing Security: Affordable Housin *A 2.15 3.10 Long -ter in Housing Security: Services for Unhoused Persons*A 2.16 3.11 Housing Support: Housing Vouchers and Relocation Assistance for Disproportionately Impacted CommunitieS*A 2.17 Housing Support: Other Housing Assistance*- 2.18 - 3.12 Social Determinants of Health: Community Health Workers or Benefits Navigators*" 2 19 3.14 Social Determinants of Health: Lead Remediation*- 2.20 3,15 Medical Facilities for Disproportionately Impacted Communifies- 2.21 Strong Healthy Communities: Neighborhood Features that Promote Health and SafetyA 2.22 Strong Healthy Communities: Demolition and Rehabilitation of properbW 2.23 Addressin Educational Disparities: Aid to High-PovertyHigh-Poaerty Districts^ 2,24 3.2 Addressing Educational Disparities: Academic, Social, and Emoficnal Services*A 2.25 3.3 Addressing Educational Dis arfties: Mental Health Services*- 2.26 3.4 Addressing Impacts of Lost Instructional Time 2.27 Contributions to UI Trust Funds- 2.28 2.8 Assistance toSmall-Businesses ^ Loans or Grants to Mitigate Financial Hardship- 2.29 2.9 Technical Assistance, Counseling, or Business Plannin *A 2.30 Rehabilitation of Commercial Properties or Other Improvements" 2.31 Business Incubators and Start -Up or Expansion Assistance* ^ 2.32 Enhanced Support to Microbusinesses" 2.33 Assistance to Non -Profits Assistance to Impacted Nonprofit Organizations (Impacted or Disproportionately Im acted)A 2,34 2,10 Aid to Impacted Industries Aid to Tourism, Travel, or Hos italic A 2.35 2.11 Aid to Other Impacted Industries^ 2.36 2.12 Other Economic Impact Assistance: Other*A 2.37 1 2,13 Household Assistance: Eviction Prevention *A 2.5 Education Assistance: Other*" 3.5 Corormirus State and Lecal Fiscal Recovery Funds Compliance and Rapotng Guidance :91 US. DFEp MENTOF THE TREASURY Expenditure Category ECII Previous EC 29 Healthy Childhood Environments. Other'^ 3.9 Social Determinants of Health: Other'^ 3.13 3: Public Health-Negativeg.Economic Impact: Public Sector Ca aci General Provisions - Public Sector Workforce: Payroll and Benefits for Public Health, Public Safety,or Human Services Workers 3,1 1,9 Public Sector Workforce: Rehiring Public Sector Staff 3.2 2.14 Public Sector Workforce: Other 3.3 Public Sector Capacity: Effective Service Delivery 3.4 7.2 Public Sector Capacity: Administrative Needs 3.5 4: Premium Pa Public Sector Employees 4.1 4.1 Private Sector: Grants to Other Employers 4.2 4.2 5: Infrastructure Water and Sewer Clean Water: Centralized Wastewater Treatment 5.1 5.1 Clean Water: Centralized Wastewater Collection and Conveyance 5.2[,"5 5.2 Clean Water: Decentralized Wastewater 5.35.3 Clean Water. Combined Sewer Overflows 5.45.4 Clean Water: Other Sewer Infrastructure 5.55.5 Clean Water: Stormwater 5.65.6 Clean Water: EnergyConservation 5.75.7 Clean Water: Water Conservation 5.85.8 Clean Water: Nonpoint Source 5.95.9 Drinkingwater Treatment 5.105.10 Drinkingwater: Transmission & Distribution 5.11.11 Drinking water: Lead Remediation including in Schools and Da cares 5.12 5.12 Drinking water: Source 5.13 5.13 Drinking water: Storage 5.14 5.14 Drinking water. Other water infrastructure 5.15 5.15 Water and Sewer: Private Wells 5.16 Water and Sewer: IIJA Bureau of Reclamation Match 5.17 Water and Sewer: Other 5.18 Broadband Broadband:"Last Mile" projects 5.19 1 5.16 Broadband: IIJA Match 5.20 Broadband: Other projects 5.21 5.-7 0:Revenue Replacement Provision of Government Services 6.1 iA Non-federal Match for Other Federal Programs 6.2 7: Administrative Administrative Ex nses 7A 7.1 Transfers to Other Units of Government 7.2 7.3 Transfers to Non -entitlement Units States and territories only) 7.4 Comnavirus scare and Local Fiscal Recovery Funds Compliance and Reporting Guidance CIL US NEPARTNENTOF THE MEASURY Treasury has prepared the additional guidance below to support recipients in implementing the new expenditure categories. This table includes only those previous expenditure categories that are changing under the new structure, aligned with the final rule. January 2022 Expenditure Categories April 2022 Guidance 1: Public Health 1.7 Capital Investments or Physical Plant Changes EC removed, capital expenditures can be to Public Facilities that respond to the COVID- designated in any relevant PH-NEI EC 19 public health emergency (e.g., new hospital wing would be tracked under EC 1.4 1.8 Other COVID-19 Public Health Expenses EC is 1.7 (including Communications, Enforcement, Isolation/Quarantine 1.9 Payroll Costs for Public Health, Safety, and EC is 3A Other Public Sector Staff Responding to COVID-19 1.10 Mental Health Services' EC is 1.12 1.11 Substance Use Services' EC is 1.13 1.12 Other Public Health Services I EC is 1.14 2: Negative Economic Impacts 2.5 Household Assistance: Eviction Prevention EC is now included as part of 2.2 2.6 Unemployment Benefits or Cash Assistance to EC is 2.9 Unemployed Workers' 2.7 Job Training Assistance (e.g., Sectoral job- EC is 2.10 training, Subsidized Employment, Employment Supports or Incentives'^ 2.8 Contributions to UI Trust Funds EC is 2.28 2.9 Small Business Economic Assistance If public -health related (e.g., providing (General)`^ rapid tests for small businesses), EC is 1.8; if related to negative economic impact eligible use (e.g., grants, technical assistance, rehabilitation, incubators, or microbusinesses), EC is 2.29-2.33 2.10 Aid to Nonprofit Organizations' If public -health related (e.g., providing rapid tests for non -profits), EC is 1.9; if related to negative economic impact (e.g., grants to stabilize non-profit budget), EC is 2.34 2.11 Aid to Tourism, Travel, or Hospitality EC is 2.35 2.12 Aid to Other Impacted Industries EC is 2.36 2.13 Other Economic Support*- EC is 2.37, re -named Other Economic Impact 2.14 Rehiring Public Sector Staff EC is 3.2 3: Services to Disproportionately Impacted Communities 3.1 Education Assistance: Early Learning'^ EC is 2.14 3.2 Education Assistance: Aid to High -Poverty EC is 2.24 Districts ^ 3.3 Education Assistance: Academic Services"^ EC is 2.25, social and emotional services will now be tracked under this EC 3.4 Education Assistance: Social, Emotional, and EC is 2.26, if social and emotional Mental Health Services'^ services EC is 2.25; Coronavirus Slate and Local Fiscal Recovery Funds Compliance and Reporting Guidance 45 US. DEPARTMENTOF THETflEM15Uf1Y January 2022 Expenditure Categories April 2022 Guidance 3.5 Education Assistance: Other`^ EC is 2.37, collected under Other Economic Impact 3.6 Healthy Childhood Environments: Child Care`A EC is 2.11 3.7 Healthy Childhood Environments: Home EC is 2.12 Visitin - 3.8 Healthy Childhood Environments: Services to EC is 2.13 Foster Youth or Families Involved in Child Welfare System*" 3.9 Healthy Childhood Environments: Other *A EC is 2.37, collected under Other Economic Impact 3.10 Housing Support: Affordable Housing *A EC is 2.15 3.11 Housing Support: Services for Unhoused EC is 2.16 Persons'" 3.12 Housing Support: Other Housing Assistance`" EC is 2.18 3.13 Social Determinants of Health: Other`" EC is 2.37, collected under Other Economic Impact 3.14 Social Determinants of Health: Community EC is 2.19 Health Workers or Bents Navi ators`A 3.15 Social Determinants of Health: Lead EC is 2.20 RemediationA 3.16 Social Determinants of Health: Community EC is 1,11 Violence Interventions`^ 5: Infrastructure 5.16 Broadband "Last Mile projects EC is 5.19 5.17 Broadband: Other projects EC is 5.20 7: Administrative - 7.2 Evaluation and Data Analysis EC is 3.4 and has been renamed Effective Service Delivery 7.3 Transfers to Other Units of Government EC is 7.2 7.4 Transfers to Non -entitlement Units (States and To be separately reported as part of territories only) NEU/Nan-UGLG module. Refer to Part 2 Section D. Coronavlrus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance M2 US OEPMVAMTOETHETREASURY Appendix 2: Evidenced -Based Intervention Additional Information What is evidence -based? For the purposes of the SLFRF, with the exception of investments in educational services (see additional information below), evidence -based refers to interventions with strong or moderate evidence as defined below: Strong evidence means that the evidence base can support causal conclusions for the specific program proposed by the applicant with the highest level of confidence. This consists of one or more well-clesigned and well -implemented experimental studies Conducted on the proposed program with positive findings on one or more intended outcomes. Moderate evidence means that there is a reasonably developed evidence base that can support causal conclusions. The evidence base consists of one or more quasi -experimental studies with positive findings on one or more intended outcomes OR two or more non -experimental studies with positive findings on one or more intended outcomes. Examples of research that meet the standards include: well -designed and well implemented quasi -experimental studies that compare outcomes between the group receiving the intervention and a matched comparison group (i.e., a similar population that does not receive the intervention). Preliminary evidence means that the evidence base can support conclusions about the program's contribution to observed outcomes. The evidence base consists of at least one non -experimental study. A study that demonstrates improvement in program beneficiaries over time on one or more intended outcomes OR an implementation (process evaluation) study used to learn about and improve program operations would constitute preliminary evidence. Examples of research that meet the standards include: (1) outcome studies that back program beneficiaries through a service pipeline and measure beneficiaries' responses at the end of the program; and (2) pre- and post-test research that determines whether beneficiaries have improved on an intended outcome. For investments in educational services, "evidence -based", consistent with the American Rescue Plan Act, has the meaning in section 8101(21) of the Elementary and Secondary Education Act of 1965, as amended (20 U.S.C. 6301 at seq.). Please see page 16 of this Frequently Asked Questions resource on the Department of Education's Elementary and Secondary School Emergency Relief Programs and Govemor's Emergency Education Relief Programs for more information. Coronavirus Slate and Local Fiscal Recovery Funds Compliance and Repoding Guidance 47 US CEPWTMENTOF THE TREASURY Appendix 3: Expenditure Categories aligned with the Interim Final Rule 1: Public Health 1.1 COVID-19 Vaccination" 1.2 COVID-19 Testing" 1.3 COAD-19 Contact Tracing 1.4 Prevention in Congregate Settings (Nursing Homes, Prisons/Jails, Dense Work Sites, Schools, etc.' 1.5 Personal Protective Equipment 1.6 Medical Expenses (including Alternative Care Facilities) 1.7 Capital Investments or Physical Plant Changes to Public Facilities that respond to the COVID-19 public health emer enc 1.8 Other COVID-19 Public Health Expenses (including Communications, Enforcement, Isolation/quarantine 1.9 Payroll Costs for Public Health, Safety, and Other Public Sector Staff Responding to COVID-19 1.10 Mental Health Services' 1.11 Substance Use Services' 1.12 Other Public Health Services ative Economic Impacts •Household 2.1 Assistance: Food Programs*" 2.2 Household Assistance: Rent, Mortgage, and Utility Aid' ^ 2.3 Household Assistance: Cash Transfers' " 2.4 Household Assistance: Internet Access Programs' ^ 2.5 Household Assistance: Eviction Prevention* " 2.6 Unemployment Benefits or Cash Assistance to Unemployed Workers' 2.7 Job Training Assistance (e.g., Sectoral job -training, Subsidized Employment, Employment Supports or Incentives)* " 2.8 Contributions to UI Trust Funds 2.9 Small Business Economic Assistance (General)' ^ 2.10 Aid to Nonprofit Organizations' 2.11 Aid to Tourism, Travel, or Hospitality 2. 22 Aid to Other Impacted Industries 2.13 Other Economic Support' " 2. 44 Rehiring Public Sector Staff 3: Services 3.1 to Disproportionately Education Assistance: Early Leaming` " 3.2 Education Assistance: Aid to High -Poverty Districts " 3.3 Education Assistance: Academic Services' " 3.4 Education Assistance: Social, Emotional, and Mental Health Services' ^ 3.5 Education Assistance: Other' " 3.6 Healthy Childhood Environments: Child Care' " 3.7 Healthy Childhood Environments: Home Visiting' " 3.8 Healthy Childhood Environments: Services to Foster Youth or Families Involved in Child Welfare System* " 3.9 Healthy Childhood Environments: Other. " 3.10 Housing Support Affordable Housing* " 3.11 Housing Support: Services for Unhoused Persons" ^ Coronavirus Stare and Local Fiscal Recovery Funds Compliance and Reporting Guidance 48 US. DEPARTMENLOF THE TREASURY 3.12 Housing Support: Other Housing Assistance` ^ 3.13 Social Determinants of Health: Other' A 3.14 Social Determinants of Health: Community Health Workers or Benefits Navigators' ^ 3.15 Social Determinants of Health: Lead Remediation A 3.16 4: Premium Social Determinants of Heahh: Community Violence Intemenficns' ^ Pay 4.1 Public Sector Employees 4.2 5: Infrastructure Private Sector: Grants to Other Employers 5.1 Clean Water: Centralized Wastewater Treatment 5.2 Clean Water: Centralized Wastewater Collection and Conveyance 5.3 Clean Water: Decentralized Wastewater 5.4 Clean Water: Combined Sewer Overflows 5.5 Clean Water: Other Sewer Infrastructure 5.6 Clean Water: Storrnwater 5.7 Clean Water: Energy Conservation 5.8 Clean Water: Water Conservation 5.9 Clean Water: Nonpoint Source 5.10 Drinking water: Treatment 5.11 Drinking water. Transmission & Distribution 5.12 Drinking water: Transmission & Distribution: Lead Remediation 5.13 Drinking water: Source 6.14 Drinking water Storage 5.15 Drinking water: Other water infrastructure 5.16 Broadband: "Last Mile projects 5.17 i 6: Revenue Broadband: Other projects Replacement 6.1 Administrative Provision of Government Services 7.1 Administrative Expenses 7.2 Evaluation and Data Analysis 7.3 Transfers to Other Units of Government 7.4 Transfers to Non-enthlemenl Units (States and territories only) Coronavirus state and Local Fiscal Recovery Funds Compliance and Reporting Guidance 49 US. DEPARITIENTOF THE TREASURY Revision Log r. ' 1.0 June 17 2021 Initial publication 1.1 June 24, 2021 Pg, 12, removed references to *summary' level with respect to reporting by Expenditure Categories in the Interim Report to avoid confusion. • Pg. 13, revised the coverage period end date for the Interim Report from June 30, 2021 to July 31, 2021 to align with the IFR. Pg. 13, removed references to *summary' level with respect to reporting by Expenditure Categories in the Interim Report to avoid confusion. Pg. 31, removed references to "summary level' with respect to Expenditure Categories in Appendix 1 to avoid confusion. 1.1 September 30, 2021 . Announced the extension in the Project and Expenditure Report submission date, onginaly due an October 31, 2021. 2.0 November 5, 2021 s Updated Subrecipient Monitoring section to clarify beneficiaries and recipients. Updated references to Interim Final Rule comment period as comment period is closed. Updated reporting tiers, thresholds and timelines in Part 2 Table 2, Reporting Requirements by recipient type, as well as Part 2 A and Part 2 B. Updated reporting periods for Interim Report and Project and Expenditure reports. . Added concept of Adopted Budget to Project and Expenditure Report data fields. Noted phase in of Required Programmatic Data in the Project and Expenditure Report. Removed certain data fields from the Ineligible Activities: Tax Offset Provision under the Recovery Plan. Separated reporting of NEU Distributions (for States and territories) from the Interim Report and Project and Expenditure Reports as information will be provided on an ongoing basis. 2.1 November 15, 2021 . Updated pages 9 and 11 to note that civil rights cer6(cation is not applicable to Tribal Governments, 3.0 February 28, 2022 . Updated to incorporate reporting updates under the final rule 4.0 June 10, 2022 Updated Recovery Plan guidance to incorporate minor revisions • Updated language around certain data fields that were required for April 2022 reporting . Updated data fields for Ineligible Activities: Tax Offset Provision for the Project and Expenditure report • Located Broadband data fields 4.1 June 17, 2022 Updated clerical errors in Ineligible Activities: Tax Offset Provision 4.2 August 15, 2022 Updated to clarify resources for Uniform Guidance applicability and add a reference to an alternative to the Single Audit available for eligible recipients 5.0 September 20, 2022 . Updated to note phase in of broadband location by location data fields Coronavirus State and Local Fiscal Rewvery Funds Compliance and Reporting Guidance 50 113 West Mountain Street Fayravvile, AR 72701 (479)575-8323 Resolution: 257-22 File Number: 2022-1000 SUBRECIPIENT AGREEMENT WCRC DEAD HORSE MOUNTAIN RD. LAND PURCHASE: A RESOLUTION TO AUTHORIZE MAYOR JORDAN TO SIGN A SUBRECIPIENT AGREEMENT WITH THE WATERSHED CONSERVATION RESOURCE CENTER FOR THE PURCHASE OF ABOUT 223 ACRES OF LAND NEAR DEAD HORSE MOUNTAIN ROAD UTILIZING AMERICAN RESCUE PLAN ACT FUNDS IN THE AMOUNT OF $1,445,400.00, AND TO APPROVE A BUDGET ADJUSTMENT WHEREAS, the City of Fayetteville has received funding from the American Rescue Plan Act (ARPA) that can be used m support the protection of water quality and watersheds and invited non-profit organizations to submit proposals for environmental projects to fund with the available ARFA funding; and WHEREAS, the Watershed Conservation Resource Center submitted an application requesting $1,445,000.00 in American Rescue Plan Act funds for the purchase of about 223 acres of land near Dead Horse Mountain Road for the purpose of conservation, restoration, and enhancement to provide water quality improvements and protection of the Beaver Lake Watershed; and WHEREAS, the property can provide significant ecological, gran infrastructure, and social value to the citizens of Fayetteville for generations to come and helps to prevent additional water treatment costs, keeping future drinking water costs for citizens of Fayetteville economical; and WHEREAS, the property treats stormwour mnoB'and supports water quality protection of our drinking water source for the residents of Fayetteville and Northwest Arkansas; and WHEREAS, the Subrecipient Agreement would provide funding in the amoum of$1,445,400.00 in addition to a contribution from the Beaver Water District in the amount of $800,000.00 for the Pyp 1 NFbCen 11 N Resdufion: 257-22 Fas Number 2022-1000 purchase ofthe land. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF FAYETTEVILLE, ARKANSAS: Section : That the City Council of the City of Fayetteville, Arkansas hereby authorizes Mayor Jordan to sign a Subrecipient Agreement with the Watershed Conservation Resource Center W provide the amount of 51,445,400.00 in American Rescue Plan Act funds to purchase approximately 223 acres new Dead Home Mountain Road, and further authorizes Mayor Jordan to execute all other documents necessary to consummate the purchase of the land as well as any additional agreevnents related to the ownership, use, and conservation of the land. Section 2: That the City Council of the City of Fayetteville, Arkansas hereby approves a budget adjustment, a copy of which is attached to this Resolution. PASSED and APPROVED on 11/12022 Apptrov Lioneld Jo ayor Attest: Pp 2 PmMm11/L}a City of Fayetteville, Arkansas - Budget Adjustment Form (Legistar) Budgetyear Division Adjustment Numoer /Org2 Non -Departmental (800) 2�22 Reauestor: Council Member Teresa Turk BUDGET ADJUSTMENT DESCRIPTION / JUSTIFICATION: A RESOLUTION TO AUTHORIZE MAYOR JORDAN TO SIGN A SUBRE IPIENT AGREEMENT WITH THE WATERSHED CONSERVATION RESOURCE CENTER FOR THE PURCHASE OF ABOUT 223 ACRES OF LAND NEAR DEAD HORSE MOUNTAIN ROAD UTIU71NG AMERICAN RESCUE PLAN ACT FUNDS IN THE AMOUNT OF $1,445,400.00 AND APPROVAL OF A BUDGET ADJUSTMENT. COUNCIL DATE: 11/15/2022 LEGISTAR FILE ID#: 2022.1000 1CeAli+VSPI`i, r 10/25/2022 5:26 PM Budget Director Date TYPE: JOURNAL#: D - (City Council) GLDATE: RESOLUTION/ORDINANCE CHKD/POSTED: / v.2D221019 TOTAL 1,445.400 1.445,400 Increase / (Decrease) Proiect.Sub# Account Number Expense Revenue Project Sub Deil AT Account Name 2246.800.9718-5905.00 1,445,400 20023 2021 EX Land - Acquisition 2246.200.9246-4309.01 - 1,44SA00 20023 2021 RE Federal Grants - Operational H:\BudgetAdusUents\pTL_Budget\COYCWNCIL\I1-1S22\M2210W-BAARPAWCRCWadPurchase Dead H.MtnAdm 10fl Dead Horse Mountain Road General Addendum City of Fayetteville Staff Review Form 2023-0281 Legistar File ID ARCHIVED N/A City Council Meeting Date - Agenda Item Only N/A for Non -Agenda Item Steve Dotson 2/2/2023 INTERNAL AUDIT(036) Submitted By Submitted Date Division / Department Action Recommendation: Recommend Mayor's signature on "General Addendum Signature Page For Buyers" to add the City to the title for the Dead Horse Mountain Road land purchase. Per RES 257-22 passed on 11/1/2022, City Council authorized the Mayor to enter into a subrecipient agreement with the Watershed Conservation Resource Center to purchase approximately 223 acres of land utilizing American Rescue Plan Act funds in the amount of $1,445,400.00. RES 257- 22 included a budget adjustment for the funding arrangements. The subrecipient agreement was signed by the Mayor on 12/2/2022. Budget Impact: Account Number Project Number Fund Project Title Budgeted Item? Current Budget Funds Obligated Current Balance Does Item have a cost? Budget Adjustment Attached? Purchase Order Number: Change Order Number: Original Contract Number: Comments: Item Cost Budget Adjustment Remaining Budget Previous Ordinance or Resolution# 2si-22 Approval Date: 02/03/2023 CITY OF FAYETTEVILLE ARKANS ARKANSAS TO: Mayor THRU: Susan Norton, Chief of Staff FROM: Steve Dotson, Internal Auditor DATE: February 2, 2023 SUBJECT: General Addendum — Signature Page for Buyers STAFF MEMO Recommend Mayor Jordan's signature on the General Addendum — Signature Page for Buyers (page 3 of "WCRC Addendum Documents" PDF). BACKGROUND: Per RES 257-22 passed on 11/1/2022, City Council authorized the Mayor to enter into a subrecipient agreement with the Watershed Conservation Resource Center to purchase approximately 223 acres of land utilizing American Rescue Plan Act funds in the amount of $1,445,400.00. RES 257-22 included a budget adjustment for the funding arrangements. DISCUSSION: WCRC submitted a request for funding under the ARPA program as a subrecipient, to purchase approximately 223 acres of land for the purpose of conservation, restoration, and enhancement to provide water quality improvements and protection of the Beaver Lake Watershed. BUDGET/STAFF IMPACT: This Watershed Conservation Resource Center land purchase will be funded with American Rescue Plan Act funds. ATTACHMENTS: WCRC Addendum Documents with the ARPA subrecipient agreement, land purchase contract information, and RES 257-22 included. Mailing Address: 113 W. Mountain Street www.fayetteville-ar.gov Fayetteville, AR 72701 Form Simplicity 1127/23, 11:20 AM O� ® Copyright General Addendum ArArlum2022 REALIM ... "Mic aaprl Page 1 of 2 Form Serial Number: 099394-200167.984000 Regarding the Contract/Agreement(Form Serial Number 074521-300166-0326469 ), dated (month) August (day) 15 , (year) 2022 , between Buyer/Lessee, Watershed Conservation Resource Center, Beaver Water District, City of Fayetteville, Arkansas ,and Seller/Lessor, COS Farms LLC , covering the real property known as TBD 225 MOL Acres Dead Horse Mountain Rd. Favatteville, AR 72701 (the "Property"), the undersigned Buyer/Lesee and Seller/Lessor, In consideration for the covenants, agreements and promises made below and other good and valuable consideration, receipt and sufficiency being acknowledged, agree as follows: 1. PARTIES: The buyers are to be Watershed Conservation Resource Center, Beaver Water_ District and City of Fayetteville, Arkansas. 3. PURCHASE PRICE: Purchase pirlce to be A16di;400.00 13. CLOSING: Closing to be on or before 2,2712023 Purchase is pending Beaver Water DAWi Board of Directors approval. See attached Signature Page for Buyers Serial Number: 000111 Page 1 of 2 wwrea era..n..n ro,rr, Simplicity htfps://ara.Mrmsimplicity.com/apilprint/ptlbviewer Page 1 of 2 Form simplicity 1127/23, 1T20 Ant General Addendum ®� Copyright Arkansas REALTORS' Page 2 of 2 ns"LTos— ......... Association This General Addendum, upon its execution by both parties, incorporates by reference all provisions of the above -referenced ContractlAgraement not expressly modified herein. This General Addendum may be executed in multiple Counterparts each of which shall be regarded as an original hereof but all of which together shall constitute one in the same. Electronic signatures shall be deemed original signatures and shall be binding upon the parties. EXPIRATION: This General Addendum shall not be effective unless siggnori by Buyer/Lessee and SellerAAssor on or before (mooch) Fehruary (day) 3 (year) 202E , at 5:00 ❑(a.m.) ❑x (p.m.). THIS IS A LEGALLY BINDING AGREEMENT WHEN SIGNED BY THE PARTIES BELOW. REAP IT CAREFULLY. YOU MAY EMPLOY AN ATTORNEY TO DRAFT THIS FORM FOR YOU. IF YOU 00 NOT UNDERSTAND THE EFFECT OF ANY PART, CONSULT YOUR ATTORNEY BEFORE SIGNING. REAL ESTATE AGENTS CANNOT GIVE YOU LEGAL ADVICE THE PARTIES SIGNED BELOW WAIVE THEIR MGM TO HAVE AN ATTORNEY DRAFT THIS FORM AND HAVE AUTHORIZED THE REAL ESTATE AGENTIS) TO FILL IN THE BLANKS ON THIS FORM, THIS FORM IS PRODUCED AND COPYRIGHTED BY THE"KANSAS REALTORV ASSOCIATION, THE SERIAL NUMBER BELOW IS A UNIQUE NUMBER NOT USED ON ANY OTHER FORM. THE SERIAL NUMBER BELOW SHOULD BE AN ORIGINAL PRINTING, NOT MACHINE COPIED, OTHERWISE THE FORM MAY HAVE BEEN ALTERED, DO NOT SIGN THIS FORM IF IT WAS PREPARED AFTER DECEMBER 31, 2022, FORM SERIAL NUMBER:88938a200157ree0005 REA ESTATCLICE SEERARE REGULAT_EgBYTHEARKANSAS REAL EM C^—MMISEIO&FALlrryE„SEENASUNOT PROPERLY. REPRESENTED YOLLYOURAY FILE A COMPLAIMALAREOANKMSAS.00V. The abow!.9eneral Addendum is executed on (month) (day) 7-7 •(year)2023 .at //-'-30_ Aa.m.) ❑(P.m.). Tice North Realty Group S.11IM; Finn Signature: Printed Name: Den1H/ Short PrtnG al or Ex cutive BroNe Signature: Printed Name: Denial Short Printed Name: See S/gnetum Page for Buyers auyer/Loaxss Printed Name: Buyedlawass The above jeneral Addendum is 7cuted on (month) �.,�r� (day) %, (year) 102-5 . at �2: 3 v ❑(a.m.) [](p.m.). True North Realty Group Listing Firm Signature: 1, 1��`J Signature: Printed NamDenlal Short Printed Name: CDS Firma LLC Pdne m Executive grIoaay'Ar Seller/Lessor Signature:_ Signature: Printed Name: Daniel Short Printed Name: Listing Agent Saller/Lessor Page 2 of 2 aw. anwa 1 .r.m. Aa..wf b:. sea.i `rm..ERR, a... I FA — Simplicity https://ara.formslm Iu,IIy.com/aPvPnnt/Pdf-viewer Page 2 of 2 Signature Page for Buyers Serial Number: 000111 General Addendum Serial Number: 089394-200167-4940005 CITY OF FA)ETTEVIILLLE, ARKANSAS Uoneld 46rdai Mayor DATE: 62 I03 12-02-3 ATTEST: By: c ;rAYE f7P✓Il.i,.E ara Paxton, CI Clerk Treasiq ;9,P . BEAVER WATER DISCTRICT M. Lane Crider, P.E., Chief Executive Officer DATE: WATERSHED CONSERVATION RESOURCE CENTER By: Sandi J. Fo mica, Executive Director DATE: / - 2. i - Z 3 © INSUARANCE COMPANY City of Fayetteville, Arkansas 113 W Mountain Street Fayetteville, AR 72701 DATE: 022T/2023 SETTLEMENT AGENT OR APPROVED ATTORNEY: File Number: 2217586-106 WACO TM Company Buyer(syBanower(s): City of Fayetteville, Arkansas 4100 Corporate Center Dr Ste 200 Property Allows: 1691 South Dead Horse Mountain Road, Fayetteville, AR 72701 Springdale, AR 72762-5766 WACO Title Company 4100 Corporate Canter Dr Ste 200 Springdale, AR 727625766 To Whom It May Concern: In consideration of Your acceptance of this letter, Chicago Title Insurance Company (the "Company'), agrees to indemnify You for actual loss of Funds Incurred by You in connection with the closing of Me referenced real estate transaction (the 'Real Estate Transaction") conducted by Me Settlement Agent or Approved Attorney on or after fire Date of this letter, subject to Me Requirements and Conditions and Exclusions set forth below: REQUIREMENTS 1. The Company issues or is contractually obligated to issue a Policy in connection with Me Real Estate Trensadlon; 2. You are to be: (a) a lender secured by pro bopower on Me Insured Mortgage on Me lithe to Me Land; m (b) a purchaser, seller or lessee of the Title to the Land; 3. The aggregate d all Funds You transmit 0 the Settlement Agent a Approved Attorney for the Real Estate Transaction time not exceed E5,000,000.0; and 4. Your loss is solely caused by: (a) any failure &the Settlement Agent or Approved Attorney W comply with Your written dosing instructions that relate W: 0) the status of the Title to the Land or the validity, enforceability, or prionry, of the lien IN Me Insured Mortgage, including obtaining any documents m Me disbursement of Funds necessary W establish Me status of Title or Me lien of tbe Insured Mortgage; or (u) obtaining any other document, sp wificaly required by You, but only to Me extent Mat the failure to obtain Me document adversely affects the status of Me Title to Me Land or Me validity, enforceability, or priority, of Me lien of the Insured Mortgage on Me This, W Me Lang or (fill Fraud in handling d any documents in connection with such closing but only to Me extent such fraud relates W this status of Me Title to Me Land or Me validity, enforceability or priority of Me Insured Mortgage on Me This to me Lend is (b) theft or misappropriation by Me Settlement Agent or Approved Attorney in handling Your Funds or documents in connection with the closing, but only to the extent Mat Me thee or misappropriation adversely affects Me status of Me Title W Me Land or Me validity, enforceability, or priority of the lien of the Insured Mortgage on the Title to the Land. CONDITIONS AND EXCLUSIONS 1. Your transmittal ct Funds or documents to Me Settlement Agent or Approved Attorney for Me Real Estate Transaction constitutes Your acceptance of this letter. 2. For purposes d this teller: (a) 'Commitment' means the Company's written contractual agreement W issue the Policy. (b) 'Funds' means Me money received by the Settlement Agent m Approval Attomey for the Real Estate Transaction. to) Tollic means Me correct m contracts of this Insurance, each in a form adopted by Me Ametlmn Land Title Association, issued or to be issued by Me Company in connection won Me closing of the Real Estate Transaction. (d) You' sir Yopr means: () Me Addressee& this letter, and (ti) subject W all rights and defenses relating to a claim under this letter Mat Me Company would have against the Addressee, (A) Me assignee of the Insured Mortgage, provided such assignment was for value and the assignee was, at the Gee of Me assignment, without Knowledge of facts that reveal a claim under this latter, and (B) Me warehouse lender in connection with Me Insured Mortgage. (a) "IndeMedness", "Insured Mortgage', "Knowledge- or "Known', 'Land', and'Title- have the same meaning given them in Me American land Title Assmiatlon Loan Policy. 3. The Company is not liable under this letter for any We arising from any: (a) failure of the Settlement Agent or Approved Attorney W comply with Your closing Instructions Met require We insurance protection In compendium win Me Real Estate Transaction inconsistent with Mat set faith in Ma Commitment. Your written closing instructions received and accepted by the Settlement Agent or Approved Attorney after issuing the Commitment that require the removal, where allowed by stage law, mle, or regulamn, of specific Schedule B Exceptions from Coverage m compliance with Me requirements contained in Me Commitment will not be deemed W require inconsistent title insurance protection; (b) loss or impairment of Funds in Me mum of collection or while on deposit with a bank due to bank failure, insolvency, or suspension, except loss or impairment resulting from failure of Me Settlement Agent or Approved Attorney to comply with Your written closing Instructions to depceit Your Funds In a bank that You designated by name; 10) constitutional or statutory lien or claim of lien Mat apses from services, labor, materials, or equipment, if any Funds are W be used for the pumbse of construction, alteration, or renovation. Condition and Exclusion 3.(c) does not modify m limit Your coverage, d any, as to any lien for services, labor, materials, or equipment in Me Policy; Ill defect, lien, encumbrance, adverse claim m other matter in connection with Me Real Estate Transactor. Condition and Exclusion 3.(d) does not modify or limit Your coverage in the Policy; (a) fraud, theft, dishonesty, misappropriation, or negligence by You m by Your employee, agent, attorney, or broker, (0 fraud,theft,dishonesty, or misappropriation by anyone other than de,Company, Settlement Agent or Approved! Attorney; (g) sediment or release of any claim by You without Me Companys what, M) raiders created, suffered, assumed, agreed W, or Known by You; (i) failure of Me Settlement Agent m Approved Attorney W determine the validity, enforceability, or Me effectiveness of a document required by Your closing instructions. Condition and Exclusion 3.(i) dces not modify or limit Your coverage in Me Policy; 0) Any law regulating trade, lending, credit, sale, and debt Collection practices involving Consumers; any Consumer financial law, or any other law deleting fo truth -Iry lentling, pretlatory lending, Or a borrowers ability to repay a ban Including any failure of Me Settlement Agent or Approved Attorney to comply with Your closing instructions ctions relating to those laws; (k) ordered or state laws establishing Me standards or requirements for asset -backed securitization including, but not limited b, exemption from credit risk retention, Including any failure of the Settlement Agent or Approved Monday to comply with Your dosing insbddgns relating W Made laws; (1) periodic disbursement of Funds W pay for construction, alteration, or renovation on the Land; (m) &Moment Agent or Approved Attorney acting in the Capacity of a qualified intermediary or facilitator for tax defened exchange transactions as provided In Section 1031 of the Internal Revenue Code; far (n) wie fraud, mail fraud, telephone baud, facsimile baud, unauthorized access W a Computer, networtc, email, Or document Production system, business email compromise, identity theft, or diversion of Funds to a person or account not entitled W receive the Funds. Condition and Exclusion 3.(n) time not modify or limit: (i) Your coverage in the Policy; or (d) indemnification in this letter for Your loss solely Caused by hand, Mat, dishonesty, or misappropriation by Me Settlement Agent or Approved Attorney in handling Your Funds or documents in connection with Me closing, but only to Me extent that Me fraud, Meft, dishonesty, or misappropriation adversely Shads Me status of the Title W Me Land or Me validly, enforceability, or priority of Me Ilan of Me Insured Mortgage on Me Title to Me Land. 4. If Me dosing Is to be Conducted by an Approved Attorney, a Commitment in connection with the Real Estate Transaction must have been received by You prior W Me transmittal of Your final closing instructions to he Approved Attorney. S. When the Company indemnifies You pursuant to this letter, It Is subrogatod to all rights and remedies You have against any person, Brady, or property had You not been indemnified. The Company's liability for Indemnification Is reduced to to extent Mat You have impaired Me value of this subrogation night. 6. The Company's liability for lass under this etler does not exceed the best of: (a) Me amount of Your Funds; (b) Me Company's liability under the Policy at Me time written notice of a calm is made under this letter; (c) the value of Me lien of Me Insured Mortgage; (d) Me value of the Title to Me Land insured or W be insured under Me Policy at Me time written notice of a claim is made under this otter, or (a) the amount stated in Requirement 3. T. The Company is liable only to Me owner of the Indebtedness at Me time Mat payment is made. Condition and Exclusion ] does not apply to a purchaser, borrower, or lessee. 8. Payment to You or to the owner of the Indebtedness under either Me Policy or from any other source reduces liability under this after by this same amount. Payment in accordance with the terms of this letter Constitutes a payment pursuant to Me Conditions W the Policy. 9. The Settlement Agent is Me Company's agent only for Men limited purpose of Issuing policies. Neither Me Settlement Agent nor the Approved Aftomey is the Company's agent for the purpose of pmYiding closing or settlement services. The Company's liability for Your loss arising from dosing or settlement services is drictty limited to Me contractual protection expressly providetl in this alter. The Company Is not kable for loss resuNng from Me fraud, theft, dishonesty, misappropriation, or negligence of any party W Bra Real Estate Transaction, the lack of creditworthiness of any borrower Connected WM Me Real Estate Transaction, or Me failure of any colateral to adequately secure a ban connected with Me Real Estate Transaction. 10. The Company is not liable for a oss 9Me virgin notice of a claim is not received by Me Company within one year hem the date of the transmittal of Funds. The Condition Met Me Company must be provided] with written notice under Condition and Exclusion 10 will not be excused! by lade of prejudice to the Company. 11. You must promptly send written notice of a claim untler Mis letter to Me Company at U, propel once at P.O. Box 45023, Jacksonville, FL 32232-5023. If the Company Is prejudiced by Your allure to provide prompt notice, Me Company's liability M You under this attar is reduced W Me extent of the Peddles. 12. When requested by the Company, You, at Me Company's expense, must: (a) give Me Company all reasonable ald In; (i) sending evidence, obtaining witnesses, prosecuting, or defending any action or proceeding, or effecting any settlement; and (ii) any other lawal ad that in Me opinion of the Company may be necessary or desirable to enable the Company's investigation and determination of Its liability under this letter; (b) deliver to Me Company all records, in whatever medium maintained, Mat pertain to the Real Estate Transaction or any claim under this leter, and (c) submit W examination under oain by any authorized representative of Me Company with rasped to any such records, Me Real Estate Transaction, any claim untler this letter or any other matter reasonably deemed relevant by Me Company. 13. The Company is not liable under this letter M. (a) the Real Estate Transaction has not closed Whin one year from Me Date of this defter, or (b) at any time after the Date of this letter, but before he Real Estate Transaction closes, Me Company provides written notice of termination of this latter to Me Addressee at Me address set forth above. 14. The protection of this letter extends only to real estate closings which eke place in the Sate of Arkansas, and any court must apply Me law of that state b interpret and enforce Me terms of this letter. The court must not apply conflicts of law principles W determine Me applicable law. Any litigation or other proceeding under this letter must be filed only in a sate or federal court within Me United States of America or its teritones having jurisdiction. 15. There is no night for any claim under this letter W be aMitratetl or litigated on a class action basis. This letter supersedes and Cancels any previous latter or similar agreement for dosing protection Mat applies to the Reel Estate Transaction and may not be modified by Me Settlement Agent or Approved Attorney. CPL80504(412021) Chicago Title Insurance Company By: 4^ f 11 AA LETTER ID: 51629632A MR6164.40.]2.04 PleasediroctallmrteepdMenreaMirrmririealo: 601 RtwM Ave Jwc mille-FL322o4Teaphone{8110)5 4MI M AUTHORIZED FOR USE IN AmUNSAs AND MAY BE USED ONLY FOR THE SPECIFIC TRANSACTION IDENTIFIED ABOVE. City of Fayetteville Staff Review Form 2023-0268 Legistar File ID N/A City Council Meeting Date - Agenda Item Only N/A for Non -Agenda Item Dead Horse Mountain Memorandum of Tenants in Common Agreement ARCHIVED Steve Dotson 2/17/2023 INTERNAL AUDIT (036) Submitted By Submitted Date Division / Department Action Recommendation: Recommend Mayor's signature on "Memorandum of Tenants In Common Agreement" relating to the Dead Horse Mountain Road land purchase. Per RES 257-22 passed on 11/1/2022, City Council authorized the Mayor to enter into a subrecipient agreement with the Watershed Conservation Resource Center to purchase approximately 223 acres of land utilizing American Rescue Plan Act funds in the amount of $1,445,400.00 and to execute necessary ownership documents. RES 257-22 included a budget adjustment for the funding arrangements. The subrecipient agreement was signed by the Mayor on 12/2/2022. Budget Impact: Account Number Fund Project Number Project Title Budgeted Item? Current Budget $ Funds Obligated $ Current Balance Does item have a cost? Item Cost $ - BudgetAdjustmentAttached? Budget Adjustment Remaining Budget vzozmszr Purchase Order Number: Previous Ordinance or ResoludonN 'Zrj"(- 22 Change Order Number: Original Contract Number: Comments: Approval Date: 02/23/2023 CITY OF FAYETTEVILLE ARKANS ARKANSAS TO: Mayor THRII: Susan Norton, Chief of Staff FROM: Steve Dotson, Internal Auditor DATE: February 17, 2023 SUBJECT: Memorandum of Tenants In Common Agreement STAFF MEMO RECOMMENDATION: Recommend Mayor Jordan's signature on the "Memorandum of Tenants In Common Agreement'. BACKGROUND: Per RES 257-22 passed on 1111/2022, City Council authorized the Mayor to enter into a subrecipient agreement with the Watershed Conservation Resource Center to purchase approximately 223 acres of land utilizing American Rescue Plan Act funds in the amount of $1,445,400.00 and to execute all other documents necessary to consummate the purchase of the land as well as any additional agreements related to the ownership, use, and conservation of the land. RES 257-22 included a budget adjustment for the funding arrangements. DISCUSSION: WCRC submitted a request for funding under the ARPA program as a subrecipient, to purchase approximately 223 acres of land for the purpose of conservation, restoration, and enhancement to provide water quality improvements and protection of the Beaver Lake Watershed. BUDGETISTAFF IMPACT: This Watershed Conservation Resource Center land purchase will be funded with American Rescue Plan Act funds. ATTACHMENTS: WCRC Memorandum of Tenants In Common agreement, property exhibit, ARPA subrecipient agreement, land purchase contract information, and RES 257-22 included. Mailing Address: 113 W Mountain Street www.fayetteville-ar.gov Fayetteville, AR 72701 RECORDING REQUESTED BY WHEN RECORDED MAIL TO: Sandi 1. Formica Watenhed Conservation Resource Center 380 W. Rock St. Fayetteville, Arkansas 72701 Type: REAL ESTATE Kind: AGREEMENTS Recorded: 2/28/2023 11:14:35 AM Fee Amt: $45.00 Page 1 of 7 Washington County, AR Kyle Sylvester Circuit Clerk SPACE ABOVE THIS LINE MEMORANDUM OF TENANTS IN COMMON AGREEMENT THIS MEMORANDUM OF TENANTS IN COMMON AGREEMENT (the "Memorandum") is dated as of February 27s, 2023, by and among the Watershed Conservation Resource Center, an Arkansas nonprofit corporation ("WCRC"), the City of Fayetteville, Arkansas, a duly constituted municipality under the laws of the State of Arkansas (the "City"), Beaver Water District, a public nonprofit Regional Water Distribution District duly constituted under the authority of A.C.A. § 14-116-101 et seq. ("BWD'7, all as tenants in common (each sometimes referred to as a "Tenant in Common" or collectively as the "Tenants in Common'). A. The Tenants in Common have entered into that certain Tenants in Common Agreement dated February 23rd. 2023 (the "TIC Agreement"), pertaining to certain real property more particularly described on Exhibit A attached hereto (the "Property"). B. This Memorandum is made and entered into solely for the purpose of providing notice of the TIC Agreement to all third parties. NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Tenants in Common hereby declare and agree: 1. The Tenants in Common hereby created a tenancy -in -common in order to coordinate all actions taken with respect to the Property pursuant to the terms and provisions of the TIC Agreement. The TIC Agreement is hereby incorporated by this reference as if set forth herein in full. 2. All communications with the Tenants in Common under this Agreement, inclubing any inquiries regarding the specific terms of the TIC Agreement, should be addressed to each Tenant in Common at its principal place of business. 3. To the extent of any inconsistency between the terms of the TIC Agreement and this Memorandum, the terns of the TIC Agreement shall prevail and control. (REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.] File Number: 20230000ab70 PMe 1 of 7 IN WITNESS WHEREOF, the parties have executed this Memorandum as of the date set forth above. WATERSHED CONSERVATION RESOURCE CENTER Ey: SANDI I. FORMICA Executive Director STATE OF ARKANSAS COUNTY OF On this A-5day of F&brlsall 20AS before me, i—Or. J.�nn allotary Public, duly commissioned, qualified and acting within and for said County and State, appeared in person the within named Sandi 1. Formica (being the person or persons authorized by said entity, to exectrte such instrument, stating their respective capacities in that behalf), to me personally well known (orsatisfactorily proven to be such peponj who speed that they were the Executive Directory of the Watershed Coma srso lion Resource Center, an Arkansas nonprofit corporation, and were duly authorized in their respective capacities to execute the foregoing instrument for and in the name and behalf of said entity, and further stated and acknowledged that they had so signed, executed and delivered said foregoing instrument for the consideration, uses and purposes therein mentioned and set forth IN TESTIMONY WHEREOF, I base hereunto set my hand and official seal this —63 day of Februe-r� ,2023. Notary Public My Commission Expires: LORI LINN Notary Public -Arkansas Washington County MY Commission Expires 04-15-2029 Commission 012707395 11 Signature Page ooMemorandum of We Agreement File Number: 2023-ON04870 Page 2 of CITY OFF YETT EVILLA ARKANSAS By: IONELD JORD N ayor ATTEST: By: — ""f rV O t : KARA PAXTON, ity Clerk-,Ooma . y STATE OF ARKANSAS ttininssss COUNTY OF Wash' On this 23 day of �oCw20.Z3 before me, �.T S a Notary Public, duly commissioned, qualified and acting, within and for said Countyared in person the within named Limuld Jordan and Kam Paxton (being the person or persons authorized by said entity, to execute such instrument, stating their respective capacities in that behalf), to me personally well known (or satisfactorily proven to be such person), who stated that they were the Mayor and City Clerk -Treasurer of the City of Fayetteville, Arkansas, a duly constituted municipality under the laws of the State of Arkansas, and were duly authorized in their respective capacities to execute the foregoing instrument for and in the name and behalf of said entity, and further stated and acknowledged that they had so signed, executed and delivered said foregoing instrument for the consideration, uses and purposes therein mentioned and set forth. TTT-���-���,�""""���� IN TESTIMONY WHEREOF, I have hereunto set my hand and official sea] this Z3 day of ggut& 2023. i sJ`t-NEY sP0 h', `SSON Notary Publi — .? nOTARI, G: My Commission Expires: Q-0t,4037- Sigrmture Page to Memorandum of 77C Agreement BEAVER ATER CT By: M. LANE CRIDER Chief Executive Officer STATE OF ARKANS S COUNTYOF� �677n {�^ On this�� rdSy of 2tD' fore me; , a Notary Public, duly commissioned, qualifie and actiR�, within and for said County and State, appeared in person the within named M. Lane Crider (being the person or persons authorized by said entity, to execute such instrument, stating their respective capacities in that behalf), to me personally well known (or satisfactorily proven to be such person), who stated that they were the Chief Executive Officer of Beaver Water District, a public nonprofit Regional Water Distribution District duly constituted under the authority of A.C.A. § 14-116-101 at seq., and were duly authorized in their respective capacities to execute the foregoing instrument for and in the time and behalf of said entity, and further stated and acknowledged that they had so signed, executed and delivered said foregoing instrument for the consideration, uses and purposes therein mentioned and set forth. f IN TESTIMONY WFIEREOF, I have hereunto set my hand and official seal this day of 2023. _ V-� lak] EAL N OWEN a .Public ARKANSAS COUNTY I V 1666n My Commission Expires: t Signature Page to Memorandum of IYC Agreement File Number: 2023-00004870 Pa,4 of EXHIBIT'A' TRACT A PART OF THE NORTHEAST QUARTER, PART OF THE NORTHWEST QUARTER, PART OF THE SOUTHWEST QUARTER AND PART OF THE SOUTHEAST QUARTER OF SECTION 23 AND PART OF THE NORTHWEST QUARTER OF SECTION 24 ALL LOCATED IN TOWNSHIP 16 NORTH. RANGE 30 WEST, WASHINGTON COUNTY, ARKANSAS, AND BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS: COMMENCING AT A THE SOUTHWEST CORNER OF SECTION 23, BEING MARKED BY A FOUND ALUMINUM CAP; THENCE ALONG THE SOUTH LINE OF SAID SECTION 23, S87'09'00"E A DISTANCE OF 2642.91 FEETTO THE SOUTHWEST CORNER OF SAID SOUTHWEST QUARTER OF THE SOUTHEAST QUARTER; THENCE S87"09'00"E A DISTANCE OF 110,79 FEET TO A POINT, SAID POINT BEING THE POINT OF BEGINNING AND BEING ON THE CENTERLINE OF THE WEST FORK OF THE WHITE RIVER; THENCE LEAVING SAID SOUTH LINE AND ALONG SAID CENTERLINE FOR THE FOLLOWING 27 COURSES: N36'55'35"W A DISTANCE OF 594.92 FEET TO A POINT; THENCE N35'57'45"W A DISTANCE OF 190.50 FEET TO A POINT; THENCE N22'03'28"W A DISTANCE OF 324.46 FEETTO A POINT; THENCE N17'29'31"W A DISTANCE OF 114.75 FEET TO A POINT; THENCE N27'55'19"E A DISTANCE OF 315.85 FEET TO A POINT; THENCE N07-14'29"E A DISTANCE OF 127.97 FEET TO A POINT; THENCE N13'40'52"W A DISTANCE OF 367.58 FEET TO A POINT; THENCE Nll-45-231-W A DISTANCE OF 27.77 FEET TO A POINT; THENCE NO2'41'22"E A DISTANCE OF 526.99 FEET TO A POINT; THENCE Nll"41'49"E A DISTANCE OF 590.87 FEET TO A POINT; THENCE N74"59'39"E A DISTANCE OF 329.33 FEET TO A POINT, THENCE N75-43'13"E A DISTANCE OF 228.67 FEET TO A POINT; THENCE N80'18'50"E A DISTANCE OF 144.47 FEET TO A POINT; THENCE NSS'32'43"E A DISTANCE OF 203.40 FEET TO A POINT, THENCE N25'56'32"E A DISTANCE OF 135.35 FEET TO A POINT; THENCE N07-09'03"E A DISTANCE OF 219.65 FEET TO A POINT; THENCE N57-22'13"E A DISTANCE OF 170.30 FEET TO A POINT; THENCE N87'56151"E A DISTANCE OF 170.30 FEET TO A POINT; THENCE S60'25'12"E A DISTANCE OF 219.61 FEET TO A POINT; THENCE S28'35'33"E A DISTANCE OF 297.90 FEET TO A POINT; THENCE S38`29'41"E A DISTANCE OF 228.73 FEET TO A POINT; THENCE S85'38'DS"E A DISTANCE OF 136.71 FEET TO A POINT; THENCE N79'55'25"E A DISTANCE OF 149.22 FEET TO A POINT; THENCE N39'38'51"E A DISTANCE OF 196.48 FEET TO A POINT; THENCE NOO'58'12"E A DISTANCE OF 163.69 FEET TO A POINT; THENCE N30'54'32"E A DISTANCE OF 216.91 FEET TO A POINT; THENCE S80-45'46"E A DISTANCE OF 348.02 FEET TO A POINT; THENCE LEAVING SAID CENTERLINE, N21'45'33"W A DISTANCE OF 969.07 FEET TO A POINT; THENCE 576'26'08"E A DISTANCE OF 111.76 FEET TO A FOUND T-POST; THENCE N81'06'42"E A DISTANCE OF 313.91 FEET TO A FOUND 1/2" REBAR (W/CAP, PS#1647); THENCE N81'34'53"E A DISTANCE OF 342.15 FEET TO A FOUND 1/2" REBAR, SAID POINT BEING ON THE WESTERLY RIGHT-OF-WAY OF SOUTH DEAD HORSE MOUNTAIN ROAD; THENCE ALONG SAID RIGHT-OF- WAY FOR THE FOLLOWING 16 COURSES: 62.24 FEET ALONG A CURVE TO THE RIGHT HAVING A RADIUS OF 65.94 FEET AND A CHORD BEARING AND DISTANCE OF S64'21'12"E A DISTANCE OF 59.96 FEET TO A FOUND 1/2' REBAR (W/CAP, PS#1547); THENCE N88'20'49"E A DISTANCE OF 66.41 FEET TO A FOUND 1/2" REBAR (W/CAP, PS#1547); THENCE N83'28'07"E A DISTANCE OF 298.63 FEET TO A FOUND 1/2" REBAR (W/CAP, PS#1547); THENCE S82'48'43"E A DISTANCE OF 55.52 FEET TO A FOUND 1/2" REBAR (W/CAP, PS#1547); THENCE S66'55'15"E A DISTANCE OF 59.93 FEET TO A FOUND 1/2" REBAR (W/CAP, PS#1547); THENCE S53'41'53"E A DISTANCE OF 36.20 FEET TO A FOUND 1/2" REBAR (W/CAP, PS#1547); THENCE S47'32'39"E A DISTANCE OF 356.23 FEET TO A FOUND 1/2" REBAR (W/CAP, PS#1547); THENCE S41'29'18"E A DISTANCE OF 48.14 FEET TO A FOUND 1/2" REBAR (W/CAP, PS#1547); THENCE S38'49'51"E A DISTANCE OF 44.78 FEET TO A FOUND 1/2' REBAR (W/CAP, PS#1547); THENCE S28'35'09"E A DISTANCE OF 254.02 FEET TO A FOUND 1/2' REBAR (W/CAP, PS#1547); THENCE S19'38'53"E A DISTANCE OF 43,63 FEET TO A FOUND 1/2" REBAR (W/CAP, File Number: 2023-00004870 Pepe 5 of 7 PS#1547); THENCE S16"02'07"E A DISTANCE OF 43.65 FEET TO A FOUND 1/2" REBAR (W/CAP, PS#1547); THENCE S08"27'34"E A DISTANCE OF 228.66 FEET TO A FOUND 1/2" REBAR (W/CAP, PS#1547); THENCE S07"15'39"E A DISTANCE OF 64.25 FEET TO A FOUND 1/2" REBAR (W/CAP, PS#1547); THENCE S07°15'39"E A DISTANCE OF 280.46 FEET TO A FOUND 1/2" REBAR (W/CAP, PS#1547); THENCE S08°09'33"E A DISTANCE OF 422.83 FEET TO A FOUND 1/2" REBAR (W/CAP, PS#1547); THENCE LEAVING SAID RIGHT-OF-WAY, S84°00'45"W A DISTANCE OF 1391.83 FEET TO A FOUND 1/2" REBAR (W/CAP, PS#1547); THENCE S05°06'34"E A DISTANCE OF 573.47 FEET TO A FOUND 1/2" REBAR (W/CAP, PS#1547); THENCE S89'47'27"W A DISTANCE OF 579.89 FEET TO A FOUND 1/2" REBAR (W/CAP, PS#1547); THENCE 500°00'01"W A DISTANCE OF 749.27 FEET TO A FOUND 1/2" REBAR (W/CAP, PS#1547); THENCE S83"47'34"W A DISTANCE OF 802.16 FEET TO FOUND 1/2" REBAR (W/CAP, PS#1547); THENCE SOO'17'51"W A DISTANCE OF 1491.52 FEET TO A FOUND 1/2" REBAR (W/CAP, PS#1547), SAID POINT BEING ON THE SOUTH LINE OF SECTION 23; THENCE ALONG SAID SOUTH LINE, N87°09'00"W A DISTANCE OF 1212.82 FEET TO THE POINT OF BEGINNING, CONTAINING 221.97 ACRES, MORE OR LESS. THIS TRACT IS SUBJECT TO ALL RIGHT-OF-WAYS, COVENANTS, EASEMENTS AND RESTRICTIONS ON RECORD OR PHYSICALLY IN PLACE. PURSUANT TO THE ALTA SURVEY BY Michael J. Nguyen, State of Arkansas Licensed Professional Surveyor #1547, Crafton Tull & Associates, Inc., Arkansas Engineer #109, Project #CBSSV0063, and Issue Date February 27, 2023. Fie Numi:ae 2023-00004870 Page 6 of 7 9aNrvlA' ;wnmxolsnxnm 3nvu9,.ve F , =�i{ ijj�2 Sill 19MFC 3'NIYtl NIX]N91dNVWA1 p F�Ei Vt• � � �SI � I I n'ssronrM+awwune _ FI9PIEIf@PI7E{ iE] 'gp.1MXRf/r/MSYAS'rA13xIf01XId 1 I¢I 40 1 1 y[ j .u.mivlr, II IIIII ,.ia , I F i {y �,igl�liis3��1lB�EI!18iliE {� :FEil�+. H if €�PHill IH77 E Fi�PaF,�IP;€91.{P1.7 ape r � P � ��� �v �9 pFinE I Ss sE, Fisiasp 11 �Ep°@�f_iF°°i F'�IIFEP�P iFiE� �;F 7,,B11°P{tP �! i! � E�'@ � i li 7o F'1,7101 e! lFI9�� iE a �'F{F7=g�P{Pi'��'1, y P� C {{{ ! •� F� {� i9 �tIFIF l ° io {Pl Ea;� Pi;jgF•i 9 PX� ; {iP{ M {{ {P�0 i fi is l I 1 lfi°4I i' J '• 911,1 "jEEg Pi{49E 1Felq.11- 1.ii{ilElr F=•i : II 9i, 4 F{lIIB S jFai S l P : E H l !E Pi.l (: f9 i Sv g 7 �I 7f E ipiij f [[ ra F;.F.�P {IE$�9{!S IF 7 5 IEifl�i` i{j P I i ' i{ jPF� �iilPPF3EEPi{617@H.I.F!lv i 1 loll", {-I • ;li°q: ` {�I�P 91BI4I[3i iilgPFi{��� i !9�'piit! i�il1 — F{g � 7�I�PElEii{fF �i;{ipa'� 1g'{e{P°{�lPf{7 ' 4 71��I 6g{gigi fifi�ii;{gil� Iin I ! �G�{�i1ll��jfll y F l�i3i3to 1 An � �Ili6 6l:f {ill, •H / II gg A if O I I — - - ----_ -' _ � • eil iP e If lillE 11 E.EIEI �F3F17171739791 000E>aooAAoo®©a 000E>aooAAoo®©a CiAAAAAAAAAA®AA File rJumee,: 2023-00004e70 aMge 7 al i OFFICE OF THE CITY ATTORNEY TO: DEPARTMENTAL CORRESPONDENCE Mayor Jordan CC: Susan Norton, Chief of Staff Chris Brown, Public Works Director Jonathan Curth, Development Services Director Steve Dotson Inte 1 A d't , rna u 1 or FROM: Blake Pennington, Assistant City Attorne DATE: February 16, 2023 Kit Williams City Attorney Blake Pennington Assistant City Attorney Jodi Batker Paralegal RE: Purchase of 225 acres along the West Fork of the White River using ARPA Funds On November 1, 2022, the City Council approved Res. 257-22, authorizing Mayor Jordan to sign a subrecipient agreement with Watershed Conservation Resource Center ("WCRC") to purchase 225 acres along the West Fork of the White River. The resolution also authorized the Mayor to sign any other documents necessary to consummate the land purchase as well as any other necessary agreements between the City, WCRC, and Beaver Water District as the co -purchasers. We have worked with WCRC and Beaver Water District ("BWD") to draft a Tenants in Common Agreement that will govern the joint purchase, use, and development of the property. Below is a summary of the high points of this TIC Agreement: 1. The parties will work together to develop a Master Plan within 2 years of acquisition. 2. A conservation easement must be in place within 1 year of the master plan approval; however, if a mitigation bank is being pursued, that deadline is extended to 3 years after master plan approval. 3. WCRC agrees to maintain the property in its current capacity as a functioning floodplain. 4. WCRC bears the cost of any taxes and will work to pursue property tax exemption. 5. If a mitigation bank is established, City and BWD are entitled to discounted rates. 6. WCRC may construct certain improvements: a. Equipment storage: up to 10,000 square feet outside of the floodway (may be built in floodplain) b. Greenhouses and hoophouses: up to 20,000 square feet out side of the floodway (may be built in floodplain) c. Office space: may be constructed only if approved in the master plan by all parties and is limited to the 1.5 acres outside of the floodplain and floodway. 7. City improvements: a. The City may construct trails and related infrastructure subject to approval in the master plan. 8. Transfer of interest: a. Transfer of interest in the property can be done to the other remaining parties. The remaining parties do not have to pay any additional money for this to happen. b. Transfer of interest to a third party land trust or conservation organization can only be done if the remaining parties agree to it. 9. Survivorship: if a party ceases to exist, that party's interest may automatically pass to the remaining parties. I'm not entirely convinced this is the law so there is also a requirement that the dissolved party will convey its interest to the remaining parties by quitclaim deed. I know this will be allowed under the dissolution provisions of Arkansas law. 0 TENANTS IN COMMON AGREEMENT This TENANTS IN COMMON AGREEMENT ("Agreement") is entered between the Watershed Conservation Resource Center, an Arkansas nonprofit corporation ("WCRC"), the City of Fayetteville, Arkansas, a duly constituted municipality under the laws of the State of Arkansas (the "City"), Beaver Water District, a public nonprofit Regional Water Distribution District duly constituted under the authority of A.C.A. § 14-116- 101 et seq. (`BWD"), hereinafter also referred to collectively as the "Parties" or individually as a "Party". RECITALS A. WCRC is a 501(c)(3) public charity whose purpose is to conserve and restore rivers, riparian and wetland resources; B. BWD's mission is to sustainably provide its customers with safe, economical drinking water. The City is one of BWD's four wholesale drinking water customers. Beaver Lake is the source of raw water for BWD. The West Fork of the White River ("WFWR") is a significant tributary of Beaver Lake; C. WCRC is the subrecipient of American Rescue Plan Act ("ARPA") grant funds totaling $1,445,400.00 (the "ARPA Funds") which were awarded by, and passed through, the City pursuant to Resolution 257-22 and that certain Subrecipient Award Agreement between the City and WCRC dated December 2, 2022 (the "Award Agreement") for the purchase of 223 acres, more or less, as more particularly described on Exhibit A hereto (the "Property"), most of which lies in the floodplain of the WFWR and can provide significant ecological services and green infrastructure for the benefit of BWD and the citizens of the City by reducing nonpoint source pollution to Beaver Lake; D. On April 25, 2022, BWD committed to contribute up to $800,000.00 toward WCRC's purchase of the Property; E. The Award Agreement provides that the Parties will take title to the Property as tenants in common and they have entered into a contract to purchase the Property in such capacities; and F. The Parties now wish to enter into this Agreement to better ensure compliance with the eligible purpose for which the ARPA Funds were awarded by establishing the terms of the Parties' relationship as tenants in common, restricting transfers of their ownership interests for permanent conservation of the Property, and establishing limited permitted uses of the Property. AGREEMENT In consideration of the provisions contained herein, including the foregoing recitals, all of which are incorporated herein as material terms of this Agreement, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties, intending to be legally bound, covenant and agree as follows: 1. Nature of Relationship. The Parties intend and hereby declare that their relationship is that of co- tenant of the Property, each as to an undivided interest therein. Except as co -tenants, no other relationship as partners or joint venturers exists among them. The Parties shall have all of the rights and privileges of co -owners of real estate, except as such rights and privileges are modified by the terms of this Agreement. Neither the ownership of the Property by the Parties, nor any of the provisions of this Agreement, nor any acts of the Parties, nor any other circumstances, shall be deemed to create a partnership, joint venture, or other business entity for any purpose whatsoever. Each Party, in connection with the ownership of such undivided interest in the Property, shall take reasonable steps in dealing with third parties to negate any inference that any such partnership, joint venture, or other business entity exists, and all acts of each Party shall be consistent with such Party being a tenant - in -common holding an undivided interest in the Property. In furtherance of the provisions of this Section, the Parties shall not conduct business under a common name, execute any agreements identifying the Parties as partners, shareholders, or members of a partnership, corporation, limited liability company or other business entity, or otherwise hold themselves out as a partnership, corporation, limited liability company or other business entity. No Party is authorized to act as agent for, to act on behalf of, or to do any act that will bind, any other Party, or to incur any obligations with respect to the Property. 2. Income and Liabilities. Except as otherwise provided herein, each Party will be entitled to all benefits and obligations of ownership of the Property. The Property shall not be used for any profit -making purpose but any incidental income shall be reinvested in furtherance of WCRC's mission. Any obligation that would require the City to expend any resources must be approved by the City in accordance with its financial and purchasing regulations and applicable state law before the City shall be bound by such obligation. BWD shall have no financial obligations except as set forth in section 3.2 below. 3. Tenants in Common's Obligations. The Parties will perform such acts as may be reasonably necessary to carry out the terms and conditions of this Agreement, including, without limitation: 3.1 Documents. The execution of documents required in connection with the acquisition, access easements, conservation easements, restoration, maintenance, improvement, or transfer of interests in the Property and such additional documents as may be required under this Agreement or may be reasonably required to achieve the intent of the Parties with respect to the Property. 3.2 Acquisition. 3.2.1 The City shall transfer the ARPA Funds, and BWD shall transfer $740,000.00 of its contribution, to WACO Title Company (the "Title Company") to be held in escrow and disbursed at closing of the Property. 3.2.2 The Title Company shall apply the ARPA Funds toward the purchase price of the Property at closing and for no other purpose. 3.2.3 The Title Company shall apply the $740,000.00 contributed by BWD toward the purchase price of the Property. 3.2.4 Prior to the closing date, BWD shall transfer the remaining $60,000.00 of its contribution to WCRC to cover the costs associated with acquiring fee title to the Property, to include, without limitation, the pursuit costs, cost of environmental site assessments, appraisals, surveys, and title policy premiums, and any remaining BWD funds shall be used for preliminary Property management, restoration planning, and ongoing Property management costs. 3.3 Master Plan. The Parties agree to develop a Master Plan for the Property (hereinafter the "Plan") within two (2) years of acquisition of the Property. The Plan must be unanimously approved by the Parties. The Master Plan should, at a minimum, address: 2 3.3.1 Restoration of the natural resources of the Property, including but not limited to the streambanks and wetlands; 3.3.2 Development of the Property, including construction of any structures that support the mission of WCRC; 3.3.3 Creation of a mitigation bank; 3.3.4 Alignment and construction of public trails; and 3.3.5 Other recreational facilities. 3.4 Mitigation Bank. The Parties agree that the Property, or portions of the Property, may be used to establish a mitigation bank, if legally permissible. 3.5 Conservation Easement. 3.5.1 The Parties agree to work cooperatively and expeditiously to grant a conservation easement to a qualified land trust covering all or most of the Property in order to conserve and protect the natural resources and water quality benefits of the Property (the "Conservation Easement"). The Conservation Easement . shall be recorded in the appropriate real property records within one (1) year of the Parties' adoption of the Plan or, if pursuit of a mitigation bank is agreed upon in the Plan, within three (3) years of the Parties' adoption of the Plan. The Conservation Easement will be in addition to and may incorporate the approximately 28.38 acres of the Property that are already held by the Northwest Arkansas Land Trust ("NWALT") in a conservation easement recorded in the real property records of Washington County on September 3, 2014. 3.5.2 Each Party may participate in discussions and negotiations with the land trust on the terms of the Conservation Easement, but WCRC will be responsible for coordinating the negotiations and the Parties' review of the drafts and final Conservation Easement and related documents. 3.5.3 One of the stated purposes in the Conservation Easement must be the protection of the Property's watershed values. 3.5.4 The Conservation Easement shall also permit the construction, development, and use of all structures, areas of non -permeable surfaces, and any other improvements authorized by this Agreement or the Plan and which must not significantly impair or interfere with the Property's watershed or conservation values. 3.5.5 Each Party will review and not unreasonably withhold its approval of the Conservation Easement and will execute and deliver such approved Conservation Easement for recording in the appropriate real property records. 3.6. Improvements. All improvements placed on the Property, whether by or on behalf of a Party, must be consistent with, and not have a substantial adverse impact on, the natural condition, watershed values, and water quality benefits of the Property, including as restored and enhanced. The use and construction of non -permeable improvements not authorized by this Agreement or the Plan must be in compliance with the Conservation Easement and must be unanimously approved by the Parties prior to commencement of any site preparation or construction work. The Parties further acknowledge and. agree that the design and location of all such improvements must not preclude or otherwise unduly interfere with the establishment of a mitigation bank on the Property. Such improvements will be subject to approval by the applicable federal governmental authorities with jurisdiction over any such mitigation bank. 4. WCRC Mana eme 4.1. At a minimum, WCRC shall maintain the Property in its current capacity as a functioning floodplain. 4.2. WCRC shall bear the cost of any taxes and pursue available exemptions from property taxes as a result of the Property being used exclusively for public charity. 4.3. WCRC shall maintain comprehensive commercial general liability insurance coverage on the Property, which shall list BWD and the City as additionally insured. 4.4. WCRC will seek funding for and, to the extent funding is secured, will: (1) stabilize and restore streambanks, wetlands, floodplains and other natural features, as needed, on the Property; (2) establish horticultural areas for the production of native plant species to be used in restoration projects in northwest Arkansas; and (3) develop infrastructure to support public spaces for hiking, birding, nonmotorized boat access, and similarly low -impact uses. 4.5. WCRC will provide BWD and the City with a minimum of annual written reports regarding WCRC's maintenance, restoration, development, and other activities on the Property. The reports will provide an accounting of expenditures by WCRC and of grants or other monies received by WCRC and used for improvements to the Property. 4.6. Any of the Parties' authorized agents shall have the right to enter and be on the Property in furtherance of the permitted uses set out in this Agreement. Such right of entry shall include use of any easements that provide access to the Property. 4.7. If the Property is used by WCRC to create wetland mitigation credits, the City and BWD are entitled to discounted rates to purchase the credits. 5. WCRC Development. 5.1 Subject to adoption of the Plan as set forth in section 3.3 above and the approval requirements of section 3.6 above, WCRC may be authorized to construct permanent structures to provide office space for WCRC staff, community education and training areas, and interpretative spaces to engage the community and educate the public on stream and riparian restoration and residential storm -water management, so long as: (a) the impervious coverage of the structures does not exceed 20,000 square feet; (b) the structures are located on the approximately 1.5 acres on the north end of the Property that are outside the floodway and floodplain; (c) the structures do not impair or interfere with the watershed values or water quality benefits of the Property; and (d) the structures are not in conflict with ARPA regulations (the "WCRC Development Reserve"). WCRC shall not be entitled to any monetary contribution or reimbursement from the Parties of costs associated with constructing or maintaining the improvements permitted by this subsection. 5.1.1. All access drives must be located, designed, and constructed with extreme care for the environment and should utilize existing road beds and pervious materials where possible; and 5.1.2. Subject to the terms of any Conservation Easement, the City and BWD may grant 4 WCRC a 99-year ground lease over, or convey fee title to, the WCRC Development Reserve, as such property is described by a licensed surveyor, and at such time as the WCRC improvements have been designed but prior to commencement of construction, pursuant to the mutually agreeable terms of a lease agreement or deed that includes all necessary and beneficial easements. 5.2. Additionally, WCRC shall have the right, but no obligation to construct the following low -impact improvements on the Property, so long as the improvements do not impair or interfere with the watershed values or water quality benefits of the Property. WCRC shall not be entitled to any monetary contribution or reimbursement from the Parties for the costs associated with constructing or maintaining the improvements permitted by this subsection. Such improvements include, but are not limited to: 5.2.1. Constructing structures to store equipment, including but not limited to stream restoration equipment, horticultural equipment, and other equipment and implements needed to maintain improvements on the Property so long as the impervious coverage of the structures does not exceed 10,000 square feet and the structures are located outside the floodway; 5.2.2. Constructing greenhouses and hoop houses to grow native plants so long as the impervious coverage of the structures does not exceed 20,000 square feet and the structures are located outside the floodway; 5.2.3. Constructing gravel roads and firebreaks for ecological restoration and maintenance; 5.2.4. Growing native plants, native plant sod, and other needed plant material for restoration projects; 5.2.5. Erecting signs reasonably necessary to regulate access to, and use of, the Property; 5.2.6. Constructing primitive walking trails covered, if at all, by wood chips, gravel, or other highly porous surface and not more than four feet (4') in width, together with steps, railings,or footbridges. Trails must largely blend into natural surroundings and be located in a manner to control soil erosion, avoid damage to fragile plant communities, and reduce the fragmentation of wildlife habitat; 5.2.7. Constructing habitat enhancement devices, such as birdhouses and bat houses; 5.2.8. Constructing blinds for nature study; 5.2.9. Contracting for and permitting construction of utility improvements servicing permitted uses of the Property and serving the improvements permitted within the WCRC Development Reserve; and 5.2.10. Constructing one (1) access point for nonmotorized boats. 6. City Development. 6.1. The City may, subject to adoption of the Plan as set forth in section 3.3 above and the approval requirements of section 3.6 above, construct the following improvements on the Property, so long as they are: (a) in compliance with City streamside protection and floodplain ordinances; (b) the cumulative impervious coverage of such improvements does not exceed four (4) acres; and (c) such improvements do not impair or interfere with the watershed values or water quality benefits of the Property. The City shall not be entitled to any monetary contribution or reimbursement from the Parties for costs associated with constructing or maintaining the improvements permitted by this subsection. Such improvements are limited to: 6.1.1. Construction and maintenance of a hard surface trail, including maintenance areas along both sides of the trail, that complies with the City's trail specifications, generally following the West Fork of the White River alignment. The City will utilize low -impact construction methods or permeable trail surfaces in sensitive areas of the Property. 6.1.2. All access drives must be located, designed, and constructed with extreme care for the environment and should utilize existing road beds and pervious materials where possible; 6.2. The City will support and financially assist with the development of trail access infrastructure and no more than one half (1/2) acre of pervious parking areas for public access. 6.3. . Until such time as the City has completed construction of the permitted trails, the Property shall remain closed to the general public. Disposition of Interest. 7.1. Except for the Permitted Transfers set forth in this section, no Party may Transfer its interest in the Property without the unanimous written consent of the other Parties in their sole discretion. Any Transfer in violation of this Agreement shall be void ab initio. "Transfer" shall mean directly or indirectly, sell, assign, transfer, convey, pledge, mortgage, encumber, or hypothecate an interest in the Property or any portion thereof, the result of which would be to directly or indirectly divest the Party of any portion of its title to the Property, voluntarily or involuntarily. 7.2. Notwithstanding the foregoing, Transfer shall not include a "Permitted Transfer." For purposes of this Contract, "Permitted Transfer" means: 7.2.1. Transfer by a Party of its interest in the Property in equal shares to the remaining Parties. Transfer shall be on an "as is, where is" basis, by special warranty deed, and subject to all easements, rights -of -way, covenants, reservations, and restrictions thereon of record. The Transfer shall be for no additional consideration. Upon execution of an assignment and assumption agreement among the assuming parties and recordation of the special warranty deed, the transferor shall be released from any further obligations and responsibilities under this Agreement; or 7.2.2. Transfer by a Party of its interest in the Property to a qualified land trust or a 501(c)(3) nonprofit organization whose primary purposes include land and stream restoration and conservation or watershed protection. Any such Transfer, however, shall be subject to the prior written consent of the other Parties. The Transfer shall be made on an "as is, where is" basis, made by special warranty deed and shall be subject to all easements, rights -of -way, covenants, reservations and restrictions thereon of record. As a condition of any such Transfer, the qualified land trust or 501(c)(3) nonprofit organization shall assume in writing all of the transferor's remaining obligations and responsibilities under this Agreement. Upon execution of an assignment and assumption agreement and recordation of the special warranty deed, the transferor shall be released from any further obligations and responsibilities under this Agreement. Partition and Accounting. To the maximum extent allowed by Arkansas law, the Parties waive all rights as tenants in common to partition all or any portion of the Property and to demand an accounting between them as to the Property. This restraint on alienation shall commence on the date of acquisition of fee title to the Property by the Parties and shall remain in effect as long as the Conservation Easement remains in place. 9. Right of Survivorship. The Parties, intending to be bound as joint tenants with right of survivorship should a Party dissolve, otherwise cease to exist, or become insolvent, agree that such Party's interest in the Property shall automatically pass to the remaining Party or Parties equally, subject to any applicable state or federal laws and regulations governing dissolution and insolvency. The dissolving Party shall deliver an executed quitclaim deed to the remaining Party or Parties for purposes of conveying their undivided interest in the Property and evidencing compliance with this provision as a matter of public record. 10. FOIA. Any records furnished by the City under this instrument are subject to the Freedom of Information Act, A.C.A. § 25-19-101 et seq. 11. Miscellaneous. 11.1. Mutuali . ; Reciprocity; Runs with the Land. All provisions, conditions, covenants, restrictions, obligations and agreements contained herein are made for the direct, mutual, and reciprocal benefit of each and every part of the Property; will be binding upon and will inure to the benefit of each Party and its respective successors, assigns, devisees, representatives, lessees and all other persons acquiring any undivided interest in the Property or any portion thereof whether by operation of law or any manner whatsoever (collectively, "Successors"); will create mutual, equitable servitudes and burdens upon the undivided interest in the Property of each Party in favor of the undivided interest of every other Party; will create reciprocal rights and obligations between the Parties, their undivided interests in the Property, and their Successors; and will, as to each Party and their Successors operate as covenants running with the land, for the benefit of the other Tenants in Common pursuant to applicable law. It is expressly agreed that each covenant contained herein (i) is for the benefit of and is a burden upon the undivided interests in the Property, (ii) runs with the undivided interests in the Property, and (iii) benefits and is binding upon each Successor owner during its ownership of any undivided interest in the Property, and each owner having any interest therein derived in any manner through any tenant in common or Successor. Every person who now or hereafter owns or acquires any right, title or interest in or to any portion of the Property is and will be conclusively deemed to have consented and agreed to every restriction, provision, covenant, right and limitation contained herein, whether or not such person expressly assumes such obligations or whether or not any reference to this Agreement are contained in the instrument conveying such interest in the Property to such person. The Parties agree that, subject to the restrictions on transfer contained herein, any Successor will become a party to this Agreement upon acquisition of an undivided interest in the Property as if such person was a tenant in common initially executing this Agreement. 11.2. Term. The term of this Agreement will begin effective as of the date of the last signature below and will terminate at such time as the Parties or their successors -in -interest or assigns no longer own the Property as tenants in common. 11.3. Memorandum of Agreement. The Parties agree that this Agreement will not be placed of record in the land records where the Property is located, or in any other place. The Parties will, however, execute a memorandum of agreement that will be recorded in the land records where the Property is located. 11.4. Further Assurances. The Parties agree that from time to time hereafter, upon request, each of them will execute, acknowledge and deliver such other reasonable documents and instruments, and take such further reasonable action, as may be reasonably necessary to carry out the intent of this Agreement. 7 11.5. Binding Effect and Benefit. All provisions of this Agreement will inure to the benefit of and will be binding upon the successors -in -interest, assigns, and legal representatives of the Parties. 11.6. Modification. No modification, waiver, amendment, discharge or change of this Agreement will be valid unless the same is in writing and signed by all Parties or their successors in interest. 11.7. Notices. City of Fayetteville, Arkansas ATTN: Mayor's Office 113 W. Mountain Street Fayetteville, Arkansas 72701 Phone: (479) 575-8330 mayor@fayetteville-ar.gov Watershed Conservation Resource Center ATTN: Sandi Formica, Executive Director 380 West Rock Street Fayetteville, Arkansas 72701 Phone: (501) 352-5252 formica@watershedconservation.org Beaver Water District ATTN: M. Lane Crider, Chief Executive Officer 301 N. Primrose Road Lowell, Arkansas 72745 (479) 756-3651 lcrider@bwdh2o.org 11.8. Waivers. No act of any Party will be construed to be a waiver of any provision of this Agreement, unless such waiver is in writing and signed by the Party affected. Any Party hereto may specifically waive any breach of this Agreement by any other Party, but no such waiver will constitute a continuing waiver of similar or other breaches. 11.9. Governing Law. This Agreement will be subject to and governed by the laws of the State of Arkansas, without regard to conflict of law principles. 11.10. Headings and Captions. Subject headings and captions are included for convenience purposes only and will not affect the interpretation of this Agreement. 11.11. Incorporation by Reference. All exhibits and documents referred to in this Agreement will be deemed incorporated herein by any reference thereto as if fully set out. 11.12. Severability. If any portion of this Agreement is illegal, null, void, or against public policy, for any reason, or will be held by any court of competent jurisdiction to be illegal, null, void, or against public policy, the remaining portions of this Agreement will not be affected thereby and will remain in full force and effect to the fullest extent permissible by applicable law. 11.13. Rights and Remedies Cumulative. The rights and remedies expressed herein are cumulative and not exclusive of any rights and remedies otherwise available. 11.14. Entire Agreement. This Agreement constitutes the entire agreement between the Parties pertaining to the subject matter hereof and all prior and contemporaneous agreements, representations, negotiations and understandings of the Parties, oral or written, are hereby superseded and merged herein. 11.15. Attorneys' Fees. If any action or proceeding is instituted between all or any of the Parties arising from or related to or with this Agreement, the Party(ies) prevailing in such action or arbitration will be entitled to recover from the other Party(ies) all of its (or their) costs of action or arbitration, including, without limitation, reasonable attorneys' fees and costs as fixed by the court or arbitrator therein. 11.16. Authority. Each individual signing this Agreement in a representative capacity acknowledges and represents that he/she/it is duly authorized to execute this Agreement in such capacity in the name of, and on behalf of, the designated corporation, partnership, trust or other entity. 11.17. Legal_ Representation of the Parties. The Parties represent that prior to the execution of this Agreement they have had the opportunity to review this Agreement, as well as the exhibits, and consult with and receive the advice of qualified legal counsel on the ramifications and effects of this Agreement. Any rule of construction or interpretation otherwise requiring this Agreement to be construed or interpreted against any Party will not apply to any construction or, interpretation hereof. 11.18. OverridingIntent. ntent. The provisions of this Agreement are intended to comply with the U.S. Department of the Treasury's Final Rule for Coronavirus State and Local Fiscal Recovery Funds, the implementing regulations, including those governing disposition of property acquired using ARPA Funds, and this Agreement will be applied and construed in a manner consistent with this intent and the Parties' desire to permanently conserve the Property for the benefit of the public and the protection of water quality in the Beaver Lake Watershed. [Signature Pages Follow.] WHEREFORE, IN AGREEMENT WITH ALL TERMS AND CONDITIONS WITHIN THIS AGREEMENT, the persons below attest that they have proper legal authority to sign for the entity on whose behalf they are signing. WATERSHED CONSERVATION RESOURCE CENTER By: SANDI J. FO ICA Executive Director Date: 2 — i & — 20 23 BEAVER Ny4LTER DISTRICT By: M. LANE CRIDER Chief Executive Officer Date: CITY OF F, Date: 1117/1 2-3 ATTEST: By: KAl ® FAYETTEV/1,L1 �b ®,rya �kA S N Q ®o N s O� 10 EXHIBIT A Property Exhibit A to TIC Agreement TRACT A LEGAL DESCRIPTION PART OF THE NORTHEAST QUARTER, PART OF THE NORTHWEST QUARTER, PART OF THE SOUTHWEST QUARTER AND PART OF THE SOUTHEAST QUARTER OF SECTION 23 AND PART OF THE NORTHWEST QUARTER OF SECTION 24 ALL LOCATED IN TOWNSHIP 16 NORTH. RANGE 30 WEST, WASHINGTON COUNTY, ARKANSAS, AND BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS: COMMENCING AT A THE SOUTHWEST CORNER OF SECTION 23, BEING MARKED BY A FOUND ALUMINUM CAP; THENCE ALONG THE SOUTH LINE OF SAID SECTION 23, S87'09'00"E A DISTANCE OF 2642.91 FEET TO THE SOUTHWEST CORNER OF SAID SOUTHWEST QUARTER OF THE SOUTHEAST QUARTER; THENCE S87'09'00'E A DISTANCE OF 110.79 FEET TO A POINT, SAID POINT BEING THE POINT OF BEGINNING AND BEING ON THE CENTERLINE OF THE WEST FORK OF THE WHITE RIVER; THENCE LEAVING SAID SOUTH LINE AND ALONG SAID CENTERLINE FOR THE FOLLOWING 27 COURSES: N16'55'35'W A DISTANCE OF 594.92 FEET TO A POINT; THENCE N35'5T46W A DISTANCE OF 190.50 FEET TO A POINT; THENCE N22'03'28'W A DISTANCE OF 324.46 FEET TO A POINT; THENCE N17'29'31'W A DISTANCE OF 114.75 FEET TO A POINT; THENCE N27'5619"E A DISTANCE OF 315.85 FEET TO A POINT; THENCE N07'14'29"E A DISTANCE OF 127.97 FEET TO A POINT; THENCE N13'40'52'W A DISTANCE OF 367.58 FEET TO A POINT; THENCE N11'45'23'W A DISTANCE OF 27.77 FEET TO A POINT; THENCE NO2'41='E A DISTANCE OF 526.99 FEET TO A POINT; THENCE N11'41'49"E A DISTANCE OF 590.87 FEET TO A POINT; THENCE N74'59'39"E A DISTANCE OF 329.33 FEET TO A POINT; THENCE N75'43'13"E A DISTANCE OF 228.67 FEET TO A POINT; THENCE N80'18'50"E A DISTANCE OF 144.47 FEET TO A POINT; THENCE N55'32'43"E A DISTANCE OF 203.40 FEET TO A POINT; THENCE N25'56'32"E A DISTANCE OF 135.35 FEET TO A POINT; THENCE N07'09'03"E A DISTANCE OF 219.65 FEET TO A POINT; THENCE N57'22'13"E A DISTANCE OF 170.30 FEET TO A POINT; THENCE N87'56'51"E A DISTANCE OF 170.30 FEET TO A POINT; THENCE S60,25'12'E A DISTANCE OF 219.61 FEET TO A POINT; THENCE S28'35'33"E A DISTANCE OF 297.90 FEET TO A POINT; THENCE S38'2941"E A DISTANCE OF 228.73 FEET TO A POINT; THENCE S85'38'08"E A DISTANCE OF 136.71 FEET TO A POINT; THENCE N79'55'25"E A DISTANCE OF 149.22 FEET TO A POINT; THENCE N39'38'51"E A DISTANCE OF 196.48 FEET TO A POINT; THENCE NO0'58'12"E A DISTANCE OF 163.69 FEET TO A POINT; THENCE N30'54'32"E A DISTANCE OF 216.91 FEET TO A POINT; THENCE S60'45'46"E A DISTANCE OF 348.02 FEET TO A POINT; THENCE LEAVING SAID CENTERLINE, N21"4533'W A DISTANCE OF 969.07 FEET TO A POINT; THENCE S76'26'08"E A DISTANCE OF 111.76 FEET TO A FOUND T-POST; THENCE N81'06'42'E A DISTANCE OF 313.91 FEET TO A FOUND 12' REBAR (W/CAP, PS#1647); THENCE N81°34'53'E A DISTANCE OF 342.15 FEET TO A FOUND 12' REBAR, SAID POINT BEING ON THE WESTERLY RIGHT-OF-WAY OF SOUTH DEAD HORSE MOUNTAIN ROAD; THENCE ALONG SAID RIGHT-OF-WAY FOR THE FOLLOWING 16 COURSES: 62.24 FEET ALONG A CURVE TO THE RIGHT HAVING A RADIUS OF 65.94 FEET AND A CHORD BEARING AND DISTANCE OF S64'21'12'E A DISTANCE OF 59.96 FEET TO A SET 12' REBAR (WICAP. PS#1547); THENCE N88'20'49"E A DISTANCE OF 66.41 FEET TO A SET 12' REBAR (WICAP, PS#1547); THENCE N83'28'OT'E A DISTANCE OF 298.63 FEET TO A SET 12' REBAR (WICAP, PS#1547); THENCE S82'48'4WE A DISTANCE OF 55.52 FEET TO A SET 12' REBAR (W/CAP, PS#1547); THENCE S66'55'15'E A DISTANCE OF 59.93 FEET TO A SET 12' REBAR (WICAP, PS#1547); THENCE S53'41'53"E A DISTANCE OF 36.20 FEET TO A SET 12- REBAR (W/CAP, PS#1547); THENCE S47'32'39"E A DISTANCE OF 356.23 FEET TO A SET 12' REBAR (WICAP, PS#1547); THENCE S41°29'18"E A DISTANCE OF 48.14 FEET TO ASET 12° REBAR (WICAP, PS#1547); THENCE S38'49'51"E A DISTANCE OF 44.78 FEET TO A SET 12' REBAR (WICAP, PS#1547); THENCE S28'35'09"E A DISTANCE OF 254.02 FEET TO A SET 12' REBAR (WICAP, PS#1547); THENCE S19'3953"E A DISTANCE OF 43.63 FEET TO A SET 12' REBAR (WICAP, PS#1547); THENCE S16'02'OT'E A DISTANCE OF 43.65 FEET TO A SET 12' REBAR (WICAP, PS#1547); THENCE S08'27'34"E A DISTANCE OF 228.66 FEET TO A SET 12' REBAR (W/CAP, PS#1547); THENCE S07'15'39"E A DISTANCE OF 64.25 FEET TO A SET 12' REBAR (WICAP, PS#1547); THENCE S07'15'39"E A DISTANCE OF 280.46 FEET TO A SET 12' REBAR (WICAP, PS#1547); THENCE S081091WE A DISTANCE OF 422.83 FEET TO A SET 12' REBAR (WICAP, PS#1547); THENCE LEAVING SAID RIGHT-OF-WAY, S84-00-46W A DISTANCE OF 1391.83 FEET TO A SET 12' REBAR (WICAP, PS#1547); THENCE S05'06'34'E A DISTANCE OF 573.47 FEET TO A SET 12' REBAR (WICAP, PS#1547); THENCE S89'47'2TW A DISTANCE OF 579.89 FEET TO A SET 12' REBAR (WICAP, PS#1547); THENCE S00'00'01'W A DISTANCE OF 749.27 FEET TO A SET 12' REBAR (WICAP, PS#1547); THENCE S874T34W A DISTANCE OF 8G2.16 FEET TO A SET 12' REBAR (WICAP, PS#1547); THENCE S00'1T51'W A DISTANCE OF 1491.52 FEET TO A SET 12' REBAR (W/CAP, PS#1547), SAID POINT BEING ON THE SOUTH LINE OF SECTION 23; THENCE ALONG SAID SOUTH LINE, N87'09'09W A DISTANCE OF 1212.82 FEET TO THE POINT OF BEGINNING, CONTAINING 221.97 ACRES, MORE OR LESS. THIS TRACT IS SUBJECT TO ALL RIGHT-OF-WAYS, COVENANTS, EASEMENTS AND RESTRICTIONS ON RECORD OR PHYSICALLY IN PLACE. TRACT B PART OF THE NORTHEAST QUARTER AND PART OF THE SOUTHEAST QUARTER OF SECTION 23 AND PART OF THE NORTHWEST QUARTER AND PART OF THE SOUTHWEST QUARTER OF SECTION 24, ALL LOCATED IN TOWNSHIP 16 NORTH. RANGE 30 WEST, WASHINGTON COUNTY, ARKANSAS, AND BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS: COMMENCING AT A THE SOUTHWEST CORNER OF SECTION 23, BEING MARKED BY A FOUND ALUMINUM CAP; THENCE ALONG THE SOUTH LINE OF SAID SECTION 23, S87'09'00"E A DISTANCE OF 2753.70 FEET TO A POINT; THENCE S87'09'00"E A DISTANCE OF 1212.82 FEET TO A SET 12' REBAR (WICAP, PS#1547), SAID POINT BEING THE POINT OF BEGINNING; THENCE N00'17'51'W A DISTANCE OF 1491.52 FEET TO A SET 12' REBAR (W/CAP, PS#1547); THENCE N83'47'34"E A DISTANCE OF 80216 FEET TO A SET 12' REBAR (WICAP, PS#1547); THENCE NDD'00'01"E A DISTANCE OF 749.27 FEET TO A SET 12' REBAR (WICAP, PS#1547); THENCE N89'472T'E A DISTANCE OF 579.89 FEET TO A SET 12' REBAR (WICAP, PS#1547); THENCE N05'06'34'W A DISTANCE OF 573.47 FEET TO A SET 1/2' REBAR (WICAP, PS#1547); THENCE N84'00'45"E A DISTANCE OF 1391.83 FEET TO A SET 12' REBAR (WICAP. PS#1547), SAID POINT BEING ON THE WESTERLY RIGHT-OF-WAY OF SOUTH DEAD HORSE MOUNTAIN ROAD; THENCE ALONG SAID RIGHT-OF-WAY FOR THE FOLLOWING FOUR COURSES: S05°42'28'E A DISTANCE OF 1945.83 FEET TO A SET 12' REBAR (WICAP, PS#1547); THENCE S05'4T08"E A DISTANCE OF 322.67 FEET TO A SET 12' REBAR (WICAP, PS#1547); THENCE S02'4526"E A DISTANCE OF 222.90 FEET TO A SET 12' REBAR (W/CAP, PS#1547); THENCE S02'45'01'W A DISTANCE OF 72235 FEET TO A SET 12' REBAR (W/CAP, PS#1547), SAID POINT BEING ON THE SOUTH LINE OF SAID SOUTHWEST QUARTER OF SECTION 24; THENCE ALONG SAID SOUTH LINE, N86'4733'W A DISTANCE OF 1607.75 FEET TO THE SOUTHEAST CORNER OF SAID SECTION 23, SAID POINT BEING MARKED BY A FOUND 5/8' REBAR; THENCE N87109'001W A DISTANCE OF 1316.39 FEET TO THE POINT OF BEGINNING, CONTAINING 165.84 ACRES, MORE OR LESS. THIS TRACT IS SUBJECT TO ALL RIGHT-OF-WAYS, COVENANTS, EASEMENTS AND RESTRICTIONS ON RECORD OR PHYSICALLY IN PLACE. RIGHT-OF-WAY DEDICATION 1 A 33.5 FOOT RIGHT-OF-WAY, LYING IN PART OF SECTION 24, TOWNSHIP 16 NORTH, RANGE 30 WEST, WASHINGTON COUNTY, ARKANSAS, AND BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS: COMMENCING AT ATHE SOUTHWEST CORNER OF SECTION 23. BEING MARKED BY A FOUND ALUMINUM CAP; THENCE S87'09'00"E A DISTANCE OF 5172.12 FEET TO THE SOUTHEAST CORNER OF SAID SECTION 23: THENCE ALONG THE SOUTH LINE OF SECTION 24, S86'47'33'E A DISTANCE OF 1607.75 FEET TO A SET 12' REBAR (WICAP, PS#1547), SAID POINT BEING ON THE RIGHT-OF-WAY OF DEAD HORSE MOUNTAIN ROAD AND BEING THE POINT OF BEGINNING; THENCE LEAVING SAID SOUTH LINE AND ALONG SAID RIGHT-OF-WAY FOR THE FOLLOWING FOUR (4) COURSES, N2'4T52'E A DISTANCE OF 720.80 FEET TO A SET 12' REBAR (WICAP, PS#1647); THENCE, N3'08'23'W A DISTANCE OF 219.21 FEET TO A SET 12' REBAR (WICAP, PS#1547); THENCE N5'10'01'W A DISTANCE OF 328.49 FEET TO A SET 12' REBAR (WICAP, PS#1547); THENCE N5'46'49'W A DISTANCE OF 1990.87 FEET TO A SET 12' REBAR (WICAP, PS#1547); THENCE LEAVING SAID RIGHT-OF-WAY, N82'52'5T'E A DISTANCE OF 33.5 FEET TO A POINT, SAID POINT BEING ON THE CENTERLINE OF DEAD HORSE MOUNTAIN ROAD; THENCE ALONG SAID CENTERLINE FOR THE FOLLOWING EIGHT (8) COURSES; S18'17'14"E A DISTANCE OF 1.79 FEET TO A POINT; THENCE S8'58'48"E A DISTANCE OF 43.76 FEET TO A POINT; THENCE SS,36'38"E A DISTANCE OF 133287 FEET TO A POINT; THENCE S5'30'54"E A DISTANCE OF 94.22 FEET TO A POINT; THENCE 85'43'06"E A DISTANCE OF 884.00 FEET TO A POINT; THENCE 106.30 FEET ALONG A CURVE TO THE RIGHT HAVING A RADIUS OF 839.49 FEET AND A CHORD BEARING AND DISTANCE OF S2'05'37'E A DISTANCE OF 106.23 FEET TO A POINT; THENCE S2'45'32'E A DISTANCE OF 68.62 FEET TO A POINT; THENCE S2145'01'W A DISTANCE OF 733.36 FEET TO A POINT, SAID POINT BEING ON THE SOUTH LINE OF SECTION 24; THENCE ALONG SAID SOUTH LINE, N87'29'25'W A DISTANCE OF 33.5 FEET TO THE POINT OF BEGINNING, CONTAINING 236 ACRES, MORE OR LESS. RIGHT-OF-WAY DEDICATION 2 A 33.5 FOOT RIGHT-OF-WAY, LYING IN PART OF SECTION 24, TOWNSHIP 16 NORTH, RANGE 30 WEST, WASHINGTON COUNTY, ARKANSAS, AND BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS: COMMENCING AT ATHE SOUTHWEST CORNER OF SECTION 23, BEING MARKED BY A FOUND ALUMINUM CAP; THENCE S87'09'00"E A DISTANCE OF 5172.12 FEET TO THE SOUTHEAST CORNER OF SAID SECTION 23; THENCE ALONG THE SOUTH LINE OF SECTION 24, S86'47'33'E A DISTANCE OF 1607.75 FEET TO A SET 12' REBAR (W/CAP, PS#1547), SAID POINT BEING ON THE RIGHT-OF-WAY OF DEAD HORSE MOUNTAIN ROAD; THENCE LEAVING SAID SOUTH LINE AND ALONG SAID RIGHT-OF-WAY FOR THE FOLLOWING 12 COURSES, N2'47'52'E A DISTANCE OF 720.80 FEET TO A SET 12' REBAR (WICAP, PS#1547); THENCE, N3'08'23 W A DISTANCE OF 219.21 FEET TO A SET 12' REBAR (WICAP, PS#1547); THENCE N5'10'01'W A DISTANCE OF 328.49 FEET TO A SET 12' REBAR (WICAP. PS#1547); THENCE N5'46'49'W A DISTANCE OF 1990.87 FEET TO A SET 12' REBAR (WICAP, PS#1547); THENCE S82'52'5TW A DISTANCE OF 19.72 FEET TO A SET 12' REBAR (W/CAP, PS#1547); THENCE NS'52'20'W A DISTANCE OF 230.05 FEET TO A SET 12' REBAR (WICAP, PS#1547); THENCE N10'55'54'W A DISTANCE OF 150.33 FEET TO A SET 12' REBAR (W/CAP, PS#1547); THENCE N22'02'57W A DISTANCE OF 155.24 FEET TO A SET 12' REBAR (WICAP, PS#1547); THENCE N7'07'03'W A DISTANCE OF 250.00 FEET TO A SET 12" REBAR (W/CAP, PS#1547); THENCE N9'32'4T'E A DISTANCE OF 161.35 FEET TO A SET 12' REBAR (WICAP, PS#1547); THENCE N24'48'10'W A DISTANCE OF 268.68 FEET TO A SET 12' REBAR (W/CAP, PS#1547); THENCE N54'29'10"E A DISTANCE OF 14.19 FEET TO A SET 12' REBAR (WICAP, PS#1547), SAID POINT BEING THE POINT OF BEGINNING; THENCE CONTINUING ALONG SAID RIGHT-OF-WAY FOR THE FOLLOWING 7 COURSES, N34'54'02'W A DISTANCE OF 86.46 FEET TO A SET 12' REBAR (W/CAP, PS#1547); THENCE 89.11 FEET ALONG A CURVE TO THE LEFT HAVING A RADIUS OF 432.37 FEET AND A CHORD BEARING AND DISTANCE OF N40'29'46'W A DISTANCE OF 88.95 FEET TO A SET 12' REBAR (WICAP, PS#1547); THENCE, N47'26'01'W A DISTANCE OF 367.78 FEET TO A SET 12' REBAR (WICAP, PS#1547); THENCE 157.60 FEET ALONG A CURVE TO THE LEFT HAVING A RADIUS OF 216.28 FEET AND A CHORD BEARING AND DISTANCE OF N74'13'18'W A DISTANCE OF 154.13 FEET TO A SET 12' REBAR (W/CAP, PS#1547); THENCE S82'5019'W A DISTANCE OF 243.13 FEET TO A SET 12' REBAR (W/CAP, PS#1647); THENCE S89'24'33'W A DISTANCE OF 104.82 FEET TO A SET 12" REBAR (WICAP, PS#1647); THENCE 61.96 FEET ALONG A CURVE TO THE RIGHT HAVING A RADIUS OF 65.08 FEET AND A CHORD BEARING AND DISTANCE OF N64'18'15'W A DISTANCE OF 69.64 FEET TO A SET 12' REBAR (WICAP, PS#1547); THENCE LEAVING SAID RIGHT-OF-WAY, N42'01'31"E A DISTANCE OF 29.49 FEET TO A POINT, SAID POINT BEING ON THE CENTERLINE OF DEAD HORSE MOUNTAIN ROAD; THENCE ALONG SAID CENTERLINE FOR THE FOLLOWING 7 COURSES; THENCE 38.84 FEET ALONG A CURVE TO THE LEFT HAVING A RADIUS OF 55.71 FEET AND A CHORD BEARING AND DISTANCE OF S67'56'47*E A DISTANCE OF 38.06 FEET TO A PONT; THENCE 61.66 FEET ALONG A CURVE TO THE LEFT HAVING A RADIUS OF 455.11 FEET AND A CHORD BEARING AND DISTANCE OF N88'22'02'E A DISTANCE OF 61.62 FEET TO A PONT; THENCE N83'28'OT'E A DISTANCE OF 300.05 FEET TO A POINT; THENCE 178.48 FEET ALONG A CURVE TO THE RIGHT HAVING A RADIUS OF 242.30 FEET AND A CHORD BEARING AND DISTANCE OF S69'47'12'E A DISTANCE OF 174.47 FEET TO A PONT; THENCE S48109'26"E A DISTANCE OF 294.76 FEET TO A POINT; THENCE 236.54 FEET ALONG A CURVE TO THE RIGHT HAVING A RADIUS OF 1035.34 FEET AND A CHORD BEARING AND DISTANCE OF S39'5427'E A DISTANCE OF 236.02 FEET TO A PONT; THENCE S29'28'OZ"E A DISTANCE OF 10.38 FEET TO A POINT; THENCE LEAVING SAID CENTERLINE, S54'2714'W A DISTANCE OF 34.81 FEET TO THE POINT OF BEGINNING, CONTAINING 0.93 ACRES, MORE OR LESS. SURVEY CERTIFICATION FOR THE USE AND BENEFIT OF WATERSHED CONSERVATION RESOURCE CENTER ��$ �x �4� AND BEAVER WATER DISTRICT AND THE CITY OF FAYETTEVILLE AND WACO TITLE 4 * ......... ATE Op; l/i �� COMPANY AND CHICAGO TITLE INSURANCE COMPANY: • Q ; •ARKANBA9 ,. m THIS IS TO CERTIFY THAT THIS MAP OR PLAT AND THE SURVEY ON WHICH IT IS DR N0. 10{7 : G1 BASED WERE MADE IN ACCORDANCE WITH THE MOST CURRENT ARKANSAS STATE co ; K b • - MINIMUM STANDARDS FOR SURVEYS OF THIS TYPE. NO ATTEMPT WAS MADE TO `�` : p--Mnvozr-4as LOCATE UTILITIES ABOVE OR BELOW SURFACE. SUBJECT TO ANY EASEMENTS �•. �' 'b... d . PRESCRIPTIVE AND NON -PRESCRIPTIVE. SUBJECT TO ANY FACTS AN ACCURATE TITLE SEARCH MAY REVEAL. THE FIELDWORK WAS COMPLETED UNDER MY ��,'i •tr..:.: SUPERVISION ON 12282022. ',,............. DATE OF PLAT OR MAP: 02/152023 500-16N-30W-0-23-000-72-1547 STATE PLAT CODE: 500-16N-30W-0-24-440-72-1547 DELTA DESCRIPTION DATE LOTSPLIT PART OF THE NE/4, SE/4, SW/4 AND NW/4 OF SEC. 23 PART OF THE NW/4 OF SEC. 24 TOWNSHIP 16 NORTH, RANGE 30 WEST PREPARED FOR: WATERSHED CONSERVATION RESOURCE CENTER FAYETTEVILLE, WASHINGTON COUNTY ARKANSAS IW0Ledq.Ig Dr. c°""'°y" ansaS203d Crafton Tull ® engineer'o,glvurveyin9 501.328.33161 501.3MA3251 .°r°na"1w.eom OF A&r VP yOp '•- CSISOCC RR1 ti � AsloculEs.wc: Na IW 02021 Crahen, Tull fiAssetlates, Inc - - = _ - - PROJECT NO: C855VO063 ISSUEDATE: 02182023 _ TMs daaman�and Maiden and designs Incorporated M1ereiquan imtrument of pralessional semre,NMe properryol Gatton, Tu116 AvsWitu, Inc, andbnotta be Pm farany other prolegwHhouf Me d.n_hea.ati .C'ahenrun6A.,eet®,In° DRAWN BY: ESIMPSON APPROVE BY: M.NGUYEN SHEET NO -- 20F2 -- VIlk �'�4 �NE CO YG ]I 1 I 1E BRIE' I�b I .E \y Oki r -n... p j � YrsS' '"/• _ J, I TRACT A l I I ±221.97 ACRES 41 \ I # w IT I PN TRACT 8 u t165.84 ACRES ,I 9a14VeI V \A / ��--�• =. —_ ` _� f. �' 03� SEC SRI, 71 R]OW na7Y� — R I _ yr oo-m. maa— ...e.wsw \ _ uP P.0.0 1RAci A h R S,}Sg• P.0.0 PRIVATE EAEUEM 1, R h ,>�al Iwaw moo 0mr.7m,i 0mar-=j mom ©off c3rrrm cm mm mm oo ©o oo °rM1 m"x gin GENERAL SURVEY �NOTED xA�a�xw�".. DRAWING LEGEND PPOPFATYUNE 0 9ET 1R"REO—HOM, EII-7 A9PHALTIOON P OHiDF-WrAY • — — — — OA CL UTATEOH—ENOTEC) EA9,W0 LOOTD NE9 PER 019 FOUNOxONUNENT(A9NOTEq N EOPHO�uwcsrPEET m EwmNC AUNHa1E Po OEMFRuxE FXI9TW0 Bmt➢INO ' GO Ex651NCWATEN N0M EwsTwc nPE PExw m oamxc uxoe+oxocxo]cr. mx &ANPARY EEVAR UNES PEROIs--= _— m FXI971NG aEOEWO AtETFA OVEPH OOOPlM4-E9 —ORE— N— OEgCATED ROW �aFLOOG.vAY LINE— NDARY AREA P.0.0 ROM UEOICAm W 1 h R / - II cm ffaCIP ry cm m - ff Cmt SEC R] �r Ii•, ;;'- g o SURVEY CERTIFICATION P6N-RLYY 116N-RXA +. a uws e 5�#ffF mb a e°xxunwvoexrxwmeCNwAwe[eoxxrarc: se Axotweo CIO CERTIFICATEOFOWNERSHIP &DEDICATION _ _ CERTIFICATE OF FINAL PLAT APPROVAL FLOODZONENOTE ro rw"'°'°•. ® rAvmnvue.Ax7snl w,Ewwt°n use.wnvmn �n Q80Rlopw,S e°LiLaa°ei`woiA"r.%e`"`iLx.NmroeearH1sn"eme °ar�.Z wn+�� �aP�"xwLOSE Hn urmx°d'nv aunsarur..w°mexswrroxeuoreaxrwmeeawmiNseoxwnsowur. oarexceawmN sam svmnoasllAveevN sn. p1p194rlxeAxW.uxvaxu°uu arnx°u°a F°x ,L.u-ss y7 xa sai� a9x .11 Wn isx�i l9ma!_E6 ceasvoMs i!A s�°.�F P.naecamw,_ aI°Nm. w.HeR rA.mn. w,earAEcunox._ alw s�a�nz A.wesmNmu-AexvvnvaL+.., x,11,1,,,.+"t uvmN AEunwromerxaxsxrrsNev wzwR eouxowr - sare a.ww+sw nmm R-- 500.16" 00.M W4430-1547 °Arsarszeanxx_ wwm. � vwsrs STATE PLAT CODE59616N30A 0-2"4G 724547 IGPAP�®IN FEET BASIS OF BEAPoNGS E�onw ows�e�Y (N) � z o z QO� O yQe so u yz z o Zoe o �W � w m `Oa zp Q N V u z¢z o o w � 3 LL i L Craffon Tull �Oa Taw ,oa 1 OF 2 Form Simplicity 1/27/23, 11:20 AM Copyright 2022 General Addendum Arkansas �O� ® Arkansas r `moo REACTORS® REALTORO OPPORTUAL UHi"Tr Association Page 1 of 2 Form Serial Number: 089394-200167-4640005 Regarding the Con tract/Agreement(Form Serial Number 074521-300166-0326469 ), dated (month) August (day) 15 —,(year) 2022 , between Buyer/Lessee, Watershed Conservation Resource Center, Beaver Water District, City of Fayetteville, Arkansas , and Seller/Lessor, CDS Farms LLC , covering the real property known as TBD 225 MOL Acres Dead Horse Mountain Rd, Fayetteville, AR 72701 (the "Property"), the undersigned Buyer/Lesee and Seller/Lessor, in consideration for the covenants, agreements and promises made below and other good and valuable consideration, receipt and sufficiency being acknowledged, agree as follows: 1. PARTIES: The buyers are to be Watershed Conservation Resource Center, Beaver Water District and City of Fayetteville, Arkansas. 3. PURCHASE PRICE. Purchase price to be $2,185,400.00 13. CLOSING: Closing to be on or before 212712023 Purchase is pending Beaver Water District Board of Directors approval. See attached Signature Page for Buyers Serial Number. 000111 Page 1 of 2 -__ -__- Serial#: 089394-2001e7ae40005 Form Prepared by: Dardel short I True North Realty Group l shoridanleb(ftmall.00m -- ` I Simplicity https://ara.formsimplicity.com/api/print/pdf-viewer Page 1 of 2 Form Simplicity 1/27/23, 11:20 AM Copyright 2022 General Addendum Arkansas as [13,21REALTORW REALTOR© VPORTUNITa Association Page 2 of 2 This General Addendum, upon its execution by both parties, incorporates by reference all provisions of the above -referenced Contract/Agreement not expressly modified herein. This General Addendum may be executed in multiple counterparts each of which shall be regarded as an original hereof but all of which together shall constitute one in the same. Electronic signatures shall be deemed original signatures and shall be binding upon the parties. EXPIRATION: This General Addendum shall not be effective unless signed by Buyer/Lessee and Seller/Lessor on or before (month) February (day) 3 (year) 2023 , at 5:00 ❑(a.m.) 0(p.m.). THIS IS A LEGALLY BINDING AGREEMENT WHEN SIGNED BY THE PARTIES BELOW. READ IT CAREFULLY. YOU MAY EMPLOY AN ATTORNEY TO DRAFT THIS FORM FOR YOU. IF YOU DO NOT UNDERSTAND THE EFFECT OF ANY PART, CONSULT YOUR ATTORNEY BEFORE SIGNING. REAL ESTATE AGENTS CANNOT GIVE YOU LEGAL ADVICE THE PARTIES SIGNED BELOW WAIVE THEIR RIGHT TO HAVE AN ATTORNEY DRAFT THIS FORM AND HAVE AUTHORIZED THE REAL ESTATE AGENT(S) TO FILL IN THE BLANKS ON THIS FORM. THIS FORM IS PRODUCED AND COPYRIGHTED BY THE ARKANSAS REALTORS@ ASSOCIATION. THE SERIAL NUMBER BELOW IS A UNIQUE NUMBER NOT USED ON ANY OTHER FORM. THE SERIAL NUMBER BELOW SHOULD BE AN ORIGINAL PRINTING, NOT MACHINE COPIED, OTHERWISE THE FORM MAY HAVE BEEN ALTERED. DO NOT SIGN THIS FORM IF IT WAS PREPARED AFTER DECEMBER 31, 2022. FORM SERIAL NUMBER:089394-200167-4840005 REAL ESTATE LICENSEES ARE REGULATED BY THE ARKANSAS REAL ESTATE COMMISSION IF A LICENSEE HAS NOT PROPERI Y REPRESENTED YOU, YOU MAY FILE A COMPLAINT AT AREC.QRKANSAS.GOV. The above eneral Addendum is executed on (month) (day) Q7 , (year) 20 2 , at // = 30 [✓(a.m.) ❑(p.m:). True North Realty Group Selling Firm Signature: Signature: Printed Name: Daniel Short Printed Name: See Signature Page fOr BuyerS Princi al or Executive Broker Buyer/Lessee Signature: Signature: Printed Name: Daniel Short Printed Name: Selling Agent Buyer/Lessee The above general Addendum is executed on (month) (day) m 7 . (year) 1OZ3 , at 42 : 3 v ❑(a.m.) (p.m.). True North Realty Group Listing Firm Signature: _\ Signature: Printed Name: Daniel Short Printed Name: CDS Farms LLC Prinshmi.or Executive Broker Seller/Lessor. Signature: w t Signature: Printed Name: Daniel Short Printed Name: Listing Agent Seller/Lessor Page 2of2 Serlal9: 0=194-200157-0B40005 Prepared by: Daniel Short I True North Realty Group I shondaNetr@gmall.00m I `Form Simplicity https://ara.formsimplicity.com/api/print/pdf-viewer Page 2 of 2 Signature Page for Buyers Serial Number: 000111 General Addendum Serial Number: 089394-200167-4840005 CITY OF FAYIETTEVILLE, ARKANSAS BY: Lioneld tda Mayor DATE: 62 I 3 120 2-3 9®q�469C96IBi ®��0vo��RK / TRF o�or s ATTEST: G\T Y O,c,'916 P o FAYEl7EVILLE°'- By: ara Paxton, Ci y Clerk Treas �Qr�°9�k SP 5 ,y ° A NTN aej0111ddOi N6A O�®' BEAVER WATER DISCTRICT By: M. Lane Crider, P.E., Chief Executive Officer DATE: / WATERSHED CONSERVATION RESOURCE CENTER By: Sandi J. Fo mica, Executive Director DATE: / r 2 —7 — Z3 6..___ _..-i CITY FAYE TTEVILLE CITY OF FAYETTEVILLE ARKANSAS AMERICAN RESCUE PLAN ACT 2022 SUBRECIPIENT GRANT APPLICATION NOTE: Submission of a Subrecipient Grant Application provides no guarantee that the applicant will receive funding. All organizations selected to receive funds will be subject to entering into a contract with the City of Fayetteville and subject to the rules and regulations pertaining to the American Rescue Plan Act. Please review the City of Fayetteville American Rescue Plan Act 2022 Subrecipient Grant Application Guide for more information on the required items listed in this application. Total Amount of Funding $1,445,400 Requested (whole dollar) Minimum $25,000 Applicant/Organization Watershed Conservation Resource Center Name Mailing Address 380 West Rock Street, Fayetteville, AR 72701 Organization Website watershedconservation.org SANE Unique Entity ID XZ1LGWGULGJ6 Number Organization FEIN/SSN 81-0594071 Contact for Project Sandi J Formica, Executive Director and Project Coordinator (name & title) Contact Phone Number Contact Email (479) 444-1916 formica@watershedconservation.org Signature Authority I Sandi J Formica, Executive Director (name, title & email address) formica@watershedconservation.org Project Address I Dead Horse Mountain Road, Fayetteville, AR 72701 (street, city, zip) American Rescue Plan Act 1 .� rVeli ram' lc" b 0` PART 3PRbJECT INFORMATION continued Is anyone with control over the Organization (i.e. owner, manager, director, board member, or other) or any Yes No member of that person's immediate family, an employee or elected official of the City of Fayetteville - If Yes, above, please identify N/A person and position with the City The Watershed Conservation Resource Center (WCRC), a 501 (c) (3) nonprofit organization, is proposing to purchase 223 +/- ML acres of floodplain property along the West Fork of the- ,White Project Summary (brief synopsis of ,proposed River (WFWR) to protect water quality and restore riparian and project) wetland habitat. The property is located in the Fayetteville City limits and 2.5 miles of the WFWR flows along its west side, and there are at least 22 acres of wetlands. Protection of the WFWR floodplain is important to the City and to the Region to ensure we have clean drinking water from Beaver Lake now and for future generations. The Watershed Conservation Resource Center (WCRC) has restored over 20 sites in Northwest Arkansas that includes river Describe previous channel, riparian, and wetlands. The WCRC is committed to experience in providing every restoration site and finds funding to monitor and maintain similar services theses ecological systems for the benefit of the environment and the local communities. Currently, the WCRC is working towards restoring wetlands and prairie at the Dead Horse Mountain property owned by both the City and WCRC. Programs will typically be funded for a time period not The primary project objective is to purchase floodplain property to exceed 12 months from along the West Fork White River off of Dead Horse Mountain the signed date of the Road to protect water quality. The WCRC has an agreement subrecipient agreement. with the landowner, so if selected for funding the property Please describe your purchase will proceed to,closing. The closing should take around organization's ability to plan 6 to 8 weeks. and utilized requested funds within that timeframe. American Rescue Plan Act 2 PART4,PR94ECTENEFICIARIS y Projected number of g0,515 Fayetteville beneficiaries Will ALL beneficiaries live, work and/or go to school in 0 Yes No Fayetteville Will ALL beneficiaries meet US Treasury Low to Yes No Moderate Income (LMI) Guidelines (please see Application Guide, Exhibit Will ALL beneficiaries have been negatively impacted by Yes No COVI D-19 Does this request respond to a negative COVID-19 I Yes U No impact? If answering Yes to the question above, please describe the COVID-19 impact and how this proposal will aid in responding to the impact Please indicate how the proposed project meets eligibility standards and requirements described in the U.S. Department of the Treasury's Final Rule for Coronavirus State and Local Fiscal Recovery Funds American Rescue Plan Act 3 Please describe the effect of the proposed environmental impact or benefit. Please indicate how the proposed project meets eligibility standards under the EPA's Clean Water State Revolving Fund (CWSRF), Drinking Water State Revolving Fund (DWSRF), or eligible projects as described in the U.S. Department of the Treasury's Final Rdle for Coronavirus State and Local Fiscal Recovery Funds. See Subrecipient Application Guide for more information. Please describe the residents or industry sector this.grant request is intended to serve or benefit. Please indicate how the proposed project meets eligibility standards and requirements described in the U.S. Department of the Treasury's Final Rule for Coronavirus State and Local Does this request respond to a negative COVID-19 impact If yes, please describe the COVID-19 impact and how this proposal will aid in the City's economic recovery The "Floodplain Conservation to Protect Water Quality" project meets the eligibility standards under the EPA's Clean Water State Revolving Fund for Section 603(c)(2) Eligibility: Section 319. Publicly or privately owned projects that implement NPS management programs established under Section 319 of the CWA are eligible. This project is located in the West Fork White River (WFWR) watershed. The WFWR is a major tributary of the White River which forms Beaver Lake, the primary drinking water source for over 350,000 people in Northwest Arkansas. This project satisfies Section 319 eligibility requirements and meets Arkansas's 2018-2023 Nonpoint Source (NPS) Management Plan objectives. The NPS Management Plan identifies the Upper White River and Kings River as a priority watershed for nonpoint . source pollution reduction. Included in this is the West Fork White UYes O No American Rescue Plan Act 4 City Code Chapter 118 Business Registry and Licenses delineates what businesses are required to have a Fayetteville Business License. Submission of this grant application indicates that, if required, a current business license is in place. PART S[GNATURE OF S1GNgTURE AUTHORITY AND DATE �.6....1.�....�,.,... I am an authorized employee/agent of the applicant organization and I am authorized to submit this application. I have read and reviewed the American Rescue Plan Act documentation. I understand -that as a subrecipient of the City of Fayetteville's American Rescue Plan Act funds, I will be responsible for maintaining records, complying with provisions of the subrecipient agreement, and providing any/all records and information necessary for the City of Fayetteville to report on this award. All applications and documentation are subject to disclosure pursuant to the Arkansas Freedom of Information Act. All documentation may be provided to Federal and/or State government agencies for accounting and auditing purposes. Sandi J. Formica/Executive Director/April 30, 2022 Name/Title/Date American Rescue Plan Act Year of Incorporation 12003 The Watershed Conservation Resource Center is a non-profit organization that strives to protect, conserve, and restore natural resources by utilizing the watershed approach, environmental outreach, and providing planning and technical assistance to Philosophy, Purpose and/or landowners, communities, and government. Mission Statement Provide a brief description of your organization including information about programs and/or services other than the proposed project. Safeguarding our Nation's natural resources requires initiative from well organized individuals, strategic funding mechanisms, and broad community support. Scientific information and effective communication of environmental data are necessary for protection and conservation of our rivers, lakes, wetlands, forest, & drinking water. With this in mind, Sandi J. Formica and Matthew Van Eps, P.E. formed the WCRC to provide technical support to communities to address environmental problems. Now 18 years old, over 50-years of combined experience, and a staff of 11, the WCRC are experts in watershed management and stream and ecological restoration. Establishing strong partnerships, the WCRC has conducted a variety of watershed -based assessments focused on sediment and nutrients sources from river instability, off -road vehicles, urbanization, and agriculture. The WCRC develops solutions to identified environmental problems and are leaders in designing and implementing ecological -based river restorations. The WCRC has successfully completed projects ranging from small urban streams to large rivers throughout Northwest Arkansas (NWA). The WCRC most recently used their assessment techniques and successful partnership collaboration to create the first watershed plan authorized by the NRCS to utilize PL-566 funding to implement river restoration projects at priority sites in the West Fork White River (WFWR) watershed. The WFWR is a major tributary to Beaver Lake, NWA's drinking water source. A first in the Nation, the WFWR PL-566 program is funding restoration of highly unstable areas along the WFWR and has the potential for millions of federal dollars to be directed to this area. For the City of Fayetteville, this effort will have a huge positive impact, because 40% of Fayetteville drains to the WFWR, and the river runs through the East side of the City limits and planning area. American Rescue Plan Act The WFWR is an untapped natural resource for the City and as it is restored through the PL-566 program, the river can provide a water trail through the City, boating and fishing recreation, and natural area hiking to Fayetteville residents 20 minutes or less from their home. The WCRC has secured over $7 million in federal grants and has leveraged at least that amount in local funding and in -kind services, to conduct watershed and conservation initiatives mostly in NWA that result in ecological restoration, enhanced recreation, and cleaner water. The WCRC is recognized for its expertise in designing and implementing stream restoration plans which include the restoration of stream channel, wetlands, and riparian areas..Working with multiple landowners and partners, the WCRC has successfully implemented 21 stream restoration projects that includes over 30,450 feet of restoration and stabilization including projects on small urban streams and large rivers in rural settings. The WCRC provides project management and collects the field data, conducts the stream stability assessment, develops the restoration design along with construction drawings and specifications, obtains and coordinates construction materials, provides construction oversight, and develops and implements site native re -vegetation plans. The WCRC continues to monitor and maintain all of these sites to ensure their success. Implementation of these projects has resulted in the reduction of sediment and phosphorus loadings in the Beaver Lake and Illinois River watersheds. These projects have restored aquatic and wildlife habitat, while creating recreational opportunities for residents to. enjoy these natural environments through boating, wading, fishing, and exploring. The stream restoration projects not only protect NWA's drinking water source, Beaver Lake, but also protect city parks, utility infrastructure, a historic cemetery, and private property from erosion, damage, and loss from major flood events. Implementing watershed -based actions and protecting water quality requires the support and cooperation of an array of local entities including landowners, government agencies, businesses, and the general public. A central component to all projects designed and conducted by the WCRC is the development of robust partnerships that encourage communication amongst stakeholders. The element of'dynamic partnerships has allowed the WCRC to develop a solid technical basis to support proposed solutions to identified environmental problems. The WCRC has enjoyed working with many partners including: Cities of Fayetteville, Greenland, Rogers, Bentonville, Bella Vista, Eureka Springs, Fort Smith, and Little Rock; Beaver Water District; Walton Family Foundation, USDA Natural Resource Conservation Service; NWA Land Trust; Beaver Watershed Alliance; Illinois River Watershed Partnership; Arkansas Game and Fish Commission; USDA National Forest Service; Arkansas Department of Agriculture, Natural Resource Division (ANRD); U.S. Environmental Protection Agency; University of Arkansas; Audubon Arkansas; the Nature Conservancy; Winrock International; and many landowners. American Rescue Plan Act 7 Floodplain Conservation to Protect Water Quality Project Budget Land Acquisition: $2,185,400 Closing Costs: $10,000 Preliminary Site Management and Restoration Plan: $30,000 Year-1 Site Management: $25,000 Total Project Cost: $2,250,400 In -Kind Contributions Beaver Water District: $800,000 (see Additional Information, Attachment 2) Watershed Conservation Resource Center: $5,000 ARPA 2022 Grant Amount Requested $1,445,400 American Rescue Plan Act The Watershed Conservation Resource Center (WCRC), a 501(c) (3) nonprofit organization, is proposing to purchase 223 +/- ML acres of floodplain property along the West Fork of the White River (WFWR) to protect water quality and restore riparian and wetland habitat. The property is located in the Fayetteville City limits and 2.4 miles of the WFWR flows along its west side (see Additional Information, Attachment 1). Based on a cursory review, there are approximately 22 or more acres of wetlands. Cost of the property is $9,800 per acre. Beaver Water District (BWD) has committed $800,000 towards the property purchase price of $2,185,400. See Additional Information, Attachment 2 for BWD's letter of commitment. One of the fastest growing areas in the United States, Northwest Arkansas is expected to double its population by 2045. Beaver Lake is the primary drinking water source for this booming area. The WFWR is a major tributary of the White River, which forms Beaver Lake. 40% of the City of Fayetteville (City) drains to the WFWR and White River. Protection of the WFWR is important to the City and to the Region to ensure we have clean drinking water for future generations. The floodplain of the WFWR is uniquely wide at this location. From the headwaters, the river flows from south to north and then takes a turn to the east on the proposed property resulting in an exceptionally wide floodway and 100-year floodplain. Also, there are a series of wetland complexes in which many are old channel scars. The expansive floodplain and wetlands are important natural features that serve to filter out sediment and nutrients from floodwaters, which in turn helps to protect Northwest Arkansas' drinking water source, Beaver Lake. In addition to water quality protection, the WFWR's floodplain provides benefits to the community: 1) Flood risk is reduced by a. Slowing and reducing velocities of floodwaters as they travel over the floodplain. Restoration of the floodplain will improve this benefit once a healthy stand of native trees are established along the riparian and native grasses and shrubs in the open areas. b. Storing flood waters 2) The extensive wetlands within the WFWR flood plain improve the quality of the local environment by providing habitat for fish and other wildlife 3) Reduces stress on the river channel; therefore, reducing the potential for accelerated streambank erosion, which can contribute thousands tons of sediment and pounds of phosphorus to the watershed 4) Provides groundwater recharge which is important to water quantity and the local ecology. American Rescue Plan Act 10 Unfortunately, these benefits are often overlooked when local land -use decisions are made, which is why the property needs to be purchased for conservation and restoration purposes. There are mechanisms within the floodplain regulations that could allow for partial development of the property, which would threaten all of the beneficial uses stated above. Loss of those uses can result in water quality and wildlife habitat degradation. A recent survey conducted by the Northwest Arkansas Council saw that a majority of residents in this region feel clean water is a high priority. Secondary benefits to conserving this property is it is adjacent to the WCRC/City Dead Horse Mountain (DHM) Property. The property can provide secondary walking trails and support the native plant program the WCRC is providing to the local community. With 2.5 miles of river frontage, the property allows for additional boating opportunities for the community with canoe/kayak access at the DHM property. In addition, the property is located across from an area where the City's demographics show a substantially lower average income. The Beaver Water District and the WCRC will co-own the property, and the WCRC will manage the property. A portion of the property has an existing conservation easement, and it is expected that most of the remaining property will also be placed in a conservation easement. American Rescue Plan Act 10 Following the grant award: First 60 days: Property will be purchased Remaining 10 months: Site management will be, initiated and a conceptual restoration plan will be developed VA American Rescue Plan Act 11 The WCRC is a non-profit organization that has been in operation for 18 years. The organization has a proven administrative track record built upon the completion of a multitude of donor and partner funded projects that required documentation of project progress and financial activities. Periodic and final reports are generated on a regular basis as prescribed by grant workplans and donor requirements. The WCRC maintains an accounting system that tracks accounts payable, accounts receivable, payroll, and procurement of goods and services that is audited by independent 3rd party entities and can produce verifiable financial reports as needed. Concerning project reporting, the WCRC has successfully completed a multitude of grants funded by local, state, and federal government agencies as well as foundations. The WCRC keeps records of data collected and report documentation as required by the funding entities in files and mostly on their local server with off -premise backup services. The WCRC provides progress reports that includes deliverables and other documentation that the work has been completed as required by the funding entity. American Rescue Plan Act 12 Use the following format Objective #: Outcome(s): Method of Measurement: The objectives of the Floodplain Conservation to Protect Water Quality Project is to 1) Purchase 225 acres of floodplain that includes wetlands along the West Fork White River to a. protect water quality of White River and Beaver Lake, the drinking water source of NWA b. initiate the restoration of the wetlands and floodplain to improve contaminant removal and restore aquatic and terrestrial habitat 2) Develop a conceptual restoration plan for the site The outcomes are 1) Floodplain and wetlands are protected, as well as water quality of our drinking water source 2) Conceptual restoration plan The method of measurement is a deed showing the joint ownership of the property between Beaver Water District and the Watershed Conservation Resource Center will be filed at the Washington County Court House. American Rescue Plan Act 13 It would be difficult to proceed with partial funding for this project, because of the limited time of 45 days to provide a commitment to the landowner for the stated purchase price. At this time the Beaver Water District has agreed to pay for $800,000 of the property purchase. There is not another funder at this time, so this grant would need to pay for the remaining cost. If the WCRC is awarded this grant, at that time, the WCRC will try to leverage the money to bring in additional funding to restore the property. American Rescue Plan Act 14 e; s t 21 Accessibility Narrative 21 Board of Directors 21 Bylaws 21 Certificate of Good Standing 21 Financial Audit (see Application Guide for more information) 1zIntake Forms Non -Profit Status Verification [IRS 501(c)(3) letter, IRS form 990 or 990-EZ, etc.] Resumes (Executive Director and Project Coordinator) System Award Management (SAM) UEI registration Status of Funding (if applicable) Additional Documentation Checklist (this page) Additional Information American Rescue Plan Act 15 Additional Information Attachment 1: Floodplain Conservation to Protect Water Quality: General Vicinity Map Attachment 2: Beaver Water District Letter of Financial Commitment Attachment 1 240 acre Conservation Flood Plain on the WFWR General Vicinity Map Attachment 2 Beaver Water District Letter of Financial Commitment a r +� - /: 4 i April 25, 2022 Sandi Formica, Executive Director Watershed Conservation Resource Center 380 W. Rock St. Fayetteville, AR 72701 RE: Floodplain Conservation to Protect Water Quality Dear Sandi, Beaver Water District is the drinking water provider for over 350,000 residents of Northwest Arkansas. To continue to provide our customers with clean, safe drinking water, we maintain a multiple barrier approach including consumer education, source water protection, and state of the art treatment and disinfection. Protection of the quality of the water in the reservoir is critical to our overall protection program and we have been active in that effort for more than 30 years. One of our strategies for protecting the water quality of Beaver Lake is through land conservation, with a focus towards riparian areas and floodplains of the tributaries that flow to our water supply. These are critical areas that function to slow down the water in flooded rivers and remove sediment and nutrients before they reach the lake. With the rapid growth being experienced in Northwest Arkansas, our opportunities to conserve and protect these areas grow smaller every day. Beaver Water District will supply up to $800,000 toward the purchase of the Collier property along the West Fork of the White River to conserve it as a functioning floodplain. Matching funds dollar for dollar will be required to complete the purchase of greater than 200 acres as indicated by a completed real estate contract. Sincerely, M. Lane Crider, P.E. Chief Executive Officer Beaver Water District Copies via email: Kevan Inboden (kinboden@bwdh2o.org) James McCarty Omccarty@bwdh2o.org) FO,bo%406 Lo'wdIAR72745 €h479,756,3651 FX479,751A3;6s Attachment 1 Floodplain Conservation to Protect Water Quality ., 1 Ll•�A �: --1,; , _.. r WCRC and City of Fayetteville Property - Vicinity Map •�{� '� ��'�.,•�� 9sAcres ° n; -•' / Y� :.a►!' :•�, +'`� ^.x3a4. 1! Sf v 4►untsvilleRd t1.. -�� ` J ` - •"' "a'�hy ''u r,�r ar i �`�.'•» -, ff � � wi � y f' s4� r • •qKv 4 � �.+ � ��t t� '•_�,., �. ,.t �. •'rt• ° '� `' �. •raj, ..�._ t f. � •1 i` � •�w F i� s `��'• 4 �i{`M�/ .�1 ,4�` et. 4 \ ! ..'S-. _ " �' n •� -• .. y' Y ter♦ ...yM,. L•- N i :y fir:.» .�; ;;�; r�r t.� ��^ � �•1 Floodway 22Acres of Wetlands 100 year Floodplain 3 ? ;• �+�°•� s `i 2 5 Miles of Rrverfront ... `' ^---1 \ 'c y e""t I Goff Farm Rd r+:S �K y ly * !} �r Combs Parka- r .- Pump Station Dam :r West Fork White River \ 100-year Flood Zone WCRCrCty Property Boundary Proposed Floodplain Purchase 0 500 1,000 2,000 3.000 Feet Proposed Floodplain Purchase 224 +t- ML acres rr Location of Property . t Beaver Lake Watershed